Forex Analysis

Bearish reversal on daily charts after the less hawkish than expected Trichet and almost exactly as expected NFP numbers. Telegraph says that: EU politicians are mulling using an obscure treaty article to curb financial speculation, in an attempt to force down oil and food prices and counter the influence of hedge funds. Now when even the EU beaurocrats foun out that the speculators move the markets these days may be their influence will be under control.

We are still above the steep uptrend line and the support @ 1.5670 is pivotal. If we see a clear break below this level the uptrend of the last 3 weeks will be violated. Next support levels are 1.5625 and 1.5550. Resistance is 1.5835 and 1.5910.

The dollar fall continued Friday. New all-time high in oil above $142 pb and another sell off in the stock market weighed on the greenback. EUR/USD is still in the well defined range but as we approach the upper boundary the verbal interventions by central bankers and politicians will be intensified. If the pair climbs above 1.60 a coordinated action by the central banks is highly possible. Support is @ 1.5680 and 1.5620. Resistance is @ 1.5845 and 1.6020.

Another crazy day in the forex market. Rumours that Chrysler filed fot Chapter 11 provided an excuse for another round of US dollar and stocks sales and buying in oil and metals. Chrysler of course denied the rumours but who cares. Big guys make money in the markets and for the last year they have show that the fundamentals are just numbers. Whatever, EUR/USD reached the resistnace @ 1.5770/75 but couldn’t break above it. Today we may see another attempt and I wonder what will be the excuse this time. I suggest to the big speculators to say “we make money and that’s why i sell dollars”. The resistance is # 1.5770/75 and 1.5845. Support is @ 1.5655 and 1.5535.

New life-time highs for the EUR/JPY underpinned by the hawkish Trichet and buying by US invesment houses and hedge funds building new carry trade positions. Some market participants expect FX warning out of ECB, Eurozone finance ministers and ECB President Jean-Claude Trichet in particular, who may need to warn on “brutal FX” again and as well as playing down talks of more than ECB rate hikes. I wonder what is his purpose? Usually ECB is always behind the developments in the economy and probably will cut rates too late to prevent slowdown in Eurozone growth.

The only restistance levels for EUR/JPY are the options barriers @ 169.50 and 170.00. Support is @ 168.10 and 166.75

Yesterday the FED wasn’t as hawkish as the market wanted and the US dollar was sold off across the board. Technical studies are supporting further rally of the EUR/USD towards the upper boundary of the range. Next resistance levels are 1.5765 and 1.5840. Any pullback should find buyers around 1.5620 and 1.55.45/35.

After a quiet Asian session misunderstainhg witih the speculators camp created some volatility today. You can see the long shadows on the 5 minutes candelsticks chart. It was strange that asiand and russians were in different camps. First the russians were bueyrsa and asians were sellers. The both parties realized their mistakes and changed the direction but their roles also. The effect was more volatility in the forex market.

According to CFTC “Speculative traders’ interest in crude oil now account for roughly 70% of all trading in West Texas Intermediate crude on the New York Mercantile Exchange, compared with 37% in 2000.”

Some officials still argue that the oil buble is not speculative. Why they are so “sure”?

http://www.cftc.gov/stellent/groups/public/@newsroom/documents/file/cftcfactsheet062308.pdf

Today I found a very interesting article on www.telegraph.co.uk - Has Europe’s terminal crisis begun with a triple no vote? by Ambrose Evans-Pritchard. I absolutely agree with the author and wonder whenwill become clear that the EU is not what it should be and its currency is overvalued.

www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/23/ccview123.xml#comments

EUR/USD gave up all of the Friday’s gains yesterday after the worse than expected Ifo index. Key support is 1.5455/60 and if it is broken we can see another test of the current range, which is around 1.5300/285 levels, Today and tomorrow probably the forex market particioants will anticipate the FOMC decision, which is expected around 6:15 PM GMT. Rallies should be capped around 1.5590 and 1.5650 resistance levels.

Ifo index came out worse than expected and euro lost some 40 pips in a minute. The forex market is still in a range mode but Wednesday’s FOMC meeting may provide reasons for a directional move. FED may hint that rate hikes are considered in the near futures, which will boost the dollar. Mr. Bernanke was clear that the high oil prices are correlated to the weak dollar and more hawkish FOMC rhetoric will not be surprise. To put it simple - the path of least resistance for EUR/USD is down (I want to know what Russiand think about this).  Support is 1.5455 and 1.5305/280. Rsistance is @ 1.5650 and 1.5840.