The break of 1.2980 send the dollar significantly weaker across the board in the European session in a thin market with the US still celebrating Thanksgiving.
MAJOR HEADLINES – PREVIOUS SESSION
USD/Majors
With no significant news out it was a day of taking out key levels. The 1.2979 high from May 2006 has been the key anticipated level to send volatility higher and the dollar significantly lower and we were not disappointed. EURUSD hit a high of 1.3108 and GBPUSD 1.9349 with closes above 1.2980 and 1.9215 giving scope for further upside acceleration in the upcoming trading week. Also USDJPY went lower, but was supported by cross EURJPY buying. We look for a break of 115.55 wave support which should accelerate the downside in a similar way that we saw EURUSD breaking higher through today's European trading session.
NZD
Carry trades are getting hurt by the pick up in volatility and we look for especially NZDJPY to remain under downside pressure. Last night trade balance in New Zealand came out at disappointing -1.167B which was twice as large as expected. Technically a close below 74.40 today would confirm a bearish outside day, which in the past has proven to be a very good indicator of more downside to come. So we look for a more downside to come with Finance Minster Mullen of New Zealand to set the pace Tuesday morning at 05:00 GMT. The last few speeches he has talked the kiwi significantly lower suggesting that he would like to see NZDUSD trading in the 0.4000 area. This should provide the necessary break in NZDJPY to set pair for a test of 0.7400 short term.
Euro/US Dollar
EURUSD (1.3081 @ 13:29 GMT)
Support:
1. 1.2460 daily base which coincides with 1.2465 38% retracement
2. 1.2320 double top form march 2006
3. 1.2260 bull trend line from March 2006
4. 1.1635 38% retracement (0.8350-1.3667), also low from 2005.
Resistance:
1. 1.2940 old top from August 2006.
2. 1.2980 long term inverse head-and-shoulder target.
3. 1.3175 upper bull trend channel from March 2006.
Resist.
1.3045
1.2997
1.2971
1.3081
1.2923
1.2901
1.2854
Support
British Pound/US Dollar
GBPUSD (1.9323 @ 13:29 GMT)
Support:
1. 1.8520 lower end of the bear channel from early August 2006.
2. 1.8500 daily base support.
3. 1.8325 wave high from March 2005.
4. 1.8090 wave support from July 2006.
5. 1.7330 long term bull trend support from 2001.
Resistance:
1. 1.9145 Old top from August.
2. 1.9215 old top from April 2005.
3. 1.9325 wave high from March 2005.
4. 1.9550 highs from december 2004.
Resist.
1.9232
1.9191
1.9173
1.9323
1.9132
1.9110
1.9070
Support
US Dollar/Japanese Yen
USDJPY (115.70 @ 13:29 GMT)
Support:
1. 116.50 wave low from late October.
2. 115.55 wave low from April (key level as it would take our weeky lower high/higher high, which would confirm accelerated downside)
3. 113.35 weekly base support.
4. 109.00 key support form confirmation of a monthly downward trend.
Resistance:
1. 119.20 choppy range base from early October.
2. 119.90 old top from mid-October.
3. 121.40 old top from December 2005.
4. 1250.00 50% retracement (form 147.63-101.67).
Resist.
117.98
117.18
116.74
115.70
115.94
115.58
114.7
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