US Dollar Index
The major trend of the US Dollar Index is still down. On Tuesday, the index went to a high of 76.98 before settling at 76.72, which is down by 0.07 compared to the previous day. The low of the week is 76.69. Immediate resistance to the Index is 78.96 (13-Week Moving Average Line), followed by 80.00.
Currently the RSI is pointing downward at 26.06%, indicating that the index is continuing moving downward, resulting in a weakening US Dollar.
General Market Commentary (October 30, 2007) by MG Financial Group:
The beleaguered Dollar found no reprieve on Tuesday, remaining mired near all-time lows versus the Euro at 1.4436, and 26-year lows against the Sterling just shy of the 2.07-level. Dragging the Greenback lower today was a report from the Conference Board revealing a dip in consumer confidence to a new 2-year low at 95.6 for October, compared with a downwardly revised 99.5 from September. The expectations index for October fell to 80.1, versus a revised 85.0 from a month earlier.
The currency market will likely consolidate in the coming session as traders take to the sidelines ahead of Wednesday’s FOMC monetary policy decision and accompanying statement. Although the Fed funds futures are fully discounting a 25-basis point rate cut to 4.50% tomorrow, the focus will be on the language used in the subsequent policy statement. Further, the Dollar may regain its footing against the majors if the Fed instead opts to leave rates unchanged at 4.75% while signaling a cut at its December meeting.
Prior to the Fed announcement, several key pieces of economic data will provide additional gauges on the state of the US economy. Growth in Q3 is estimated to fall to 3.0%, down from 3.8%. The core PCE is seen edging up to 1.5% from 1.4%, while the headline Q3 PCE is forecasted to fall to 1.5% from 4.3%. The October ADP private sector payrolls, often viewed as a proxy to the more important non-farm payrolls, are seen up slightly to 60k versus 58k. Meanwhile, the October Chicago PMI is estimated to slip to 53.0, down from 54.2.
The Sterling climbed to its highest level in 26-years against the Greenback while rallying sharply versus the Yen prompted by overnight comments from a Bank of England board member. The BoE’s Barker pondered whether conditions have changed significantly since August that would force the Bank’s hand next week. Given the recent slate of upbeat UK economic reports, we do not expect the BoE to alter its stance when it deliberates monetary policy next week.
The Euro remains buoyed near its record high versus the Dollar near the 1.4440-level. Germany’s October unemployment rate was unchanged at 8.7%, while the unemployment change was -40k, versus -30k from September. In the Wednesday session, traders will digest Germany September retail sales, Eurozone October business climate, consumer sentiment, industrial sentiment, unemployment rate and flash inflation.
EUR/USD
From the weekly chart, the pair is on a major “upward” move, as indicated by the Long MACD and the Moving Average Lines. The week continues to be bullish as the pair broke higher to 1.4441, indicating that the major “downward” retracement is not going to happen so soon, even with the Weekly Stochastic being over-bought. Immediate weekly support is at 1.4259, followed by 1.4084, and 1.4035 which is the upper band of the upward channel. Immediate weekly resistance is at 1.4441, which is the pair’s historically high. Weekly Stochastic is seen moving upward again at the 96% level, indicating that though the pair’s upside is limited, it is still attempting to move upward.
From the daily chart, on Tuesday, the price candle reaches a high of 1.4441. Its immediate daily support is at 1.4341 (10-Day Moving Average Line), followed by 1.4280 (Upward Trend-line), and 1.4158 (40-Day Moving Average Line). The Default MACD has turned upward showing an up-trend, while the two pairs of Moving Average Lines are also indicating an up-trend. Daily Stochastic is seen moving upward at the 94% level, indicating a possible continuous upward move over the next few trading days before making another attempt to undergo its major “downward” trend.
From the hourly chart, the pair is seen drifting upward towards 1.4450.
The pair’s upside is limited. However, currently the pair is continuing to break higher, so we may go long for small profits of 30-50 pips on dips.
GBP/USD
From the weekly chart, the pair is on a major “upward” move, as indicated by the Long MACD and the Moving Average Lines. This week the price candle is bullish as the pair continues to move higher to a record high of 2.0702, indicating that the pair’s attempt to undergo a downward move is not going to take place so soon. Its immediate weekly resistance is at 2.0702, which is its historical high. Its immediate weekly support is at 2.0600 followed by 2.0398, 2.0356 (13-Week Moving Average Line) and 2.0140. Weekly Stochastic is seen moving upward again at the 92% level, indicating a limited upside.
From the daily chart, Tuesday’s upward move of another 100+ pips is showing that the pair has much upward momentum. Its immediate daily resistance is at 2.0702 while its immediate daily support is at 2.0546, followed by 2.0529 (10-Day Moving Average Line), 2.0480 and 2.0360. The pair’s short-term moving average lines (10 and 40-Day) are still indicating an uptrend. Daily Stochastic is seen moving sideway at the 85% level, indicating that the pair maybe hesitating to move upward. We are still expecting the pair to make another attempt to undergo major downward retracement as its upside is limited.
