Bank Recommendations 08.11.2006

Deutsche Bank

EUR USD (1.2775) After dawdling in a 10-pip range for much of the European morning, the Euro stunned traders by suddenly embarking on a half-percent upsurge at the start of the NY session. Scratching their heads, some observers suggested that much earlier comments by the likes of BOJ Governor, Fukui, and regional Fed boss, Yellen, might have contributed to the dollar’s decline. Others cited mid-term election jitters. But the remarks by the various central bank chiefs had already been completely ignored by traders earlier in the day and the euro’s move started even before the polls had opened in the US. There were also some rumors that more bad news from the US housing sector might be in the pipeline as one US homebuilder reported weaker sales in formerly hot areas. Alone, this news should not have caused such a price move. But, combined with a one-off buy-order somewhere, it might have been enough to cause a little panic. Yesterday’s development at least suited our current bullish strategy, which continues to target 1.2850. Beyond this hurdle, the gains would likely extend to 1.2975, the level that marks the upper end of the euro’s broad range. The risk-limit to the bullish view can be raised slightly once again today; fresh weakness must not now extend beyond 1.2700 for the outlook to remain positive.

USD JPY (117.75) The dollar’s early NY slide was even steeper against the yen than against the Euro, but this observation does not bring us any closer to uncovering the catalyst for the move. The dip down to a 117.25 low was enough, however, to allow us a very favorable entry into a new bullish strategy, whose objective is 119.90. The risk-limit to this new strategy was set deservedly tight at 117.10 yesterday; it remains there today. Below, the outlook would worsen noticeably for the dollar, as we see no other good support for another 100- pips. To the upside, initial supply stands at 118.90.
EUR JPY (150.30) The cross underwent some modest correction yesterday, but the outlook remains broadly positive. We continue to look for further modest strength to 151.10 (if not to 151.60). Supports stand now at 149.75 and at 148.70/80.

GBP USD (1.9040) The current objective is 1.9350. A renewed rally above $1.91 attracted energetic selling yesterday – as has been the case since the start of last week. Many UK interest rate bulls have no doubt been dumping their positions ahead of the BOE meeting; selling the fact before the facts are known. These offers have not resulted in any significant decline. But the risk-limit to the bullish view must nonetheless be observed at 1.8990. To the upside, Cable may still run into some offers in the 1.9125/35 zone, but supply there must be close to exhaustion. The most reliable nearby resistance is likely to be at 1.9180.

AUD USD (0.7690) The A$ raced practically all the way back to its recent 0.7765 peak in NY yesterday. But, this morning in Asia, in response to dovish noises from the RBA, it suffered another setback that cost us our latest bullish strategy (apologies). The price is at risk of further corrective weakness that could extend to 0.7670 or even to 0.7645. But from these lower levels we expect it to be able to recover once again. In case of an immediate rebound beyond 0.7760, it would also be considered as bullish. However, elaborating a reasonable bullish strategy, given the current perspective to 0.7850, might prove difficult.

IFR Markets

EUR/USD
Bounce out of 1.2765 is encouraging for the long trade and the pair is now pushing back above the 1.2800 mark. Hourly studies still bullish and we are eyeing 1.2830 resistance. Yesterday price rallied to 1.2820 but with daily trend studies overbought and showing signs of easing it looks like this could represent a top.

Resistance:
1.2980(M) 2% MA Band Top Flat On A Failure
1.2940(S) Daily High Aug 21 Take Profits, Buy Break
1.2855(M) 1% MA Band Top Flat On A Failure
1.2830(M) Daily High Sept 22 Flat On A Failure

Support:
1.2750(M) Hourly Support Nov 7 Sell Stops Below
1.2735(M) 61.8% Of 1.2685 - 1.2820 Buy A Bounce
1.2680(M) Daily Low Oct 31 Sell Sustained Break
1.2645(M) Daily High Oct 20, 20 M/A Cover On A Bounce

USD/JPY
117.40 supports and we will stick with our sell strength strategy and we are looking to short the page on a rejection from 118. Daily charts show a big down day and a negative close yesterday and with trend studies showing a mild bearish bias we are looking for a push back inside the Ichimoku Cloud below 117.10.

Resistance:
119.35(M) Daily High Oct 25 Flat On A Failure
118.75(M) Daily High Oct 27 Flat On A Failure
118.50(M) Nov 6 Hi, 61.8% Fibo Sell Failure, Buy Break
118.00(M) Hourly Highs Nov 7 Sell A Failure

Support:
117.25(M) Prior Rsst, Hrly Lo Nov 7 Buy Bounce, Sell Break
117.10(M) Ichimoku Cloud Top Cover On A Bounce
116.85(S) 200-Day M/A Cover On A Bounce
116.60(M) Pullback Lows Nov 1 Take Profit, Sell Break

GBP/USD
Price has bounced quite sharply and 1.9100 is coming back into focus intraday in line with bullishly ticking hourly studies. Daily charts are overbought but show no decent signs of pulling back as yet so we will stick with the buy dips strategy for now. On the topside 1.9125 - 45 is key.

Resistance:
1.9295(M) Daily High Mar 16 05 Flat On A Failure
1.9215(M) Daily Highs Apr 20 & 21 05 Take Profit, Buy Break
1.9160(S) Daily High Apr 29 05 Flat On A Failure
1.9145(S) Daily High Aug 8 Sell Failure, Buy Break

Support:
1.8950(S) Daily Low Nov 6 Buy Bounce. Sell Break
1.8870(M) Daily Low Oct 27 Cover On A Bounce
1.8830(M) 1% MA Band Base Cover On A Bounce
1.8665(S) Daily Lows Oct 18 & 19 Take Profit, Sell Break

USD/CHF
The pairing remains in a choppy down trend, which began in mid October from the high at 1.2775. Daily studies are now at neutral levels, after the recent bounce off 1.2405 and 1.2395/05 is the key, being trend line and range support. Our bias is down and our strategy is to set shorts into a bounce towards 1.2535.

