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Monday May 22, 2006 - 08:38:53 GMT
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ACM - www.ac-markets.com
Currency Markets to consolidate
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The Dollar was up on Friday as the corrective phase continued, EURUSD reached a low of 1.2695, Cable traded at 1.8700. Short-term traders then closed their position for the weekend, allowing currencies to gain back part of their losses on the day. This morning a new round of Dollar buyers emerged, Cable fell to 1.8635, EURUSD again traded at 1.2695. We think that the Dollar has pretty much achieved its first goals in this correction and look forward to a few days of range trading, consolidating around current levels. EURUSD should last in a range of 1.2665 to 1.2825, for Cable we look to trade 1.8620 to 1.8885. USDJPY finally has reached a high of 112.95, strong resistance at 113.40 and 113.85 should top the pair for the next two days.
ECB’s Liebscher and Liikanan were both herd with fairly hawkish comments, stating that economic recovery was broad-based and sustained and that fighting inflation risks remained the ECB’s top priority. The ECB is believed to increase interest rates by 25 or 50bp on Thursday June 8th.
FED’s Geithner made no comments on monetary policy, but stressed the point that the US must do anything to ensure that foreign investments continue to pour into the country, adding that the US financial markets openness was one of its greatest strengths. He did not point out that the net inflow has been stabilizing the US Dollar for years.
Todays Key Issues:
Only economic data release today is Euroland March Trade Balance at 9am GMT, no forecast available, it showed a deficit of €3.1Bln in February.
The Risk Today:
1-H EURUSD: A new low of 1.2695 was reached on Friday and again this morning, key support underneath at 1.2665. Short-term falling trend-line at 1.2745, a rise through this level once again reverses the pairs direction towards 1.2820, for the next few days, expect this consolidation-phase within 1.2650 – 1.2850 to continue.
1-H GBPUSD: We are still in bearish short-term move that started Friday morning, watch the trend-resistance at 1.8735, a break of that should see us rise back to the (blue) resistance at 1.8870ish. While the current short-term trend holds, we can again attack the 1.8650 low and continue the bearish move to 1.8550, next strong support.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.2820 S ||1.8865 K ||113.85 S ||1.2320 S |
|1.2780 M ||1.8770 M ||113.40 K ||1.2260 K |
|1.2745 T ||1.8735 T ||113.00 S ||1.2235 S |
|1.2745 ||1.8720 ||112.70 ||1.2180 |
|1.2695 S ||1.8650 S ||112.65 M ||1.2170 S |
|1.2665 K ||1.8550 S ||112.25 S ||1.2130 M |
|1.2580 S ||1.8485 K ||111.70 T ||1.2080 T |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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