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Euro stays above 1.30, but for how long?
AUD, NZD and GBP rebound from weakness in Asian session, broader rebound capped by strong US TIC report. Little action in US bond market despite several Fed speakers.


Major Headlines - Previous Session
Markets try to drive the Euro back through 1.3000, so far without success.

Indeed, the Euro held up comparatively well considering that the US portfolio capital flows report showed the biggest net inflow into US securities since April (and a full USD20bn greater than needed to fund the record November trade deficit), with flows into equities at a level last seen since May 2001.

The Fed commentary was broadly in keeping with what we have heard from other speakers of late. President Santomero noted that he expected the US economy to evolve in a way consistent with moving Fed Funds back to neutrality at a measured pace.


Themes To Watch Upcoming Session
No major economic releases expexted in the upcoming Asian trading session.

The focus today will be on the US CPI report. The market is looking for a 0.2% mom rise in the core. Interestingly, the UK December CPI surprised on the high-side for second month in a row, which may forewarn of similar developments elsewhere. Initial jobless claims data will also be closely watched as this is payrolls survey week, whilst the oil market will await the latest US inventory report. There are also still several Fed speeches due.


EURUSD
EURUSD broke back higher after making a new low in Asian trading a classic reversal signal. But it has later drifted lower again capped by strong US TIC report. It is likely the pair will be able to stay above 1.3000 in Asian and make it back above the 1.3060/70 area, in which case the reversal could continue all the way up to 1.3160/70. Despite this price action, it may just be a matter of time before the 1.3000 level is breached

Resist.
1.3193
1.3112
1.3020
1.2950
1.2869
Support


GBPUSD
GBPUSD turned heads with the huge rally from a marginal new low at close to 1.8530 this morning. The upside has been impressive, and cleanly took out 1.8650 resistance which now becomes support once again. GBPUSD has drifted lower in New York on the back of the US TIC report, but the upside could continue to 1.8720.

Resist.
1.8931
1.8791
1.8656
1.8511
1.8371
Support


USDJPY
USDJPY has not been the focus of trading today as both the USD and the JPY alternated in weakness. But the upside did extend to 103.00. Later USDJPY has again drifted lower to break 102.30, which to us indicates continued weakness towards 101.70.

Resist.
104.18
103.33
102.24
101.63
100.78
Support


EURJPY
EURJPY managed to pull all the way to 134.35 on the EURUSD reversal. The trading may be choppy in this pair for a bit as EURJPY pauses for breath. 135.10 is now more likely with the break of the 134.00 resistance.133.30 is support. The upside may only be a brief bullish interlude in an otherwise very bearish chart for the medium to long term.

Resist.
136.07
134.82
133.09
132.32
131.07
Support


USDCAD
USDCAD pulled back after tickling 1.2250 resistance this morning and could continue lower to the 1.2140 support area. Eventual support at that level or slightly lower may be found as these levels would not yet threaten the longer term rally stance of this pair.

Resist.
1.2397
1.2309
1.2245
1.2133
1.2045
Support


USDCHF
USDCHF was a strong performer to the downside as EURCHF has come off heavily today. The downside could continue to at least 1.1775 and if that area is taken out a further fall to 1.1675 is not out of the question for this reversal. On a longer term basis, however, USDCHF is still in rallying mode if it stays above.

Resist.
1.2063
1.1960
1.1856
1.1754
1.1651
Support


AUDUSD
AUDUSD broke back through the 0.7550 resistance a short-term bullish development. However, the has been struggling with that level on the back of the US TIC data. We still believe AUDUSD may rally higher back toward 0.7650 resistance and a challenge of 0.7700 isnt out of the question.

Resist.
0.7713
0.7631
0.7550
0.7468
0.7387
Support


NZDUSD
NZDUSD also reversed course, and could see 0.7000/20 again before finding resistance.

Resist.
0.7117
0.7034
0.6974
0.6868
0.6785
Support

The support/resistance levels used in the matrixs of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.

Jeffie you have email from the burrow

Thanks Hils
Been a real roller coaster day - lost a load trying to spot the turn and now got almost all my points back on the way down. Preference would have been to gain points up and down - but then I would be almost as good as mos ;))))

Currently need 20 points to breakeven. You don't want to know the gross figures - or, more to the point, I'm not gonna tell you ;)

Stop in at breakeven on my remaining position and a limit in @ 18650 - 'cos I'm greedy - and think I deserve some kind of profit after spending all day fiddling with cable as well as trying to fix my other PC. Think I've finally achieved the PC fix - now all I need is a continued slide in the /$

mg.... vie only been following you my friend.....:::))))))

Had other stuff to fix today - pc would have been a doddle :(
So no FX trades today..

