MARKET SUMMARY – 23/12/05(03.00GMT)
- The Dollar was mixed against the major currencies, weakening against the Japanese yen and Euro but strengthened against the high yielding currencies. The inflation gauge favored by the Federal Reserve came in softer than expectations. The November US PCE price index hinted to currency analysts that the FED might come under less pressure to continue raising interest rates. The core November PCE price index was up 0.1% below analysts’ forecasts for a rise of 0.2%.
University ofMichigan
- The Euro spike higher from 1.1811 after the economic data out of the States and traded to a high of 1.1896 before closing at 1.1880 in
New York
- The Japanese yen lifted from JPY117.56 per US dollar to JPY116.43, before ending in
New York
- The Pound trading down from 1.7465 to 1.7339 overnight, before closing at 1.7380 in
New York
- The Aussie dollar traded in a range of 0.7299 to 0.7325, before closing at 0.7310 in the
New York
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.1766 | 1.1800 | 1.1870 | 1.1900 | 1.1970 |
| USD/JPY | 114.64 | 115.52 | 116.60 | 117.70 | 118.46 |
| GBP/USD | 1.7340 | 1.7380 | 1.7390 | 1.7594 | 1.7684 |
| AUD/USD | 0.7260 | 0.7320 | 0.7310 | 0.7420 | 0.7470 |
- Euro – 1.1870
The December volatility continues with the slide from 1.2062 moving into the 1.1818 (previous high from Dec 5) to 1.1800 (61.8% of 1.1638 to 1.2062) support zone. Hourly momentum indicators are attempting to form bullish divergences in oversold territory, a sign that the current 1.1801 low will be tough to break. But only a sustained move above the 1.1914 (reaction high) to 1.1962 (61.8% of 1.2062 to 1.1801) band of resistance would bring focus back to the 1.2062 Dec 14 high.
- Yen – 116.60
While it’s encouraging for long-term USD bulls that last week’s abrupt sell-off from the previous week’s 121.41 high on Dec 5 has thus far held the zone of support between 115.09, the 50% retracement of the advance from 108.76 to 121.41 and area of former resistance from July 20 at 113.73, renewed gains beyond Dec 15’s 117.70 high are minimally required at this stage to relieve the immediate bearish tone. In lieu of 117.70+ price action, and despite yesterday’s recovery from a 115.52 low, near-term gains are considered corrective, with a loss of 115.52 likely to expose 115.09 ahead of 113.73.
- Pound – 1.7390
The slide from 1.7810 continues to plod lower, slowly eroding through supports, keeping the pattern of lower lows and lower highs alive. The violation of the Dec 9 congestion from 1.7493 to 1.7462 has the door open toward the next and even more important support from 1.7339 (61.8% of 1.7048 to 1.7810) to 1.7290 (Dec 7 reaction low). A break of this range would reestablish the broader bear trend for an eventual drop below the 1.7048 Nov 28 low. Short-term resistance is at the recent 1.7594 reaction high.
- Aussie – 0.7310
The recent pummeling of this pair put it below support at 0.7383 (61.8% of 0.7261 to 0.7580) to 0.7372 (Nov 29 reaction low). That opened the door for a run toward 0.7325 (Nov 28 reaction low), and violation there leaves the pivotal 0.7261 (Nov 14 low) to 0.7242 (61.8% of 0.6781 to 0.7989) area as the next support. Only a move above 0.7419 (38.2% retracement of the declines from 0.7580 thus far) would point to a notable relief rally taking hold.
