04 January 2013
Currency market
Rupee has now shifted its focus from 54.35-53.85 resistance zone into 54.85-55.35 support zone driven by strong USD rally (USD Index strongly up from 79.00 to above 80.60) and significant dilution in bullish momentum in the domestic equity market. Nevertheless continue to stay with near/short term consolidation at 53.85/54.10-54.85/55.10. USD/INR has bounced strongly from “no-short zone” of 53.85-54.35 into “no-long zone” of 54.85-55.35; need to start covering 3-6 month FC assets and those who covered 15-30 day FC liabilities at/below 54.35 can look to unwind for re-entry below 54.60 (with stop above 55.10). For today, let us watch consolidation at 54.60/54.70-54.85/54.95; test/break either-way to attract. The trading strategy is to trade end-to-end. Strategic traders can look to sell April 2013 dollars at/above 56.00 (seen opening high of 56.04) with stop on spot above 55.35, enjoy the “carry”/time-decay till then!
EUR/USD slipped into set strategic buy zone of 1.2990-1.3040 (low of 1.3017); reversal from set resistance zone of 1.3300-1.3350 (high of 1.3299/1.3308) is sharp, already seen 300 pip drop from 1.3308. EUR/USD need to quickly recover above 1.3040-1.3090 resistance zone, else deeper correction into 1.2950 is possible; break of which will provide exit to strategic “longs” entered at 1.2990-1.3040. For today let us watch 1.2950-1.3090 not ruling out sharp recovery into 1.3190-1.3240. EUR/USD is already into intra-2013 support zone of 1.27-1.3150 and it is time for hedgers to assess to cover part of Euro liabilities. Traders can trade end-to-end of 1.2965-1.2940 and 1.3065-1.3090 with tight stop on break thereof.
USD/JPY could not sustain correction into 86.50-86.90 (low of 86.74) and reversed sharply to meet set objective at 87.75-88.00 (high at 87.83). In the process USD Index rallied over key resistance at 80.60. The undertone is very bullish for extension into 91 while firmly above 86.50. For today, let us watch 87-89/90 with bias into higher end. Let us abandon the counter-trade (from short side) and prefer to build “longs” at 87.25-86.75 (with stop below 86.50) for 89-91.
Have a great day and Good luck.......................Moses Harding
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