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Forex Market Update
Published: Jun. 06 2006, 05:44 GMT
Dollar continues stronger in Asia on Bernanke's comments!
The Fed's Bernanke spoke in Washington Monday and pledged to stay vigilant against inflation and caught the market on the wrong foot sending EURUSD below 1.2900.
MAJOR HEADLINES â€“ PREVIOUS SESSION
â€¢ UK PMI Services May, out at 59.2 vs. 58.9 expected.
â€¢ UK Official Reserves (Changes) May, out at $271M vs. $936M expected.
â€¢ US ISM Non-Manufacturing May, out at 60.1 vs. 60.0 expected.
â€¢ ISM details, Employment 58 from 56.5, New orders 59.6 from 64.6, Inventories 59.0 from 59.0.
â€¢ Australian Current Account Deficit Q1, out at -13999M vs. -14800M expected.
â€¢ Australian Home Loans April, out at -0.5% vs. 0.8% expected.
â€¢ Australian Investment Lending April, out at -2.0% vs. a prior reading of 2.5%.
â€¢ UK CIPS data May, out at 59.2 vs. 58.9 expected.
THEMES TO WATCH â€“ UPCOMING SESSION
The speculation that the Fedâ€™s Chairman Bernanke would suggest a pause for U.S borrowing costs left the market caught on the wrong foot. EURUSD tumbled almost a figure following the speech to the bankers Association in Washington.
Bernanke commented that he was concerned on core inflation and that it could break the upper end of the range. This left the market unsure if the Fed will raise rates for the 17th straight time to 5.25%. There is PMI services out from several European countries, but lacking US data which leaves the market with not a lot of new data to go by.
So we will change the our present intra week dollar stand from bearish to neutral and expect technical trading to be the main driver in todayâ€™s markets, with EURUSD trading above 1.2980 to spark renewed dollar weakness.
Note: the support/resistance levels used in the matrixâ€™s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.
EURUSD (1.2895 @ 05:43 GMT)
Weekly update 04-06-2006: EURUSD remains congested after last weekâ€™s sideways consolidation pattern. But the strong close Friday gives reason to believe that a retest of 1.2980 resistance, is in the making. We look for a break of the mentioned level this week to confirm the bullish bias and suggest a target of 1.3175 further out. For the downside only a break of the 1.2660-1.2685 support area would give reason for a more meaningful downside correction.
Tuesday: Still caught in the consolidation range of 1.2980-1.2685 and we look to trade this pair with a neutral stand inside the range for now. We still look to buy the break of 1.2980 for a 1.3050 target further out.
06 Jun 06
British Pound/US Dollar
GBPUSD (1.8717 @ 05:43 GMT)
Weekly update 04-06-2006: GBPUSD recovered Friday on the weaker dollar to make a strong close, but remains in a tight congested range. For the upcoming week we look for a break of 1.8885 which would give scope for a test of 1.9216, the top from April 2005. For the downside the pair remains well supported in the 1.8500-1.8530 area, which needs to break if a deeper downside correction is to be seen.
Tuesday: GBPUSD has made a triple top on the hourly charts with the lack buying interest above 1.8870 yesterday. Look to play the 1.8640-1.8810 range in today's session, with the pair likely in brerakout mode above 1.8890.
06 Jun 06
US Dollar/Japanese Yen
USDJPY (112.42 @ 05:40 GMT)
Weekly update 04-06-2006: USDJPY fell short of testing 113.40 resistance, where a break would open up to challenge 115.50.But we look for 113.40 to cap the upside for the upcoming trading week supported by daily stochastics pointing lower. Look for a break of 111.00 this week to accelerate the downside for a test of longer term wave support at 108.75, the low from September 2005.
Tuesday: USDJPY found downside relief after bernanke's comments and broke the 112.30 resistance area to challenge 113.40 where selling interest will likely appear again. Only a close above the mentioned level would give reason to more upside acceleration towards 115.50.
06 Jun 06
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