EUR/USD: A 2% day

GBP/USD: 452 points don’t mean jack

USD/JPY: Fills a gap

USD/CHF: Keeps most of nightly move and sets new Daily High

I read the WSJ article early Friday evening that quoted “unnamed sources familiar with the deal”, regarding the Freddie and Fannie takeover by the Federal Government. Immediately ,I couldn’t help but question what effect this would have on the currency market.  I suppose that both things I anticipated happened. The view the market has taken for the news is offering support to the dollar, and is likely to continue to for the time being. Until there is a more compelling reason to bet against the Buck, the Fed and Treasury are seen as being more proactive to shore up the American economy then the ECB and the BoE, who last week elected to not do anything. As far as the four majors go, let’s take a look at the Overnight move and see if we can tell what will happen over the next twenty four hours.

EUR/USD

The pair made a nice try to the top side, but ended up giving everything back that it had gained, when Europe got into their offices. It made a daily high about the R2 line and now is below the S2 line. Only about 2% of the time do you have daily high over R1 and a Daily Low below S1. Today’s significance is that the move to the top would not be tolerated and the downside is still preferred. On the daily charts this move below the 10/22/07 low of 1.4125 puts 1.4014 (daily low from 10/09/07) in focus and in extension the 1.3854 Resistance from July and August of 07.

GBP/USD

Last night the pair made a nice strong move to the top side.  The push reached a high of 1.7978 which was 452 points from its daily low last Friday. The strong move brought out a few buyers at the top and they got pinched. Looking at the break lower on Europe’s return this morning makes me think they have little if no positive expectations from their respective economies for the near future. So far, today’s low is 1.7501 and the bottom is nowhere in sight yet. Just now price broke to 1.7472. The hourly RSI is below 30 and lately that only seems to confirm a further drop.  For today the bottom should rest around 1.7439 and any rise should be capped by 1.7550.

USD/JPY

This morning’s late small move down has so far only filled in the 80 point gap made by yesterday’s opening. Daily, we are again above the short term upward channel support line, and above the Bollinger Band. Make sure you confirm any long trade with an hourly entry. Any move to the top could be short lived. For today though, the short Bounce away from 107.77 should be held short of 108.50 and the low could be the 107.00 daily pivot point. The small channel drawn by the blue lines may simply be extending it’s boundaries by 30-50 points.

USD/CHF

Last night the move lower was corrected as with the other majors, however in the pair we are now firmly moving toward the 1.4953 area which is the 50% Fibo line I have been referencing in previous emails. With less than 120 points to go, the move could happen quickly. This 50% Retracement line should offer significant resistance on any move higher. As of late though, significant points have been blown through and offered little in the way of resistance. Look for 1.1400 to offer up little resistance overnight and 1.1459 to come under fire today or this evening. 1.1400 is the R3 line and seldom hit in the pair but that has meant little to the market lately. TO the down side 1.1316/19 supports.

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