EURUSD
Trading strategy: standing aside
The euro lost ground yesterday, pulling back from 1.2460 to as low as 1.2285, following EUR/JPY as the yen strengthened on speculation European banks will struggle to raise money amid the debt region’s crisis. Despite the 190 points pullback, the euro is still in a bullish configuration against the dollar – forming higher highs and higher lows since two weeks ago. Important short-term support is formed into the 1.2250/70 region and a potential breakdown below this barrier could signal a downtrend resume – opening the way to more losses, towards 1.2150 which would be the next downward objective. My yesterday’s expectation for 1.2365-1.2400 to provide support on dip was proven wrong and I maintain a neutral stance in current conditions – waiting for a confirmation, preferably to the downside (respecting the medium term bearishness). Today’s economic calendar includes few important events such as the German Ifo Business Climate Index at 09:00 GMT, followed by Existing Home Sales and Treasury Secretary Geithner’s speech at 15:00 GMT. Important levels to watch would be 1.2250/70 followed by 1.2150 to the downside and 1.2365/00 higher. Current quote is 1.2295 @06:10 GMT
Support: 1.2285/00, 1.2250/70 and 1.2150
Resistance: 1.2365/00, 1.2450/65, 1.2500 and 1.2670
Market sentiment: long term – bearish, medium term – bearish, short term – bullish, intra-day – bearish
GBPUSD
Trading strategy: standing aside
The retreat from 1.4930 brought into attention both the 1.4800 horizontal support and the rising trend line coming from 1.4354 which provided support on the higher lows formed since two weeks ago. The break down below the said trend line suggests that a temporary top is in place into the 1.49 region and more losses are likely – perhaps down to 1.4640/50 (50% of 1.4345-1.4935) or even 1.4570 (61.8% of same up leg). Short-term studies remain slightly bullish and a recovery above 1.4800 would favor further gains, resuming uptrend and confirming that current breakdown was a false one. Current quote is 1.4725 @06:10 GMT
Support: 1.4700/20, 1.4640/50, 1.4600, 1.4570 and 1.4500
Resistance: 1.4800, 1.4930/50, 1.5000 and 1.5100
