We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • PBoC Governor says they will increase credit support to the economy and will step-up counter-cyclical adjustment for the economy
  • Over 3 yards expiring at 1.3000 this week keeps $GBPUSD upside rather contained https://t.co/gOHlWgtQpF
  • LIVE IN 30 MIN: Join Currency Strategist @PaulRobinsonFX as he keeps you updated with the latest movements and trends during the London session for the FX and CFDs Market. Register here: https://www.dailyfx.com/webinars/243785867?CHID=9&QPID=917720
  • Join @PaulRobinsonFX 's #webinar at 5:30 AM ET/10:30 AM GMT for insight on London #FX and #CFD trading. Register here: https://t.co/AoM3UvLtcF https://t.co/w7f9yQwfib
  • The $AUDUSD and $EURUSD downtrend may prolong as traders counterintuitively buy into their descent. Meanwhile, the USD/CAD uptrend may accelerate on rising net-short bets. Get your market update from @ddubrovskyFX here:https://t.co/dlzJ31kf3f https://t.co/4X0tBVglwD
  • RT @GrayConnolly: Jeremy spoke in class today
  • RT @DShahTR: https://t.co/HQKpJtMw5v
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.72%, while traders in France 40 are at opposite extremes with 83.41%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/ueoSLUWKzP
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia from @DavidCottleFX here: https://t.co/E2hqoRdO7q https://t.co/mCZcz5lLpu
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Silver: 0.32% Gold: -0.14% Oil - US Crude: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/ZiRe0m5CYF
Fundamental Themes Continue to Suggest that USD Selling Should be Limited

Fundamental Themes Continue to Suggest that USD Selling Should be Limited

2011-05-25 10:47:00
Joel Kruger, Technical Strategist
Share:

Although currencies managed to rally a bit on Tuesday, most of the gains were classified as corrective consolidation rather than any significant shift in the trend. Overall, the credibility of the Eurozone continues to be challenged and this is a theme which heavily weighs on sentiment. But things haven’t been only gloomy in Europe, with the latest WSJ report saying that the 5 largest US banks face possible liability of at least $17B in foreclosure lawsuits, also doing some damage. Additionally, a report in the Telegraph on Wednesday is also getting some traction, with the piece striking a chord with many investors. The article is entitled “China Seen as the Candidate for the Next Catastrophe” and the talk of a potential bubble in the giant economy could contribute to another wave of risk selling.

Relative Performance Versus the USD Wednesday (as of 10:40GMT)

  1. CHF +0.49%
  2. GBP +0.28%
  3. NZD -0.10%
  4. JPY -0.12%
  5. CAD -0.20%
  6. EUR -0.25%
  7. AUD -0.61%

In the end, it seems as though the US Dollar will continue to benefit going forward, with a combination diminished risk appetite and anticipation of the end of QE2 seen driving the Greenback into a more sustainable recovery. The currencies most at risk should therefore be the higher yielding commodity bloc, with the antipodeans in particular showing relative overvaluation and looking very exposed. Data released in Asia was mostly a non-event, although the lower than expected Australia construction release did not help the Aussie’s cause and easily offset any positives from the 1.5 rise in the Westpac/MI leading economic index. In European trade, UK data produced a mixed bag, with early rumors of softer GDP proving unsubstantiated and the release coming in as expected. Elsewhere, more selling ensued in EUR/CHF, with the market breaking to yet another fresh record low by 1.2300 and showing no signs of let up.

Still, from an intraday perspective, the buck has managed an impressive rally against many of the major currencies, and buying additional US Dollars at current levels could prove to be a dangerous venture. Instead, we favor looking to re-buy US Dollars into dips. Looking ahead, US durable goods and the house price index will be the key economic releases in North America, while on the official circuit, ECB Stark and Fed Kocherlakota are slated to speak. US equity futures and commodities are tracking lower on the day. US equity futures are tracking slightly lower ahead of the North American open, while commodities are also consolidating by Tuesday’s closing levels.

ECONOMIC CALENDAR

Morning_Slices_body_Picture_5.png, Fundamental Themes Continue to Suggest that USD Selling Should be Limited

TECHNICAL OUTLOOK

Morning_Slices_body_eur.png, Fundamental Themes Continue to Suggest that USD Selling Should be Limited

EUR/USD: The market continues to show signs of weakness following the break below 1.4155 support several days back, and the risks from here are for deeper setbacks over the coming days towards next key support in the 1.3800’s. Look for a clear break below 1.4045 to confirm and accelerate, while any rallies should be well capped ahead of 1.4350.

Morning_Slices_body_jpy2.png, Fundamental Themes Continue to Suggest that USD Selling Should be Limited

USD/JPY: After undergoing a fairly intense drop off from the 85.50 area several days back, the market looks to have finally found some support by the bottom of the daily Ichimoku cloud and could be in the process of carving out some form of a base. Look for setbacks to continue to be well supported in the 80.00’s with only a close back below 79.50 to give reason for concern. From here we see the risks for a fresh upside extension back towards the recent range highs at 85.50 over the coming days.

Morning_Slices_body_gbp2.png, Fundamental Themes Continue to Suggest that USD Selling Should be Limited

GBP/USD: The market is starting to give way, with the price now dropping back below the 50-Day SMA to warn of additional declines over the coming sessions. Look for deeper setbacks below 1.6000, with any rallies now expected to be well capped ahead of 1.6400. Ultimately, only back above 1.6520 gives reason for concern.

Morning_Slices_body_swiss1.png, Fundamental Themes Continue to Suggest that USD Selling Should be Limited

USD/CHF: Starting to show signs of basing off of the recently established record lows by 0.8550, with the market putting in a solid bullish close for two consecutive weeks and breaking back above the previous weekly high. Next key resistance comes in by 0.9000 and a break above will further confirm recovery structure and open the door for a move back towards a medium-term lower top at 0.9340. Look for any intraday setbacks to be well supported above 0.8700 on a daily close basis. Ultimately, only a daily close back below 0.8700 delays and gives reason for concern.

FLOWS

Corporate demand has been noted in Cable and twin UK clearer sales in Eur/Gbp. An ACB has been an aggressive seller in Aud/Usd with Middle Eastern sovereign demand trying to contain the downside. Contacts talk of heavy Asian demand around the 1.4000 mark in Eur/Usd.

Written by Joel Kruger, Technical Currency Strategist

If you wish to receive Joel’s reports in a more timely fashion, email jskruger@dailyfx.com and you will be added to the distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.