Today’s USD Trading
USD ends mixed GBP falls through support
Today’s Economic Reports Consumer Confidence out at 62.3
Looking Ahead All times EASTERN (-5 GMT)
8:15am USD ADP Nonfarm Employment Change -60K 8K 8:30am USD Advance GDP q/q 0.2% 0.6% 10:45am USD Chicago PMI 47.5 48.2 2:15pm USD FOMC Statement 2:15pm USD Federal Funds Rate 2.00% 2.25%
USD mixed, GBP and EURO fall through support Actually a very unexpected day for the GBP and the EURO as the USD ends a mixed session sharply higher against the Europeans and mixed against everyone else. BOE Blanchflower was making dovish remarks this afternoon and the GBP extended losses from the London fix to make lows under the 1.9700 handle later in the day; the lack of volume from the Far East today likely contributed to the run on the stops as bids were simply not there. A new weekly low and a press for bids under the 1,9680 area left a low print at 1.9665; good enough to wreck a few balance sheets. EURO pressed into stops as well as the potential for correction continues; low prints at 1.5539 in early US trade were untouched for the end of the day and EURO rallied on dip buying but not enough to discourage the bears. Low prints under the 1.5520 area expected tomorrow after the FOMC meeting I think. Other pairs remained fairly range-bound; no real action either way with the exception of USD/JPY. Many traders get so absorbed in trying to find the “best” entry point that they completely lose focus on the really important things.The most significant thing to always remember is that price action needs to be exploited from the point of view that you need to buy low and sell high in order to profit.It doesn’t matter if you are shorting the market or going long—you ALWAYS must have a buy execution lower than your sell. Anything else is a loss. Therefore, you must always be selling strength; whether or not you are covering a long or going short. Same for the other way around. It doesn’t matter if you are covering a short or going long; you must buy weakness. In the final analysis, your trading results are determined by your willingness to buy when everyone else is selling…and buy when everyone else is selling. Don’t look for the perfect place to enter. Rather look for a buy zone after a break and vice-versa. Actually a very unexpected day for the GBP and the EURO as the USD ends a mixed session sharply higher against the Europeans and mixed against everyone else. BOE Blanchflower was making dovish remarks this afternoon and the GBP extended losses from the London fix to make lows under the 1.9700 handle later in the day; the lack of volume from the Far East today likely contributed to the run on the stops as bids were simply not there. A new weekly low and a press for bids under the 1,9680 area left a low print at 1.9665; good enough to wreck a few balance sheets. EURO pressed into stops as well as the potential for correction continues; low prints at 1.5539 in early US trade were untouched for the end of the day and EURO rallied on dip buying but not enough to discourage the bears. Low prints under the 1.5520 area expected tomorrow after the FOMC meeting I think. Other pairs remained fairly range-bound; no real action either way with the exception of USD/JPY. The rate found stops under the 103.50 area for a low print at the 103.21 number before rallying hard to re-gain the 104.00 handle; sympathy buys along with equities as well as cross-spreading likely lifted the pair. Looking ahead to US data tomorrow you can expect a volatile day in my view. First up is ADP private payrolls which have added a lot of two-way action. Next is GDP and last is FOMC—all things considered tomorrow is the day to set the tone for the rest of the week. Look for the Greenback to be quiet overnight.
Resistance 3: 1.9820 Resistance 2: 1.9750 Resistance 1: 1.9720/30 Latest New York: 1.9683 Support 1: 1.9650/60 Support 2: 1.9600 Support 3: 1.9550
Other Things to Watch/Open Trades/News
Currently flat—stopped out of short yesterday.
Rate has strong buy signal but top is at resistance; possible “late” conflicting signal.
Rate under 1.9720 area important, major stops likely under the 1.9600 handle; likely to be challenged soon but given conditions a bounce is coming first. Closing under the 1.9600 the next 24 hours likely set the stage for a return to 2008 lows near-term. Upside is limited in my view but ranges can be wide as evidenced by the past few days of trade. Sell rallies if not short; buying dips dangerous in my view. Drop to under the MA’s very important in my view. Long selling wick makes sell side attractive for further losses. Need down bars with higher volume to confirm Overnight data unfriendly with more to come, Some pressure from EURO also.
