Forex Analysis

EUR/USD bounced off the 1.4196 support Friday helped by the worse than expected NFP numbers and the rebound in EUR/JPY caused by the US government Fannie, Freddie takeover plan. EUR was knocked down last week buy EUR/JPY sales and it may be helped buy EUR/JPY buying this week. Probably the long awaited correction started and the market will present good selling opportunities. Actually the correction in EUR/USD was accelerated with US positive news. Resistance is @ 1.4465, 1.4570 and 1.4630. Support is @ 1.4310 and 1.4195.

Monday someone bought 1-month EUR/JPY 150.00 puts. After this the pair was sold off and plunged almost 8 big figures. Interesting coincidence.

EUR/USD made new low for the year this morning after huuuuge sell off in Cross/JPY. EUR/JPY made 449 pips trading range, which is the 7-th largest during the last 9 years. Liquidation of large carry trade positions some of which > 500M was the name of the game. Trichet wasn’t hawkish neither dovish and the traders decided to postpone any changes in the direction of the forecx market. Today’s NFP could be used as a trigger for correction in EUR/USD, but the mood is extremely bullish for the USD. We should see a number below -120K for any significat US Dollar selling to emerge. Support is @ 1.4210 and 1.4100 before the key 1.4000 level. Resistance is @ 1.4380 and 1.4460.

Today is the Central banks’ day. At 11:00 GMT BoE will announce its decision while at 11:45 GMT we will have the ECB decision and at 12:30 GMT Mr. Trichet will have press conference. This latter event will be very important for the forex market. If ECB’s boss sounds hawkish the EUR/USD could begin its long awaited correction. If he sounds dovish we can see new lows for the current downmove. EUR/USD is weighed by EUR/JPY sales by US investment houses, Europeans. French and Japanese banks, model funds. Support is @ 1.4385 and 1.4310. Resistance is @ 1.4530, 1.4570 and 1.4630. Bulls should be cautious because a hammer reversal candelsticks formed on the daily charts yesterdays and a correction towards 1.4780/800 and 1.4980/5000 could develop. Today’s Trichet speech and tomorrow’s NFP report could provide excuse for such market move.

US Dollar continues to muscle its way across the board vs Majors and Asian currencies, with EUR, GBP, AUD, NZD, CAD, CHF all falling to day lows. EUR stoploss hit below 1.4450 to fresh 7-month lows of 1.4411. Dealers report bids @ 1.4410/00, but also huge stop loss building below 1.4400/3990. EUR/USD broke below the uptrend line on weekly chart and if this break is confirmed on closing basis the trend will  be reversed oficially. Some hedge funds have problems with the positions in commodities and have to liquidate more longs to meet the margin requirements. This could cause new waves of selling in oil futures which will give another boost for the USD. Support is @ 1.4410/00 and 1.4310. Resistance is @ 1.4485 and 1.4570.

EUR/USD made new lows for the current down move, which shows that it may not be over, although the market is oversold. The hurricane Gustav was not as dangerous as it was expected and the oil prices fell to $110-111, which weighed on the euro also. GBP is under renewed preassure after Chancelor darling’s comments and boosts the USD against other majors. Some new problems for the US banking sector are emrging but probably they won’t have serious impact for the forex market. Support is @ 1.4555/30, 1.4480. Resistance is @ 1.4630, 1.4720, 1.4810. EUR/USD is trading in a flag like pattern, which looks like downside channel and probably will continue to consolidate before Thursday’s ECB meeting.

The US Dollar is again the preferred currency today. Cable was weighed by UK Chancellor Darling comments in Guardian on Saturday. This initiated broad USD buying. Large US banking group was active EUR seller as well as Asian , Sovereign, Korea, China accounts. EUR/USD is also weighed by rumours that 1-month 1.50 EUR/JPY puts were purchased. On the charts flag-like formation is noticed, althoug it is not perfect. Support is @ 1.4570 and 1.4530. Resistance is @ 1.4720 and 1.4810.

Yesterday the forex market was again more volatile than it is usually. The big guys played all the trick they know to make some money. “Buy the rumor sell the fact” reaction to the much better than expected US GDP numbers was one of the money making clasics. Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of EU sanctions and Nato naval actions in the Black Sea. This time the effect of this news is not as clear as it should be. Obviously it will take oil prices higher but this time EUR may not be supported as well. EUR/USD is concolidating the recent free fall and the pair should break below 1.4570 or above 1.4810 for any directional movement. Support is @ 1.4670 and 1.4630. Resistance is @ 1.4810 and 1.4915. Some rumors that large North Asian account, Sovereign and China names buying EUR on dips below 1.4700.

Interesting developments in EUR/USD these days. Yesterday’s price action confirmed the beginning of a correction of the recent $ strenght. EUR was helped by ECB’s Weber’s hawkish comments about the inflation and rates. EUR/USD must break above 1.4810 for further advance towards 1.4910/15 and 1.5130. Rising tensions in Black Sea, between Russia and US/West over Georgia, could weigh on EUR and the rally attempt could fail. Some tug of war type price action is possible in the net few days. Use stops and don’t be greedy! Support is @ 1.4710, 1.4630 and 1.4530.

Very interesting pirce action yesterday. First we saw a break below the key 1.4630 level and new low @ 1.4570, which is just 40 pips above the double top tartget. Then we had a short squeeze and a rally in EUR/USD towards 1.4740. Today probably we’ll see if this rally was just a positioning for a larger sell off towads 1.4530 or a beginnig of bigger correction towards 1.4915 and even 1.5130. Be very careful next few days because the big guys are cooking something. Use stops and don’t take large positions until the picture bemoes clearer. Support is @ 1.4630, 1.4570 and 1.4530. Resistance is @ 1.4740/50, 1.4810, 1.4915.