Forex Update

Contraction by $1.39 billion seen in India's forex kitty

Contraction by $1.39 billion seen in India's forex kittyA fall in India's foreign exchange reserves was noticed to $251.702 billion as on 1 May from $253.091billion a week earlier. This made a drop of $1.39 billion.

EURO USD Technical Forex Analysis for Forex Traders

More lows overnight; panic drives trade and liquidity remains low. Rate possibly getting spillover effect from GBP. IFO overnight shows decline in business sentiment; helps drive trade lower. Option barriers reported on the dip but those are cleared. Official interest noted traders say but rate continued to sell-off.

GBP USD Technical Forex Analysis for Forex Traders

Volatility increases as rate is whipsawed by G7 news; follow-on selling finds bids at prior low. Bounce off the lows yesterday leaves a healthy bid wick suggesting some upside coming soon but today is an inside range so far. Traders note liquidity is still thin. Rate at new support level but ranges appears wider.

Traders note quality bids on the dip suggesting a bottom is in here somewhere but buyers have been stepping up for 1000 points now; many likely sidelined.  Aggressive traders can buy anytime but expect more whippy action. Two-way action likely to continue.

USD Technical Forex Analysis for Forex Traders

Fears of continuing global slow-down of the major world economies continues to benefit the USD this morning as flight-to-quality buying and deleveraging liquidation drive the majors lower. Most pairs are at new 2008 lows to start New York with USD/JPY holding firmer near the 93.50 area after an attempt at lows was stopped cold in Asia.

GBP USD Technical Forex Analysis

Rate falls back in sympathy with EURO; rate is under pressure from stops. Volumes lighter into the lows. Stops and technical buying seen from some desks, buying seen from semi-official names on Friday and possibly the early higher action today signals a bottom is in. Stopped out of another long but keep looking at the long side.

USD Forex Trading Analysis for Forex Traders

The USD is trading firmer to start New York this morning after a slow start in Asia; traders have been waiting for the return of US trading before large volumes were seen. Cross-spreaders and option defense started the overnight session as EURO/JPY sales initially rallied the majors to highs overnight before the USD began to gain in Europe.

EURO USD Forex Trading Analysis for Day Traders

Rate drops on stops and aggressive selling; model accounts on the offer traders say around the 1.5630/40 area. Major support at the 1.5580 area and slightly below. Stops elected under the 1.5700 area but option defense reported at 1.5650 area.

Highs were sold aggressively by Asian sovereigns Wednesday traders say. Lots of stops building under the 1.5770 area were cleared overnight and a further break lower is likely on whipsaw today. Stops noted under the previous lows layered under 1.5600 to 1.5550 traders say.

USD JPY Forex Trading Analysis for Forex Traders

Upside limited now that rate clears stops ahead of 107.80 area; option defense ahead of 108.00. 200 bar MA likely to cap the rate near term. Rate firms up on large cross-spreading traders say; resting order at the 107.50 area to sell the rate should be filled.

JPY USD Technical Analysis for Forex Traders

Exponential reversal signal overnight, need to sell the rate. If short—let it work. Close under the 108.00 area significant today; look to add if rate can hit the stops in the 107.40/50 area near-term. Some topping seen; expect volatility. Today’s close under the 200 bar MA likely to draw some sympathy selling but watch volumes. Bids appear solid but so do offers; exporters on the offer all the way to the top overnight and active the past several days.

USD Euro Technical Analysis for Forex Traders

Near the highs around the 1.5550 area suggests more follow-on buying. Rate remains trapped inside range; pressured along with GBP but holds support at 1.5470 area. Looking for a long on next push into highs—then a pullback. If rate can clear the 1.5550 area and then fall to support around the 1.5500 area I think we are on the buy side at that point. Expect higher action all week as late shorts get squeezed.