Research Desk


10th May 2005

Tuesday



Daily Support & Resistance levels:




Levels
EUR/USD
GBP/USD

Resistance 3
1.2930
1.9011

Resistance 2
1.2890
1.8963

Resistance 1
1.2867
1.8901

Pivot Point
1.2827
1.8853

Support 1
1.2804
1.8791

Support 2
1.2764
1.8743

Support 3
1.2741
1.8681

Trend (Long-Term)
Upwards
Upwards






Markets Confused as Euro hangs above its yearly low…



Euro managed a spike low with a hammer in daily charts, could this be a reversal? However Cable was punished by negative Fundamentals with Industrial production coming in at -1.2% and Manufacturing output showed a decline of 1.6%, moreover since last week cable has been hit by sequence of bad news; UK election results followed by much better then expected employment numbers from US and just when I thought it was collecting all the steam to rally in the second half of this week, cable was hit by yesterday’s negative fundamentals. This events are not as big a threat to our long-term USD negative view against both the pairs, because Cable has more room on south side but Euro doesn’t, hence we saw a reversal pattern in Euro yesterday 50+ pips away from its yearly low (1.2730) and Cable continued downwards. For cable 1.8750 should provide a support and if this level breaks we can see cable touching 1.8650-8600 level.



Market sentiment right now are on USD bullish side, reasons being US fundamentals are Strong and interest rate is consistently rising. However, I believe market is ignoring the US Deficit problem, which if highlighted could result in Euro and Cable resuming its long-term bullish trend.

Market Range:



EUR/USD

1.2700-Support, Buy the bounce & Sell the break

1.3000-Resistance, Buy the break & Sell the bounce

GBP/USD:

1.8750-Support, Buy the bounce & Sell the break.

1.9000-Resistance, Buy the break & Sell the Bounce.








*Economic Calendar:



Date/Time (GMT)
Loc
Description
Forecast
Previous





10/05/2005 06:00
Germany
Trade balance (March) unadjusted, bln
14.0
13.5

10/05/2005 06:00
Germany
Current account (March) unadjusted, bln
8.8
8.4

10/05/2005 06:00
Germany
Wholesale prices (April)
-
0.8%

10/05/2005 06:00
Germany
Wholesale prices (April) Y/Y
-
3.3%

10/05/2005 12:55
USA
Redbook (07.05)
-
-





*Source: fxservice.com



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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