Friday, April 23, 2010

Euro Continues Getting Hit By Greece Concerns

Briefing
The dollar was mixed in Asia Friday, gaining on the euro but lower against the yen.

Euro-dollar ran into heavy selling pressure at the start of the session, hurt by renewed concerns about Greece. Euro-dollar sank below the overnight $1.3257 low, with German name sales providing the main weight to take the rate through the reported option barrier at $1.3250. Stops were triggered through this level, which took the rate to fresh lows doe the year of $1.3201, meeting further barrier protection ahead of $1.3200.

The euro has since has been penned in by $1.3205/40, trading around $1.3232 in early Europe.

Dollar-yen this morning has weakened marginally, as yen crosses declined in a "risk-off" environment. The pair traded down from a high of Y93.64 to Y93.31 and now ttrades around Y93.40 into Europe. Euro-yen was also trading heavy though off Thursday's lows of Y123.32, Asia contained by Y123.41/124.25, around Y123.58 into Europe.

Euro
Euro-dollar was already slipping back off a late NY recovery to $1.3320, having seen lows in the session of $1.3257, easing under $1.3300 into the Asian session before coming under strong sell interest from around the $1.3280 area. A major German was linked to pressing rate to an initial low of $1.3265, before another wave of strong sales took out the NY base, then the barrier at $1.3250. Stops were triggered below this level to take rate to $1.3228. Support didn't last long before sales from Japanese names and a US investment bank targeted the next barrier at $1.3200. Defence of this level cushioned the move at $1.3201, with the rate then settling back into a $1.3205/40 range, currently around $1.3235 into early Europe.

Option linked demand remains ahead of $1.3200, one trader noting barrier interest down to $1.2800. Below $1.3200 expectation of further demand toward $1.3190, a break here to expose main stops, which if triggered to take rate down to $1.3165/60 area ahead of $1.3140. Resistance $1.3240, stronger between $1.3255/65. A break here to allow for a move back toward $1.3320/25. Traders also report Asian sovereign demand interest seen in place between $1.3220/10. Barrier interest is also seen placed every 50 pips down to $1.3000, one trader reports.

RES 4: $1.3720 Current top of Bollinger band
RES 3: $1.3692 High 12 Apr
RES 2: $1.3470 21-day moving average
RES 1: $1.3360/80 5-DMA, Short-term channel top

CURRENT LEVEL: $1.3209

SUP 1: $1.3118/28 Minor support line from mid-Feb, 50% projection
SUP 2: $1.3057 38.2% of $0.8232 to $1.6039
SUP 3: $1.3022 Projection calculation from Dec, Jan downmoves
SUP 4: $1.2993 76.4% retracement of the post-Oct 2008, 61.8% projection


Yen
Opened in early Europe around Y93.38 and Y123.62 Another relatively quiet session for dollar-yen overnight trading a Y93.31-Y93.64 range. Despite the general risk off moves going on dollar-yen holds up well and is still trading in the all too familiar Y92.50-Y93.80 range. Talk demand for the Toushin launches one reason why dollar-yen holds up as well as a Moody's downgrade for a major Japanese car manufacturer.

Cross-yen has been consolidating overnight ahead of the Y123.15 support level, traders reporting stops starting to build below this level with very large stops said to be sub Y123.00 whilst offers at Y123.80 cap the topside. With all the problems in Greece investors are looking to exit any risk trades put on earlier in the week. After yesterdays choppy session traders expect similar today with any bad news expected to impact the cross-yen markets.

RES 4: Y95.05/09 High 24 Aug 2009, 61.8% retracement of 2009 decline
RES 3: Y95.02 Minor resistance line from Jan high
RES 2: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April
RES 1: Y93.53/61 Minor res line from 2 Apr, High 22 Apr

CURRENT LEVEL: Y93.43

SUP 1: Y91.60/67 Low 19 Apr, 61.8% of 18 Mar to 1 Apr rally
SUP 2: Y91.30 55, 200-day moving average
SUP 3: Y91.05 100-DMA
SUP 4: Y90.67/90 61.8% of 4 March rally, Top of the Ichimoku cloud


Cable
Recovery off fresh lows of $1.5315 extend to $1.5355 as traders note PM Brown to give a press conference following release of UK GDP data. This event sparks suggestions that the GDP could be on the better side of expectations. Rate currently trades around $1.5352. Offers seen at $1.5365, stronger toward $1.5380.

Bids seen placed toward $1.5300, with stops now seen placed on a break of $1.5290. Earlier talk suggested demand interest to be in place between $1.5290/80.

ES 4: $1.5620 50% of 2010 decline
RES 3: $1.5580/93 High 23 Feb, 38.2% of Nov/Mar move
RES 2: $1.5547 Former channel support, Bollinger band
RES 1: $1.5522 High 15 Apr

CURRENT LEVEL: $1.5366

SUP 1: $1.5280 21-day moving average
SUP 2: $1.5163 50% retracement
SUP 3: $1.5130 Low 6 Apr
SUP 4: $1.5078 61.8% retracement of April recovery

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