ForexAnalysis

Forex Daily Analysis Today’s US Dollar Trading • USD has range-bound trade despite news • CPI as expected, Housing data worse • EURO scores a lifetime high Overnight Preview • Look for the USD to consolidate with weaker tone • Book-squaring ahead of US data tomorrow likely Looking Ahead • 9:00 AM CDT Thursday Philly Fed forecast -14.0 Summary The USD was under pressure most of the forex trading day today after a quiet two-way start in Asia that saw the highs for the day. Remaining inside established ranges on the highs, the Greenback continued to probe for serious buyers but found none as today’s inflation data and housing data disappointed USD bulls quickly. Although benign, the CPI numbers suggest that producers are holding back some of the pain that the inflation pressures seem to be giving the economy at this time; PPI yesterday showed that inflation was certainly being seen at the manufacturing level while today’s “as expected” CPI numbers show the cost is not being passed to the consumer very quickly. That leaves a lot of room for the Fed to stimulate growth and most analysts are upping the forecasts to include a 25 BP rate cut at the April 30 FOMC meeting. In my view, the lack of hard downward pressure on the USD despite the bad housing data suggests that the jury is still out as to the extent of the potential for a housing rebound. Still declining the housing starts fell 11.9% while permits continued to lag. Traders took the opportunity to sell USD across the board but the lack of downside follow-through argues for continued two-way trade. The one exception was EURO which scored another lifetime high at 1.5980 and ends NY near the highs suggesting more upside on the way. Aggressive traders can look for the 1.60 area of psychological “big-figure” resistance to offer a selling opportunity. Likely to see a “first through the even” scenario and I suggest a short from above the 1.6000 handle. Cable rallied along with EURO but found resistance at the 1.9800 handle; high prints at 1.9809 before falling back with the rate dropping under the 1.9720/30 area “sell-zone” on the close. More selling expected in GBP so hold shorts if you have them. USD/JPY continued to trade two-way with high prints at 101.94 in Asia going unchallenged in NY; lows at 100.81 also unchallenged leaving most of the day mid-range. Firmer stocks were a big help for the rate and traders expect offers between 101.80 and 102.00/10 to cap further gains should the Nikkei open firmer. In my view, a sideways selling opportunity today; look for the USD to suffer more tomorrow. GBP/USD Daily R3: 1.9800/10 R2: 1.9750 R1: 1.9720/30 Current Price: 1.9710 S1: 1.9680 S2: 1.9650 S3: 1.9620 Although reversal pattern is active for the bounce off the 1.9600 area the long selling wick is more significant as the stops above the 1.9720/30 area “sell-zone” failed to include fresh buying. Close under the 1.9700 handle ideal but with a few minutes left to run a close under 1.9720 is still technically viable for a “head-fake” up day. Look for stops to build under the 1.9680 area in range for late longs today adding to volatility. 50 bar MA offered resistance today and as long as rate hold below; stay short. USD/JPY Daily R3: 102.20/30 R2: 102.00/10 R1: 101.80/90 Current Price: 101.66 S1: 101.20/30 S2: 100.80 S3: 100.50 Overhead resistance continues to remain thick with lots of offers reported between 101.80 and 102.00/20 area (?) suggesting that the rate will remain range-bound at least through Philly Fed tomorrow. Look for stops above the 102.30 area to build as well as under the 100.50 area with more at 100.00/10. If rate can hold under the 101.50 are by Friday’s trade I think a downside test of support is in the works for next week. Stops likely large under the trend line for the small up channel. Analysis by: Forexpros.com written by Jason Alan Jankovsky Disclaimer: Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Today’s US Dollar Trading • USD range bound ahead of PPI • Muted reaction to the news but USD extends gains • Traders note stops flushed Overnight Preview • More consolidation within existing ranges likely Looking Ahead • 7:30 AM CDT Wednesday CPI forecast +0.3%, core +0.2 • 7:30 AM CDT Wednesday Housing Starts and Building Permits forecast 1025K and 970K Forex Summary After a quiet two-way start overnight in Asia the USD stayed within existing ranges until the release of US PPI this morning. Traders note that the data was seen as USD supportive but not enough to break the USD out of current ranges; PPI out at +1.1% (well above expectations) while core was out at +0.2% (as expected). The Greenback attempted to build on initial gains but remained two-sided until after the London fix where a bit of additional buying lifted the USD into fresh highs against most pairs later in the day. Cable of course the big mover as UK data overnight was not so supportive and stops were finally triggered on the dip below the 1.9650 area. Low prints during late New York at 1.9603 erased a potential option barrier traders say and leave the door open for a test of the 1.9550 area near-term. Aggressive traders can look to add to open shorts on a rally back to test the 1.9680-1.9720 support zone. EURO also fell off a bit but remained above important support making a very strong case for the rising wedge formation to remain viable into the next round of data. High prints again at 1.5876 turned back from offers at the 1.5880 area and slightly higher traders say and after the news stops under the 1.5800 handle were triggered; lows later in the day at 1.5750 as more stops were set off. EURO is now poised to tackle a zone of bid interest said to extend from 1.5750 to 1.5720 with more stops below but most desks note that buying the dips is still on most traders minds as the downside still is seen limited until a test of the 1.6000 handle possibly changes the sentiment near-term. Expect a modest recovery from additional lows if they are seen overnight. USD/JPY continued to find bids on the dips as low prints overnight Asia at 100.78 were never challenged during NY trade; highs at 101.81 came later in the day with offers said to be thick above this area extended to 102.00 with stops beyond. For the near future the USD is tightly constrained by these existing S/R levels; stops have been in range and the volumes have been light suggesting the smaller trader is active. Firmer equities overnight likely to support the USD/JPY but for the most part the USD is range-bound. Look for book squaring ahead of CPI tonight. GBP/USD Daily R3: 1.9700 R2: 1.9680 R1: 1.9650 Current Price: 1.9607 S1: 1.9600 S2: 1.9580 S3: 1.9550 Rate drops back to potential support and tests the lows late in the day suggesting there is more downside coming after a slight bounce. Look for the upside to remain limited to between the 1.9680 and 1.9720 zone with follow-through selling expected tonight. Stops likely clustered under 1.9550 and layered with bids to 1.9520 area suggesting volatility is in the works too. In my view, the potential for a rally back above the previous monthly low is dropping quickly on closes at or below 1.9600. USD/JPY Daily R3: 102.20 R2: 102.00 R1: 101.80 Current Price: 101.54 S1: 101.00/10 S2: 100.70/80 S3: 100.50 Rate has inside range day closing higher which is technically inconclusive at this point. Traders note volumes were light and the rate seemed to be tracking equities more than other things. Additional impetus seen on tomorrow’s CPI should the data disappoint and a break back to trend line support around the 100.50 area is likely. Look for stops building in range now that the up-channel continues to be respected. A break lower very possible tomorrow with a quick drop under the 100.00 handle.

Daily Forex Analysis Today’s US Dollar Trading • USD two-sided, ends mixed • Volumes light Overnight Preview • Look for light flows overnight • Book-squaring ahead of US data in the morning Looking Ahead • 7:30 AM CDT Tuesday PPI forecast +0.4, core +0.2% • 8:00 AM CDT Tuesday TICS Summary After starting higher overnight on a generally USD-positive change in the closely watched G7 communiqué, the greenback ends the first day of the week mixed in relatively light trade. After the London fix traders report that volumes dropped and the majors drifted lower as the bulk of market participants covered positions initiated on the overnight volatility. GBP rallied into highs at 1.9896 overnight but drifted lower all day to end the NY session sharply lower off the highs near the important 1.9740/50 area; traders note that the rate still is rotating around the 1.9720/30 area as near-term traders debate the significance of the previous monthly support level. EURO rallied into formidable resistance at the 1.5880 area for a high print in early NY trade at 1.5888 before dropping back during the day a full handle lower. Traders note that the rate is securely trapped in a rising wedge formation combined with drifting volumes suggesting that the rate is coiling for a strong move one way or the other. Should EURO breakout of the wedge higher offers are expected to cap at option defense around the 1.5820/30 are with stops layered above. Technical studies point to a firmer EURO near-term but mostly off a dip into the 1.5720/30 area. Traders note that large names on the bid for EURO overnight and on the break today but remind that the rate has had a very violent last few weeks; EURO could be ready for more volatility. USD/JPY felt obligated to trade along with stocks today as initial strength was sold into highs at 101.50 area and dips into the 100.30 area were bought. Closing slightly better than mid-range the rate is ready to extend losses most desks say after the disappointing reaction to the G7 data Sunday. Most forex trading desks are looking for the USD/JPY to range-trade near-term ahead of US data this week which is expected to be USD negative. Look for most of the action to be stop-driven near-term as traders try to make sense of the recent volatility. USD data tomorrow should be USD neutral as the Fed is likely more focused on employment data. Should there be a surprise in the works it most likely will be in TICS. Look for inflation data to be “as expected”; we all know there is a bit out there. GBP/USD Daily R3: 1.9850 R2: 1.9820 R1: 1.9780 Current Price: 1.9754 S1: 1.9720 S2: 1.9700 S3: 1.9680 Rate gives back all the overnight gains as bulls are heavily disappointed by lack of follow-through. In my view, today’s break back to the 1.9720 area after pressing into the 100 bar MA is significant as the downtrend continues to offer resistance at areas where bulls expect to gain control. Look for stops under the 1.9650 area to grow again overnight and offers above the 1.9820 area to thicken. Expect a bounce to be sold hard after a test of the 1.9650 area again. USD/JPY Daily R3: 102.00 R2: 101.80 R1: 101.50 Current Price: 101.08 S1: 100.50 S2: 100.00/10 S3: 98.80 Rate gaps higher then fails with highs never being challenged all day suggesting that the rate is attracting active selling; longs who bought on the news have been disappointed all day. Support at the 100.50 area is only near-term in my view and a failure on another rally to hold the 101.80 area suggests a potential for a test of the stops under the 100.00 area. In my view, it is only a matter of time before the longs throw the towel in and push the rate under the 100.00 handle. Analysis by: Forexpros.com written by Jason Alan Jankovsky Disclaimer: Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.