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Currencies Well Offered As Uncertainty Escalates (Morning Slices)
Monday, 06 July 2009 11:21:09 GMT  |  Joel Kruger, Technical Currency Strategist
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MORNING SLICES (Abbreviated)

Fundys – The lack of economic releases in the overnight session failed to prevent the markets from moving significantly with currencies selling off across the board in favor of the flight to safety lure of the Yen and USD. Heavy stops were tripped across the board to open a fresh wave of selling, with both the Euro and Cable breaking below key short-term supports by 1.3925 and 1.6185 to expose critical levels further down at 1.3750 and 1.5800 respectively. The one economic release in Europe didn’t help the Euro’s cause after Eurozone sentix came in much weaker than expected at -31.3 after analysts had been looking for a more reasonable -25 print. Sterling has been the big loser on the day, with many attributing the relative weakness to the news that the Shadow MPC has called for the Bank of England to ramp up its quantitative easing measures. The Yen on the other hand was the prime beneficiary of the currency selling with the recent talk of a slower global recovery starting to weigh on investor sentiment. The World Bank is the latest to come out with downbeat talk after saying that 2009 remains a dangerous year and that the recovery prospects for 2010 remain far from certain. Commodities and equities have also been weighed down heavily with many citing a technical double top trigger in oil that now projects a drop back towards $59 over the coming days. US equities are also warning of a deeper pullback with the formation of a head and shoulders top on the S&P daily chart. The near onset of Q2 earnings is also worrying investors with the broader global macro gloom and doom not helping to bolster what appears to be a very cautious investor mindset. Looking ahead, the only scheduled economic release in North America comes in the form of the ISM non-manufacturing composite (46 expected) due at 14:00 GMT. 

Techs - EUR/USD takes out Friday’s low to expose key support by 1.3750 further down. Rallies now expected to be well capped ahead of 1.4100.  USD/JPY trading back to the recent range lows with a break below 94.90 to open a deeper setback towards critical trend support by 93.55-85. Rallies should now be well capped above 96.00. GBP/USD takes out key support at 1.6185 overnight to expose the more significant consolidation lows by 1.5800 over the coming sessions. Look for rallies to now be well capped ahead of 1.6400. USD/CHF continues to attempt to carve out a meaningful base with the market pressing higher on Friday to end a sequence of 6 consecutive daily lower highs. A higher low is now sought out by 1.0710 ahead of the next upside extension back above 1.1025. Key levels to watch over the coming session come in by 1.1025 and 1.0855.

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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Joel Kruger publishes 6 daily pieces:

“Tech Talk” – A Daily Video Highlighting Technical Developments in the Overnight Session of Trade.
Monday-Friday (between 5:30am-6:30am EST)

“Morning Slices” – Morning Overview using Fundamental, Technical, Flow, and Quantitative Analysis (Includes “Trade of the Day”).
Monday-Friday (between 6:30am-7:30am EST)

“Indicator of the Day” – A Feature Report that Highlights our Most Significant Technical Indicator of the Day.
Monday-Friday (between 8:00am-9:00am EST)

“Midday Snapshot” – A Midday Fundamental Update, along with Technical Analysis of Selected Rates. 
Monday-Friday (between 10:30am-11:30am EST)

“Scandi Daily” – A Specialized Daily Fundamental and Technical Overview of the Nordic Currencies.  (This report is only distributed through email. Please contact Nordic@fxcm.com if you would like to be added to distribution.)
Monday-Friday (between 11:30am-12:30pm EST) 

“Daily Classical” – A Daily Technical Overview of the Major Currencies. 
Monday-Friday (published between 2:00pm-3:00pm EST)

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