Daily Market Outlook for 09.07.2013

The dollar held steady versus a basket of currencies in early Tuesday trading, and its broad uptrend was seen intact as the market positions for when the U.S. Federal Reserve will start to slow its stimulus.

Expectations that the Fed will reduce its bond-buying as early as September should keep the dollar buoyant, although there is caution about its near-term outlook in the wake of recent gains. The policy divergences between the Fed and the developed countries like UK and Japan are likely to widen over time and that will continue to favor dollar strength. In the short term, however, the dollar could retreat as it approaches technical resistance.

While the Fed is seen heading toward reducing the pace of its monetary stimulus later this year, the European Central Bank has said it would keep interest rates at record lows for an extended period, and the Bank of England has indicated that it is in no hurry to raise interest rates. The Bank of Japan is expected to continue with its aggressive monetary stimulus.

The dollar index, which measures the greenback's value against a basket of currencies, held steady above 84.00 mark. The dollar index had set a three-year high of 84.58 on Monday following Friday's upbeat U.S. jobs report.

 

EURUSD

 

The Euro trades in a consolidative mode, off fresh low at 1.2805, posted last Friday and ended Monday’s trading in a positive tone. Recovery rally is so far capped at 1.2880 zone, Fibonacci 38.2% of 1.3016/1.2805 descend / hourly linear regression channel upper line. Hourly studies are positively aligned and see potential for stronger correction above 1.2911, 50% retracement and pivotal 1.2930 zone, 61.8% / 03/07 low; 04/07 high. However, prevailing negative tone on 4-hour chart, sees the recovery limited for now. On the downside, 1.2800 zone offers initial support and guards key 1.2750 double-bottom and annual low.

Levels to watch: 1.2911; 1.2935; 1.2966; 1.3000 / 1.2845; 1.2805; 1.2795; 1.2780

 

EURJPY

 

Fresh rally through 130.20, short-term congestion top, signals double-bottom formation and opens way for stronger gains that would look for full retracement of 131.11/128.63 corrective phase. Short-term indicators broke into positive territory and support the notion, as overall bullish tone sees scope for fresh extension of the upleg from 124.94, with break above 131.11 to open 131.29, 11/06 high and 131.69, Fibonacci 76.4% of 133.78/124.94 downleg. Higher base at 129.60 zone should hold corrective dips.

Levels to watch: 130.80; 131.11; 131.29; 131.69 / 130.18; 130.00; 129.60; 129.40

 

GBPUSD

 

Cable corrects recent losses that bottomed at 1.4856 last Friday, with basing attempt under way. Break above 1.4900 barrier, gives more credibility to the support, however, regain of minimum 1.5000 handle is required to signal base, while confirmation requires extension to 1.5080, 50% retracement of 1.5303/1.4856 / 04/07 lower platform. Improved hourly studies are supportive for further recovery, while 4-hour indicators hold well in the negative territory and see limited upside prospect. Larger picture bears see scope for final push lower, to fully retrace larger 1.4830/1.5751 bull-phase, with break lower to target psychological 1.4800 support and 1.4793, Fibonacci 161.8% expansion of the downleg from 1.5751. 

Levels to watch: 1.5000; 1.5027; 1.5080; 1.5100 / 1.4919; 1.4871; 1.4856; 1.4830

 

USDJPY

 

Dollar/yen consolidates gains that peaked at 101.52, with pullback being so far contained 100.80 zone, daily cloud top / hourly 55 DMA. Overall positive tone keeps the upside in focus, with any further easing, expected to hold above psychological 100 support, to keep bulls intact. Upside targets remain at 101.52 and 102.00/56.

Levels to watch: 101.52; 101.79; 102.00; 102.56 / 100.84; 100.65; 100.40; 100.00

 

AUDUSD

 

The pair remains within 0.9035/0.9179 consolidative range, as bears found ground at 0.9035 and price bounces. As recovery rally from 0.9035 extends above 0.9100 barrier, scope is seen for possible test of key short-term hurdle at 0.9179. Break here is required to confirm double-bottom formation and to spark stronger recovery above 0.9200. Positive hourly studies, with 4-hour indicators in heading north, support the notion. Downside should stay protected at 0.9100, to keep freshly established bulls in play.

Levels to watch: 0.9179; 0.9200; 0.9225; 0.9252 /  0.9100; 0.9081; 0.9035; 0.9000

 

AUDNZD

 

Short-term price action remains entrenched within 1.1650/1.1785 consolidation range, with tone being negatively aligned, following recovery rally’s stall at 1.1785 and reversal under 1.1700 mark. Short-term studies are negative and see increased downside risk, as long as price holds below 1.1742, Monday’s high and 61.8% retracement of 1.1785/1.1672 downleg, with break higher, required  to open 1.1785 for retest. Conversely, loss of 1.1672 short-term base, would risk return to 1.1650 and possible resumption of broader bear-trend.

Levels to watch: 1.1711; 1.1742; 1.1785; 1.1814 / 1.1672; 1.1648; 1.1600; 1.1580

 

XAUUSD

 

Spot Gold trades in corrective mode, as fresh extension higher, off 1208 higher low, fully retraces 1529/1208 downleg. Positive hourly studies remain supportive, however, overbought conditions suggest a pause in current rally.  Improved 4-hour studies keep the upside favored, as the price broke above triangular consolidation and shifts focus towards the next barrier at 1267, 02/07 high. Break above the latter is required to confirm short-term base at 1180 and allow for stronger corrective action that would look for test of psychological / 21/06 high at 1300. Higher low at 1233, reinforced by 20/55DMA’s bullish crossover, underpins the action and keeps the downside protected.

Levels to watch: 1267; 1272; 1292; 1300 / 1252; 1233; 1218; 1208

 

Disclaimer: FinFX is not an Adviser or a Fiduciary to Client

The market recommendations provided by FinFX are informational and do not constitute an offer to buy or sell, or solicitation of an offer to buy or sell. Each buy or sell decision by Client is an independent decision by Client. FinFX is not acting as an advisor or serving as a fiduciary to Client. Client agrees to indemnify and hold FinFx Trading Oy harmless from and against any and all liabilities, losses, damages, costs and expenses, arising there from. FinFX will not in any way be liable or responsible for any buy or sell trading actions done by the Client or for any losses arising there from.

Market Outlook Signup

Subscribe to the FinFX Daily Market Outlook via email.

Follow us on