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Tuesday May 2, 2006 - 09:27:10 GMT
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ACM - www.ac-markets.com
Dollar baisse is slowing
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The week started with a new round of Dollar selling, especially USDJPY dived far with a low of 112.35, the Euro reached a new high of 1.2690, Cable peaked above 1.8400. The Dollar was able to retrace from these lows, breaking short-term bullish trends of the Cable, Japanese YEN and the Swiss Franc. This countermove was started after US data showed stronger then expected growth of 0.8% in Personal Income and 0.6% in Personal Spending in March. The price Index has increased to 0.4%, core prices rose by 0.3%. The news is slightly hawkish, currencies were quick to retrace, especially USDJPY was quickly back at the days opening levels, we note a large hammer on the daily USDJPY charts, this is usually a bullish sign.
Minneapolis FED President Stern, a supporter of setting an inflation target is not too worried about the recent increase in energy costs, saying that the US economy flexibility in absorbing rising prices should not be underestimated. On US deficits he commented that it does not seem to have profound near-term implications, but in the long-term it will hurt economic growth and rise interest rates.
Todays Key Issues:
Euroland Manufacturing PMI increased to 56.7 in April from 56.1. A year ago the index stood at 49.2, this is the highest level in close to 5years and the euro reacted positively rising through 1.26.
UK April PMI was also strong, rising to 54.1, the highest level in 18 months, lifting Cable a full cent to above 1.83.
Only US data is March Pending Home Sales data, no forecast available, it was down 0.8% in February.
The Risk Today:
4H EURUSD: Yesterdays spike to 1.2690 as well as this mornings dip to 1.2560 were well inside the rising trend, outlook for the EURUSD remains bullish today. Strong initial support at 1.2590, trend-line at 1.2560, key support is a touch lower at 1.2485. Strong resistance again at 1.2665, a daily close above is bullish, next resistance 1.2705, 1.2730, next target is 1.2900.
4-H USDCHF: After a 1.2285 low the pair returned but was unable to make it back into the old descending channel and for now remains in a steeper bearish trend with resistance at 1.2430. While down here we are looking for a new fall to try the 1.2260 key support again, minor support at 1.2335 on the way lower. A rise through 1.2430 has space for a rally to 1.2550 and even into the 1.26’ where the 1-month bearish trend intersects.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2730 S ||1.8500 K ||116.00 K ||1.2550 K |
|1.2705 M ||1.8400 S ||114.70 T ||1.2450 M |
|1.2665 S ||1.8345 M ||114.00 S ||1.2430 T |
|1.2620 ||1.8330 ||113.60 ||1.2380 |
|1.2590 S ||1.8285 T ||113.40 P ||1.2370 M |
|1.2560 T ||1.8230 M ||113.00 M ||1.2335 M |
|1.2485 K ||1.8140 K ||112.60 S ||1.2260 K |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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