Forex Daily Analysis - 10/09/2008 : The US dollar continues to trade two-way today
The USD continues to trade two-way today attempting to extend recent gains but turned back from new highs. Traders note volumes have been patchy at times as the major’s attempt a recovery; most pairs unable to rally significantly from Monday’s action. Today’s US Housing data continued to show weakness and some desks report no activity after the news that would be considered noteworthy. With the recent advance by the greenback appearing to falter at current highs it is becoming increasingly likely that the USD will suffer at least a corrective pullback as traders stand clear of adding to long positions. GBP was unable to press for lows in New York trade today and extended the potential recovery to a high print of 1.7709 before offers capped the move. Traders say cross spreading for non-USD Sterling pairs has contributed to intraday volatility; GBP back almost a full handle lower to close around the 1.7630 area in very light trade. The lack of volume seems to suggest that buyers are scarce but short covering appears to be the rule today. EURO had a volatile day as well tracking GBP both ways after scoring a minor new low overnight; traders note stops in both pairs may have contributed to some upside today and the EURO was able to score a New York high at 1.4227 before dropping back in sympathy with GBP. USD/JPY remained under pressure all day unable to hold the 108.00 handle dropping into the 106.00 handle for a low print at 106.82 before bids supported; traders say the Yen is being heavily bought on the crosses for Sterling and EURO suggesting that the USD/JPY pair will continue to meet with upside resistance on any attempt to rally. USD/CHF also attempted highs at 1.1366 before being turned back to make lows on the day at 1.1214 but was unable to tag stops said to be resting around the 1.1200 handle and slightly below. Aggressive traders can look to add to open shorts in USD/CHF on a close below the 1.1200 handle in my view. On the day, traders note that volumes were better overnight and the poor US data was adding to the USD’s woes today; lower Oil prices likely adding a bit of support to the USD but that support will likely be short-term at this point. With the USD facing the first few days it has not been able to extend gains it is apparent that a potential long-liquidation break is developing. Look for the USD to soften again overnight on follow-on selling.
Analysis Provided by: Forexpros.com - Written by Jason Van Jankovsky
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09-10-2008, 07:40 AM
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