EURUSD Technical Analysis, 16th November

BRIEFING
The market this week will be focusing on inflation data for most of the major economies, as well as Q3 GDP for several EM countries. Fed Bernanke headlines a week full of speeches by Fed officials, Bernanke, Fisher and Kohn are due to speak this evening. Most expected to repeat that exits from non-conventional policies are necessary but still too early to initiate such moves. ECB Trichet speaks Thursday and Friday. RBA and MPC minutes will be released on Tuesday and Wednesday respectively. The dollar came under early pressure into Asian trade as any hopes for a surprise change in the yuan were quashed in Chinese press reports over the weekend. Cable was pressured higher in early trade as a Swiss bank hunted out stops above $1.6700, taking the rate to highs of $1.6735. The move lifted euro-dollar and Aussie with it, the former trading up from early lows at $1.4905 to $1.4974. Aussie trailed the rally as Aussie-yen sales provided counter. Dollar-yen was pressed lower, stronger than expected Q3 GDP data and model fund sales providing weight though countered by Toshin-linked buyers.

EURO
Euro-dollar opened Asia around session lows of $1.4905 and was pressured higher as the dollar came under early pressure as weekend hopes for a statement from China for a change in the yuan peg were quashed by press reports. Rate pushed to an initial high of $1.4965 before momentum waned, the rate slipping back to $1.4935 as euro-yen was sold off after the Tokyo fix. A reversal in the cross, on reported short covering, allowed euro-dollar another rally this time extending the session highs to $1.4974. Upside pressure remains into early Europe with the topside stretching on to $1.4979, currently trading around $1.4975. Offers seen placed toward $1.4980/85, stronger on approach to $1.5000 with one trader suggesting that sovereign accounts are expected to try and keep rate enclosed within a $1.4800/1.5000 range. A break above $1.5000 to expose $1.5015/20 ahead of stronger $1.5050/65 area. Barriers have recently been noted at $1.5050 and at $1.5070 (recent high $1.5049), as well as a $1.48/1.51 short dated dnt in play (helped to keep rate buoyed above $1.4800 Friday). Support $1.4920, $1.4905/00.

The euro-dollar faded ahead of the highs at $1.5060/64 and the subsequent pullback is holding around the 5 & 21-DMAs at $1.4890 and $1.4945. These levels remain in focus as the euro seeks direction with bulls encouraged by a positive daily stochastic study but momentum uninspiring. The pair remains broadly constructive above the 17 August support line at $1.4722.

RES 4: $1.5210 2% moving average envelope
RES 3: $1.5163/75 76.4% of decline from July 2008 high, Res line 3 June
RES 2: $1.5100 Current Bollinger band top
RES 1: $1.5047/64 High 11 Nov, Double-day high 23, 26 October

CURRENT LEVEL: $1.4965

SUP 1: $1.4890 21-day moving average
SUP 2: $1.4788 61.8% retracement of $1.4628 rally
SUP 3: $1.4722 Support line 17 Aug
SUP 4: $1.4628/80 Low 3 Nov, Base of Bollinger band

Source: Nordmarkets

Source: Nordmarkets