Ralph Shell @ 4:04 PM, Tuesday June 23 2009
EUR/USD Commentary and Trade Ideas
It looks like the failure of this pair to print a new low was a
precursor of a new pattern. There were some experts chattering that
the Fed may be unable or unwilling to raise rates later this year and
how that is bearish the dollar. This seemed to start the rally and was
followed by a modest increase in US home sales. Never mind the medium
sales price was down 17% from a year ago, the market wanted to go up.
We are currently trading about 1.40, after cleaning out all the stops
above the 1.4011 spike high on the 19th. Has the market turned back to
the upside? If so, you might consider the long side on a retracement
to the 1.39. The problem here is the giant Treasury auction of 104B
notes may provide a surprise to jolt the market. Today's 2 year sale
will probably be well received but the 5 and 7 year notes may prove
another story. But we were just told that low rates mean a lower
dollar, so does a higher than expected yield on the longer notes mean
the dollar is going up? Looks like the jury is still out on this one.
Bias: Neutral
Bias Term: Medium
Support: 1.3940 1.3820 1.3750
Resistance: 1.4050 1.4160 1.4240
GBP/USD Commentary and Trade Ideas
Comments by a Bank of England spokesman that a lower exchange rate
would better serve the economic recovery of the UK unnerved the pair
for a bit. The sell off was brief and we are now trading above
1.6330. This market has been moving horizontally for several weeks,
absent of bullish energy. The longer term charts look friendly so
breaks should be used to acquire longs. Are owners of oil dollars
moving money to the UK, concerned of chaos caused by an unstable Iran?
Bias: higher
Bias Term: long
Support: 1.6350 1.6290 1.6150
Resistance: 1.6420 1.6500 1.6620
USD/JPY Commentary and Trade Ideas
Friends of the yen have emerged taking the USD down under 95, a
level that had been the approximate support area. There seems to be
increased turbulence in currencies today that is not shared in other
markers. Equities are mixed, crude up a little and commodities are
mixed. Perhaps the dollar has weakened because President Obama,
criticized by his tepid response to the Iranian crises, may do
something besides talk. The Japanese want, like everybody else, a
cheap currency to stimulate economic recovery. Prefer the buy side of
this pair around the current level.
Bias: Higher
Bias Term: Long
Support: 95.00 94.60 94.10
Resistance: 95.50 96.70 97.30
USD/CHF Commentary and Trade Ideas
A wave of dollar weakness has taken this pair down under 1.07 to
the area of the previous low. There was a report that the Swiss trade
balance was better than expected, but the move today is caused by
disdain for the USD. Considering the pending Fed meeting and the US
Treasury auction of a record amount of 2, 5 and 7 year notes, look for
additional volatility this week.
Bias: Neutral
Bias Term: Medium
Support: 1.0620 1.0580 1.0490
Resistance: 1.0780 1.0880 1.1010
USD/CAD Commentary and Trade Ideas
The Canadian dollar's swoon versus the US is showing some signs of
ending as we spend time going sideways in the 1.15 to 1.1550 area.
Considering some of the USD's weakness to other currencies the CAD's
action is not that impressive. The Canadian currency suffers from a
split personality. Some weeks it is a commodity currency composed of
oil, natural gas, gold and wheat. Other times it seems like it is a
suburb of Detroit, sharing the problems of the auto industry, the
meddling from Washington, and the problems of the US economy. Would
like to buy this pair on a retreat to the 1.1350/1.14 area.
Bias: Higher
Bias Term: Medium
Support: 1.1400 1.1360 1.1310
Resistance: 1.1550 1.1740 1.1900
AUD/USD Commentary and Trade Ideas
The market sell off, probably caused by long liquidation came to a
halt at a little under .78, when it was announced that the Australian
economy actually grew during the first quarter by .4%. A decline of
.2% had been expected. It looks like the bulls and the bears are
going to duke it out in the 79 to 80 area to determine which group is
in charge. There is a possibility that a couple more days of sideways
trading will form a pennant and a breakout from that formation will be
our next move.
Bias: Neutral
Bias Term: Medium
Support: .7910 .7860 .7710
Resistance: .7980 .8040 .8100
NZD/USD Commentary and Trade Ideas
Very little new to report on this pair. Today's rally undoes
most of yesterday's sell off, and regret that I am clueless what
tomorrow might bring. Longer trend is up, but that appears to be
losing some momentum.
Bias: Higher
Bias Term: Long
Support: .6340 6240 .6190
Resistance: .6460 .6520 .6600
Author: Ralph Shell - ForexRazor Analyst - Graduated from a small Ohio liberal arts college. Graduate studies in economics and history at Duke University. Ten years experience trading cash commodities in domestic and export markets. Former commodity analyst with Merrill Lynch in Chicago. Member of and floor trader at the Chicago Board of Trade for 18 years.