Wednesday, January 13, 2010

The dollar marked scant gains against the yen Weds. Dollar-yen fell to a 3-week low of Y90.73 in the U.S. session but started this morning with a slight uptick, trading around Y91.00 as the Asia-Pacific session got under way. The pair then marked a high of Y91.36 as the dollar's rebound continued and as risk appetite continued to worsen, with reaction to hawkish Fed comments from Plosser and Fisher aiding.

But the gains didn't last as yen crosses resumed their declines, with euro-yen briefly hitting a Y132.25 high before quickly withdrawing to Y131.51. Late on, dollar-yen was back down at where it had started the day, around Y91.00/05 while euro-yen was also near its opening levels, around Y131.80. Euro-dollar also failed to extend an initial rise as concerns about Greece's debt repayment problems continued to dog the eurozone currency. The pair pulled back from a high just shy of $1.4500 to hit $1.4456 in midmorning trade, despite the dollar's decline. The recovered to trade around $1.4485. Meanwhile, sterling was buoyed by comments from the Bank of England's Sentance as well as positive M&A flows.

Euro-dollar opened Asia around $1.4490 and began to ease as euro-yen was pressured lower after the Tokyo fix. Dollar demand was also given an added early boost as markets reacted to hawkish comments from Fed's Plosser and Fisher. Rate pressed down before meeting decent demand that restricted losses to $1.4456. Rate then recovered, with traders noting Asian sovereign demand interest in the move (two waves mentioned) with rate edging back to challenge the $1.4500 area into early Europe. Continued demand into this session took rate on to $1.4516, currently trading around $1.4507.

Rate continues to be seen within a basic $1.4450/1.4550 range with stops said to have been built on a break out on the bottom side, though fresh demand reported to begin from around $1.4440. Greek concerns continue as a counter to upside hopes with rate seen contained by two way cross flows. Resistance noted at $1.4530 ahead of $1.4545/60, with stops noted on a break of $1.4570.

RES 4: $1.4790/10 61.8% retracement and November lows
RES 3: $1.4695 55-day moving average
RES 2: $1.4669/81 Former bear-flag base, 100-DMA, 50% of Dec decline
RES 1: $1.4572 38.2% retracement of Dec decline


SUP 1: $1.4450 5-day moving average
SUP 2: $1.4375 21-day moving average
SUP 3: $1.4270/76 200-Day moving average, Support line from 22 Dec
SUP 4: $1.4218 Low 22 Dec

Dollar-yen lifted off early lows of Y91.09 to Y91.36 as the dollar got an early lift on market reaction to reported hawkish comments from Fed Fisher and Plosser. However, move met willing sellers into the rally, with Asian equity markets trading soft as they took direction from the Shanghai reaction to yesterday's PBOC hike of 0.50% in reserve requirements. Euro-yen tracked the early move, finding demand interest as Japanese traders were attracted in by the lower levels presented after Tuesday's sell off ahead of the fix, the rate edging to a high of Y132.25 from Y131.94 opening level, before it too met sell interest that eased it lower again.

Dollar-yen eased to a session low of Y90.91 (NY low Y90.73) while euro-yen traded off to Y131.51. Dollar-yen again met willing buyers into the dip below Y92.00 with rate able to recover to Y91.25 into early Europe. Euro-yen currently trades around Y132.22, lifted by dollar-yen's recovery as well as euro-dollar extending its recovery back above $1.4500. Dollar-yen bids seen from Y90.90 to Y90.70 with stops below. Resistance toward Y91.80.

RES 4: Y94.22/27 50% proj 26Nov/4Dec rally from 5 Jan, Res line 4 Dec
RES 3: Y93.35/78 200-day moving average, High 7 Jan
RES 2: Y92.30 Tenkan line of the Ichimoku cloud
RES 1: Y91.75/00 21, 5-day moving average


SUP 1: Y90.75 Low 12 Jan, High 4 Dec
SUP 2: Y90.36/45 38.2% retracement, 100-DMA and Kijun line &
SUP 3: Y90.00 55-day moving average
SUP 4: Y89.30 50% retracement of the 'December' rally

Cable opened into Asian trade at $1.6160 before initially marking early highs at $1.6167 before easing back to $1.6137 on early dollar demand, seen as market reacted to hawkish comments from Fed Plosser and Fisher. Rate bounced again between $1.6167/37 before picking up a fresh bid tone as sterling's recent positive trend moved back into gear. Rate moved back up to retest Tuesday's highs at $1.6195, breaking above ahead of the European open and extending rally into early Europe to $1.6225.

Lot of talk around of euro-sterling LHS (sell) interest to be seen into the 0900GMT fix which has also aided the pounds positive feel. Demand for sterling seen M&A related (possible Vattenfall), with BOE MPC Sentance headline comments (highlighting hawkish element though disregarding dovish counter argument) also providing bullish tone. Key resistance seen between $1.6235/42, with stops noted on a break of $1.6250. A break and clear here to boost technical positive outlook. Support seen back at $1.6205/00 ahead of $1.6180.

RES 4: $1.6365/10 55-day moving average, High 16 Dec
RES 3: $1.6310 100-day moving average
RES 2: $1.6237/42 High 31 Dec, 4 Jan, Bollinger band top
RES 1: $1.6194 Highs 11, 12 Jan


SUP 1: $1.6065/90 21, 5-day moving average
SUP 2: $1.5880/96 Current base of daily Bollinger band, Low 7 Jan
SUP 3: $1.5833 Low 30 Dec
SUP 4: $1.5707 Low 13 October


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