Thread: forex Daily Analysis - 22/10/2008: The USD continued to advance

The USD continued to advance against the majors today as stops under recent lows were triggered in thin trade; Traders note two-way trade early overnight gave way to additional risk-aversion trade as desks reported USD buy-side interest into the London fix. After the noon hour traders note that the majors continued to drift lower as sell-orders and stops continued to pressure EURO and GBP into lows. Equities were under pressure after an early rally failed and USD/JPY dropped to new lows as exporters and Japanese lifers were seen on the offer late European trade and early New York. Semi-official names and sovereigns were on the bid for EURO and GBP early traders say but support evaporated as the day went on. EURO dropped to a low print of 1.3077 before profit-taking bids lifted the rate back over the 1.3140 area; again traders report thin conditions. GBP dropped to the 1.6800 handle for a low print at 1.6835 in late New York action and the 2008 lows are now under threat; technicians are targeting the next layer of support in GBP at the 1.6750 area. USD/JPY dropped to the 100.15 area before a late rally in equities lifted the rate back to the 100.80 area. Traders note that both Swissy and Loonie extended their respective ranges higher but sellers were active on the rally and both rates dropped back into the close a bit. Most pairs have completed technical objectives analysts say and are showing signs of oversold conditions suggesting that the USD may be finally due for a correction. In my view, the USD is overdue for a correction and now that the credit crisis may be showing signs of resolution the Greenback may fall back quickly; especially if economic news is unfriendly to end the week. Tomorrow is a light day for news but later in the week Existing home sales will likely show another decline. Regardless of near-term sentiment the USD has horrible fundamentals underlying current action; I am still looking for the USD to fall back to end the year. Tomorrow will likely be a day of technical trade as the calendar is again light; look for the majors to hold existing ranges.

Analysis Provided by: Forexpros.com - Written by Jason Alan Jankovsky