Published: Jan. 05 2005, 07:41 GMT
USD reigns supreme!

USD bouyant as the correction deepens. Market appears to have been overpositioned for USD weakness. Of the majors, CHF faring the worst. Not much reaction after to FOMC minutes released yesterday.





MAJOR HEADLINES – PREVIOUS SESSION

Asian session reasonably tame compared with yesterday’s huge moves.

As is often the case, GBP is doing well against its European counterparts in the current strong USD regime – and this despite yesterday’s new 12-year low in UK mortgage approvals.

US Weekly Consumer Confidence number off a couple of points.













THEMES TO WATCH – UPCOMING SESSION

ISM Non-Manufacturing today could see the US continuing to outperform the rest of the major economies (save for China, of course) and could mark some kind of high in the USD until at least Friday, when the US nonfarm payrolls will be announced.

1.3100 may be the eventual target for this phase of the EUR/USD correction, though that level may not be seen until next week.

Next FOMC meeting on Feb. 2 could be the cyclical time target for this USD correction.



Trading Note: The USD correction has cut so deep that it appears there will be plenty more opportunities for USD buying before we revert to the weak USD supertrend somewhere much further out.







EURUSD



EUR/USD stopped its demise at around 1.3250. With the size of the move thus far, the pair have plenty of room for a large retracement as high as 1.3350 without threatening the bearish technicals. The 1.3100 area is the next target to the downside after a possible few sessions of consolidation.

[font='trebuchet ms', arial, sans-serif]Resist.1.38321.36871.32881.30971.2852Support
[/font]






GBPUSD



The GBP/USD sell-off has looked precipitous indeed, though GBP has fared better than many of the other majors. The pair did almost make it all the way to the 1.8775 level discussed as a target here before finding support. There may be a retest of lows today, but GBP/USD may be a bit overdone on the downside and could rise back to 1.8940+ before finding resistance again.



[font='trebuchet ms', arial, sans-serif]Resist.1.94271.91651.88461.86411.8379Support
[/font]






USDJPY



The USD/JPY rally has been impressive and everything now points to this rally continuing. The possible target further out is 107.00 with 105.75 as a possible stopping point along the way. First support comes in at 104.25 and then 103.75.

[font='trebuchet ms', arial, sans-serif]Resist.108.64106.29104.35101.5999.24Support
[/font]






EURJPY



EUR/JPY has tended higher and may yet make a try at the 139.50 before finding resistance again. This pair is not the focus for now, but may become the focus again once the major part of the USD correction is over with. Further out, looking for EUR/JPY to head to 135.00.

[font='trebuchet ms', arial, sans-serif]Resist.140.77139.67138.63137.47136.37Support
[/font]






USDCAD



USD/CAD took out the major resistance levels to the highs side after going al the way through the 1.2220 level yesterday. Retracement support comes in just below 1.2200 and final support is now at the 1.2140 area. USD/CAD may make progress higher toward 1.2750 in the coming weeks.

[font='trebuchet ms', arial, sans-serif]Resist.1.26131.24021.22231.19801.1769Support
[/font]






USDCHF



USD/CHF made it all the way to the 1.1700 level in one go yesterday as the CHF competed with JPY for weakest currency status yesterday. CHF is often a punching bag in a USD correction, and that may continue to be the case. While the pair could retrace as far as 1.1600, the die appears to be cast and 1.1940 is now the major target.

[font='trebuchet ms', arial, sans-serif]Resist.1.21511.18811.18811.13411.1071Support
[/font]






AUDUSD



AUD/USD was smacked for further losses once the 0.7700 level was taken out. The demise looks to continue with 0.7550 as the next target. AUD/USD may eventually fall to around 0.7360.

[font='trebuchet ms', arial, sans-serif]Resist.0.80240.78590.76620.75300.7366Support
[/font]






NZDUSD



NZD/USD fell to nominal support at 0.6970 before finding support. 0.7100 is the major resistance level, though it NZD/USD may find resistance below 0.7070 and head toward the next target of 0.6850. NZD/USD may eventually fall to 0.6740.

[font='trebuchet ms', arial, sans-serif]Resist.0.73650.72130.70130.69090.6757Support
[/font]




The support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur