Thursday, April 8, 2010

Euro Remains Under Pressure

Briefing
The euro remained under pressure through the Asian session Thursday, the single European currency still pressured by concerns over Greek debt but the downside still cushioned by reported Asian sovereign demand. Some suggest this demand is linked to a $1.33/1.36 option range play.

Euro-dollar squeezed to an extended low of $1.3314 (NY low $1.3326), then trading around $1.3326 into early Europe.

The Yen sees pressure on both sides, with Geithner's reported detour to China next week further sparking speculation of yuan appreciation, with the yen seeing proxy demand.

The Aussie was boosted overnight on the release of jobs data, coming in at the expected level but enough to prompt further demand.

UK Halifax housing data at 0800GMT, UK IP at 0830GMT followed by eurozone retail sales at 0900GMT provide the morning's highlights ahead of the BOE and ECB rate announcements at 1100/1145GMT. No change widely expected in both with 1230GMT comments from Trichet being the main interest.

Euro
Euro-dollar opened Asia at $1.3345 and managed to edge to $1.3348 to post session highs at $1.3348 before reversing lower on fresh euro-yen sales. Rate pushed through Wednesday's lows at $1.3326 to extend recent pullback to $1.3314, but move lower again was seen meeting decent Asian demand that cushioned the rate ahead of $1.3300. Continued talk suggesting that a $1.33/1.36 dnt option structure is in play and held by a major Asian sovereign.

However, with ongoing concern toward Greek debt, and yen demand seen as a proxy for speculated yuan appreciation via euro-yen, seen providing the main weight with a break of $1.3300 expected to allow for a quick dip down to $1.3270/65. Some reports suggest demand in place from the overnight low at $1.3314 through to $1.3250 with main stops below. Resistance noted at $1.3350, more from around $1.3370 through to $1.3420 with stops placed on a break of $1.3425, larger ones above $1.3450. Rate currently trades around $1.3330 into early Europe.

RES 4: $1.3800/19 Current top of Bollinger band, High 17 Mar
RES 3: $1.3650 55-day moving average
RES 2: $1.3591 High 1 Apr
RES 1: $1.3520/29 21-day moving average, Channel top 3 Dec

CURRENT LEVEL: $1.3328

SUP 1: $1.3270 Low 25 Mar
SUP 2: $1.3246/50 Low 6 May, 50% projection level
SUP 3: $1.3210 Current base of the daily Bollinger band
SUP 4: $1.3122 61.8% projection level


Yen
Euro-yen sales again provided the early lead into Asian trading, the move down from early posted session highs of Y124.59 taking the rate through the NY base at Y124.49 and on to lows of Y124.19. The euro still seen reeling on the back of Greek debt woes, with sales of euro-yen seen as yen demand seen as a proxy bet for speculated yuan appreciation. Dollar-yen was pulled down to an early low of Y93.17 (NY low Y93.15), the rate again seen meeting decent demand placed ahead of Y93.00 which cushioned.

Yen pairs were provided with a reprieve as Aussie-yen demand was prompted by the release of Aussie jobs data, confirming strong forecasts. A Japanese security house was a noted strong buyer of dollar-yen in the recovery, cited for taking the rate up to highs of Y93.45. Euro-yen has struggled to recover, with offers toward Y124.50 seen providing resistance, with stops below Y124.00 possibly seen as an enticing target. Downside stops in dollar-yen noted on a break of Y92.90 but importers likely to have further demand interest toward Y93.00 ahead with Y93.04 seen as their average rate for year end.

RES 4: Y97.52/79 76.4% retracement, High 7 August
RES 3: Y95.05/09 High 24 Aug 2009, 61.8% retracement of 2009 decline
RES 2: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April
RES 1: Y93.50 Tenkan line of the Ichimoku cloud

CURRENT LEVEL: Y93.22

SUP 1: Y92.86 38.2% retracement of 18 Mar advance
SUP 2: Y92.23/27 38.2% of 4 March and 50% of 18 March rallies
SUP 3: Y92.00 21-day moving average
SUP 4: Y91.40/67 200-day moving average, Support line 4 Mar


Cable
Close NY at $1.5248 and was on a downward track into early Asian trade Thursday. Sterling sales gathered pace as early market reacted to a Telegraph piece noting the BIS warning over UK debt. Rate pushed down to a session low of $1.5212 before meeting profit take demand into the dip. Further sales into early Europe has taken rate through $1.5200, extending the corrective pullback to $1.5176, currently trading around $1.5185.

Bid interest noted from around $1.5165, with interest extending to $1.5150, a break to allow for a deeper move toward $1.5130. Hearing in early Europe that stops are seen building in the area between $1.5130/25. Resistance $1.5220, more toward $1.5235. BOE rate decision today though no change expected. Ahead of this event we will see the release of Halifax house price data at 0800GMT and UK IP data at 0830GMT.

RES 4: $1.5420/22 61.8% of Feb/Mar decline, 38.2% of 2010 decline
RES 3: $1.5410 Current top of the daily Bollinger band
RES 2: $1.5382 High 17 Mar
RES 1: $1.5320 High 5 April

CURRENT LEVEL: $1.5225

SUP 1: $1.5125 21-day moving average
SUP 2: $1.4840 Current base of the daily Bollinger band
SUP 3: $1.4783/98 Recovery low 1 March, Low 25 Mar
SUP 4: $1.4619/59 Low 29 Apr, High 23 Feb

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