Monday, March 15, 2010

EU FinMin meeting Today

The greenback was modestly higher across the board in Asian trade Monday, albeit in thin volume and narrow ranges.

Euro-dollar was last trading at $1.3740, towards the lower end of the $1.3726 to $1.3784 trading range. Traders said the market was on hold ahead of the Eurogroup meeting and any possible announcement regarding aid packages for Greece.

Dollar-yen was trading at Y90.65, having been stuck in a Y90.55 to Y90.97 trading range. Traders said the press reports noting further unease over the US fiscal position from Moody's had little impact on FX rates.

For this week the Fed and BoJ meetings are the highlights, although no rate change is expected from the Fed and it is expected to hold the line on end asset purchases. The BoJ is widely expected to announce additional easing policies - increased quantity and maturity of current liquidity programs. Key economic data releases during the week are US IP (Monday), euro area CPI (Tuesday), UK employment (Wednesday) and US CPI (Thursday). UK BOE Minutes Wednesday will also be in focus for any comment on need for further QE.

Euro-yen gapping higher into early Asian trade saw euro-dollar push up from its opening level around $1.3764 to post session highs at $1.3784. The move was seen as an early reaction to weekend press reports that the EU is getting close to agreeing a rescue package for Greece. However, comments from France FinMin Lagarde that Germany's trade surpluses built on holding down labour costs may be unsustainable for the other countries in the eurozone (an unusually blunt warning to Berlin) acted to temper this early enthusiasm.

Euro-dollar eased off the highs, holding between $1.3767/72 for around 4-hours before stronger sales of euro-yen (as Asian equity markets traded in the red) squeezed the rate to lows of $1.3726. The rate settled between $1.3730/40 ahead of the European open, edging back to $1.3754 (50% $1.3784/26) on early European demand. Support remains in place at $1.3730/20, a break to expose stronger support, said to have been building, toward $1.3700. Resistance noted at $1.3755 ahead of $1.3760/70 and the overnight high at $1.3784. Weak talk emerging suggesting the $1.3800 level holds barrier interest.

RES 4: $1.4008/26/46 50% of Jan/Mar, High 3 Feb, Lows 21 Jan, 17 Aug
RES 3: $1.3853/73 Low 1 Feb, 38.2% retracement of Jan/Mar decline
RES 2: $1.3838/39 High 9 Feb, 55-DMA, 23.6% of Dec/Mar decline
RES 1: $1.3796 High 12 March, Bollinger band


SUP 1: $1.3610 21-day moving average
SUP 2: $1.3530 Low 5 March
SUP 3: $1.3475 Current Bollinger band base
SUP 4: $1.3420/37 76.4% of April/Dec rally, Low 2 Mar

After briefly taking out the Y91.00 level on Friday dollar-yen settled back to range trade under this level. The market was Y90.55-Y90.97 in Asian trade as the early gains to Y90.97 were not able to hold and dollar-yen was sold off for the majority of the session. Talk for some traders that the BOJ may hold back on any policy change until after the next Tankan survey helped the yen rally and dollar-yen traded back down to Y90.55 where the daily Ichimoku cloud line is currently located.

The cross-yen had a similar trade, euro-yen opening around the highs at Y125.35 level as some light stops were taken out after Fridays rally to Y125.20 (previous high Y125.23). However the rally did not last long as negative equity markets and renewed fears of problems with providing Greece with a bailout package saw risk aversion and euro-yen was once again sold off trading down to Y124.40 as Japanese exporters were noted sellers through the Y125.00 level.

RES 4: Y92.15 High 19 Feb
RES 3: Y91.80 200-day moving average
RES 2: Y91.24 76.4% retracement
RES 1: Y91.09 High 12 Mar


SUP 1: Y90.15 21 & 100-DMA, Kijun line
SUP 2: Y89.60/65 Tenkan line of the Ichimoku cloud, Low 9 March
SUP 3: Y89.25 Base of the Ichimoku cloud
SUP 4: Y88.13/24 Low 4 March, 61.8% retracement of Oct/Dec rally

Saw an early high in Wellington of $1.5218 before opening main Asia around $1.5180, with rate edging up to $1.5200 on early risk-on trade prompted by weekend reports that the EU were close to agreeing a rescue package for Greece. This early view on risk was quickly reversed as market took note of China comments on yuan and dollar fluctuations, with press reports suggesting Moody's will warn the US over its AAA rating if it can't get its public finances in order.

Rate dropped, posting session lows at $1.5152 before settling between $1.5155/70 ahead of the European open. Fresh demand into this session took rate back up to retest the overnight high, extending to $1.5206 in a quick spike before being slapped back to $1.5155. Rate currently trades around $1.5160. Bids said to remain in place between $1.5155/50, a break to open a deeper move toward $1.5125/20 ahead of $1.5100/090. Resistance remains toward $1.5210, with mention of stops placed on a break above $1.5220. Above $1.5220 and rate can edge toward $1.5235 ahead of $1.5250.

RES 4: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 3: $1.5350 Breakout level
RES 2: $1.5265/99 21-DMA, 50% retracement of post-17 Feb decline
RES 1: $1.5218 High 12 March


SUP 1: $1.4866/73 Low 2, 10 March
SUP 2: $1.4770/81 Current base of the daily Bollinger band, Low 1 March
SUP 3: $1.4659 High 23 Feb
SUP 4: $1.4619 Low 29 Apr


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