Monday, January 25, 2010

MORNING FX
BRIEFING
German name sales of cross yen ahead of the Sydney open triggered exposed stops, left vulnerable in the thin markets, with euro-yen dropping 50 points to an early low of Y126.69 and dragging dollar-yen down to Y89.71. The move met fund demand at the lows which snapped euro-yen back to Y127.95, dollar-yen to Y90.41 before the rates settled back to Y127.80 and Y90.25. Euro-dollar got a mild bid tone at the start of the main session, thanks to the euro-yen recovery. The pair managed a $1.4173 high and then spent the rest of the morning shuffling between there and $1.4133. Rate currently trades around $1.4155.

After the active start market overall in Asia was described as subdued. Exporter demand for Aussie provided buoyancy, offsetting any negative react from the release of weaker than expected Australian PPI data, with Asian sovereign buys also cited as the rate lifted from lows of $0.8995 to $0.9075 before Japanese sales of Aussie-yen countered. Focus today is on developments over Bernanke's re-appointment, with US existing home sales the stand out data release.

EURO
Euro-dollar opened Asia around $1.4150, slightly firmer than the NY close as traders adjusted the rate on the weekend reports that Bernanke would secure enough Senate votes to be reappointed. Rate came under pressure in early pre Sydney trade as a German name took advantage of the thin conditions to target downside stops in euro-yen, forcing this rate down 50 points to Y126.69, the move taking euro-dollar to early lows of $1.4112.

Recovery was seen more aggressive as funds emerged into normal hours trading, euro-yen spiking back up to Y127.95, with euro-dollar tracking the move as it rallied to $1.4173. Rate then settled into a $1.4150/70 range for the balance of the session, currently trading around $1.4163. Offers seen placed between $1.4175/85,with talk of stops positioned on a break of $1.4190. Further offers noted toward $1.4220 with more stops above. Support seen at $1.4155/50, more between $1.4135/25 ahead of the mentioned Asian low at $1.4112.

RES 5: $1.4447 Low 14 Jan
RES 4: $1.4355 21-day moving average
RES 3: $1.4315 200-Day moving average
RES 2: $1.4218 Low 22 Dec
RES 1: $1.4170 5-day moving average

CURRENT LEVEL: $1.4162

SUP 1: $1.4090 Current base of the daily Bollinger band
SUP 2: $1.4009/29 Low 29 Jul, 50% retrace of April/Dec rally, Low 21 Jan
SUP 3: $1.3937 Minor support line 3 Nov
SUP 4: $1.3801/25 50% retracement of March/Dec rally, Low 22 June
SUP 5: $1.3736/50 50% post-Oct 2008, 61.8% April/Dec rally, Low 16 June


YEN
German name selling of yen crosses greeted the thin pre Sydney market Monday, euro-yen dropping 50 points to Y126.69, the move dragging dollar-yen to session lows of Y89.71. Fund demand emerged into the dips with the correction off the lows snapping euro-yen through reported CTA stops at Y127.80 to take rate on to Y127.95. Dollar-yen rallied back to Y90.41 before recovery faded, with Japanese sales of Aussie-yen noted as a factor in the counter. Euro-yen currently trades around Y127.70, dollar-yen at Y90.30.

Dollar-yen offers placed toward Y90.50, with stops reported above. A break here to open a move to Y90.80 ahead of Y92.00. Support remains toward Y89.70 (Asia low Y89.71), with stronger interest seen from Y89.50 through to Y89.30. For euro-yen, offers placed toward Y128.00, more from Y128.20 through to Y128.40 with stops placed on a break of Y128.50. Support Y126.70/50.

RES 4: Y92.05 High 14 Jan
RES 3: Y91.70/87 21-day moving average, High 21 Jan
RES 2: Y91.15/35 Kijun & Tenkan lines of the Ichimoku cloud
RES 1: Y90.36 Breakout level & 100-day moving average

CURRENT LEVEL: Y90.12

SUP 1: Y89.30 50% retracement of the 26 Nov rally
SUP 2: Y88.95 Low 18 Dec
SUP 3: Y88.55 Top of the Ichimoku cloud
SUP 4: Y88.24/30 61.8% retracement, Base of the Ichimoku cloud


CABLE
02:54 01/25 CABLE: Opened Asia around $1.6100 and initially marked session lows at $1.6090 as rate tracked the early cross yen sell pressure. Rate recovered off lows, in tandem with euro-yen and euro-dollar, pushing up to $1.6137 where it met US name supply. Rate eased back to $1.6100, settling for most of the session between $1.6095/1.6125 before a late rally spiked rate up to $1.6144 ahead of the European open, the move seen as a reaction to euro-sterling as this rate dropped back from overnight highs at stg0.8796 to stg0.87665.

Cable currently trades around $1.6125, the cross around stg0.8770. Cable offers seen between $1.6145/55, a break of $1.6160 to open a move toward $1.6190/00. Support seen at $1.6090 (Asia low), stronger between $1.6075/65.

RES 4: $1.6479 61.8% retracement of the decline from 16 Nov
RES 3: $1.6435/59 Top of the daily Bollinger band, High 19 Dec
RES 2: $1.6310/20 100, 55-day moving average
RES 1: $1.6220 5-day moving average

CURRENT LEVEL: $1.6118

SUP 1: $1.6077 Low 22 Dec
SUP 2: $1.6028/30 Minor support line, 76.4% of $1.5898/1.6459 rally
SUP 3: $1.5898 Low 7 Jan
SUP 4: $1.5880 Current base of daily Bollinger band

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