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Daily Forex Outlook

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U.S. Dollar Trading fell against the majors

Thu, Oct 26 2006, 02:14 GMT
by Easy Forex Team

Easy Forex

US Federal Reserve and the RBNZ decide to leave rates on hold. German IFO stronger than expected.

CURRENCY TRADING SUMMARY

• U.S. Dollar Trading (USD) fell against the majors in the overnight foreign exchange trading session as the US Federal Reserve decided to leave rates on hold. As expected, the Federal Open Market Committee (FOMC) kept rates steady at 5.25% for the third consecutive meeting. The statement released after the decision was handed down was almost identical to previous statements citing the slowdown in economic growth and the moderation of inflationary pressures as the housing market cooled. Market analysts were expecting a more aggressive rhetoric from the FOMC especially with regards to inflation, but to no avail. Existing home sales fell to 6.18mln from 6.3mln previously, where the market was expecting a drop to only 6.23mln. In other markets, the Dow Jones index rose modestly by 7pts and the NASDAQ strengthened by 12 pts. Crude oil posted its largest percentage gain in 7 months; rising US$2.05 a barrel to US$61.40 as OPEC nations enforced production cuts. Looking ahead, durable goods orders and new home sales are due out tonight.

• The Euro (EUR) traded within a low of 1.2551 and a high of 1.2620, before closing at 1.2615 in the New York session. On the data front, German IFO expectation came in at 99.2, better than the 98 level expected.  

• The Japanese Yen (JPY) traded within a low of 118.88 and a high of 119.44 versus the dollar, before closing at 118.95 in the New York session. Looking ahead, Japanese CPI is due out tomorrow.

• The Sterling (GBP) traded within a low of 1.8722 and a high of 1.8802, before closing at 1.8792 in the New York session.

• The Australian Dollar (AUD) traded within a low of 0.7584 and a high of 0.7622, before closing at 0.7616 in the New York session. On the data front, the RBNZ decided to leave rates on hold at 7.25% prompting a rally in the AUD/NZD and AUD/USD.

• Gold (XAU) rose by US$3.20 to US$590.80 an ounce as oil increased in value.  

TECHNICAL COMMENTARY

• Euro 1.2515

Initial support at 1.2524 (Oct 24 low) followed by 1.2483 (Oct 16 low). Initial resistance is now located at 1.2644 (Oct 19 high) followed by 1.27 (61.8% retracement of the 1.2834 to 1.2483 decline).

• Yen 118.95

Initial support is located at 118.56 (Oct 23 low) followed by 118.04 (Oct 19 low). Initial resistance is now at 119.9 (Oct 13 trend high) followed by 120.0 (Psychological round number resistance).

• Pound  1.8790

Initial support at 1.8663 (Oct 18 low) followed by 1.8649 (61.8% retracement of the 1.8516 to 1.8863 advance). Initial resistance is now at 1.8801 (Oct 25 high) followed by 1.8863 (Oct 20 high).

• Australian Dollar  0.7610

Initial support at 0.7559 (Oct 24 low) followed by 0.7522 (Oct 18 low). Initial resistance is now at 0.7625 (Oct 25 high) followed by 0.7649 (76.4% retracement of the 0.7722 to 0.7414 decline).

• Gold  592

Initial support at 573.5 (Oct 24 low) followed by 560.13 (Oct 4 low). Initial resistance is now at 592.9 (Oct 23 high) followed by 602.6 (Oct 20 high).

Published on  Wed, Oct 25 2006, 00:00 GMT