Forexpros Daily Analysis - Evening session - GMT

Overnight Asia/Europe
 
• USD mixed-to-higher
• Traders waiting on earnings reports and data
• Asian equities higher helps USD firm

Today’s Economic Reports

• 7:30 AM CDT Regular unemployment numbers
• 9:00 AM CDT Philly Fed forecast -14.0

Looking Ahead

• Next week Durable Goods, Housing data, and Michigan Sentiment
• Light week but housing likely to be closely watched

Summary
The USD is mixed to open New York after a solid two-way session that saw a press for weekly highs by some pairs overnight. The Greenback was helped by firmer Nikkei in Asia after a slow start closing NY near the Wednesday highs at 101.84; two-way action pressured the rate for an Asian low at 101.68 before bids took the rate over the 102.00 handle. European trade saw cross-spreaders for EURO/JPY pressuring Yen lower; spillover strength into USD/JPY lifted the rate for a European high print at 102.53 just ahead of the NY open. Traders report stops over the 102.30 area and more said to be positioned over the 102.70/70 area leaving resistance around the 102.50/60 area; early highs in NY at 102.64. Cable rallied on weak earnings reports from Merrill Lynch early today, high prints at 1.9826 before comments from Eurogroup Chairman Juncker suggesting that the markets did not understand the G7 communiqué last week; traders see selling pressure as the result as “excessive volatility” usually means “EURO too high”; EURO seeing some selling pressure which is spilling over into Cable in early NY. Low prints in GBP overnight at 1.9690 making a small showing under the weekly low but still not finding the stops said to be building in size under the 1.9700 handle. Traders still expecting a test of the 1.9600 handle again soon as upside appears solely to be driven by sympathy bids from EURO strength. EURO scratched out a marginal fresh high at 1.5984 but traders say volumes were light and option barrier interest remains ahead of the psychological 1.60 handle. Selling was from a semi-official name at the 1.5950 area some desks report suggesting that the rate is continuing to attract large sellers with good reasons to sell. In my view, the rate is slowing the advance considerably and it is only a matter of time before sentiment goes neutral to corrective. A healthy pullback will set the stage for an additional run higher later in the year. For today, expect US data to again be unfriendly to the USD and for the majors to continue in two-way action. Expect to cover a lot of the same ground twice today; look for continued range trade.

GBP/USD Daily

R3:  1.9880
R2:  1.9850
R1:  1.9820/30
Current Price: 1.9782
S1:  1.9720/30
S2:  1.9680/90
S3:  1.9650

Rate finds resistance offered by 50 bar MA again after a quiet stop-driven rally in sympathy with EURO. Traders say the rate is expected to drop over time as fundamentals and technicals look continuingly bearish mid-term but recent strength appears to have some teeth; dips under the 1.9720/30 “sell zone” have been bought and stops have been close-in on the buy side the past 3 sessions. Reversal pattern may be gaining credibility but the weekly close will shed light on the remaining potential for a bottom.

 
EURO/ECB Daily

R3:  1.5970/80
R2:  1.5920/30
R1:  1.5900
Current Price:  1.5867
S1:  1.5850
S2:  1.5820
S3:  1.5800

Rate showing another hook reversal, initial reversal last week still valid suggesting the rate is attracting sellers in size now; the speed of the sell-off from the highs on minor rhetoric argues for nervous longs getting out. Fall-back into the rising wedge a good sign of a head-fake; market needs a close back under the 1.5800 handle to make the longs nervous. Aggressive traders can sell rallies back to or through the recent highs if volatility shows up; 1.60 sell order still working.