Wednesday October 27, 2010 - 12:10:50 GMT
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FX Thoughts for the Day - www.fxthoughts.com
FX Thoughts for the day : 27-Oct-2010 - 1209 GMT
EURO, JAP YEN and EURO-YEN
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Our comments on Dollar-Swiss, Sterling Pound and Australian Dollar are given below
USD/CHF @ 0.9870/73... Bullish
S: 0.98/ 0.9740-0.9755.
As expected, Dollar-Swiss found supply above 0.9900. As long as pair remains below 0.9910-20, we are looking at a range to develop between 0.98-0.99 before the next up leg
gets underway. As for overall view, we stick to our morning update:
" As we pointed out before that there is resistance between 0.9910-0.9920 and we believe the resistance will hold for consolidation to take hold. Post-consolidation we expect
Dollar-Swiss to move towards parity and then towards 1.03. Support is expected around 0.98 and then 0.9750. As long as the pair can hold above 0.9750 the minor trend remains up."
GBP-USD @ 1.5827/30... Recover towards 1.59.
R: 1.5880/ 1.6020.
S: 1.5780-90/ 1.5690.
Cable recovers from a sharp sell-off in the early European session towards 1.5755. Though the overall direction would depend on whether dollar finds a ceiling or not but given the
way cable is floating resiliently above 1.58 makes us side with the bulls. Data out of UK points to a mild increase in inflation expectations, together with
above-target inflation and strong Q3 GDP growth, will probably persuade the BOE at the upcoming meeting that, while extra QE is an option if the economy does weaken
significantly, it is not needed at present.
We have longs in the pair and looking for a rally beyond 1.59 in the coming sessions.
GBP 10K Long at 1.5805, SL 1.5725, TP open
AUD-USD @ 0.9710/14...0.9709...Might test the 8-Week-MA (0.9651)
R: 0.9800 / 0.9855 / 0.9890
S: 0.9700 / 0.9655 / 0.9600
Aussie is continuing with its downmove and has dipped further during the day as expected. As mentioned earlier, the 8-Week-MA (currently at 0.9651) is the next significant Support level seen on the downisde and a test of it is looking more likely in the coming sessions. We expect this Support to hold. However, a strong break below 0.9650 would confirm a Double Top pattern on the daily chart which could trigger further downmove. We will have to wait and see. On the upside Resistance is seen at 0.9800.
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