Daily Outlook – USD Under Pressure, Volatile
Monday, October 25th, 2010U.S. Dollar Trading (USD) the market sold the USD aggressively in the Asian and European sessions but traders took profit in the US session as stock markets fell back from opening levels. Existing Home Sales surprised at +10% in September. In US stocks, DJIA +31 points closing at 11164, S&P +2 points closing at 1185 and NASDAQ +11 points closing at 2490. Looking ahead, August Case Shiller House Prices +0.2% m/m. October Consumer Confidence is forecast at 49.2 vs. 48.5 previously.
The Euro (EUR) a solid rally back above 1.4000 once again failed to hold for the entire trading day with sellers capping near 1.4100. September Industrial Orders is 5.3% vs. -1.8R% m/m. Topside Range trading is tipped ahead of the US FOMC meeting next week. EUR/USD traded with a low of 1.3906 and a high of 1.4082 before closing at 1.3970. Looking ahead, October German Consumer Confidence is forecast at 5.2 vs. 4.9 previously.
The Japanese Yen (JPY) broke down to fresh year lows under Y81 finding support at Y80.50 but struggled to bounce aggressively. Stronger US housing data did offer slight support but GBP/JPY and EUR/JPY weighed later in the US session. Overall the USDJPY traded with a low of 80.39 and a high of 81.35 before closing the day around 80.80 in the New York session.
The Sterling (GBP) managed gains against the USD in Asia but underperformed the broader market with EUR/GBP extending recent gains to 0.8940. The situation changed in the US session however with EUR/GBP selling providing support for the GBP/USD. Overall the GBP/USD traded with a low of 1.5675 and a high of 1.5775 before closing the day at 1.5715 in the New York session. Looking ahead, Q3 GDP is forecast at 0.4% vs. 1.2% previously Q/Q.
The Australian Dollar (AUD) outperformed in Asia when Q3 PPI accelerated by more than expected at 1.3% vs. 0.3% previously. RBA Governor Stevens also spoke about the global recover being of a very two speed nature. Overall the AUD/USD traded with a low of 0.9837 and a high of 0.9976 before closing the US session at 0.9915.
Oil & Gold (XAU) did well in the weak Dollar environment but gave up most of the gains in the US session. Overall trading with a low of USD$1332 and high of USD $1350 before ending the New York session at USD$1340 an ounce. Oil moved in step with stocks edging higher on the day. WTI Oil Closed +$0.59 at $82.28 a barrel.
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.3560 | 1.3637 | 1.3940 | 1.4159 | 1.4373 |
| USD/JPY | 77.91 | 79.75 | 80.80 | 82.01 | 83.03 |
| GBP/USD | 1.5503 | 1.5606 | 1.5725 | 1.5879 | 1.6107 |
| AUD/USD | 0.9542 | 0.9662 | 0.9910 | 1.0004 | 1.0166 |
| XAU/USD | 1283.00 | 1312 | 1341 | 1349 | 1387 |
| OIL/USD | 80.00 | 81.00 | 82.30 | 82.50 | 84.00 |
Euro – 1.3940
Initial support at 1.3637 (Oct 5 low) followed by 1.3560 (Sept 30 low). Initial resistance is now located at 1.4159 (Oct 15 High) followed by 1.4373 (76.4% retrace of 1.5144-1.1877)
Yen – 80.80
Initial support is located at 79.75 (All time low, 1995) followed by 77.91 (101.44 minus 110.66-87.13). Initial resistance is now at 82.01 (Oct 13 high) followed by 83.03 (Oct 7 high).
Pound – 1.5725
Initial support at 1.5606 (61.8% retrace of 1.5297-1.6107) followed by 1.5503 (Sept 21 low). Initial resistance is now at 1.5879 (Oct 20 high) followed by 1.6107 (Oct 15 high).
Australian Dollar – 0.9910
Initial support at 0.9662 (Oct 19 low) followed by the 0.9542 (Oct 5 low). Initial resistance is now at 1.0004 (Oct 15 high) followed by 1.0166 (0.8067 plus 0.618 of 0.6009-0.9406).
Gold – 1341
Initial support at 1312 (Oct 5 low) followed by 1283 (Sept 28 low). Initial resistance is now at 1349 (Oct 21 High) followed by 1387 (Oct 14 high).
Oil – 82.30
Initial support at 81.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 84.00 (Intraday Resistance).
Written by Easy-Forex
