Major Pairs Trade Near Important Swing Areas
Major Pairs Trade Near Important Swing Areas
Overall, the currency market advanced a limited amount of pips against the dollar tonight, during the Sunday session. Following the previous three days of trading, almost every pair is sitting at an important support level, which sustained the upside movement seen over the last few weeks of trading. What will happen in the following few sessions of trading will certainly influence the market for a longer period, since the major currencies are sitting near important swing areas. If the majors break lower, the market may retrace the recent dollar’s decline.
The Euro (Eur/Usd) bounced off the support area that held the pair since late April. The euro gained 50 pips, being one of the few pairs that moved decisively throughout tonight’s Sunday session. This week the Euro-area calendar is free of top-tier releases, something that may affect the pair’s momentum.
The Pound (Gbp/Usd) lost more than 600 pips over the last three days of trading as the market is penalizing the unstable U.K. government. This caused the pound to be the worst performer over the last period. Currently, the pound is trading near the 1.6000 area, which acted as an important swing area in the past.
The Aussie (Aud/Usd) gained 50 pips throughout tonight’s Asian market, as the pair bounced off the support trend-line that connects the 04.28 and the 05.18 lows. On the daily chart, the aussie is trading just near the 50% retracement of the downtrend that lasted from July to November 2008, known as the market’s credit crisis selling, or as the market’s risk aversion phase.
The Cad (Usd/Cad) advanced approximately 200 pips on Friday, even though crude oil managed to hold its value around the $68 area. The cad had been in a very strong downtrend over the last two weeks, declining in 11 occasions out of the last 15 days of trading. However, the cad started to retrace some parts of the move, as the market follows a wave-like structure.
The Swissy (Usd/Chf) gained 160 pips on Friday, the most in a month. The swissy had no clear direction in the Asian and European sessions, but started to head higher during the news reports at 8:30am EST. On the daily chart, the swissy is trading just above the trend-line that connects the 04.22 and the 05.07 highs. In tonight’s Asian session, the swissy bounced off the 20-day moving average, and declined 30 pips.
The Yen (Usd/Yen) advanced strongly on Friday, after the Non-farm Payroll release. The pair traded side-ways during the overnight session, but surged almost 200 pips during Friday’s U.S. session, breaking above the resistance trend-line that connects the 04.06 and the 05.07 highs. The 99.00 area is the next major resistance point the yen has to break through.
Asian Markets Advance Following Better Than Expected Labor Numbers
Current Futures: Dow -39.00, S&P -4.90, NASDAQ -8.00
Asian markets advanced tonight, helped by the better than expected Non-farm Payroll release. However, the S&P futures lost a few points tonight as it is testing the low touched on Friday.
Asian market was pulled higher by the exporting companies tonight, especially the ones with strong exposure to the U.S. consumer market. Recent macroeconomic reports showed that the global economy is recovering, something that may make traders believe that consumption is set to rise over the coming few quarters. Despite this, many companies are still trading at their highest Price-Earnings Ratio (P/E Ratio) over the last few years.
The Japanese Nikkei was also influenced by the weakness of the yen posted throughout the last week of trading, which further helps the country’s export industry. Mazda and Isuzu continued to rally following GM’s bankruptcy, while one of the biggest manufacturer’s of construction machineries in the world, Komatsu gained 5%, after both Morgan Stanly and Nomura Holdings upgraded the company’s rating.
On Friday, the infamous NFP report showed that the U.S. economy lost 345K jobs in May, coming in much lower than the forecasted number. Moreover, the report showed that the U.S. economy lost the least amount of jobs over the last eight months in May, something that rallied many investors’ hopes that the economy is recovering. However, the unemployment rate continued to advance in May, even at a stronger pace than it was previously seen. As such, the unemployment rate reached 9.4% in May, the highest since 1983.
Overnight, the Japanese Nikkei added 136.55 points (1.40%) to 9,904.56. The Australian S&P/Asx advanced 36.60 points (0.93%) to 3,971.20.
Crude oil for July delivery was recently trading at $68.10 per barrel, lower by $0.40.
Gold for July delivery was recently trading lower by $4.50 to $958.10.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
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