• Home ::
• Technical ::
• Market View

• Send
• Print
• Add To
• Rss

Intraday Forex Technical Report

U.S. Update: More dollar corrections

Fri, Nov 20 2009, 16:15 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team

What happened

Asian stocks falling, plus Japan’s government officially declaring that the economy has fallen into deflation due to weak domestic demand, has kick started a dollar rally that extended to American session; adding to negative sentiment regarding high yielding currencies, was the approach of the year end, that push investors to adjust positions.

 Early economic data show that the Swiss recovery is not strong as it was believed: retail sales earlier this week were quite disappointing and after a 0.3% contraction in the economy in the second quarter, the SNB itself now acknowledges that GDP may not turn positive until the fourth quarter.

Also, nationwide reported that growth in U.K. unemployment during 2010 will put downward pressure on house prices, sending Pound to an intraday low of 1.6460 against greenback; the fact that that government borrowing hit a new record October high, helped to keep the currency subdue, even after later recovery across the board.

What to expect

Despite dollar highs against major rivals, the fact that gold is unable to correct is halting further gains in the American currency, that at current levels, will only be correcting it’s still in play bearish trend. No doubts, many will question that trend at this point, and it has been over reacted, or if it’s just a consolidation stage.

Far from the week close, at current levels dollar is about to close with gains against most rivals except Japanese Yen; if this last was unable to run further on this risk aversion movement, was due to the recognition of the nation deflation. Gains are more substantial against commodity currencies such as AUD, CAD and NZD despite neither gold, not oil, are far from year highs. As we approach the year end, maybe not only adjustment but profit taking, could trigger further dollar gains.

Published on  Fri, Nov 20 2009, 16:15 GMT

U.S. Update: Risk appetite fades

Thu, Nov 19 2009, 15:54 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team

What happened

Following Wall Street, Asian shares fell dragging dollar and yen higher across the board, a movement that extended to Europe, and continues in American session.

However, Euro managed to hold above 1.4840 support area against greenback, despite general risk aversion sentiment has pushed gold almost $ 20 to the downside, from yesterday’s high. Battle among dollar destiny, is no doubts in the European currency hands: as long as the pair remains above the 1.4740 area, greenback recovery will remain limited to corrective movements inside ongoing trend.

We should keep in mind also, that Euro tend to strengthen at this time of the year, because is typically when European financial firms repatriate their overseas investments ahead of the year end.

Another factor favoring dollar today is gold that quotes around 1135 in this first American session hour, from yesterday’s record high above $ 1153/oz. Early news show that gold appreciation was mainly due to the fact that the supply of gold on the world market fell during 3Q mainly due to central banks being net buyers ;  rally has paused today on dollar strength and lower stocks, yet metal is far from losing its bullish trend.

Pound fell strongly, despite some positive data mounted on market sentiment and the inability of breaking above the 1.6840 level, 50% retracement of last monthly fall. Capped now under 1.6660 area, only above that level pair could recover some of its previous upside strength.

Still, movements in most majors remain inside recent ranges, without offering not new real cues on the long term destiny of greenback. In general dollar remains under pressure and is far away from a trend change, as long as rates differentials play against the currency. Yesterday FED’s members comments about possible movements in rates only starting around 2012,surely won’t favor more than current corrections.

What to expect

Despite Japan policy meetings hardly affect market, many investor are expecting the Japanese government to declare Friday that the nation's economy is in deflation, putting BOJ under pressure, and also yen. Despite a fresh 6 week low, against greenback, Japanese currency was unable to extend the rally, as market rather wait for next Friday’s data to take another step.

U.S. stocks continue pushing lower as well as gold, both close to intraday lows. Rally has no signs of halting yet, and will probably extend to next Asian stocks markets session, favoring further greenback recoveries. Still, as long as inside mentioned ranges, bearish perspective for the American currency, remains as mentioned, unchanged.

EUR/USD Outlook

Holding under 1.4880, pair lack of definitions is clear in the daily charts, with 20 SMA flat and price moving between 1.4800/1.5000 since past Thursday; daily ascendant trend line, today a bit above static support area at 1.4740, remains first key support for the pair, followed by 1.4610, 61.8% of the monthly fall 1.6038/1.2330, also neck of the probable double roof formed at 1.5050 area. Only a weekly close under that level, could trigger a trend change in the pair, quite unlikely at this point. On contrary, 1.5020 is the first level to watch to the upside, followed by early high of 1.5062, 1.5100 level, and above 1.5150 area, 76.4% of the same monthly rally.

Levels to Watch

EUR/USD: 1.4740 1.5020
GBP/USD: 1.6510 1.6840
USD/CHF: 1.0030 1.0240
USD/JPY: 88.20 90.70

Published on  Thu, Nov 19 2009, 15:54 GMT