(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 higher. USD/CNY is likely to consolidate at an elevated level after Monday's spike, which saw the yuan depreciate by 0.4% versus the dollar on a daily basis. The relatively steep fall for the currency was attributed to market chatter of China's central bank discussing quantitative easing measures. The People's Bank of China has been considering buying local government debt, a move akin to the U.S. Federal Reserve's buying of government bonds to pump liquidity into the banking system. The daily USD/CNY chart has turned mildly bullish now that the pair is inside the daily Bollinger uptrend channel, suggesting that the yuan could weaken further against the greenback in the near term. But a key chart barrier spanning 6.2255-6.2284 demarcated by the daily Ichimoku Cloud resistance zone needs to be broken in order for the pair to rally much higher. Dow Jones technical analysis suggests immediate support for spot USD/CNY is at 6.2098 (base of daily Bollinger uptrend channel), then at 6.2026 (20-day Bollinger mid support), before 6.2000 (round-figure trading barrier). Immediate resistance is at 6.2255 (daily Ichimoku Cloud resistance), then at 6.2284 (top of daily Ichimoku Cloud resistance zone), before 6.2500 (psychological resistance).
USD/TWD--downtrend. The Taiwan dollar has been rising on hopes that the local stock market could benefit massively from a potential China-Taiwan stock exchange link similar to the one that has propelled Hong Kong stocks higher in recent weeks. USD/TWD broke the 31.000 round--figure trading barrier cleanly on Monday, the first time the pair has closed below this watermark since November, making the Taiwan dollar the strongest against the greenback in five months. The daily chart remains biased lower while the Bollinger downtrend channel caps lower at 31.100. The greenback may sink lower toward 30.500 as the market adopts a dovish view on the tone of the U.S. Federal Open Market Committee monetary policy meeting, which begins today and concludes Wednesday. Dow Jones technical analysis suggests immediate support is at 30.800 (psychological support), before 30.500 (psychological support). Immediate resistance is likely at 31.000 (round-figure trading barrier), then at 31.100 (top of daily Bollinger downtrend channel), before 31.200 (psychological resistance).
USD/KRW--downtrend. USD/KRW is still in a technical downtrend but appears to be consolidating near the base of the Bollinger downtrend channel following a deceleration of the U.S. dollar index decline overnight. The pair has already notched a new six-month low of 1,069 in early Tuesday trade--a level not seen since October--but is now bobbing just above the round-figure trading barrier of 1,070. The bearish bias for the pair will persist as long as it closes today below 1,079 and thus inside the Bollinger downtrend channel. The U.S. dollar is likely to stay depressed ahead of the U.S. Federal Reserve's monetary policy meeting which concludes Wednesday--analysts are expecting the Fed to remain dovish on the economy and the labor market, implying that an interest rate increase may be delayed. Dow Jones technical analysis suggests immediate support is at 1,070 (round-figure trading barrier), then at 1,069 (base of weekly Bollinger downtrend channel), before 1,060 (round-figure trading barrier). Immediate resistance is 1,079 (top of daily Bollinger downtrend channel), then at 1,080 (round-figure trading barrier), before 1,082 (top of weekly Bollinger downtrend channel).
USD/SGD--downtrend. USD/SGD appears more bearish now that it has broken yet another round-figure trading barrier. If USD/SGD ends this week below 1.3293 it would be inside the weekly Bollinger downtrend channel and thus more likely to keep sliding in the medium-term. The pair has been plunging since mid-April as U.S. yields declined steadily--an indication that traders think the U.S. Federal Reserve will remain dovish on interest rates due to the lackluster U.S. economic recovery. The Fed begins its monetary policy meeting later today and will announce its decision on Wednesday; no change is expected for interest rates but the market will be keenly awaiting the post-meeting comments and statement for a clue as to how far away the Fed's first interest rates rise might be. Dow Jones technical analysis shows immediate support is at 1.3250 (psychological support), before 1.3200 (round-figure trading barrier). Immediate resistance is at 1.3293 (top of weekly Bollinger downtrend channel), then at 1.3300 (round-figure trading barrier), before 1.3350 (psychological resistance).
USD/MYR--downtrend. USD/MYR may be on its way to breaking the February low of 3.5380 as the dollar remains depressed before Wednesday's conclusion of the U.S. Federal Reserve FOMC meeting. The likelihood of a dovish tone from the U.S. interest rate policy meeting has been the reason for broad U.S. dollar weakness since Friday. The daily USD/MYR chart shows a fairly strong bearish technical stance now that the dollar is below the Ichimoku Cloud support zone and inside the Bollinger downtrend channel. If the momentum indicator line of the Ichimoku Cloud technical analysis drops under the Cloud as well, which could happen in a day or two based on its current trajectory, USD/MYR could fall with greater conviction in the near term. Dow Jones technical analysis suggests immediate support is at 3.5500 (psychological support), then at 3.5380 (February low), before 3.5200 (psychological support). Immediate resistance is at 3.5800 (psychological resistance), then at 3.5960 (top of daily Bollinger downtrend channel), before 3.6000 (round-figure trading barrier).
USD/THB--consolidation. USD/THB is inside the bullish Bollinger uptrend channel but is capped by the daily Ichimoku Cloud resistance zone that looms at 32.64-32.69. Thailand releases its March trade data as well as industrial production index later today, which may move the baht if the data surprises. The recent weakness of the Thai economy has already prompted the Bank of Thailand to unexpectedly cut interest rates once in March for the first time in a year. Despite the bullish tone in USD/THB, the dollar is generally trading with a bearish bias in the region due to the likelihood that the U.S. Federal Reserve will cast a dovish tone at its monetary policy meeting, which concludes Wednesday. Dow Jones technical analysis suggests immediate support is at 32.56 (base of daily Bollinger uptrend channel), then at 32.50 (200-day moving average support), before 32.47 (20-day Bollinger mid support). Immediate resistance is at 32.64 (top of daily Bollinger uptrend channel and daily Ichimoku Cloud resistance), then at 32.69 (top of daily Ichimoku Cloud resistance zone), before 32.80 (psychological resistance).
USD/PHP--downtrend. USD/PHP will remain bearish on the daily chart--implying that the peso could keep rising versus the U.S. dollar--if it closes Tuesday below 44.28 and thus inside the Bollinger downtrend channel. The dollar has popped up slightly in early Tuesday trading on U.S. government bond yields staging a mild rebound overnight, but is unlikely to rally while traders are betting on a dovish tone from the U.S. Federal Reserve's monetary policy meeting, which concludes Wednesday. The peso has been a firm favorite for emerging market investors due to the Philippines' high growth potential amid a relatively stable fiscal and political climate. The Philippines will release its February trade data at 0100 GMT. Dow Jones technical analysis suggests immediate support is at 44.08 (base of daily Bollinger downtrend channel), then at 44.00 (round-figure trading barrier), before 43.90 (base of weekly Bollinger downtrend channel). Immediate resistance is likely at 44.28 (top of daily Bollinger downtrend channel), then at 44.32 (200-day moving average), before 44.46 (daily Ichimoku Cloud resistance).
USD/IDR--possible uptrend. USD/IDR is rising toward the daily Bollinger uptrend channel as the dollar recovers slightly after Monday's mild bounce in U.S. government bond yields. The pair has been defying the broader trend of a weaker U.S. dollar in Asia--on the back of dovish expectations for Wednesday's U.S. FOMC meeting. On Monday, Indonesia stocks fell, sending the benchmark stock index down 3.5%--its biggest one-day move in months--due to weak corporate earnings. The steep fall of stocks set a bearish tone for the rupiah, thus propelling USD/IDR higher. If USD/IDR ends Tuesday above 13,000 it would be inside the Bollinger uptrend channel and thus more likely to keep rising. Dow Jones technical analysis suggests immediate support for spot USD/IDR is at 12,950 (20-day Bollinger mid support), then at 12,890 (daily Bollinger downtrend channel), before 12,820 (base of daily Bollinger downtrend channel and base of daily Ichimoku Cloud support zone). Immediate resistance is at 13,000 (round-figure trading barrier and daily Bollinger uptrend channel), then at 13,050 (top of daily Bollinger uptrend channel and top of daily Ichimoku Cloud resistance zone), before 13,200 (psychological resistance).
USD/INR--uptrend. USD/INR has retreated from its four-month high of 63.67 chalked up on Friday but maintains a bullish technical bias--as long as it closes Tuesday above the 63.00 base of the Bollinger uptrend channel. The bullish chart signal could lead USD/INR toward the 64.00 round-figure trading barrier in the near term. The pair has recently been rising despite the broader U.S. dollar slide on the back of dovish expectations of the U.S. Federal Reserve FOMC meeting. The even-more dovish stance of the India central bank still makes it attractive to be long USD/INR on the basis of yield-differential. The rupee has been under pressure since the Reserve Bank of India's governor last week said additional monetary policy easing is an option as inflation has slowed. Dow Jones technical analysis suggests immediate support is at 63.20 (psychological support), then at 63.00 (round-figure trading barrier and base of daily Bollinger uptrend channel), before 62.80 (psychological support). Immediate resistance is likely at 63.50 (psychological resistance), then at 63.80 (psychological resistance), before 64.00 (round-figure trading barrier).
Write to Ewen Chew at ewen.chew@dowjones.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
April 27, 2015 21:10 ET (01:10 GMT)
April 27, 2015 21:10 ET (01:10 GMT)
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