MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES
The relative strength in Sterling on Tuesday persists into the London Fix with the single currency benefiting greatly from the inflation data shock and resurgence in risk buying. Much of the morning US session was dominated by stop hunting in spec accounts caught long USDs, with Russian, Middle Eastern and US investment accounts all heavy buyers of currencies and sellers of USD and Yen. Also seen bolstering risk appetite were comments from the IMF that a global recovery was underway. Elsewhere, SNB Jordan was on the wires saying that central bank was happy with Eur/Chf at current levels and cited the positive impact the exchange rate was having on the economy. US producer prices were softer than expected, while housing starts and building permits were also weaker. US equities are well bid on the day, while commodities are also higher.
ANALYSIS OF SELECTED RATES
Gbp/Usd: Although Monday’s bearish price action has now been totally negated, we retain our bearish outlook and will look to take advantage of the choppy market conditions to establish a fresh short trade on Tuesday. Hourly studies are now looking well overbought and the market has also exceeded its daily average true range of 200 points. There is a confluence of resistance by 1.6580 in the form of the 10/20-Day SMAs, and 78.6% fib retrace off of the recent 1.6665-1.6275 move, and as such we will look to take advantage and sell on a push into this confluence. STRATEGY: SELL @1.6580 FOR AN OPEN OBJECTIVE, STOP @1.6780. RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5PM ET) ON TUESDAY.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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