Australian FOREX Daily Outlook 28/06/2005

28/06/05 (03:00 GMT)

• Dollar was under mild pressure with slow movements on all majors in thin trading conditions. The slight improvement in the outlook for the Euro coupled with Oil prices refusing to ease back and marching towards $61 pb has weighed in against the Greenback. Apart from the robust unrelenting demand for Oil, the election of a hardline president in Iran is feared to reduce the already restricted foreign investment in the oil sector. Even though Greenspan has stated that energy prices are crucial for the U.S. to maintain its growth rate, upward revision to Q1 GDP and higher consumption could boost the Dollar this week.

• Euro has pared back its losses after last week’s speculation of rate cuts in the zone thanks to ECB officials dismissing any rate cut eventuality in the near term stating that the current 2% is the appropriate rate. With the zone’s inflation expected to inch higher than the ECB’s target and recent pick up in data on increased export demand due to a weaker Euro, is making the ECB’s decision to stay on hold a bit easier. German IFO index increased in line with expectations with current conditions sub index rising. It remains locked within the 1.21 region with mixed technical interest.

• Yen already under pressure due to record high oil prices, declined further after this morning’s Retail Sales data declined more than expected largely due to seasonal factors. Consumer Spending is expected to pick up steadily as the year progresses but high oil prices threaten to stall Japan’s slow recovery process. With Chinese Premier Jiabao throwing cold water on Yuan revaluation in the near term, the attentions has shifted back to Japan’s poor fundamentals. Its losses could accelerate on a decisive break above 110.

• Pound strengthened a bit against the Dollar in thin trading conditions and managed to break above 1.83. But its foray above that mark was brief as decent selling interest remains in that region with strong offers lined up to 1.84. Mortgage approval figures continued on its trend of slow decline but lending figures indicate the housing market has stabilized for now. Lack of U.K. data releases should see the Pound take direction from the Euro.

• Australian Dollar was confined to very narrow moves on a thin trading day and took its direction from other majors. Commodities remained subjected to mild profit taking thus keeping the Aussie below 0.77 with mild support around 0.7655. Meanwhile, New Zealand’s trade balance data surprised to the downside after expectations of a surplus the final outcome was a deficit of $25m as exports continued to slide while imports costs rose on high oil prices.

EUR/USD – Yesterday’s low was 1.2121 and high was 1.2184.
The pair closed at 1.2166.

The pair has left its lows behind and has stabilized within the 1.21 region which holds mixed interest. Mild resistance exists in the 1.2195-1.2210 zone with decent selling interest above 1.2255. A break higher brings into focus the strong resistance zone of 1.2305-20 with strong selling interest. On the downside, 1.2090 now holds mild support with a break below targeting the strong support zone of 1.2020-35 with strong buying orders on a break below 1.20. However a decisive break below 1.1980 could accelerate losses for the Euro.

Key resistance is seen at 1.2215 followed by 1.2305 while support starts at 1.2090 followed by 1.2025.

USD/JPY – Yesterday’s low was 109.17 and high was 109.43.
The pair closed at 109.37.

The pair is still largely unchanged and continues to move in narrow range bound movements. High oil prices are stiffening its gains as the Yen weakens on its crosses. 109.75 holds mild resistance followed by a stronger resistance in the 109.95-110.10 zone. A decisive break above that zone could accelerate losses for the Yen with next distant resistance around 111. On the downside 108.75 continues to hold mild support with strong Dollar bid interest around 108.25.

Key Resistance is seen at 10975 followed by 110.10 while support starts at 108.75 followed by 108.25.

GBP/USD – Yesterday’s low was 1.8220 and high was 1.8315.
The pair closed at 1.8275.

The Pound was a bit firmer and has stabilized below 1.83 with resistance around the 1.8355 mark. A break above brings into focus the strong resistance zone of 1.8395-1.8410 with decent sized selling orders on any foray above 1.84. On the downside 1.8225 now becomes mild support mark with strong support having moved up to around 1.8155. A break below that mark could accelerate losses for the Pound with distant support around 1.8075.

Key Resistance is seen at 1.8355 followed by 1.8405 while support starts at 1.8225 followed by 1.8155.

AUD/USD – Yesterday’s low was 0.7669 and high was 0.7702.
The pair closed at 0.7694.

The Australian Dollar traded in a very narrow range taking cue from other majors with mild support in the 0.7655-70 zone with a break below bringing the 0.7625 support mark which has held well so far. On the upside resistance has moved down to 0.7755 with strong resistance and heavy selling interest on any foray above 0.78. Commodity prices trend is eyed to see if more profit taking eventuates.

Key Resistance is seen at 0.7755 followed by 0.7795 while support starts at 0.7655. followed by 0.7615.

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