The following are projected trading ranges and outlooks for nine secondary currency pairs in Asia today:
(Ranges are calculated using recent highs and lows, information on the placement of option strikes, and technical analysis--Bollinger Bands, Fibonacci levels, trendlines and moving averages.)
USD/CNY--consolidation. Spot USD/CNY has nullified a bearish technical bias - triggered just three days ago - after a Friday spike higher. The pair is now likely to consolidate within a range of 6.2000-6.2200 demarcated by the lower and upper Bollinger bands (standard deviation 1). The move higher in USD/CNY on Friday appeared to have coincided with bigger moves in USD/JPY and EUR/USD after the Swiss National Bank's market-shocking move to scrap its currency cap Thursday. The yuan may recover on general investor optimism if market chatter that the Chinese central bank will soon ease monetary policy again turns out to be true. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2000 (round-figure trading barrier and daily Bollinger downtrend channel), then at 6.1900 (base of daily Bollinger downtrend channel), before 6.1800 (psychological supported). Immediate resistance is at 6.2100 (20-day Bollinger mid resistance), then at 6.2200 (daily Bollinger uptrend channel), before 6.2300 (top of daily Bollinger uptrend channel).
USD/TWD--downtrend channel. USD/TWD downside pressure may increase after Friday's steep drop into the Bollinger downtrend channel. The downtrend channel now caps the pair at 31.600 and points toward the daily Ichimoku Cloud support zone at 31.050. The difference in price between the benchmark 1-month USD/TWD contract and that of the spot contract has dropped further below par, suggesting that speculative traders are now more bearish on the greenback. Recent dollar weakness has partly attributed to falling U.S. government bond yields. Dow Jones technical analysis suggests immediate support is at 31.450 (base of daily Bollinger downtrend channel and psychological support), then at 31.200 (psychological support), before 31.000 (round-figure trading barrier). Immediate resistance is likely at 31.500 (psychological resistance), then at 31.600 (top of daily Bollinger uptrend channel), before 31.760 (20-day Bollinger mid resistance).
USD/KRW--downtrend. USD/KRW is inside the daily Bollinger downtrend channel, suggesting a bearish technical bias. But it is also creeping back into the daily Ichimoku Cloud resistance zone, which typically indicates consolidation - until the pair closes outside of the Cloud. The South Korea won is likely to track USD/JPY - which has rebounded but is also inside its daily Bollinger downtrend channel. If USD/KRW ends the day below the Cloud base of 1,081, there is likely to be more downside for USD/KRW. Dow Jones technical analysis suggests immediate support is at 1,081 (base of daily Ichimoku Cloud support zone), then at 1,080 (round-figure trading barrier), before 1,077 (base of daily Bollinger downtrend channel). Immediate resistance is at 1,086 (top of daily Bollinger downtrend channel), then at 1,090 (round-figure trading barrier).
USD/SGD--consolidation. USD/SGD is in a consolidation zone of 1.3233-1.3339 demarcated by the lower and upper daily Bollinger bands (standard deviation 1). Overnight U.S. dollar index strength and the possibility of the European Central Bank easing monetary policy Wednesday will likely keep the greenback buoyant. If USD/SGD climbs into the daily Bollinger uptrend channel at 1.3339 the odds of Singapore dollar weakness against the greenback in the near term will increase. Dow Jones technical analysis shows immediate support is at 1.3233 (daily Bollinger downtrend channel), then at 1.3200 (round-figure trading barrier), before 1.3180 (base of daily Bollinger downtrend channel). Immediate resistance is at 1.3286 (20-day Bollinger mid resistance), then at 1.3300 (round-figure trading barrier), before 1.3339 (daily Bollinger uptrend channel).
