EUR/USD has now completed its reversal from 1.3065-1.3090 (high of 1.3083) into 1.2950-1.2900 (low of 1.2918) and now below the earlier support zone of 1.2985-1.3010. The risk environment is not in favour of weak dollar; hence it is possible that Euro unwinds its entire rally from 1.2824 to 1.3139. For now, let us watch resistance at 1.2985-1.3015 to hold for 1.2925-1.2900. USD Index has now settled into higher range at 79.70-80.20 not ruling out extension into 80.70. The strategy is to sell EUR/USD in two lots at 1.2985-1.3010 with tight stop for 1.2915-1.2900 (and thereafter into 1.2835-1.2820) before prospects of strong Euro rally.
Rupee is looking good despite strong dollar against global currencies. There is strong support for rupee at 53.85-54.00 (worst case at 54.15-54.30). These two zones are good to cover 12M exports. Importers did get an opportunity to cover ultra near term payables (up to 30 days) on earlier rupee gains into 53.40-53.30. This zone is considered good to cover 7-15 day payables. Rupee is likely to get into near term consolidation mode at 53.35-53.85 with extension limited to 53.20-54.00.
USD/JPY finds good support at set buy zone of 79.75-79.60 (low of 79.68) but unable to get the desired momentum for break above 80 (high of 79.97). Let us continue to watch set buy zone and sell zone of 80.50-80.65; test/break either-way not expected to sustain.
Good luck................Moses Harding
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