Daily Currency Forecasts - Choppy Trading Week Expected for Euro

EUR/USD Commentary and Trade Ideas

An overnight sell off gave us a chance to take a long at 1.4125 in this pair. The market subsequently printed a new high and is currently a little above 1.4235. A choppy trading week is my expectation, so be quick to take profits. Early expectations for equities are mixed. Euro unemployment is a little higher than expected at 9.2%, and up from 7.3% last year.

Citibank (C), with the pending second federal bailout in the last two decades, really deserves to be in the Hall of Shame. Tuesday morning, Citibank was halting severance payments to those ousted execs that ran the company during its demise. It is ironic that Robert Rubin, who received more than $100M in salary from Citibank during the last 8 years, was the Clinton White House authority that blocked derivative reform and supervision in the late nineties. With Government Motors (GM) now embarking on a path to build little green cars, what changes are planned for the Government Bank? Can anybody recall how long it took the UK to clean up the mess created by Clement Attlee? The failure of the Euro to run very far after the new high on the move suggests you can try scalping the short side here with appropriate stops.

Bias: Higher

Bias Term: Long

Support: 1.4180 1.4100 1.4010

Resistance: 1.4260 1.4300 1.4360

GBP/USD Commentary and Trade Ideas

This is a market that is taking no prisoners. The 150 pip sell off appears to have been a buying opportunity. There reports of modestly better UK loan activity and a mini pick up in construction activity did help the pound but dislike of the dollar is probably the best reason for the pound's strength. Longer term charts look like we may be headed to 1.73 with 1.6750 the first resistance. The visibility provided by the COT report, confirms there is a large speculative group with big losing positions, which will likely to give us additional short covering. Try to buy this pair at about 1.6350 with a 100 pip stop.

Bias: Higher

Bias Term: Long

Support: 1.6360 1.6260 1.6060

Resistance: 1.6500 1.6590 1.6700

USD/JPY Commentary and Trade Ideas

We took a pass on a selling opportunity Monday in the 96.60 area, fearful that the rally had more to go. Currently trading at 95.95, let's try to sell at 96.50 with a 70 pip stop. For the moment we seem to be range bound between 94 and 97 with some hedging activity at the end of both ranges. US home sales are recovering, but only because the prices have been slammed. Real estate values are determined by the latest sales and the lower prices leave a lot of the neighbors of the lower prices houses under water. It seems like there is a lot of new stock speculative activity, with unsolicited stock tips coming from bartenders, barbers and limo drivers. Too often my timing is early, but this is often the precursor of trouble ahead. Not sure how this plays out with the USD and the Yen, but risk assumption is the emotion currently in charge.

Bias: Neutral

Bias Term: Medium

Support: 95.20 .94.60 93.50

Resistance: 97.00 97.90 98.40

USD/CHF Commentary and Trade Ideas

Monday's market failed to rally back to our selling ideas of 1.0795, so we remain an observer in this market. The Swiss GDP dropped by 0.8% a little less than expected, and the year to year comparison was a 2.4% decline. The pattern of lower highs and lows continues, suggesting the trend is still lower with the 1.0400 area the obvious target. Our decent has been notable, 1100 pips, so one would think we are closer to the bottom of the range rather than the top. The epicenter of the global economic malaise has been the banking sector, and the Swiss, as renowned international bankers, probably have some undisclosed problems. Though the trend is down I fear selling in this area.

Bias: Down

Bias Term: Long

Support: 1.0600 1.0490 1.0370

Resistance: 1.0800 1.0900 1.0990

USD/CAD Commentary and Trade Ideas

Our 1.09 sell from Monday was filled, but we had to take some heat, a rally up to 1.0970, prior to a sell off to current 1.0810 level. Congratulations to the Canadian Gov. for the acquisition of 12.5% of the Government Motors Green Car Company, making them junior owners to the US Gov, and the UAW. This may be a case where it is a lot easier acquire than to get ride of ownership. The CAD strength has had the help of bull markets in equities and crude. Last years high in crude occurred in late June when the CAD traded around 100. Can we see a repeat of the same market action this year? Cover your short at the 1.0800.

Bias: Lower

Bias Term: Long

Support: 1.0815 1.0750 1.0610

Resistance: 1.0900 1.0990 1.1120

AUD/USD Commentary and Trade Ideas

The AUD continues its ascent, currently approaching the .82 level. As expected, the Central Bank kept the rate at 3%, which is attractive to Japanese housewives and others. There are some economic statistics, but these items matter little because massive investments into Australia that overwhelms these stats as well as the negative trade balance. We are back to the approximate place where the pair broke to the downside last September, so we should spend some time around the 80/82 level. Not sure how to initiate a new position here.

Bias: Higher

Bias Term: Medium

Support: .8140 .8050 .7970

Resistance: .8200 .8300 .8450

NZD/USD Commentary and Trade Ideas

The pair has come back to where the down move commenced last August/September. The 65/66 has long been our objective, and with the daily RSI above 70 this shows an overbought condition, both reasons to take profits. This does not mean the macro commodity concept investors will alter their plans and take money out of the market. We prefer to watch developments from the sidelines.

Bias: Higher

Bias Term: Long

Support: .6420 .6330 .6220

Resistance: .6570 66.90 .6800