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.

GBP/USD Daily

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%

EURO/USD Daily

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

Other Things to Watch/Open Trades/News

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

USD/JPY Daily

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

Other Things to Watch/Open Trades/News

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.

Data due Wednesday All times EASTERN (-5 GMT) Forecast Last

1:00am JPY Housing Starts y/y -6.5% -5.0%
Tentative JPY BOJ Governor Shirakawa Speaks
2:00am JPY BOJ Monthly Report

USD/CHF Daily

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

Other Things to Watch/Open Trades/News

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.

Data due Wednesday All times EASTERN (-5 GMT)

5:30am CHF Leading Index m/m 1.46 1.54

USD/CAD Daily

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

Other Things to Watch/Open Trades/News

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

Comments
Sharp 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.

Data due Wednesday All times EASTERN (-5 GMT)

8:30am CAD GDP m/m 0.2% 0.6%
8:30am CAD IPPI m/m 0.9% 0.1%

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