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Tuesday August 22, 2006 - 05:58:48 GMT
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ACM - www.ac-markets.com
Euro Technicals still pointing higher
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
After a strong start on Monday morning, the Euro spiked to a new August high of 1.2940, just a little short of the 1.2980 high seen in May. The move was helped by the surprise Euroland Trade Surplus of â‚¬2Bln, more help came in form of EURJPY buying, as the cross continues to make fresh 7-year highs, the psychological 150 EURJPY level is just a wink away. While the Swiss Franc also managed to push the Dollar to a new August low of 1.2185, Cable faltered at the 1.90 resistance and ended the day underneath of key resistance 1.8960.
The German Bundesbank in its monthly report supported the ECBâ€™s recent rate hikes as a measure to contain inflation, adding that monetary policy remained expansionary.
With the EU economy currently growing at its fastest pace in six years, it can absorb up to another two rate hikes from the present 3% interest in view of many analysts. The ECB is to meet again on 31 August, but we doubt the next move would be scheduled this early.
In comparison, forecasts for US interest rates have now peaked. A majority of analysts do not expect the FED to increase interest rates again this year and early forecasts indicate a rate cut in late 2007.
Todays Key Issues:
German IFO Economic Conditions Survey for August is due at 9amGMT. Last months large fall to 15.1 stands in contrast with good data we have had in Euroland recently. No forecast is available, but a strong bounce would surely benefit the Euro. Swiss July Trade Balance is due at 12.15GMT, no forecast available, in June a surplus of CHF 935mio was achieved. At 2pmGMT the Richmond FED Manufacturing Survey for August will be released, it stood at 12 in July.
The Risk Today:
1-H EURUSD: After yesterdays high, the pair retraced to 1.2855 overnight. Remain firmly bullish while 1-week bullish trend-line at 1.2850 holds, its break risks 1.2825 in the very short-term, with additional risk to test underlying rising support at 1.2780. Buy dips and expect a test of the 1.3000 level before the week ends.
Daily USDJPY: Thanks to large buyers in the EURU and GBP crosses, this pair remains stubbornly high. Unable to remain underneath of 115.85 last night, it looks set to test its medium-term resistance at 116.50 first before a new move down to the 114.65 key level can be expected. In the longer-term, we expect USDJPY to eventually dip to 111.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3000 M ||1.9110 S ||117.35 K ||1.2420 S |
|1.2965 K ||1.9020 S ||116.60 S ||1.2375 K |
|1.2910 S ||1.8960 K ||116.20 M ||1.2330 S |
|1.2870 ||1.8925 ||116.10 ||1.2260 |
|1.2850 T ||1.8890 S ||115.95 S ||1.2260 K |
|1.2770 K ||1.8850 M ||115.35 M ||1.2200 M |
|1.2740 S ||1.8760 K ||114.65 K ||1.2060 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
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