Bank Recommendations 01.12.2006

Deutsche Bank

EUR USD (1.3270) Despite their best efforts to sell short, daytraders could not prevent a steady climb for the single-currency. Most of the day’s upside action followed in the NY session as they realised that their attempts did not work and on the release of US
data they had to run for cover, which propelled the euro up to a 1.3270 peak. On thing that became clear from the market’s reaction yesterday is that the inflation outlook in the US is not the crowdpuller that it once was, but traders are much more interested in figuring out to what extent the US economy is weakening. This could also explain why the core PCE deflator, the Fed’s favourite inflation measure, did not help the dollar much., Jobless claims, however, which are hardly ever a market mover, solicited a bigger reaction and even rippled into the bond market. This also explains why market participants preferred to ignore Bernanke’s hawkishness earlier in the week – they only have eyes for information that sheds light on the extent to which the US economy is slamming on the brakes. The same also holds true for the Chicago PMI. As this was
also the last data release for the day, it was then that that it began to sink in that nothing was going to ‘save’ the outstanding shorts. We remain bullish on the euro for a 1.3290 objective. Beyond, 1.3610 would be the next target. The risk-limit for the current and
future bullish strategies is now tightened to 1.3190.

USD JPY (115.95) The dollar’s uptick simply ran out of steam yesterday and it was forced below the ¥116 level again. The broader outlook remains unfavourable and we prefer to reckon with downside potential to 114.20 (intermediate support lies at 115.10). However, due to risk-reward considerations, we will only turn bearish, with the lower point as a target, following a bounce to 116.05/15. This would allow us to use the level
116.55 as a risk-limit.

EUR JPY (153.75) Recurrent new highs are still the order of the day. Risk-*reward
considerations have so far prevented us from diving into a bullish strategy. However, thanks to an improvement in support at 152.90, a modest dip to 153.30 would be sufficient to open a new target at 154.80. In the meantime, near-term supply
remains at 153.85/90 and at 154.50.

GBP USD (1.9725) Cable chasers got even more excited as it hurtled a 14½-year high and peaked near 1.9750. Those seeking an explanation for the move turned to year-end repatriation flows, M&A inflows and central bank buying. But even though many are now convinced that the Pound is ‘bullish’, have had no occasion to step in. Not even
the below expectation UK consumer confidence and retail surveys could bring about a small correction. Of note is that some even reckon that there is less of a risk in political interference when shorting the dollar although, soon afterwards, the BoE Governor conceded that UK manufacturers find it hard to sell their goods in the US. Sterling
easily cleared our 1.9640 target yesterday. We now set our next objective to 2.0315 (adjusted). However, on its way up we expect to first run into a hurdle at 1.9680.The risk-limit stands at 1.9540/60.

AUD USD (0.7855) The AUD continued its upward spiral after having cleared our last 0.7855 objective and is now well on its way to the next 0.8170 target. To the upside, we reckon with intermediate resistance at 0.7970. One can also count on support at the breakpoint. The risk-limit for today stands at 0.7835.

IFR Markets

EUR/USD
The price is ignoring the daily studies and continues to surge, testing 1.3275 overnight. We are long on the break of 1.3215, the prior high and we tightened the stop on the strong close in NY. The daily studies are overbought and flat lining, which is not unusual in a strong trend, but the very high ADX readings flag caution. Hourlies are off overbought levels.

Resistance:
1.3440(M) Mar 16, 05 High Flat On A Failure
1.3320(M) 2% MA Env Top Expect Stalling
1.3315(M) Weekly High Mar 21 05 Take Profit
1.3290(M) Mar 16, 05 Low Flat On A Failure

Support:
1.3210(M) Prior Hrly Highs, TL Sell Stops Below
1.3175(M) Hourly Support Nov 30 Buy A Bounce
1.3145(M) Daily Low Nov 30 Buy A Bounce
1.3120(M) Daily Low Nov 28 Buy A Bounce, Sell Break

USD/JPY
Shorts reset in Asia on the bounce off the overnight 115.50 low, as the hourlies have reset to neutral levels. Daily studies remain bearish, with room to run before oversold levels are a real concern. Yesterdays failure just short of the 38.2% Fibo at 116.60 suggests that the pairing is ready for the next leg lower. We will tighten the stop on a 115.50 break.

Resistance:
116.60(M) Daily High Nov 24, 38.2% Sell A Failure
116.50(M) 10 Day M/A Sell A Failure
116.30(M) Hourly Resistance Nov 30 Buy Stops Above
116.00(M) Prior Hrly Low Nov 30 Sell A Failure

Support:
115.50(M) Hourly Low Nov 30 Expect Stalling
115.35(M) Daily Low Nov 27 Cover On A Bounce
115.20(M) Daily Low Aug 17 Cover On A Bounce
114.70(M) Daily Low Aug 10 Cover On A Bounce

GBP/USD
A good profit booked on intraday longs overnight, after the pairing stalled just short of 1.9700. Our strategy is to reset the trade on a dip, as the overbought hourlies unwind. Daily studies are highly overbought, but remain bullish, though the very high ADX readings suggest that a correction is due. The break of 1.9550 targets 2.0100

Resistance:
2.0045(M) Daily High Sept 9 92 Flat On A Failure
1.9825(M) Daily High Sept 10 92 Take Profit, Buy Break
1.9715(M) 2% M/A Band Expect Stalling
1.9700(M) Hourly High Nov 30 Buy Sustained Break

Support:
1.9580(M) Prior Hrly Rsst Nov 30 Buy A Bounce
1.9545(M) Daily High Nov 29 Buy A Bounce
1.9500(M) Hourly Support Nov 30 Buy A Bounce
1.9435(M) Daily Low Nov 29 Buy A Bounce

USD/CHF
Key support at 1.2005 gave way overnight and we booked a modest profit, as oversold hourlies started to turn. Our bias remains down and we are looking to reset the trade on a bounce to 1.2000/20 for a 1.1920 break. Daily studies are bearish, though highly oversold, which often happens in a strong trending market.

