Dukascopy Afternoon Forex Overview

Previous session overview

The dollar held its ground on the euro and high-yielding currencies Tuesday, finding support as a rating agency’s threat to downgrade the U.K.’s AAA rating spooked investors and increased the desire for the relative safe-haven status of the U.S. unit.

The British pound was the session’s big mover, selling off after David Riley, Fitch Ratings’ co-head of global sovereign ratings, told Reuters in an interview Tuesday that the U.K. has the highest risk of major economies of losing its AAA status.

The language echoed a Fitch report from late July, but Riley’s remarks proved enough to trigger a round of profit-taking a day after sterling rose to a three-month high against the dollar.

In recent action, the pound fetched USD1.6710, down from USD1.6763 in North American trading late Monday. The pound had slipped to a low near USD1.6600 in earlier action.

The EUR rose as much as 0.5% against the pound earlier on, but it recently traded up 0.2% to 89.62 pence.

The EUR did not mark time with cable on the move instead holding to recent consolidation around the USD1.4980 area; low prints at USD1.4949 again finding bids with highs matching Monday’s at USD1.5021.

Market expectation

The euro and other high-yielding currencies are expected to take their cues from stocks and commodities during Tuesday trading; if U.S. stocks extend Monday’s rally that sent the Dow Jones Industrial Average to a 13-month high, high-yielders are expected to break out of their morning ranges and gain; if stocks open lower, as is expected, the dollar could strengthen.

USDJPY pressed to JPY89.70 area a short while ago as euro-yen retreated from its earlier high as the euro saw LHS pressure around various fixings but flows here, as elsewhere, on the light side. Dollar pair still said to hold demand interest sub JPY89.60 and pair is modestly responsive to risk-appetites still. Exporter offers remain atop JPY90.30 area, beyond the high seen just ahead of the US session as euro-yen supported.

Pound again meets decent resistance at USD1.6722 (50% USD1.6844/1.6600), with rate backing off to currently trade around USD1.6710. Rate retains a buoyant tone with continued talk that the 1600GMT fix to see RHS fix interest. Traders note that the earlier sale of E700mln in euro-sterling was transacted for the 1400GMT fix.

Movers & Shakers:

USD/CHF +0.28%
EUR/GBP +0.21%
NZD/USD +0.18%
EUR/CHF +0.07%
CAD/JPY +0.06%
EUR/USD -0.21%
AUD/JPY -0.24%
EUR/JPY -0.30%
AUD/NZD -0.31%
EUR/CAD -0.36%
CHF/JPY -0.37%
EUR/NOK -0.38%
GBP/USD -0.43%
GBP/JPY -0.52%

Important levels:

Support Resistance
EUR/USD
1.4895 1.5068
1.4784 1.5131
1.4721 1.5242
GBP/USD
1.6645 1.6878
1.6511 1.6977
1.6412 1.7111
USD/CHF
1.0029 1.0149
0.9982 1.0222
0.9909 1.0269
USD/JPY
89.620 90.190
89.375 90.515
89.050 90.760

Source: Dukascopy

2 thoughts on “Dukascopy Afternoon Forex Overview”

  1. I believe that what we are seeing this last few days in the dollar pairs, is nothing more than just a retracement. The dollar selling will probably reemerge even stronger by late January 2010 so i treat this as a good opportunity to establish long positions against the usd.

  2. At this moment I agree with you..I’m still holding on to my long positions. If eur/usd drops below 1.4491 I may consider that a short term downtrend is at play and may consider closing my long positions.

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