Cheers Hils

DAILY TECHNICAL ANALYSIS
Wednesday, January 19, 2005 15:49 GMT
Daily Report
by Mizuho Corporate Bank
http://www.mizuho-cb.co.uk


EUR
Comment: The Euro is still very oversold and bearish momentum is surprisingly strong. Long Euro positions continue to be slashed and trendline support is just holding. We continue to feel that the Euro is trying to find an interim base around current levels, but only above 1.3200 does immediate downside pressure ease. Expect prices to consolidate above 1.3000 again today, and re-test of 1.3150/1.3175.

Strategy: Attempt tiny longs at 1.3025; stop well below 1.3000. Cover longs ahead of 1.3150 but be ready to re-buy above 1.3175 for 1.3300.


GBP
Comment: Behaving better than some as the pound gains against the US dollar and against the Euro. An interim low at 1.8525 appears to be in place but momentum does not even start to turn bullish unless we can hold above 1.8950. Until then expect a lot more basing-type activity between 1.8600 and 1.8900.

Strategy: Buy at 1.8650/1.8600; stop below 1.8500. Add to longs above 1.8750 for 1.8930/1.8950.


JPY
Comment: Easing off oversold levels and momentum is only just bearish. While above support around 101.80 allow for consolidation up to 103.25 today. A sustained break above 103.40, while probably unlikely today, should set off a short squeeze to 104.00/104.50.

Strategy: Attempt small shorts at 102.50, adding to 103.00; stop/reverse above 103.40 for 104.40. Cover shorts ahead of 101.85 and stand aside if possible. For those who have to, only re-sell below 101.65 for 101.25.


EUR/JYP
Comment: Very disappointing as this pair squeezes higher and then ends down on the day. Needless to say it is grotesquely oversold and that bearish momentum is stronger than it has been since March last year. For today we favour more half-heated basing attempts above 133.00. A sustained break above 134.00 should set off a sharp short squeeze to 135.00.

Strategy: Attempt tiny longs at 133.50/133.00; stop below 132.70. Cover longs ahead of 135.00 short term and 136.20 further out.

jeez, closed my USD/CHF about 70 points too soon

Ton of points to be had betting on the strong dollar since 2:00pm

Hils is back :-)

shrt usd/chf @96 stop @ b/e

good entry mos

sold USD/JPY at 102.80. stop 103.00, limit buy at 103.40

Closed out of my /$ short for a slight net profit - I can sleep tonight ;)

mng jm...didnt drop as much as i hoped overnight 19.00 big level
taken half profit @ 50 will run rest..stop @1925

Intraday Range Forecast, Resistance and Support Levels
USD/JPY
Intraday Range Forecast: 102.65 / 102.90
R: 103.00/103.22/103.55
S: 102.42/102.02/101.67

EUR/USD
Intraday Range Forecast: 1.2995 / 1.3025
R: 1.3042/1.3076/1.3119
S: 1.2964/1.2930/1.2894

USD/CHF
Intraday Range Forecast: 1.1830 / 1.1860
R: 1.1908/1.1929/1.1985
S: 1.1806/1.1748/1.1713

GBP/USD
Intraday Range Forecast: 1.8690 / 1.8720
R: 1.8739/1.8764/1.8829
S: 1.8658/1.8627/1.8583

AUD/USD
Intraday Range Forecast: 0.7590 / 0.7615
R: 0.7652/0.7697/0.7725
S: 0.7565/0.7535/0.7505

EUR/JPY
Intraday Range Forecast: 133.60 / 133.90
R: 133.90/134.40/134.62
S: 133.13/133.01/132.60

EUR/GBP
Intraday Range Forecast: 0.6945 / 0.6970
R: 0.6968/0.6987/0.7027
S: 0.6933/0.6914/0.6893

EUR/CHF
Intraday Range Forecast: 1.5402 / 1.5430
R: 1.5445/1.5485/1.5515
S: 1.5402/1.5379/1.5335

Daily updates on Australian Forex Market from CMC Group Asia Pacific
AUD range bound during choppy trade session

The greenback slipped against other major currencies in early London session. The AUD crept higher above the US$0.7600 level and touched intraday high of US$0.7650. However, the USD reversed earlier weakness as firmer US economic data including the December housing starts rose 13.1 per cent month-on-month to 2004k. The latest weekly jobless claim plunged 46k to 319k. The core CPI index rose 0.2 per cent MOM and 2.2 YOY, which is in line with market expectation. The AUD gradually lost all of its overnight gains before it recovered towards the US$0.7600 level in late US afternoon. Resistance is now found at US$0.7650 and US$0.7700. Support can be found at US$0.7560 and US$0.7500.