USD/MYR--consolidation lower. USD/MYR may drift lower toward the 20-day Bollinger mid line support at 3.5350 as crude oil prices recovered Friday, taking some pressure off the oil-sensitive ringgit. Friday's rise of the U.S. dollar index - partly on expectations of fresh easing policies by the European Central Bank on Wednesday - will however keep USD/MYR supported on dips. If however the 20-day Bollinger mid line support breaks, the more resilient support at 3.5000 - a round-figure trading barrier and also the entrance to the Bollinger downtrend channel - will be tested. Dow Jones technical analysis suggests immediate support is at 3.5500 (psychological support), then at 3.5310 (20-day Bollinger mid support), before 3.5000 (round-figure trading barrier and daily Bollinger downtrend channel). Immediate resistance is at 3.5720 (daily Bollinger uptrend channel), then at 3.5800 (psychological resistance), before 3.6000 (round-figure trading barrier).
USD/THB--bearish. USD/THB has a stronger bearish technical bias now that it has broken the base of the daily Ichimoku Cloud support zone. USD/THB may next be headed for the weekly Ichimoku Cloud support at 32.34. Factors weighing on the greenback remain the same - the depressed yield on the U.S. government bonds which makes it less attractive to hold the greenback. The yield on the 10-year U.S. Treasury note recovered slightly on Friday but still remains under the 2.00% psychological level. A possible factor that could spark a rebound in USD/THB is the Wednesday European Central Bank monetary policy decision which could spark a euro fall and thereby a bounce for the dollar. Dow Jones technical analysis suggests immediate support is at 32.50 (psychological support), before 32.34 (weekly Ichimoku Cloud support). Immediate resistance is at 32.64 (daily Ichimoku Cloud resistance), then at 32.73 (top of daily Bollinger downtrend channel), before 32.84 (20-day Bollinger mid resistance).
USD/PHP--closed.
USD/IDR--consolidation. USD/IDR may hover around the 20-day Bollinger mid support at 12,540 as the U.S. dollar index rallied overnight due to euro weakness. The dollar is likely to stay broadly supported until Wednesday. Currency traders are bracing for an easing of monetary policy by the European central bank on Wednesday that would depress the euro and push up the greenback. Fundamentally though, the rupiah could look more attractive to investors in the medium term as the government seeks to channel budgetary savings from its fuel-subsidy cut into infrastructure development. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 12,540 (20-day Bollinger mid support), then at 12,500 (psychological support), before 12,430 (daily Bollinger downtrend channel). Immediate resistance is at 12,640 (daily Bollinger uptrend channel), then at 12,740 (top of daily Bollinger uptrend channel), before 12,970 (top of monthly Bollinger uptrend channel).
USD/INR--possible downside break. USD/INR could again attempt to break through the daily Ichimoku Cloud support at 61.71. A Monday close below the entire Cloud support zone would be an additional bearish signal on top of the daily Bollinger downtrend channel that has been in effect since Jan. 8. The bearish technical bias for the dollar may however be nullified by suspected intervention by the Reserve Bank of India. An offshore trader said the RBI has been suspected of buying U.S. dollars in the spot market to curb excessive rupee strength last week. If the central bank starts to buy dollar more aggressively and pushes USD/INR out of the Bollinger downtrend channel which now caps at 62.33, the bearish near-term technical bias will end. Dow Jones technical analysis suggests immediate support is at 61.71 (base of daily Bollinger downtrend channel and base of daily Ichimoku Cloud support zone), then at 61.50 (psychological support), then at 61.00 (round-figure trading barrier). Immediate resistance is likely at 62.00 (round-figure trading barrier), then at 62.33 (top of daily Bollinger downtrend channel), before 62.50 (psychological resistance).
Write to Ewen Chew at ewen.chew@wsj.com
(This article is general financial information, not personalized investment advice, as it does not consider the unique circumstances affecting an individual reader's decision to buy or sell a specific security. Dow Jones does not warrant the accuracy, completeness or timeliness of the information in this article, and any errors will not be made the basis for any claim against Dow Jones. The author does not invest in the instruments or markets cited in this article.)
(END) Dow Jones Newswires
January 18, 2015 19:59 ET (00:59 GMT)
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