EUR/USD: Very neutral situation with trading dominated by tight ranges as we enter the holiday period. We expect the same situation to prevail during the week, with some activity expected towards the end of the week when the payrolls data will be released. For those of you wishing to trade, probably the best strategy is to test the recent ranges on the expectation that they will hold. So on the upside, first resistance line is at 1.5770, beyond which its open again for another test of 1.5855, then 1.5945 with the all-time high of this year at 1.6040 seen capping the move. On the downside, a slide lower should find first support at 1.5685, followed by 1.5640. But the real support is at 1.5560 to 1.5610, which is the major uptrend line coming from August 07 and combining with the Jan-Feb ’08 lows. Only a closing break below 1.5470 would confirm that a top is in place and call for lower euro to 1.5000 area.
USD/CHF: The 1.0420 held the dollar and forced the pair lower, but lack of follow-through on the downside meant a return to 1.0350, which appears to be the middle of the very tight range of 1.0285-1.0440. Within this range, there is nothing much to say, but perhaps things will become more exciting if a breakout occurs. A break above 1.0440-1.0490 should open the way for a test of 1.0540, but more importantly 1.0620, while a break below 1.0260 should see a test of 1.0205, then 1.0140 to 1.0070.
USD/JPY: Here as well, the dollar rally fizzled out with the 107.40 support currently under pressure. If this support gives way, then expect a return to 106.60 106.05 supports, which if penetrated opens the way for an assault on the previous low at 105.10. On the upside, anything above 107.90 is bound to open the way for a rally to 108.60-108.90 but heavy resistance at 109.50 is seen capping the move.
GBP/USD: Sterling continues to defy the rules of gravity and though we had a break below 1.9835 support last week, the lack of follow-through on the downside has allowed sterling to creep up back up to near 1.9950. To be honest, we are surprised at the resilience shown by sterling to all the bad news emerging from the UK and would have expected that by now, sterling would be trading closer to 1.95 rather than 2.00 level. There is no other alternative but to wait for a break out of the recent trading band of 1.98-2.00. You know that we favour the downside break, so we start with that possibility. Indeed, a break below 1.9810 will open the way for a test of 1.9770, but the real acceleration will come following a break below 1.9730, which in that case opens the way for a test of 1.9590-1.9650 and eventually 1.9510 major support. On the upside, first resistance is at 2.0005, above which its open for a test of 2.0080 and then 2.0150.
Disclaimer
The information appearing on this page and all other pages in this edition are for indication purposes only and the Financial Mirror does not take any responsibility for investment action taken. Nothing in this report should be considered to constitute investment advice. It is not intended, and should not be considered, as an offer, invitation, solicitation or recommendation to buy or sell any of the financial instruments described herein. Always consult a professional before investing.