The EUR climbed higher in early London session amid a broad-based USD retreat and touched intraday high of US$1.3120. However, the USD regained its strength after better than expected economic data and a speech from the ECB's Issing. The central bank policymaker signalled interest rates will stay on hold until Eurozone's growth takes firmer hold. ECB was not concerned about the 2005 outlook for inflation, which it expects to drop below 2 per cent later this year from 2.3 per cent in December. After the US market open, the EUR dropped more than 100 points to dip below the US$1.3000 level before it bounced back above this level towards late US afternoon. Support is now seen at US$1.2970 and US$1.2920. Resistance starts at US$1.3030 and US$1.3050.

GBP edged higher on jobs data. The claimant count fell by more than expected, dropping 6.2k, versus the forecasts of a 1k drop in November. Unemployment rate remained unchanged at 2.7 per cent. GBP regained the US$1.8800 level but eased off after the release of US economic data. The currency pair closed above the US$1.8700 level for the US session. Support is now seen at US$1.8700 and US$1.8650. Resistance is found at US$1.8730 and US$1.8770.

As expected, the Bank of Japan left monetary policy unchanged when it announced its decision during the Asian session. The bank maintained its stance to keep the current account deposits target at 30-35 trillion yen, while adding that it would provide additional liquidity regardless of the target if risks emerge. In the BoJ's January report, it kept its economic assessment unchanged, saying that the economy remains in recovery trend with persisting weakness in output. The board expects GDP around 2.5 per cent in fiscal year 2004-2005 and 1.5 per cent in the subsequent year. The currency pair strengthened to overnight low of 102.00 and bounced back towards 103.00 after the stronger US economic data. Resistance is now found at 103.00 and 103.50. Support is now at 102.00 and 101.70.

Gold settled fractionally lower at US$423.00, giving back its earlier gains on the back of a firmer USD as the market digest a slew of US economic data that may suggest further interest rate hikes. Silver was also dragged lower to close at US$6.60.

European Forex Session Wrap-up

The European session closes today, january 19th, with the GBP as, again the major winner of the session. Specially against the EUR, where the bearish indicators sentiment is weighing at the moment, driving the pair to the 0.6940 level. However, and despite this mornings recovery from the europeans against the greenback, they have almost retraced in full and lost all those previous gains.
At the time of this writing, the EUR is trading around 1.3025 against the greenback, 10 pips up. GBP is doing around 1.8725, up more than 100 pips, the Swiss Franc CHF- around 1.1855, loosing (USD gaining) some 10, and finally the Yen around 102.55, gaining 30, and keeping the strong yen view unaltered, though some signs of change arise and we could see some USD buying in coming weeks this view is again reaffirmed today. As yesterday said, I foresee very interesting times to come.
USD small brothers session performance : the AUD is trading around 0.7600, or 40 pips up, the NZD trading around 0.7020, or 50 pips higher, and CAD trading around 1.2275, down around 35 pips. I repeat once again, the performance of the USD against the CAD will be interesting to watch in coming weeks, after the pair is triggering long term bullish signals.
Economic events to resume for january, 21.

USD/JPY - Dollar-yen bounced lower from 103.00.


Dollar-yen bounced lower from 103.00 on continued selling pressure.
Trend: Neutral.
Try shorts from 102.80 target 101.80 stop 103.20.
Supports: 102.00, 101.50
Resistances: 102.90, 103.40


USD/CHF - Dollar-swiss has failed to break above 1.1890/00.


Dollar-swiss has again failed to break above 1.1890/00 resistance area.
Trend: Neutral.
Try longs from 1.1750 target 1.1850 stop 1.1720.
Supports: 1.1740, 1.1690
Resistances: 1.1810, 1.1860

Traps & Tumbles
The 'bear trap' and spike north which I expected yesterday to come real on EUR/USD were indeed confirmed, yet only partially since - although the pair managed to climb for like 100+ pips today in Europe, that up-swing could barely been seen on the 1-day chart.
GBP/USD got a bit more momentum to the north, but eventually fell down itself a lot in the US time.

Such failure shows the USD bulls revived back across the board - and it's possible now EUR/USD may take a good tumble as USD/CHF should rise out of an 'ascending triangle' (4-hr chart). I believe also USD/JPY has good odds to visit 103.70 at the least during a corrective spike north, and even the JPY crosses should be in the process of finding interim bottoming zones.

hola Mos

Just closed my USD/JPY short for +15. As you say didnt do much at all overnight. No positions at the mo. Might look to short USD/JPY after lunch