NEWS / Foreign Exchange

It may be time to unwind long Dollar positions

By Marc Spaelti - ACM Senior Trader Yesterdays News and Events: Monday was a non-event in terms of currency trading. The Dollar was held in tight ranges at its high levels. Remaining underneath 1.26 throughout the day, the Euro maintained its 2-week bearish trend. Medium-term bulls will point to the 1.2470 key support and the rising trend-line on the daily charts, those levels have yet to be tested and it seems that a good number of buyers are lined up to take advantage of such a dip. Turning to the Japanese Yen and especially the EURJPY and GBPJPY crosses, which have both turned from their Friday-peak to correct 38% of their gains over the past 10days, while USDJPY went nowhere. We continue to think that the rise of USDJPY will come to an end and needs correcting, a fall back towards 113.85 is expected. Atlanta FED Guynn wishes for ???the United states and its elected officials??™ recognize the fact that there is no way around reducing the federal deficit. Its fix can only come through a combination of reduced spending and higher tax revenues, but he declined to make specific suggestions. Todays Key Issues: US Housing Starts for May are due at 12.30GMT, expectations are for 1.85m units, unchanged from April. The Risk Today: Daily EURUSD: In the short-term the pair remains negative, 10-day bearish trend-line is at 1.2600 this morning, while underneath the Dollar should push on to test the medium-term rising trend underneath of 1.25. Of course progress may be extremely slow as the market seems to be waiting for the FED FOMC meeting in 10 days and substantial buying interests are placed near 1.25. A break of 1.26 can see the pair spike to 1.2680 in the short-term. 4-H GBPUSD: Looking slightly bearish with 10-day falling resistance at 1.8485. Currently at 1.8405 it only has room to 1.8350 key support, if that is broken with a low daily close the pair risks a fall to 1.8100 next. On the other side a spike through 1.8485 will re-test the 1.8530 level and carries the possibility of a move back to the 6-week falling trend at 1.8750. Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.2700 K 1.8610 S 116.10 S 1.2520 S 1.2650 S 1.8530 K 115.85 S 1.2465 K 1.2600 T 1.8475 T 115.55 M 1.2425 S 1.2570 1.8405 115.45 1.2410 1.2550 S 1.8385 M 115.05 M 1.2390 M 1.2530 S 1.8350 K 114.65 S 1.2335 T 1.2470 K 1.8310 M 113.85 K 1.2260 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot