Friday, May 14, 2010

Light Euro Calendar Today - Volume Returns Somewhat After Ascension Day

Briefing
The dollar was narrowly mixed in Asian trade Friday, stuck in tight ranges amid light volumes. Dollar-yen was last at Y92.90, at the upper end of the Y92.51 to Y92.95 range, with offers seen at Y93.00 from exporters capping further gains initially.

Euro-dollar was also higher in thin trade, trading up to $1.2659, the upper end of its $1.2516/59 range, still holding off the much reported option barriers at $1.2500, dropping back to $1.2640 into early Europe.

Cable recovered off early lows of $1.4584, pushing to a high of $1.4640 ahead of the European open, only to drop back to retest the earlier lows into Europe. Kiwi traded with a soft tone through the overnight session, easing from $0.7153 to $0.7110 as market reacted to release of weaker than forecast retail sales data.

Light data calendar through the European morning with US retail sales at 1230GMT ahead of Cap.Ut./IP at 1315GMT the afternoon focus. Equity market performance to continue providing direction.

Euro
The euro recovery to $1.2559 through the Asian session, from early lows of $1.2516, has quickly reversed into early Europe as rate drops back to $1.2518 but meeting strong demand from reported bids placed below $1.2520 and said to extend toward $1.2500, linked to protection of decent sized barriers at the figure ($1.25/1.31 May 31).

Stops are said to have built up below the figure, which if triggered to expose another barrier at $1.2475. If we see a break of $1.2500 expect some profit take buying to emerge to soak up triggered stops on the initial move, as well as further protective demand ahead of the next mentioned barrier interest. Resistance remains in place at $1.2560

RES 4: $1.3100/15 High 10 May, 50% of $1.3692 decline, Low 28 Apr
RES 3: $1.3065 21-day moving average
RES 2: $1.2950 High 7 May
RES 1: $1.2620 5-day moving average

CURRENT LEVEL: $1.2543

SUP 1: $1.2515 Low 6 May
SUP 2: $1.2459 Recovery low 4 March
SUP 3: $1.2390 Current base of the declining Bollinger band
SUP 4: $1.2329 Lows Oct 2008


Yen
Opened in early Europe around Y92.95 and Y116.54 Dollar-yen dipped to Y92.51 in early Asian trade as some early risk aversion impacted the pair. The sell off in cross-yen weighed on the pair and general dollar buying saw dollar-yen rally back to Y92.95. Traders had noted some spec accounts buying near the lows. Offers ahead of Y93.00 have capped throughout the Asian session and saw the pair dip to Y92.66 in early European trade. Japanese names were noted on the offer around Y92.90.

Traders note the daily Ichimoku upper cloud line is providing support coming in at Y92.67 Friday, a close below this level would be seen as negative. Euro-yen had a mixed session overnight trading sub Y116.00 to Y115.93 early on taking out some weak longs before testing lower once again to Y115.88. Bids ahead of Y115.80 level kept the cross underpinned and euro-yen recovered to Y116.70 area where Japanese names were noted sellers once again.

RES 4: Y95.25 Resistance line from 7 Jan
RES 3: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline
RES 2: Y94.97 High 4, 5 May
RES 1: Y93.25/54 21-day moving average, High 10 May

CURRENT LEVEL: Y92.91

SUP 1: Y92.20/45 55-day moving average & Top of Ichimoku cloud
SUP 2: Y91.45/55 Tenkan & Base of Ichimoku cloud, 100-day moving average
SUP 3: Y91.20 200-day moving average
SUP 4: Y88.22 Spike low


Cable
Opened Asia around $1.4605, off NY lows of $1.4593, with rate coming under early pressure that eased it to session lows of $1.4572. Recovery into positive territory for Asian equities prompted some risk appetite, with rate edging higher through the balance of the session to $1.4640 ahead of the European open. Sterling came under stronger sell pressure into early European dealing, the rate dropping back to retest the overnight lows, breaking below before basing around $1.4553. Rate recovered to $1.4610, the correction only offering better sell levels with supply taking rate back to $1.4565/60.

Rate currently trades around $1.4570. Support seen to $1.4550, a break to open a deeper move toward $1.4520 ahead of $1.4500 with stronger support noted at the recent lows of $1.4475. Resistance now seen at $1.4610/20, more toward $1.4650. Wednesday's dovish BOE Inflation Report continues to weigh on the pound.

RES 4: $1.5140 21-day moving average
RES 3: $1.5122/26 61.8% retracement of Apr/May decline, Low 28 Apr
RES 2: $1.5055 High 10 May
RES 1: $1.4775 5-day moving average

CURRENT LEVEL: $1.4626

SUP 1: $1.4575 Current base of the Bollinger band
SUP 2: $1.4487 61.8% projection
SUP 3: $1.4475 Low 7 May
SUP 4: $1.4336 76.4% of 2009/10 range


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