Currency Pair Overview:
Majors Stall Overnight
The overnight session was very quiet in the currency market. The major pairs traded ranged bound, while the pound traded in a very small range, even though the market expected the BoE Monetary Meeting Minutes to spark some activity since it is a report that usually creates volatility. Ahead, the market is expected to continue trading on thin momentum, waiting to see if the upcoming U.S. reports spark some near-term trends.
The euro (Eur/Usd 1.4245) had a range of only 40 pips throughout the overnight session, consolidating in the 1.4250 area. On the daily chart, the euro is trading in a downward channel, close to the 200-day moving average. Looking ahead, the market is expected to test the moving average, and if the pair’s bearish momentum continues, it is expected to push below this price point area.
The pound (Gbp/Usd 1.5960) saw very thin momentum during the day, even though the market expected the BoE Monetary Meeting Minutes to create some movement. From the start of the session, the pound only moved 50 pips, from which 30 pips came shortly after BoE report. This is a huge change from just a few months back, when the pound surged as much as 150 pips during the meeting minutes. On the higher time frames, the pound appears to be in short mode, which could push it down to the 1.5800 support area.
The aussie (Aud/Usd 0.8750) is currently struggling to break below the 0.8750 area, the same place where the market bottomed in Tuesday trade. However, a break below this area can only come on broad dollar strength since it does not look capable of developing and sustaining a downtrend on its own right now. Similar to the other major pairs, the aussie is in a strong downtrend.
The cad (Usd/Cad 1.0545) is testing the 1.0550 area for the third consecutive day, the same area where the 20 and the 50-day moving averages can be found. At 08:30 EST, the market is expecting the Canadian GDP report – a positive read can help the cad push beyond the 1.0550 area and maybe, in the medium term, even below the 1.0420 area.
The swissy (Usd/Chf 1.0475) had a range of only 20 pips overnight, lacking a solid direction. Against the euro, the Swiss franc is strengthening again, something that could force the Swiss National Bank to intervene in the foreign exchange market, and devalue the Swiss franc. Even thought the Central Bank has denied any involvement, traders have seen throughout 2009 that they have been quite active in the currency market.
The yen (Usd/Jpy 91.80) traded within the range of the prior day of trading, as it does most of the time during the European session. However, the yen picked up further momentum during the U.S. session throughout the last few weeks of trading, something that is expected to happen once again in Wednesday trade.
TheLFB Trade Plan of the Day is one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, as well as S&P futures, oil, gold, and the dollar index.