From the hourly chart, the pair is seen drifting upward towards its historical high of 2.0702.
The pair’s upside is limited. However, there is still momentum for the pair to move higher to around 2.0750. Hence we may go long for small profits of 30-50 pips on dips.
USD/CHF
From the weekly chart, the pair is on a major “downward” move, as indicated by the Long MACD and the Moving Average Lines. This week’s price candle has turned from bullish into bearish mode. Its immediate weekly resistance is at 1.1642, followed by 1.1770 (Weekly 23.6% Fibo Level), 1.1848, 1.1904 and 1.1985, while its immediate weekly support is at 1.1502. Weekly Stochastic is seen moving downward at the 10% level, indicating a possible downward move over the next few trading days.
From the daily chart, Tuesday’s bearish candle has wiped out Monday’s gain. The pair’s immediate daily support is at 1.1585, while immediate daily resistance is at 1.1666 (10-Day Moving Average Line), followed by 1.1762 (40-Day Movig Average Line) and 1.1824. The default MACD is showing a downtrend while the short-term moving average lines (10-Day and 40-Day Moving Average Lines) are still indicating that the pair is on its major “down” trend. The Daily Stochastic is seen moving downward at the 15% level, indicating the pair is undergoing a downward move over the next few trading days.
From the hourly chart, the pair is seen moving downward towards 1.1600 psychological support level.
The pair has lost its momentum to undergo its major “upward” retracement. Its immediate downward target is 1.1600, followed by 1.1550.
USD/JPY
From the weekly chart, this week began as a bullish candle with the pair moving upward 100+ pips. This may be its another attempt to crawl back to its upward channel. However, both the Long MACD and the Moving Average Lines are still indicating a down-trend. Its immediate weekly resistance is at 115.21, 115.61 (Weekly 38.2% Fibo Level) and 116.41.Its immediate weekly support is at 114.15, followed by 113.00 (Weekly 50% Fibo Level) and 112.58. Weekly Stochastic is seen moving downward at 27% level.
From the daily chart, Tuesday’s downward move did not seem to have much momentum to move downward. The pair’s immediate daily support is at 113.65, while its immediate daily resistance is at 114.70 (10-Day Moving Aerage Line), followed by 115.18 and 115.55 (40-Day Moving Average Line). Its short-term (10-Day and 40-Day) moving average lines have crossed downward again indicating a downward move. Default MACD is also indicating a downtrend. However, Daily Stochastic is seen moving upward at 58% level, indicating a possible rebound over the next few trading days before resuming its downward move.
From the hourly chart, the pair broke its intra-day resistance at 114.67 and managed to remain above this level.
The pair is seen regathering its upward momentum. It may move upward over the next few trading days before resuming its major downward move.
EUR/JPY
On the weekly chart, this week’s candle begins as a bullish candle. Its immediate weekly support is at 163.63, followed by 163.20 (13-Week Moving Average Line), followed by 161.72 (the lower band of the upward channel), 160.00 and 159.26 (52-Week Moving Average Line). Its immediate weekly resistance is at 168.36 (upper band of the upward channel). Its Long MACD is showing a down-trend. Weekly Stochastic is seen moving downward at 61% level. However, the pair may make another attempt to move upward over the next few trading days, riding on the strength of the Euro.
On the daily chart, Tuesday’s move broke higher above 165.16. Its immediate daily resistance is at 167.00, while its immediate daily support is at 165.16, followed by 164.75 (Daily 23.6% Fibo Level), 164.50 (10-Day Moving Average Line), 163.59 (40-Day Moving Average Line), 162.73 (89-Day Moving Average Line) and 162.05 (Daily 38.2% Fibo Level). Default MACD is indicating a downtrend while the Long MACD is still indicating an up-trend. Daily Stochastic is seen moving upward at the 93% level, indicating that the pair is riding on the strength of the Euro even as its daily upside is limited.
On the hourly chart, the pair continues to move upward and managed to remain above its intra-day resistance at 165.16. If the pair is able to continue to remain above 165.16, then it may move higher to 166.00 today.
The pair may rebound over the next few trading days, riding on the strength of the Euro before resuming its downward move.
TNT students, please use the updated TNT charting templates that was sent to you on October 28. Any resistance or support levels not found in the charts, please manually update them yourself as we will be sending you the next updated charting templates this coming Sunday.
The above analysis can also be used by our non-TNT students as a guide to their own trading. We welcome feedback from our non-TNT students regarding the effectiveness of this Daily TNT Market Analysis for your trading.
Have a great trading day ahead!
Cheers,
Clarence
Admin of The Forex Club
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