FOREX Trading Australia Daily Outlook 03/05/2005

FOREX Outlook 03/05/05 (02:00 GMT)

FOREX Trading Australia – Foreign Exchange Market Summary

Dollar

• Dollar remained confined to narrow movements on most majors as the market awaits FOMC meeting (18:15 GMT). Expectations are for another 25 bps hike while the opinion is mixed on tone of the accompanying statement. The steady build up in inflationary pressures has in creased chances of the Fed being more hawkish but they would also be mindful of recent signs of slowdown in the economy. ISM Manufacturing came below expectations but below par data from other regions neutralized any negative impact it could have on the Dollar.

Euro

• The Euro has found bottom pickers on moves down towards 1.28 but recent soft data and grave doubts on the zone’s growth prospects could sink it down to yearly lows if the U.S. Fed adopts a more hawkish tone. PMI Manufacturing from across the zone was weak with common problems of high oil prices, low domestic demand and a higher Euro dampening exports weighed in on the final outcome. 1.2750-75 is the pivot region where the Euro has bounced back from in recent times with a break below likely to accelerate losses.

Yen

• The Yen came of its highs as the Yuan story subsided a bit while news of North Korea test firing a missile over the Sea of Japan led to bit of Yen selling as well. However, it remains well bid as speculation is rife of the Chinese moving a step in the revaluation direction in the near term and the Yen has broken back below 105. Japanese markets are closed today as well as the next two days with focus on U.S. data.

Pound

• The Pound slipped back towards the pivot region of 1.8925-40 as the U.K. markets were closed leading to thin trading conditions while the usual uncertainty surrounding any election has led to the market adopting a neutral position. Positive events for the U.S. and loss of the support mark at 1.8855 could accelerate losses for the Yen.

Australian Dollar

• The Australian dollar is confined to narrow movements on anticipation of U.S. interest rate decision and the Australian one a few hours later while the likelihood of Yuan revaluation in the near term is also keeping it supported. Commodity prices remain subject to bouts of profit taking and the Aussie remains vulnerable to slip towards 0.77 and for now resistance is strong around 0.7840.

Economic Data Released

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*Only key potential market moving data is mentioned, for a detailed Economic Calendar please click on the ‘Financial Calendar’ link on the web-site.

FOREX Technical Analysis

EUR/USD – Yesterday’s low was 1.2835 and high was 1.2972.
The pair closed at 1.2853.

The Euro is slipping on poor data while the Dollar garners some support ahead of the Fed’s meeting. The support at 1.2875 has broken below with the next strong support zone at 1.2775-90 with a break below to target its yearly lows. On the upside the resistance comes at 1.2925 followed by strong selling interest in the 1.2980-1.30 zone. The 1.28 region holds a mixed technical picture for this pair.

Key resistance is seen at 1.2925 followed by 1.3015 while support starts at 1.2795 followed by 1.2745.

USD/JPY – Yesterday’s low was 104.89 and high was 105.41.
The pair closed at 104.99.

The Yen has rallied on the Yuan story but the preceding denial coupled with an overbought view has seen it go back above 105.25. The uncertainty on the Yuan issue would continue to see volatile moves with strong in the 104.60-75 zone. On the upside the market is looking to buy on any shallow dips for the Yen with resistance around 105.50 and a strong one around 106.25. A break below the support zone targets the 103.90 support mark.

Key Resistance is seen at 105.75 followed by 106.25 while support starts at 104.55 followed by 103.90.

GBP/USD – Yesterday’s low was 1.8923 and high was 1.9062.
The pair closed at 1.8931.

The pair has slipped back towards the pivot region at 1.8925-40 with a decisive break below likely to accelerate losses. Uncertainty surrounding the U.K. election on Thursday is also weighing in on it. 1.8855 is the crucial support mark a break of which could send the pair down towards 1.87750-75. On the upside mild resistance exists around 1.9025 with a strong one around 1.9095. U.S. data and U.K. election results could lead to volatile moves for this pair.

Key Resistance is seen at 1.9015 followed by 1.9095 while support starts at 1.8905 followed by 1.8825.

Australian Dollar

AUD/USD – Yesterday’s low was 0.7783 and high was 0.7811.
The pair closed at 0.7794.

The pair remains within its narrow ranges as the market awaits interest rate outcomes from sides of the Pacific. Good support and buying interest exists at 0.7755 followed by stronger support above 0.7710. On the upside strong offers exits in the 0.7825-40 zone with a break bringing the 0.7875 resistance mark into focus.

Key Resistance is seen at 0.7825 followed by 0.7860 while support starts at 0.7755. followed by 0.7705.

Kunal ‘Kris’ Sharma
Forex Analyst
E-mail: kris@easy-forex.com

Australian Financial Services License 246566

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