The FX markets gave some signs of recovery on Wednesday; the immediate rush seems to have calmed, as central banks continued to pour money into the system. Euro and cable advanced, yen weakened, while the Aussie and the Kiwi joined the fray late in the day. It’s very premature to call for the return of the carry trades, but short-term opportunities exist in longing EUR/CHF and yen crosses. Keep an eye on the Fed today, as there is a small risk of another discount rate cut.
Euro/dollar
The euro/dollar finally moved away from a secondary Fibonacci retracement level at 1.3475 and tested the top of Friday’s ample range. If successful in breaking higher, look for the euro to make more gains against both the dollar and the yen
Initial resistance is seen at 1.3595. Above 1.3625 there is resistance at 1.3700. This is followed by 1.3775.
Immediate support comes at 1.3495. Below 1.3410, support remains at 1.3358. Distant support is at 1.3265.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen closed higher on Wednesday but remained in an inside range. Only a break above the upper border would add confidence in longing more yen crosses. For now the pair remains under the trendline rising since January 2005, now at 116.00.
Strong resistance is at 116.00. Distant resistance is at 116.85 from a 50-point pivot that targets 116.35 and 117.35.
Initial support is at 115.50 from another 50-point pivot, which targets 115.00 and 116.00. Distant level is 114.20 from another 50-point pivot that targets 113.70 and 114.70. Below 113.25, support is at 112.90 from a 50-point pivot that targets 113.40 and 112.40.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar has been alternating up and down days and on Wednesday it rallied. But the pair remained in an inside range slipped on Tuesday but remained stuck within Friday’s wide range. The pair must break above 1.9930 to encouraged further demand or it will return to its consolidation area.
Above 1.9930, strong resistance is at 2.0015. Strong resistance follows at 2.0130.
Immediate support is at 1.9830. The next big level is 1.9750. A break below the pivotal level at 1.9653 would signal a further slide to 1.9550.
Oscillators are mixed.
NEAR-TERM: Mixed with upside bias
MEDIUM-TERM: Bearish
LONG-TERM: Bullish
Dollar/Swiss franc
Dollar/Swiss franc continued to trot in place and closed virtually unchanged on Wednesday as well. Expect further consolidation.
Initial resistance is still seen at 1.2100. The next level is .2140. Above 1.2219, distant resistance is at 1.2310.
Immediate support is at 1.2017. The next level looms at 1.1970. Below 1.1870, distant support is seen at 1.1819.
Oscillators are rising.
NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
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