Wednesday, February 10, 2010

Greek Bailout Plan in Focus

The dollar pared gains against the yen through the Asian session and was sitting close to the session lows of Y89.53 ahead of the European open. Dollar-yen traded to a high at Y90.02, as Asia took on board the increased hopes for a settlement to the Greek situation. This also saw euro-dollar trade to an early high at $1.3807. However, as the situation became less clear, with the Goldman's/Greece swap story again to the fore, euro-dollar fell to session lows at $1.3734. Japanese exporter sales were prominent as yen pairs eased, euro-yen off 100 points to Y123.00.

Chinese trade data came in weaker-than-expected and copper imports were down by a noticeable amount, which all added to negative weight against the Aussie, which was also pressured by weak domestic data. Aussie-dollar eased to lows of $0.8736 from $0.8797. IP out of Italy 0900GMT and UK 0930GMT ahead of BOE Inflation Report at 1030GMT provide this morning's highlights. Inclement weather in DC and NY to affect calendar releases in the US. Bernanke text will be released but US trade data may lag stated release time of 1330GMT.

Euro-dollar opened Europe around $1.3797 before cross yen buys in early Asia lifted it on to mark session highs at $1.3808. Rate eased off, settling for a while around $1.3790/75 before Asian sovereign sales emerged to knock rate down to session lows of $1.3734. Rate was on a recovery course ahead of the European open, with added demand from early buyers lifting rate back toward the mentioned Asian sovereign sell level at $1.3775. Offers seen placed between $1.3775/80 ($1.3780 61.8% $1.3808/1.3734), a break to open a move toward $1.3800 (61.8% $1.3840/1.3734) ahead of $1.3810/15.

Traders have noted that there has been good demand for $1.3850 strikes for Friday expiry. Support seen at $1.3735/30 with interim interest suggested at $1.3750. Focus remains on any developments to eurozone plans for possible aid to Greece, and other periphery eurozone countries. Inclement weather in DC and NY has hit data releases for the rest of the week, though trade data today to be released via website. Bernanke testimony will be released (1500GMT), though no appearance.

RES 4: $1.4191/95 Channel top 3 Dec, High 25 Jan
RES 3: $1.4043/46 21-day moving average, Lows 21 Jan, 17 Aug
RES 2: $1.4026 High 3 Feb
RES 1: $1.3853 Low 1 Feb


SUP 1: $1.3585 Low 5 Feb
SUP 2: $1.3519/35 Proj channel support 3 Dec, Bollinger base, 2% MAE
SUP 3: $1.3485 61.8% retracement of March/Dec rally
SUP 4: $1.3404/20 61.8% of the post-Oct 2008 76.4% April/Dec rally

Dollar-yen continues to be the most stable of the currency pairs for the time being. Opening in London at Y89.76 after trading up to Y90.02 in the early part of the Asian session. There were talk of exporter offers layered up to this area. Talk is that the dollar-yen is benefitting from cross-yen demand as the market continues to focus on any noise coming out of Euroland regarding the Greek debt situation.

Technically the dollar-yen is in no-mans land, trading deep within the daily Ichimoku cloud. A daily close below the base of the cloud at Y89.00 area would signal more downside pressure for dollar-yen. On the topside Y90.00-15 area is said to hold more offers. Y90.54 is the 38.2% Fibonacci retracement of the Y93.75-Y88.56 downmove, past that we have Y91 as the top of the daily Ichimoku cloud.

RES 4: Y91.87 High 21 Jan
RES 3: Y91.28 High 3 Feb, Kijun line
RES 2: Y91.00 Top of the Ichimoku cloud
RES 1: Y90.00/35 Tenkan line, 21, 100 & 55-day DMAs,


SUP 1: Y89.00 Base of the Ichimoku cloud
SUP 2: Y88.55 Low 4 Feb
SUP 3: Y88.24 61.8% retracement of the 26 Nov rally
SUP 4: Y87.36 Low 9 Dec

Opened Asia around $1.5715, off NY highs of $1.5749. Rate initially edged up to mark session highs at $1.5728, the move seen in tandem with euro-dollar, with both pairs then slipping lower, cable dropping back to $1.5660 by late Asian dealing, as risk positions were pared on release of weaker than expected Chinese trade data, along with market looking for confirmation/clarity over speculated eurozone plans for Greece (and periphery eurozone countries). Cable was recovering off lows ahead of the European open, with early buys lifting the rate on to $1.5690/95 before momentum again faltered. Rate currently sits back around $1.5775.

UK industrial production/manufacturing data is due for release at 0930GMT, partly overshadowed by the BOE Inflation Report at 1030GMT. Traders have suggested going short ahead of the Report, suggesting the Bank could lower its 2-yr inflation targets because of lower GDP, with Report in general expected to be dovish. Support seen at $1.5660/50, a break to open a deeper move toward $1.5635/30 ahead of $1.5610/00. Resistance $1.5705/15 ahead of $1.5725/30 and $1.5750.

RES 4: $1.6055 21-day moving average
RES 3: $1.5833/50 Low 30 Dec, Low 1 Feb
RES 2: $1.5811 Top of minor downchannel from mid-February
RES 1: $1.5749 Hourly high


SUP 1: $1.5655 5-day moving average
SUP 2: $1.5530/35 Current base of the daily Bollinger band, Low 8 Feb
SUP 3: $1.5409/12 61.8% retracement of $1.44 advance, Projection level
SUP 4: $1.5350/68 50% retracement of $1.3659 to $1.7041, High 5 Jan 2009


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