FOREX Trading Australia Daily Outlook 23/03/05

FOREX Outlook 23/03/05 (00:00 GMT)

FOREX Trading Australia – Foreign Exchange Market Summary

Dollar

• Fed was hawkish sending the Dollar soaring like an eagle on all majors. Rates were raised by 25 bps and the word ‘measured’ remained in the accompanying statement, however the Fed expressed enough concern on the rising inflation and acknowledged the pick up in the purchasing power. With the Fed looking at data results to direct its policy recent inflationary pressures certainly warrant a hawkish approach in the short term with PPI increasing on surge in energy prices.

Euro

• The Euro remained at the Dollar’s mercy and crashed down towards 1.3050 after Fed’s announcement. It is hurting as the market has shifted focus, which is likely to be temporary, back to the cyclical yield advantage of the U.S. putting the structural deficiencies in the economy on the back bench for now. Earlier, French Consumer spending data was lower than expected due to rising energy costs and record unemployment.

Yen

• The Yen like other majors fell against the Dollar, but the strong resistance zone of 105.55-70 has held well so far. Strong selling interest could come up on any Dollar foray above 106. This morning’s Trade Balance data showed a smaller increase in surplus compared to expectations as exports have declined but so have imports although to a lesser degree.

Pound

• The Pound’s losses accelerated after the pivotal region of 1.8925-40 gave way and it went down towards 1.88. Bottom picking has prevented further losses for now but they could extend down towards 1.8725 as the market eyes the minutes of BoE’s meeting. Inflation was within market’s expectations but Business investment fell due to stagnation in key sectors of the economy.

Australian Dollar

• The Australian dollar was duly liquidated on broad Dollar strength, its inability to break higher in the last few weeks and profit taking on key commodities. It has broken below 0.78 with 0.7750-75 the next key support zone, 0.79 now becomes the key barrier for the upside. Its own fundamentals remain favorable for the Aussie to remain supported in the short to mid term but general Dollar direction is eyed.

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FOREX Technical Analysis

EUR/USD – Yesterday’s low was 1.3052 and high was 1.3223.
The pair closed at 1.3072.

Fed’s hawkish tone has sent the pair towards the second support mark around 1.3050 where it has stabilized for now. A break below that mark puts focus on the strong support zone at 1.2990-1.3010 where strong buying interest should come up. On the upside, mild resistance exist around 1.3250 with selling interest likely on forays above 1.33.

Key resistance is seen at 1.3175 followed by 1.3285 while support starts at 1.3050 followed by 1.2985.

USD/JPY – Yesterday’s low was 104.84 and high was 105.67.
The pair closed at 105.57.

Dollar has gone towards the strong resistance of 105.55-70 stabilizing around that mark. A break above could see strong selling interest on any rally above 106. It has decent support around 104.75 an d strong buying interest around 104.25.

Key Resistance is seen at 105.75 followed by 106.15 while support starts at 104.75 followed by 104.20.

GBP/USD – Yesterday’s low was 1.8798 and high was 1.9017.
The pair closed at 1.8851.

The pivotal region of 1.8925-40 was broken below which accelerated losses down to 1.88 before buyers came in. 1.8925-40 now becomes the first resistance zone with a decisive break above bringing the 1.9010 resistance mark into focus. On the downside 1.88 is expected to hold but a break below could accelerate losses down towards 1.8725.

Key Resistance is seen at 1.8925 followed by 1.9005 while support starts at 1.8805 followed by 1.8725.

Australian Dollar

AUD/USD – Yesterday’s low was 0.7779 and high was 0.7924.
The pair closed at 0.7790.

It has fallen; taking cue from other majors, the strong support mark of 0.7845-60 was broken but 0.7775 second line support has held well so far. A break below targets 0.7755 where strong buying interest should come up. On the upside, 0.79 now becomes the difficult mark to break above.

Key Resistance is seen at 0.7895 followed by 0.7935 while support starts at 0.7775 followed by 0.7745.

Kunal ‘Kris’ Sharma
Forex Analyst

Australian Financial Services License 246566

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