Australian FOREX Daily Oulook 24/08/2005

24/08/05 (05:00 GMT)

• Dollar remained firm and gained further after earlier being locked in narrow range bound movements on most majors as thin August trading conditions coupled with data releases on expected lines and strong technical barriers are preventing any significant breakouts for now. Existing home sales fell and came below expectations but it was still the third highest level ever as the housing market remains on strong ground but high interest rates as well as sky high oil prices eating into consumer spending could eventually lead to a substantial cool down in this sector. The focus shifts to Durable goods orders data which is expected to ease back but the Dollar remains supported.

• Euro continued to trade within its immediate resistance and support levels with better than expected data helping it hover above the 1.22 mark but lack of any significant factors to push It higher risks further losses. Earlier the German ZEW economic sentiment index came in much higher than expected thanks to an increase in exports on improved global demand. In spite of this robust result the Euro failed to gain much as a solid result was anticipated by the market who are more concerned by the effect on this recovery by high oil prices and the Euro appreciating in the last month.

• Yen has slipped back after appreciating on the higher than expected rise in the Services index. With good economic news having been priced in, concern is growing on the effects of rising oil prices and its ramifications on the second largest importer of oil. It is speculated that tomorrow’s Trade balance data could show a severe dent in the surplus due to the high import costs of oil. This assertion has also halted the recent strong run on the Nikkei while any yield comparison also shows in the Yen in poor light.
  

• Pound is finding it hard to break decisively into the 1.80 region continuing to encounter strong offers above it and has accordingly has slipped back while lack of any factors to drive it higher could lead to further acceleration of losses. The catalyst for the pullback came from a report by the British Chambers of commerce who reduced their GDP forecast which is well below the Government’s estimation. Cooling housing market and the high level debt on the average consumer were the main factors for this downward revision. The focus shifts to CBI industrial trend survey which is expected to remains in deep negative territory.

• Australian Dollar remained in locked in very narrow range bound movements but has held well within the 0.75 region as in spite of the general rally by the Greenback, the Aussie’s own supporting factors are helping it stay firm. These include pick up in domestic demand in key Asian nations while demand for commodities is also increasing, this augurs well for the maintenance of steady demand for Aussie exports.

FOREX Related Upcoming Economic Release

FOREX (Foreign Exchange) Technical Analysis

EUR/USD – Yesterday’s low was 1.2189 and high was 1.2254.
The pair closed at 1.2221.

The pair is in semi neutral territory with mild bias for the Dollar after key support levels were breached. Immediate support is now seen in the 1.2105-20 zone with mixed interest seen within the 1.21 region which could lead to patchy directionless trading. A clear and decisive break below could accelerate losses with strong support seen in the 1.2040-55 region with decent bottom picking bid interest seen around and just below 1.20. On the upside resistance levels have moved down with immediate resistance seen in the 1.2240-55 zone as upside looks increasingly difficult. In case of a break above stronger resistance exists around 1.2310 with selling orders intensifying above this mark.

Key resistance is seen at 1.2255 followed by 1.2310 while support starts at 1.2125 followed by 1.2055.

USD/JPY – Yesterday’s low was 109.58 and high was 110.16.
The pair closed at 110.00

The pair managed to inch further up but is playing within its range with the 109-111 range play the likely order of the day. Strong resistance is seen in the 111.05-20 zone with a break above to shift the momentum back in the Dollar’s favour and the Yen risks acceleration of losses. 111 region has mixed technical interest with no clear bias before strong resistance crops up around 112.15. On the downside mild support has now moved up to 109.45 followed by strong support in the 108.90-109.10 region which has held well so far while any breaks below 109 have strong bottom picking bid interest for the Dollar

Key Resistance is seen at 111.15 followed by 112.05 while support starts at 109.45 followed by 109.05.

GBP/USD – Yesterday’s low was 1.7960 and high was 1.8020.
The pair closed at 1.8003.

The pair has slipped back as decisive upside move is more difficult with immediate resistance cropping up in the 1.8040-55 resistance zone with decent sized offers laced within the 1.80 region and resistance gets stronger on any move higher. On the downside immediate support crops up around 1.7875 with a break below risking acceleration of losses with distant strong support in the 1.7810-25 region with bottom picking bid interest on dips below 1.78.

Key Resistance is seen at 1.8025 followed by 1.8105 while support starts at 1.7875 followed by 1.7820.

AUD/USD – Yesterday’s low was 0.7536 and high was 0.7568.
The pair closed at 0.7556.

The Australian Dollarremains vulnerable for further losses with immediate support seen around 0.7475 with decent bid interest around this mark. A break below risks further acceleration of losses till strong support is encountered around 0.7425 and sentiment would shift in deep negative territory. On the upside, immediate resistance is seen around 0.7590 with any foray above 0.76 leading to strong selling interest. Very strong resistance exists around 0.7645 with only a break above to shift the pair back into neutral territory.

Key Resistance is seen at 0.7590 followed by 0.7645 while support starts at 0.7475 followed by 0.7425.

Kunal Sharma

Forex Analyst

Easy Forex Pty Ltd. (Australia)
E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products