Daily Support & Resistance:




Levels
EUR/USD
GBP/USD

Resistance 3
1.3174
1.9310

Resistance 2
1.3134
1.9240

Resistance 1
1.3099
1.9194

Pivot Point
1.3059
1.9124

Support 1
1.3024
1.9078

Support 2
1.2984
1.9008

Support 3
1.2949
1.8962

Trend (Long-Term)
Upwards
Upwards





The US economic data was mixed over the last week and added to the uncertainties over the US outlook. The economic data during the first half of the week was disappointing with a decline in housing starts of 17.6% for March. The picture was the opposite over the second half with unexpectedly strong data for the Philadelphia Fed index and a sharp drop in housing starts. Leading indicators, however, recorded a 0.4% decline for March, maintaining the recent disappointing trend.

The inflation data was generally stronger than expected with consumer prices rising 0.6% over the month while producer prices rose 0.7%. The underling increase in consumer prices was also stronger than expected at 0.4%. There were suspicions that the growth and inflation data was distorted by seasonal considerations and the true position may not emerge in the short term, but inflation concerns will continue. The Fed Beige Book reported generally firm activity and rising price pressures. There has not, however, been decisive evidence that a more aggressive monetary tightening is required and the Fed is likely to maintain the policy of 0.25% rate increases at the next two Fed meetings. This tightening has been discounted in the dollar’s value and this will make it difficult for the US currency to strengthen.



Fed Chairman Greenspan warned over the need for action to tackle the US budget deficit and stated that there would be a high risk of stagflation or something worse if action was not taken. The weak US structural position will remain negative for the US currency in the medium term. For This week, watch out for Existing home sales with slightly forecasted increase from last month and consumer confidence which is forecasted lower from a last month’s rally. Durable gods is scheduled around mid-week and to conclude the US fundamentals we have jobless claims and GDP forecasted US Negative.


Cable: Managed very well above 1.9000 on Friday, even though daily charts looked overbought. Daily charts still look overbought but if we can manage to hold above 1.9000-8950 till mid-week, we should see cable rally again to break further resistance levels.



Euro: Faced a great deal of resistance from 100 Day SMA @ 1.3147 and only managed a peak till 1.3126 However, the pair held above 1.2950-3000; if we can hold above here till mid-week we should see a definite rally for euro as well.










Market Range:



EUR/USD

1.2900-Support, Buy the bounce & Sell the break

1.3145-Resistance, Buy the break & Sell the bounce

GBP/USD:

1.9000-Support, Buy the bounce & Sell the break.

1.9330-Resistance, Buy the break & Sell the Bounce.






Economic Calendar:



Date/Time (GMT)
Loc
Description
Forecast
Previous







25/04/2005 14:00
USA
Existing home sales (March), mln
6.90
6.79



25/04/2005 15:30
Germany
CPI (April) preliminary
0.2%
0.3%



25/04/2005 15:30
Germany
CPI (April) preliminary Y/Y
1.7%
1.8%



25/04/2005 15:30
Germany
HICP (April) preliminary Y/Y
-
1.7%






Hemendra A.Ghaghada
Emirates FX L.L.C. - Chief Trading Analyst
P. O. Box: 114211, Dubai
Tel: +971-4-33 400 90
Fax: +971-4-33 448 28
Email: hemendra@emiratesfx.ae

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