4x Profit Maker » Forex News » Daily Report: Dollar Back Under Mild Pressure as Markets Stuck in Range

Daily Report: Dollar Back Under Mild Pressure as Markets Stuck in Range

February 23rd, 2012 | Add a Comment

While trading activities are relative subdued today so far, dollar is seen softening and is possibly back under some mild pressure. Swiss franc has been quietly firm this week and is leading the rally against dollar. Indeed, EUR/CHF is back pressing 1.205 level for the momentum and seems to be heading back to recent low at 1.2031. Aussie also pared some of this week’s losses and is untroubled by the recent political turmoil in the country. Indeed, strength in commodities might help trigger some rebound in Aussie and Kiwi and possibly Loonie too. Without major focus for the day, main attention will turn to German IFO business climate in European session.

EUR/CHF’s fall from 1.2127 extends further to as low as 1.2050 so far today and is possibly heading back towards 1.2031 recent low. The Swiss government said yesterday that an independent legal review of the supervision of the SNB showed the current supervisory framework is adequate. The reviewed was triggered after former president Hildebrand resigned on currency dealing scandal. The new president would possibly be named in mid-Q2 and before that, there should be any scope for rebound in EUR/CHF. However, we’d maintain that SNB remains determined to defend the 1.2 floor and any downside in EUR/CHF should be contained there.

German Ifo business climate is expected rise for the fourth month in February to 108.8, to hit a seven month high. This would be inline with Bundesbank’s updated outlook that the Germany economy has “improved perceptibly”. The current assessment component is expected to rise to 116.5 while expectation component is expected to improve to 102. EUR/USD is so far held below recent high of 1.3321 in spite of the conclusion of Greece’s second bailout and needed some fuel to get through this resistance.

Other data to be released include UK BBA mortgage approvals, CBI trends total orders, US jobless claims and house price index.

Daily Pivots: (S1) 0.9085; (P) 0.9112; (R1) 0.9126; More….

USD/CHF drips further to 0.9072 so far today and further fall is expected to 0.9065 support. As discussed before, break there will affirm the case that rebound from 0.7065 is finished at 0.9594 on bearish divergence condition in daily MACD. In such case, deeper fall should be seen to 0.8567 support for confirmation. On the upside, above 0.9144 minor resistance will flip bias back to the upside. Further break of 0.9300 will dampen this bearish view and bring stronger rebound instead.

In the bigger picture,we’re treating rebound from 0.7065 medium term bottom as part of a consolidation pattern only. Below 0.8567 support will indicate such rebound is finished and bring retest of 0.7065 low. Above 0.9594 will bring another rise. But after all, strong resistance is expected at next cluster level at 0.9916 (61.8% retracement of 1.1730 to 0.7065 at 0.9948, 61.8% projection of 0.7065 to 0.9315 from 0.8567 at 0.9958) to limit upside and bring reversal. The long term down trend is expected to resume later after consolidation from 0.7065 completes.