Resistance:
1.2630(M) 61.8% Of 1.2775 - 1.2405 Flat On A Failure
1.2600(M) Dntrend Line Fm Oct 13 Buy A Break Above
1.2580(M) Daily High Nov 6 Sell A Failure
1.2535(M) Failure High Nov 7 Sell A Failure

Support:
1.2435(M) Daily Low Nov 2 Buy A Bounce
1.2405(M) Daily Low Nov 1 Buy A Bounce
1.2395(S) Uptrend Fm 1.1920 Sell Sustained Break
1.2290(M) Range Low, Dly Low Sept 25 Cover On A Bounce

EUR/JPY
There is formidable resistance between 150.60 and 150.75 but daily trend studies suggest that we could still see a run at this level. Intraday 150.20 is propping up the downside and hourly studies hve bounced taking price with it. Short trades remain in play below 150.75 but will consider covering bounces out of 149.90 for a profit.

Resistance:
152.50(S) Two-Yr Channel Top Take Profit, Sell Failure
151.40(M) 1% MA Band Top Flat On A Failure
150.75(M) Fail High Aug 31 & Oct 27 Stop/Reverse Above
150.60(S) Nov 6, 7 Highs, BB Sell A Failure

Support:
149.90(M) Daily Low Nov 6, 10-d MA Cover On A Bounce
149.45(M) Daily Low Nov 3 Cover On A Bounce
149.05(M) Ichimoku Cloud Top Take Profit, Sell Break
148.50(M) Daily Low Oct 17 & 18 Cover On A Bounce

EUR/GBP
Shorts are in play from overnight but we would need to see a break of 0.6680 support before becoming confident in the short side again. Hourly studies are bearish and 0.6695 could come back under pressure near term. The daily picture remains mixed but capped by the 21-Day Ma at 0.6710, lower stops to above here on a break of 0.6680.

Resistance:
0.6795(M) Daily High Sept 29 Flat On A Failure
0.6770(M) Daily High Oct 6 Flat On A Failure
0.6725(M) Daily High Oct 26 Stop/Reverse Above
0.6715(M) Failure High Nov 7 Sell A Failure

Support:
0.6695(M) Hourly Low Nov 7 Expect Stalling
0.6680(S) Daily Low Nov 2, 3, 6 Lower Stops On A Break
0.6670(M) Oct 31 Trend Low, Bolli Cover On A Bounce
0.6635(M) 1% MA Band Base Cover On A Bounce

EUR/CHF
Long trade are in play but price is struggling to match the fresh 6 yr high around 1.5985/90 made over the last couple of sessions. 1.5970 is a current intraday top and with hourly studies rolling over risk is for pullback from her eto test 1.5940 lows ahead of 1.5935 support. Daily charts are top heavy, flatting fails for profit advised.

Resistance:
1.6160(S) January 2000 High Take Profit, Buy Break
1.6135(M) March 2000 High Flat On A Failure
1.6075(S) Channel Top Take Profit, Buy Break
1.5990(M) Daily High Nov 7 Expect Stalling

Support:
1.5935(M) Hourly Lows Nov 6 Buy A Bounce
1.5920(M) Nov 2 High, 10-Day Sell Stop Below
1.5860(M) Oct 19, 31 Lows Sell A Break Below
1.5845(M) 61.8% Of 1.5755 - 1.5990 Cover On A Bounce

USD/CAD
Yesterday"s price action formed another Doji on the candles which reprents indecision in the market. 1.1325 has capped intraday as hourly studies threaten to topple from oversold levels and aggressive players can try buying dips for a run towards 1.1375 resistance. Daily charts show mild bull bias.

Resistance:
1.1535(M) Weekly Highs Apr 06 Flat On A Failure
1.1460(M) Jul 24 Peak, 1-yr TL Flat On A Failure
1.1420(M) Trend High Oct 17, BB Take Profit, Buy Break
1.1375(M) Oct 19 Hi, Nov 2 High Sell Failure, Buy Break

Support:
1.1260(M) Daily Low Nov 7 Buy A Bounce
1.1175(M) Daily Low Oct 30, BB Buy A Bounce, Sell Break
1.1145(S) Daily Low Oct 2, 3 Cover On A Bounce
1.1090(S) Sep 27, 28 Lows Take Profit, Sell Break

AUD/USD
The price looks to be in a well defined range, with 0.7670 now a triple daily base and 0.7765/70 a double daily range high, withing the context of a strong up trend. Daily studies are overbought, but not at extreme levels and the hourlies bouncing from oversold levels. Our strategy is to sell strength, with a tight stop/reverse.

Resistance:
0.7925(M) Daily High Mar 22 05 Flat On A Failure
0.7840(M) Daily High Apr 29 05 Flat On A Failure
0.7795(M) Trend High May 11 Sell Failure, Buy Break
0.7770(S) Daily High Nov 1 Sell A Failure

Support:
0.7670(S) Lows Oct 27, 30, Nov 6 Buy A Bounce, Sell Break
0.7650(M) Daily High Oct 26 Cover On A Bounce
0.7635(M) 1% MA Band Base Cover On A Bounce
0.7560(M) Oct 17 Hi, Oct 24 Lo, 38.2 Take Profit, Sell Break