Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

U.S. Dollar Regroups After Dramatic Overnight Plunge

Currencies / Forex Trading Jan 29, 2009 - 05:45 AM GMT

By: ForexPros

Currencies Best Financial Markets Analysis ArticleAfter dropping dramatically overnight and into early New York the USD has reversed to hold gains across the board against the majors. Most traders note that volumes dropped off significantly ahead of the FOMC rate announcement suggesting that most were sidelined ahead of the statement. Analysts are divided as to the exact meaning of the statement; some suggest that the Fed stands ready to do “whatever it takes” to resolve the economic crisis while others say the Fed appears a bit panicky in view of interest rates at near-zero unable to add positive stimulus so far. In my view, the issue still remains short-sighted at best and long-term solutions will be hard to enact with a financial community wanting a quick fix.


As such, any Fed action will likely be short-lived and deepen the potential for recession; however at first blush the equities markets like the FOMC announcement and the USD is responding higher. GBP high prints at 1.4378 attracted sellers today with the rate dropping back to trade at the 1.4200 handle and looking like a reversal to test recent lows is in play. Traders note that LHS interest at the fix was largely ignored in thin conditions but sellers are currently active.

EURO fared no better with high prints at 1.3329 ahead of FOMC; reversing hard to trade the 1.3100 area after the announcement. LHS interest was also reported in EURO suggesting that everybody kept their powder dry until the afternoon. Low prints at 1.3103 are still ahead of deeper support suggesting follow-on selling is due in Asia tonight.

USD/JPY found close-in stops as expected above the 90.10 area for a high print at 90.76 before dropping back; traders note that technical resistance at 90.80 area appears to have held the advance suggesting that the stop-driven rally will need some active buying soon to extend into stops rumored to be at or near the 91.00 handle. Traders note that a short-squeeze is overdue and argue that today was an upside breakout from near-term resistance at the 90.00 handle.

USD/CHF found stops above the previous support level at 1.1480 and continued to advance after the FOMC action; high prints at 1.1568 with lows still from overnight at 1.1329 suggesting the rate will try for resistance at the 1.1650 area again. USD/CAD found stops under the 1.2150/60 area early in the day for a low print at 1.2023 before rallying after FOMC; New York highs back over the 1.2200 handle are back above the previous support area suggesting that if the rate holds above the 1.2180 area into the close a rally may be in the works.

Look for the USD to consolidate gains with an upward bias; more data due this week likely will be USD-negative so expect whipsaw and sell rallies.

GBP USD Daily

Resistance 3: 1.4420, Resistance 2: 1.4380, Resistance 1: 1.4330/40

Latest New York: 1.4210, Support 1: 1.4120, Support 2: 1.4050, Support 3: 1.3980

Comments

Rate rallies to resistance at the 1.4330 area and corrects back after FOMC; USD appears to like the news but GBP holds support ahead of the close. Holding 23 year lows so far and a pullback likely to be bought so expect whipsaw. Light stops seen on the move over the 1.4250 area as late shorts get squeezed but big move still coming. Two-way action continues suggesting that shorts are aggressively adding and longs are trying to find a bottom. Short-squeeze likely in progress after first attempt to rally was sold back but recovers. Rate trading on technical’s now. Signs of the bottom may be showing up as “smart” buyers reported in GBP Wednesday and Thursday night last week. Spillover from EURO likely but modest. Look for two-way action into this bottom. A short-covering rally is increasingly likely now. Late sellers likely in or hurting.

Data due Thursday: All times EASTERN (-5 GMT)

2:00am GBP Nationwide HPI m/m

12:00pm GBP MPC Member Blanchflower Speaks

7:01pm GBP GfK Consumer Confidence

EUR USD Daily

Resistance 3: 1.3420, Resistance 2: 1.3380, Resistance 1: 1.3320/30, Latest New York: 1.3137

Support 1: 1.3030, Support 2: 1.2950, Support 3: 1.2880

Comments

Rate follows GBP higher; scores highs overnight Europe but fails into early New York. Rate then follows GBP lower on correction but major support at 1.3030 still the key. Rally less volatile and the rate holds tech resistance at 1.3325/30 area overnight. Rally all day today suggests a short-squeeze is in the works; fall back argues the squeeze is over. Stops around 1.3030 area likely under the market. More likely in-range but probably cleared on the pullback from highs. Bulls are attempting to find a bottom. 50 bar MA failed now likely to offer resistance and a close above suggests the bottom will be in. Semi-official and sovereign bids and offers seen last week. Technical levels around the 1.3300 area now likely to offer resistance so expect two-way action and consolidation. Aggressive traders can look to buy the next dip.

Data due Thursday: All times EASTERN (-5 GMT)

3:55am EUR German Unemployment Change

4:00am EUR M3 Money Supply y/y

4:00am EUR Private Loans y/y

5:00am EUR Consumer Confidence

Analysis by: http://www.Forexpros.com - Written by Jason Alan Jankovsky

Forexpros offers the most definitive Forex portal on the web. It contains industry leading market analysis, up-to-the minute news and advanced trading
tools which provides brokers, traders and everyone involved in the financial market with an all-round guide to Forex.

Copyright © 2009 by ForexPros.com All rights reserved.

Disclaimer: Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

ForexPros Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in