FOREX Trading Australia Daily Outlook 19/04/2005

FOREX Outlook 19/04/05 (02:00 GMT)

FOREX Trading Australia – Foreign Exchange Market Summary

Dollar

• Dollar continued its downward spiral from Friday as apart from its structural imbalances the market now as to contend with growth concerns emanating from the recent stream of poor data results. Lower growth prospects will throw cold water on the chances of any aggressive rate hike stance while continued losses in the stock market is also weighing in on the Greenback. The market is eyeing the inflation data to be assured of a continuous rate hike stance from the Fed.

Euro

• The Euro’s own fundamental weaknesses have been hidden under the veil of recent concerns for the U.S. economy, thus helping it break back above 1.30. Inflation came in line with expectations with today’s data especially the German ZEW surveys likely to highlight the sluggish state of the economy. In spite of every opportunity to break higher, the Euro’s inability to do, so could see it pulling back sharply. For now the market is looking to buy on dips.

Yen

• The Yen was confined within its range against the Greenback while falling on its crosses. Any signs of global slowdown would hit the export dependant Japanese economy hard, as losses continue on the Nikkei. Also weighing on the Yen is the recent deterioration of relations with China over misrepresentation of some events in Japanese school textbooks, this small issue has the potential to turn into a very ugly situation. For now the Yen remains confined to its recent range.

Pound

• The Pound was buoyed by general Dollar weakness and the prospect of strong U.K. data during the course of this week. It broke past strong offers between 1.8940-75 triggering stops and rallying towards 1.9055 where profit taking and a lower than expected result in the RICS house price data has prevented further gains for now. The attention turns to the inflation data from both sides of the Atlantic.

Australian Dollar

• The Australian dollar unlike its European counterparts was confined within its recent range and failed to break back above 0.77. The market expects another bout of profit selling on key commodities while uncertainty surrounding RBA’s rate decision early next month is also weighing in on it. It has found a good base in the 0.7610-25 zone with the market looking to buy on dips below 0.7650.

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FOREX Technical Analysis

EUR/USD – Yesterday’s low was 1.2875 and high was 1.3043.
The pair closed at 1.3010.

The pair has broken above 1.30 on growth concerns for the U.S. with the market looking to buy on dips till the release of the inflation data. First line of resistance is seen around 1.3055-70 with a break above leading to the mild resistance mark of 1.3125 with very strong resistance in the 1.3175-1.32 zone. On the downside the Euro has good buying interest on any dips around 1.2955 with stronger one around 1.2895-1.2910.

Key resistance is seen at 1.3075 followed by 1.3185 while support starts at 1.2955 followed by 1.2875.

USD/JPY – Yesterday’s low was 107.26 and high was 108.04.
The pair closed at 107.46.

Still within its recent range with market waiting for a decisive breakout, decent Dollar bid interest continues around 107.30-50 with a break below bringing into focus the very strong support zone around 106.90-107.10. On the upside mild resistance exists around 108.25 and 108.55 with very strong resistance in the 108.85-109.10 offered zone.

Key Resistance is seen at 108.25 followed by 108.85 while support starts at 107.25 followed by 106.75.

GBP/USD – Yesterday’s low was 1.8883 and high was 1.9056.
The pair closed at 1.9005.

It has broken decisively past the pivot region of 1.8945-60 and has gone towards the next crucial resistance mark at 1.9055 with decent sized offers preventing further gains for now. It is likely to pullback to the pivot region of 1.8945-60 where buyers might come up. Further direction is derived from the outcome of the inflation data from across the Atlantic.

Key Resistance is seen at 1.9055 followed by 1.9115 while support starts at 1.8925 followed by 1.8855.

Australian Dollar

AUD/USD – Yesterday’s low was 0.7634 and high was 0.7692.
The pair closed at 0.7666.

Dollar’s weakness helped it break back above 0.77 but resistance lies around 0.7725 with a break above bringing the offered zone of 0.7755-75 into focus. On the downside support lies around 0.7650 with very strong buying interest on dips below 0.76.

Key Resistance is seen at 0.7725 followed by 0.7775 while support starts at 0.7655 followed by 0.7605.

Kunal ‘Kris’ Sharma
Forex Analyst

Australian Financial Services License 246566

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