Resistance:
1.2185(M) Daily Range Low Aug 21 Flat On A Failure
1.2115(M) Daily High Nov 29 Sell Failure, Buy Break
1.2055(M) Hourly Resistance Nov 30 Sell A Failure
1.2015(M) Prior Daily Range Low Sell A Failure

Support:
1.1920(M) Trend Low May 15. 2% Buy Bounce, Sell Break
1.1880(S) Daily Low May 4 05 Take Profit, Sell Break
1.1840(M) Daily Low Apr 29 05 Cover On A Bounce
1.1805(M) Daily Low April 25 05 Cover On A Bounce

EUR/JPY
The pairing has stalled just short of 153.50 on the last three sessions, so we locked in a profit on Wednesday"s long overnight. It is tempting to try to pick a top in this trend, as the overbought daily studies are topping out, but this has happened before on this move. Key levels are 151.80 and 153.50. Hourlies are neutral.

Resistance:
174.75(M) Synthetic Yearly High 92 Take Profit, Buy Break
162.40(M) Synthetic Yearly High 98 Take Profit, Buy Break
155.20(M) 2% MA Band Top Take Profit, Buy Break
153.50(M) Daily High Nov 30, Bolli Buy A Clear Break

Support:
152.90(M) Hourly Support Nov 30 Buy A Bounce
151.80(M) Nov 24 Hi, Gap Bottom Buy A Bounce, Sell Break
151.65(M) Daily High Nov 20 Cover On A Bounce
150.50(M) Daily Low Nov 24 Cover On A Bounce

EUR/GBP
Shorts squared for flat overnight, after the pairing stalled at support around 0.6735. Our bias remains lower and our strategy is to reset on a rebound to 0.6765 or perhaps even the 0.6785 recent range highs. Daily studies are bearish, with plenty of room to extend. 0.6730 is the initial support.

Resistance:
0.6850(M) 61.8% Of 0.6960 - 0.6670 Flat On A Failure
0.6820(M) High Sept 11, 200 M/A Flat On A Failure
0.6785(S) 5 Recent Daily Highs Sell Failure, Buy Break
0.6765(M) Hourly Highs Nov 29 Sell A Failure

Support:
0.6730(M) TL Fm 0.6670 Lo Nov 14/30 Sell Sustained Break
0.6720(M) 61.8% Of 0.6670 - 0.6795 Cover On A Bounce
0.6715(M) Nov 8 High, 10,13 Lows Cover On A Bounce
0.6695(M) Daily Low Nov 7,8,9 Cover On A Bounce

EUR/CHF
A volatile session overnight saw the pairing stall just short of the 61.8% retracement at 1.5935 and then slip to test 1.5860 in Asia, forming a bearish outside trading day, which is a poor signal for our long trade. Daily studies continue to support the position, rising from oversold levels and the hourlies are coming off oversold levels, so we will hold on.

Resistance:
1.6010(M) Daily High Nov 17 Flat On A Failure
1.5975(M) Daily High Nov 20 Flat On A Failure
1.5935(M) 61.8% Of 1.6010 - 1.5810 Flat On A Failure
1.5900(M) Hrly Lows Nov 29, 30 Exit On A Failure

Support:
1.5835(M) Daily Low Nov 28 Sell Stop Below
1.5800(M) Daily Low Sep 28 Buy A Bounce, Sell Break
1.5755(S) Trend Low Sep 25 Cover On A Bounce
1.5715(M) Daily Low Aug 7, 8 Take Profit, Sell Break

USD/CAD
We dumped our long trade overnight, taken as the Nov 23 and 24 highs at 1.1430 were removed, the last historical resistance ahead of the Nov 21 peak at 1.1500, but follow-through proved limited. Dailies are mixed with an upward bias. Support is at 1.1365 and 1.1335. Dip-buying is a slight favorite. Hourlies are neutral.

Resistance:
1.1535(M) Weekly Highs Apr 06 Flat On A Failure
1.1500(S) Daily High Nov 21 Sell Failure, Buy Break
1.1470(M) Daily High Nov 22 Expect Stalling
1.1440(M) Hourly High Nov 30 Sell A Failure

Support:
1.1365(M) Daily Low Nov 30 Buy A Bounce
1.1335(M) Hourly Rsst Nov 28, 29 Buy A Bounce
1.1290(M) Daily Low Nov 28 Buy A Bounce
1.1280(M) 200-Day MA Line 1% Env Buy Bounce, Sell Break

AUD/USD
Yesterday"s long remains in play, after the pairing touched 0.7000 overnight, keeping the strong uptrend on track, with 0.8000 a real possibility. Daily studies, though at overbought levels, remain bullish and as our target is close, so we have raised the stop close to our entry level. Hourlies are back at neutral levels.

Resistance:
0.7990(M) Mar 8, 9 2005 Highs Flat On A Failure
0.7955(M) Dbl Top Mar 9 & 16 05 Flat On A Failure
0.7945(M) 2% M/A Band Flat On A Failure
0.7925(M) Daily High Mar 22 05 Take Profit, Buy Break

Support:
0.7855(M) Hourly Support Nov 30 Sell Stops Below
0.7825(M) Pullback Low Nov 29 Buy A Bounce
0.7815(M) Uptrend Fm Nov 17 Low Buy A Bounce
0.7775(M) Daily Low Nov 28 Buy A Bounce