Tuesday, April 20, 2010

Dollar Trading Flat to Modestly Higher Against Majors

Briefing
The dollar is trading flat to modestly higher against the majors into early European trade Tuesday, llittle changed form late NYC levels against the euro and sterling, although has eked out modest gains against the yen.

Dollar-yen was last at Y92.60, the upper end of the session's narrow Y92.39/71 trading range as Goto-bi Day demand flows were seen at the fix. Flows overall though were described as muted, with traders reporting offers layered from Y92.75 to Y93.00.

Euro-dollar was last at $1.3470, just off the overnight lows of $1.3467, with players awaiting further concrete news out of Greece.

Sterling was little changed, with polls still pointing to a hung Parliament in the UK. Cable was under pressure in early Europe, breaking out of its overnight range of $1.5315/43, currently around $1.5307.

Euro
Euro-dollar opened Asia around $1.3485, just off NY high of $1.3488. Euro-yen Goto-bi Day demand into the Tokyo fix provided the rate with the lift to move above $1.3500, with traders noting a major Swiss name as prominent in the buying. Rate touched a high of $1.3502 before meeting decent supply from a US investment bank, denying pressure on reported stops above $1.3510. Release of hawkish RBA Minutes had provided risk with an early boost, only to be countered by reports that China could impose further curbs on the property market. Euro-dollar slipped back to $1.3466 before picking up fresh demand interest, edged back to $1.3485/90 ahead of the European open.

Early Europe sold into the recovery, easing the rate through the overnight pullback lows to $1.3457. Rate currently trades around $1.3460. Support seen in place around $1.3450 ($1.3449 61.8% $1.3416/1.3502), a break below to open a deeper move toward $1.3435/30 ahead of Mondays low at $1.3416. Resistance remains at $1.3500/10, with mentioned stops above. Further stops noted on a break of $1.3520/25.

RES 4: $1.3925 50% of 2010 range
RES 3: $1.3819 High 17 Mar
RES 2: $1.3692 High 12 Apr, Current top of Bollinger band
RES 1: $1.3535 5-day moving average

CURRENT LEVEL: $1.3484

SUP 1: $1.3416 Low 19 Apr
SUP 2: $1.3270/80 Low 25 Mar, 8 Apr, Bollinger band
SUP 3: $1.3246/50 Low 6 May, 50% projection level
SUP 4: $1.3057 38.2% of $0.8232 to $1.6039


Yen
The yen opened in early Europe around Y92.63 and Y124.89 vs the euro. Dollar-yen traded steadily higher in the US session and this continued into early Asian trade as the pair traded up to Y92.71. Traders note stops were triggered around the Y92.70 area and it reached this level on good buying for the Tokyo fix, traders also reported larger than usual fix demand as it was a "Goto-bi Day". Traders go on to note more stops around Y92.80 and Y93.00 on the downside talk of weak longs exiting on a move back through Y92.30 area.

Cross-yen was also trading higher overnight helped by risk on trade post the RBA minutes, however euro-yen stalled running into decent supply around the Y125.00 area as traders took the rally as an opportunity to sell and the cross moved lower to Y124.60 and lower still into the European open. Traders note that the risk off dips provide decent opportunity to sell yen as Japan still has very low rates and as of yet no sign of an exit strategy.

RES 4: Y95.05/09 High 24 Aug 2009, 61.8% retracement of 2009 decline
RES 3: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April
RES 2: Y93.20 Resistance line from 2 Apr high
RES 1: Y93.00 21-day moving average, Tenkan line

CURRENT LEVEL: Y92.64

SUP 1: Y91.60/67 Low 19 Apr, 61.8% of 18 Mar rally
SUP 2: Y91.20/30 55, 200-day moving average
SUP 3: Y90.90 100-DMA, Top of the Ichimoku cloud
SUP 4: Y90.67 61.8% of 4 March rally


Cable
Opened Asia around $1.5335, having seen a recovery high of $1.5341 in late NY, off earlier European session lows of $1.5192. Rate initially pushed up to retest the NY high, extending the recovery topside to $1.5343 in early cross yen driven trade. Rate drifted lower after the Tokyo fix, which had seen Goto-bi Day linked demand, easing off to session lows of $1.5315. Rate recovered to $1.5330 ahead of the European open only for the rally to offer better short entry levels for early Europeans.

Rate was pressured through the overnight base to $1.5290, with recovery efforts so far remaining shallow. Bids are seen placed between $1.5290/85 ($1.5285 38.2% $1.5192/1.5343), with stronger interest noted from around $1.5265 to $1.5250. Resistance noted at $1.5330 ahead of $1.5340/50, with stronger interest seen at $1.5370/80. UK inflation data at 0830GMT the morning's highlight. Rate currently trades around $1.5295.

RES 4: $1.5620 50% of 2010 decline
RES 3: $1.5580/93 High 23 Feb, Bollinger band, 38.2% of Nov/Mar move
RES 2: $1.5522 High 15 Apr
RES 1: $1.5380 5-day moving average

CURRENT LEVEL: $1.5330

SUP 1: $1.5210 21-day moving average
SUP 2: $1.5163 50% retracement
SUP 3: $1.5130 Low 6 Apr
SUP 4: $1.5078 61.8% retracement

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