Forex Perspective 7-21

Written by JS T Alexander | 21 July 2010

The Forex market's reaction has been tamed with the USD holding at the current levels. The trade weighed average of the USD index which has reached its psychological and technical support at the 85.08/10 basis pt. have also supported its stability for now.

While investors shift sentiments back when the stocks drifted lower from not so good economic indicators for the week.The wider band of hi/lo and trading range for the USDX is within the 85.20 and the current low of 82.08/10 which would increase trading ranges for the majors within an average range of 150-200 pips between trading sessions from Asia to the North American sessions. For most currency pairs like the USDCHF and USDJPY, a tighter trading range would be seen until fresh incentives from reports would be made before the end of the trading week. However, the USDCHF recent low of 1.0395/98 registered last week would hold in line with the low of the USDX index, as we made mention in our previous market view dated July 13 that the target for the USDCHF was 1.0380 whenever the 1.0530 price levels were penetrated lower. (Pls. refer to market view analysis on the 13th of July with an accompanying video supporting this call.)

While these two key price levels would be watch carefully and may give some signals of stability for the USD for the time being. The USDJPY weakness is more related towards the current stock market direction and investors overview of the next big thing that would be a catalyst to the market's direction.The price level of 84.79 last registered on the week of 22nd Nov.2009 may still be considered the major bottom price for the USDJPY.A natural tendency for most analyst is to call a USD recovery vs. the Yen at his time together with the USDCHF. The absence or presence of the SNB in the market has been what some major traders are watching for.However, the levels are still not quite where a possible intervention would occur.As for now, the relative currency price levels of the major pairs are just about right. That is in line with the price of the USD at current levels.

Addressing the European currency pairs; the GBPUSD has made a relief correction which started at Friday's closing while the EURUSD made a slight opening correction in the Asia session and continue to steadier pace thereafter.Currently the GBPUSD is working at the 1.5236 barely close to its closing price last Friday at the 1.5290. While the EURUSD found a slight resistance at the 1.3006 and currently at 1.2976.It has now been a wait and see attitude for most traders and the reluctance of position trade is not present. Although, a speculative position may not be ruled out as these are the times when a surprising move would likely occur at the middle of the week where other traders would be complacent in their anticipation of a major move and what would trigger such movement.We do remain true to our holdings as of now since our long positions on the GBPUSD and the NZDUSD were settled before the closing of Friday's trading.

EUR,GBP,CHF,JPY,AUD,NZD & CROSSES
YouTube URL: http://www.youtube.com/watch?v=nmXuTO79ybc

The Aussie and the Kiwi has indeed made some significant movements in spite of the correction. Now the incentive for both pairs to continue may be lackluster and sluggish as the pace for the USDX has been steadier.After, The Aussie's high at the 0.8870 a second attempt should not be ruled out as volumes are again slowly gaining as the AUDUSD is currently at 0.8769 inching its way higher and trying a penetration of the resistance price of 0.8858/70 area. While the NZDUSD at 0.7113 would also do the same attempt within the week's trading. A slight corrective move can also be seen with the USDCAD witha resistance at the 1.0570/80 thena corrective move lower between the 1.04800-80 is likely since a resitance trendline for the monthly is well defined. but watch for higher lows which would also be a signal for a long term bull trend in the making.

Timing a market entry at whenever the market is quiet would seem to be a good strategy for most position traders as percentage trading with amore defined risk factor would be ideal in these circumstances. But some may disagree to this strategy, as it is more speculative rather than the short term day traders style of scalping the market by using swing trading styles. These styles may work for others but it is how one feels and sees based on their approach and analysis of the market.

With that said, the synchronize movement of the precious metals like Gold has been seen quite significantly comparing with the shift of sentiments with the EURUSD rising. When the Euro lost its value the money flow on the EURO seemed to steadily go to Gold investments rather than a USD. It was only after the fact that the USD recovery were finally accepted then. Signaling a rise between both USD and Gold prices due to the weakness of the Euro with the Greece crisis were in the background.True enough, the major support for Gold would still be the USD$1045.00/oz area still below the current price of 1189.15 low for the week.

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