Euro Currency (ECU8):

The EC opened lower at 1.4712 and rose to a morning Hi of 1.4746 as the DX retraced on higher oil prices. A report from the German Economy Ministry forecasted continued slowing in the EZ, beyond the Q2 slow-down estimate that took its toll on prices, after the DOE report helped the DX rebound. The EC retraced to a mid-day Lo at our initial Support level of 1.4651, before bouncing into the afternoon session and moving higher into the close of 1.4718, down 27 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. The EC will need some better economic data to counter the negative outlook or DX weakness to entice a short-covering rally. A lower open may find Support at 1.4651 and 1.4583, while an open above 1.4718 should find Resistance at 1.4786 and 1.4853. 

Dollar Index (DXU8):

The DX opened higher at 77.15 and retraced to a morning Lo of 76.96 as oil prices rebounded ahead of the DOE inventory report. A larger than expected increase in crude inventory sent oil lower and the DX to a morning Hi of 77.38, before drifting lower into the start of afternoon trading. Financial concerns over FNMA & FHLMC and a bounce in oil prices were enough to send the DX lower into the close of 77.095, up 11 tics. The s/t trend remains 'positive' w/ over-bot momentum indicators. Continued pressure on foreign currency markets support the DX. Longs should tighten 'stops' or buy 'puts' to reduce exposure. Traders will key on Jobless Claims and Leading Economic Indicators for direction. A lower open may find Support at 76.82 and 76.55, while an open above 77.10 should find Resistance at 77.37 and 77.65.

British Pound (BPU8):

The BP opened lower at 1.8549 and rose to a morning Hi of 1.8604 on DX weakness. As the DX rebounded, prices retraced to a morning Lo of 1.8526 and bounced into the afternoon session. Release of the minutes from the BoE's previous rate meeting showed expectations for slower inflation, which could lead to a rate cut, possibly by the next BoE rate meeting. A sell-off in the DX helped the BP recover towards the close to end the session at 1.8579, down 43 tics. The s/t trend remains 'negative' w/ over-sold momentum indicators. As the ground work is laid in place for a rate-cut, traders continue to hold short positions for further weakness and more potential profit. Shorts should tighten 'stops' or buy 'calls' to reduce exposure to any DX profit/taking. A higher open should find Resistance at 1.8650 and 1.8722, while an open below 1.8578 may find Support at 1.8506 and 1.8434.

Canadian Dollar (CDU8):

The CD opened hgher at .9434 after a firm ex-auto,Retail Sales report of +1.4%. Higher oil prices and a weaker DX helped the CD climb to a morning Hi of .9454, before retracing after the DOE report to a morning Lo of .9387. Prices bounced into the afternoon session and traded on either side of our Pivot level of .9401 heading towards the close. Prices recovered as the DX weakened and crude oil prices rose, sending the CD to a close of  .9409, up 4 tics. The close above the 9-day MA changes the s/t trend to 'positive' w/ weak momentum indicators. The doji close suggests short-covering and will need fresh specs to fuel additional interest. A lower open may find Support at .9377 and .9344, while an open above .9415 should find Resistance at .9448 and .9486. 

Japanese Yen (JYU8):

The JY opened lower at .9098 and rose to a morning Hi of .9127, before following most other major foreign currency markets lower on the DX rebound. Prices slid to a morning Lo of .9097 and bounced into the afternoon session. As the DX retraced, the JY rose to a daily Hi of .9127, before drifting to a close of .9119, down 1 tic. The close above the 9-day MA changes the s/t trend to 'positive' w/ weak momentum indicators. A higher open should find Resistance at .9142 and .9165, while an open below .9112 may find Support at .9089 and .9059.

Bob Kozak
Alaron Research Team
              800.462.4691       
bkozak@alaron.com

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