Data due Wednesday All times EASTERN (-5 GMT)
Tentative GBP Nationwide House Prices m/m -0.5% -0.6%
Resistance 3: 1.5680 Resistance 2: 1.5650/60 Resistance 1: 1.5600/10 Latest New York: 1.5565 Support 1: 1.5630/40 Support 2: 1.5600/10 Support 3: 1.5480
4-22-08 SHORT EURO/USD 1.6000 Stops @ 1.6100 4-24-08 SHORT EURO/USD 1.5650 Stops @ 1.5750
Look to add to shorts again soon.
Comments Market has failed at 1.6000 area resistance with confidence now, be patient on the potential break. Overhead resistance is heavy above the 1.5750 area; traders say offers extend into the 1.5800/30 area with stops above. Two-way trade at resistance to start on Monday suggests a deeper pullback is in the works. Strong long-liquidation break is still coming; look for a test of the lows again within 24 hours. Watch for two-way volatility. Be ready to add quickly if a rally happens.
Data due Wednesday All times EASTERN (-5 GMT) Forecast Last
3:55am EUR German Unemployment Rate 7.8% 7.8% 5:00am EUR CPI Flash Estimate y/y 3.4% 3.5% 5:00am EUR Consumer Confidence -13 -12
Resistance 3: 105.00 Resistance 2: 104.80 Resistance 1: 104.20/30 Latest New York: 104.00 Support 1: 103.50/60 Support 2: 103.20/30 Support 3: 103.00
Still Flat but aggressive traders can sell on a test of the 105.00 area;
Looking at the sell side early this week.
Comments Extra effort by the bulls cleans out stops and makes the 105.00 area in view now. Don’t expect a rally over the 105.00 area to last, need a failure on good volume but rate continues to trade firm; no failure on Friday sets the tone for a test of 105.00 today at some point. Traders note that the market is still trading technically and expect stops to be run in both directions near-term; expect some volatility. Day traders may get a lot of opportunity as the rate will likely cover a lot of the same ground twice on the hourly time frame. With rate back under the 104.00 handle expect a bounce from the 103.20/30 area if stops accelerate the move; look to sell that bounce the next 48 hours.
1:00am JPY Housing Starts y/y -6.5% -5.0% Tentative JPY BOJ Governor Shirakawa Speaks 2:00am JPY BOJ Monthly Report
Resistance 3: 1.0450 Resistance 2: 1.0420 Resistance 1: 1.0380 Latest New York: 1.0373 Support 1: 1.0320/30 Support 2: 1.0300 Support 3: 1.0270/80
SHORT USD/CHF 1.0380 Stops @ 1.0480
Aggressive traders can sell 103.70/80 area and hold over the weekend (Higher risk so trade accordingly)
Comments Rate clears stops above near-term resistance. Rate now at very top of range; look for a sell-off from here but news is needed. Pullback was bought after the fix on Friday and the rate is firm now for a test of the 104.30/40 area again. Test of the lower range now expected if rate can fail again at resistance. Expect a bounce from 1.0250 now so be nimble though as a break below there likely to draw aggressive selling. Rate has set up to attract dip buying so we need to see if that is a head-fake. Need a failure at 1.0420 near-term to go short in my view. No follow-through is to be respected; look for offers to show up higher than the1.0400 handle now that the bounce followed through higher.
5:30am CHF Leading Index m/m 1.46 1.54
Resistance 3: 1.0220 Resistance 2: 1.0180 Resistance 1: 1.0130 Latest New York: 1.0109 Support 1: 1.0100 Support 2: 1.0080 Support 3: 1.0050
SHORT USD/CAD 1.0130 Stops @ 1.0230
Failure to close above the 101.80 area suggests the rate has a failed rally (top of range).
ON THE LOWS TO END NEW YORK
CommentsSharp break early Monday suggests sellers trying to take control; bounce off the MA’s expected but volumes not high. OK to hold through the close if not stopped out as stops are out of range from last week. Close below 1.0100 now needed to set up break into the bottom of the range in my view. Lack of downside follow-through Friday suggests rate is “stuck”. OK to day trade from both sides if aggressive. Rate needs to clear under the 1.0100 area in my view to set-up a deeper pullback later this week. Nothing to do but continue to wait in my view; price is inside “no man’s land” Monday action is another clue that the sellers are trying to take control.
8:30am CAD GDP m/m 0.2% 0.6% 8:30am CAD IPPI m/m 0.9% 0.1%
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.
updated Apr 30, 2008
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