The Fusion Media Network:

Real-Time Quotes:

Home

Analysis

General Overview

Fundamental

Technical

Futures

Central Banks

Forex Brokers

Trading Tools

Crosses

Forexpros Daily Analysis - Morning session - GMT

By:

Forex Trading Edge

2008-19-03

votes

View Comments (0)

Previous Analysis | Next Analysis

	Text Size
	Print
	Email
	Add a Comment

Today’s US Dollar Trading

• Big news is Fed rate cut, 75 BP
• Markets are “disappointed”
• USD begins rally

Overnight Preview

• Look for more USD short-covering and book squaring
• Volumes likely to surge if close-in stops hit in Asia

Looking Ahead

• No real news until Friday’s Philly Fed forecast -18.0

Summary
The USD is gaining ground making highs on the day against several pairs as the markets react to a “disappointing” 75 BP rate cut by the FOMC. Market gurus were touting a 100 BP rate cut due to the liquidity “crisis” but in my view, that was a reactionary point of view after the USD’s decline on Monday and the panicky nature of the market. Cooler heads are prevailing as a bout of short-covering is lifting the USD into the best levels of the day; Cable is dropping to new US lows as the selling takes hold. GBP highs just prior to the rate announcement at 2.0276 making for a huge range in the pair but heading into the close the rate is trading back under the 2.0150 area leaving a large selling wick on the day’s action and generating a “strong sell” signal. Traders note that the buying ahead of the news was e-platform accounts and CTA type accounts who are traditionally late to the party; stops close in under the 2.0200 handle helped break the rate lower. EURO has completely reversed from earlier highs above the 1.5800 handle; traders note that official and semi-official selling above the 1.5800 handle helped keep the rate in check until the news. Making lows on the week under the 1.5700 handle for a low print at 1.5666; EURO has found stops close in as well but a slight bid tone remains most likely from stubborn longs traders say. Most technical indicators in all the majors are over-bought and EURO making lows on the week after the news is an obvious clue that a correction is beginning in my view. USD/JPY is roaring back making a two-bar reversal and high prints back over the 99.00 handle at 99.51 as stops are triggered. The rate looks set to regain the 100.00 handle later today and in Asia you can expect more follow-on buying as the Japanese have been large buyers of USD the past two week on the break lower. In my view, the Fed easing was “baked in the cake” and the USD rally after the news confirms that the oversold USD is starting a relief rally. Look for the USD to continue firming up overnight and to end the week stronger across the board. Aggressive traders can buy USD across the board on a minor dip the next 24 hours.

EURO/USD Daily

R3: 1.5820
R2: 1.5780
R1: 1.5720/30
Current Price: 1.5685
S1: 1.5650/60
S2: 1.5600/10
S3: 1.5580

Rate completes an inverted hammer formation and marks new weekly lows from an inside range day; classic images of a failed high in my view. Close in stops under the Monday low triggered but bids mixed in for an initial bounce. Aggressive selling likely overnight as late longs are forced to cover back and early shorts press their advantage. More downside is likely and aggressive traders can sell the rate on any bounce. Look for continued weakness ahead of Philly Fed Friday.

USD/JPY Daily

R3: 100.80
R2: 100.30/40
R1: 100.00
Current Price: 99.36
S1: 98.80
S2: 98.20/30
S3: 97.80

Rate completes a two-bar reversal adding an exponential reversal signal; good signs of an extended correction in the works. Rally on stop driven trade likely to take a few days as late shorts will need time to take their beatings. Stops likely over the 100.50 area in large size as that was where the sentiment turned “really negative” last week. Rhetoric likely to drive additional buying as early longs are encouraged by BOJ and other Asian officials “welcoming” the fed move.

Digg

Del.icio.us

Mixx it!

Reddit!

Wikio

Next Analysis:

Content Provided by:

Forex Trading Edge
At Forex Trading Edge, we believe our superior customer support is one of our many competitive advantages. Our staff is quick, friendly, knowledgeable and here for you every step of the way. If you are interested in trading currencies online, you will find that the FOREX market offers several ...

Disclaimer:
Before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Please be aware of the forex risk. There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair.

News

Quotes

Forex Analysis

Forex Brokers

Forex Software

Live Events

Charts

Education

Forex Forums

Languages

Risk Disclosure: Fusion Media will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible. Currency trading on margin involves high risk, and is not suitable for all investors Before deciding to trade foreign exchange or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All stock prices, indexes, futures and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn’t bear any responsibility for any trading losses you might incur as a result of using this data.