Monday, April 26, 2010

Focus Remains on Greece Developments

Briefing
The dollar was mixed in Asia, marking modest gains against the yen on firmer yen crosses but remained almost flat on the euro.

Euro-dollar lost ground at the start of the morning's session with a German name selling from $1.3381 to a $1.3317 low, before bids from Japanese accounts then appeared, from $1.3320, and sparked a modest short-covering bounce to a $1.3398 high. Euro-dollar eased as offers at $1.3400 capped its rebound, and traded between $1.3365 and $1.3380 ahead of the European open, currently around $1.3372.

Dollar-yen ran into some early profit-taking interest at Y94.00 at the start of the day, although the retreat was limited to Y93.93. The pair marked a Y94.37 morning high, but was then limited by sell orders from corporate accounts spotted just ahead, from Y94.50 to Y94.80.

Sterling retained its recent buoyant tone through Asia, extending its recovery off Friday lows of $1.5295 to $1.5468, and holding just off highs into Europe.

It is a very light data calendar today with attention remaining on Greek developments. FOMC on Wednesday is the next major point of interest ahead of US GDP Friday.

Euro
Euro-dollar closed NY Friday at $1.3372, having traded to a recovery high late in that session of $1.3400 on optimism over the proposed Greek loan provision. Rate came under early downside pressure into Asian trade, a major German name linked to heavy sales that took the rate down to a session low of $1.3317 before running into suggested option related demand. One trader notes decent sized option maturities for today with strikes at $1.3325, $1.3300 and $1.3280, possibly linked to the demand interest. Spec shorts covered back, with the same German name a noted buyer as the rate edged back above $1.3340, gaining pace ahead of the Tokyo fix and topping out at $1.3398 before easing back to $1.3360.

The euro managed a quick recovery to $1.3380 ahead of the European open, but fresh sell interest quickly emerged to knock rate back to $1.3350 into the session. The euro currently trades around $1.3358. Offers are seen placed towards $1.3400, with talk of stops on a break of $1.3410. Mix of offers and stops noted at $1.3440, the sell interest said to extend to $1.3450. Support noted from around $1.3320 (Asia low $1.3317), through to $1.3280, with one trader noting stronger interest begins from below $1.3295. Stops noted on a break of $1.3280.



RES 4: $1.3819 High 17 Mar
RES 3: $1.3710 Current top of Bollinger band
RES 2: $1.3692 High 12 Apr
RES 1: $1.3475 21-day moving average

CURRENT LEVEL: $1.3367

SUP 1: $1.3201 Lows 22, 23 Apr
SUP 2: $1.3111/28 Minor support line from mid-Feb, 50% projection
SUP 3: $1.3054/57 Supp line from Feb 2002, 38.2% of $0.8232 to $1.6039
SUP 4: $1.3022 Projection calculation from Dec, Jan downmoves


Yen
It was a moderate session for yen overnight with dollar-yen opening initially off of Friday's high levels and trading down to Y93.85. The dip was bought into and dollar-yen traded up to Y94.37 on cross-yen demand. Traders are wary of the weekly Ichimoku cloudline at Y94.28 level and note that Friday was the first time the pair had traded above the weekly cloud since August 2007. Offers are said to be stacking up ahead of Y94.50 through to Y95.00 whilst bids are building around Y93.80 area.

Cross-yen tested higher once again overnight after initially trading down to Y125.30 as traders looked at the Greek rescue package with a slight negative view. Traders note a lack of detail on the deal and questioning whether or not this will resolve Greece's problems long-term adding to the euro's woes. The weakness was short lived and a spike above Friday's high to Y126.30 ensued, offers capped and the cross moved back sub Y126.00 to open Europe around Y125.89 level.



RES 4: Y95.05/09 High 24 Aug 2009, 61.8% retracement of 2009 decline
RES 3: Y95.04 Minor resistance line from Jan high
RES 2: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April
RES 1: Y94.35 Hourly high

CURRENT LEVEL: Y94.22

SUP 1: Y93.30/60 21, 5-day moving average
SUP 2: Y92.95 Tenkan line of the Ichimoku cloud
SUP 3: Y92.15 Minor support line 4 Mar
SUP 4: Y91.60/67 Low 19 Apr, 61.8% of 18 Mar to 2 Apr rally


Cable
Opened Asian trade around $1.5380 and was initially pressed back to lows of $1.5365 as rate tracked euro-dollar's early fall. However, sterling retained its recent underlying buoyant tone which allowed rate to rebound, the move back up aided by sterling-yen demand. Rate met resistance around $1.5440 before edging on to $1.5468 ahead of the European open. Rate has been pressured back to $1.5425 into early Europe, traders noting macro supply hitting the early market.

Traders make note that ongoing dividend linked demand from a UK oil company expected again today, with talk also that a UK clearer has similar interest for its dividend needs. Cable currently trades around $1.5445. Offers seen placed from around the overnight high at $1.5468 through to $1.5476 (April 22 high), with stops above $1.5480. A break here to open a move toward $1.5500/10 ahead of $1.5525. Support $1.5325/15.



RES 4: $1.5650 100-day moving average
RES 3: $1.5620 50% of 2010 decline
RES 2: $1.5580/93 High 23 Feb, 38.2% of Nov/Mar move
RES 1: $1.5522 High 15 Apr, Bollinger band

CURRENT LEVEL: $1.5432

SUP 1: $1.5310 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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