Dollar Up After Fed; Market Awaiting ECB

Good morning. The dollar recovered yesterday after the Fed said yesterday that the economy is weakening. The Fed left unchanged the statement that they would likely hold the rate unchanged, near zero, at least through late 2014 – and left the door open for fresh stimulus. It seems there’s a good chance we won’t see more QE in the next months since election is just around the corner and the Fed doesn’t want to appear political. The market is currently waiting for the ECB at 13:30 GMT, which is today’s major event

EURUSD

Euro declined from the 1.2330 region yesterday in risk-off trade, but it found intraday support 100 points lower, around 1.2230. There isn’t much to do until the ECB press conference.

Market sentiment: intraday – bearish, short-term – bearish

Potential trade strategy: to sell on weakness below 1.2220 or sell on rally to 1.2300/30

EURUSD 4hrs 8-2-2012

EURUSD 4hrs 8-2-2012

Hourly chart:

EURUSD hourly 8-2-2012

EURUSD hourly 8-2-2012

AUDUSD

Aussie dollar has weakened, too, but remains bullish on short-term basis. Anyway, selling on the potential break below 1.0440 is tempting, so it’s worth to keep an eye on this support level

Market sentiment: intraday – bearish, short-term – bullish

Potential trade strategy: to sell on breakdown below 1.0440, target at 1.0330

AUDUSD 4hrs 8-2-2012

AUDUSD 4hrs 8-2-2012

GBPUSD

Cable lost more than other majors against USD yesterday, so my plan to look for a buying opportunity on the break above 1.5730/50 is on-hold. What’s important now is this support formed by previous higher lows.

Market sentiment: intraday – bearish, short-term – bearish

Potential trade strategy: to sell on pullback to 1.5600/20, target at 1.5400

GBPUSD daily 8-2-2012

GBPUSD daily 8-2-2012

USDCHF

Support around .9750 holds and USD pulled back, but the recovery is still weak.

Market sentiment: intraday – bullish, short-term – slightly bullish

Potential trade strategy: none

USDCHF 4hrs 8-2-2012

USDCHF 4hrs 8-2-2012

Have a great day!

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