Bank Recommendations 14.11.2006

Deutsche Bank

EUR USD (1.2825) What could have ended up in a feast for euro bulls, ended up very different. It seems as if the start of the new trading week just left some market participants with more unanswered questions. On Friday, traders were scrambling to buy
the euro as it soared, at a time when volatility was up and option risk-reversals were jumping. Despite this, the market simply got stuck at the $1.29 level. At least one thing is certain and that is that those who were stopped out on Friday were not yesterday’s sellers. The euro’s drift lower over the trading day also brought a new spin to the Chinese diversification talk. By lunchtime in Europe, traders started to turn the story on its head and viewed the previous Zhou comments as actually dollar-supportive. This also makes one wonder whether the Chinese central bank itself could not have been on the offer yesterday. After all, were China to diversify to a sufficient degree to make any measurable difference to its trillion-dollar portfolio, would not the dollar sales increase precisely the risk they are trying to avoid by diversifying? As implied volatility has held up rather well, yesterday’s euro dip, which violated our risk-limit, was probably not the work of rangetraders. Further weakness can then still be expected to run into demand (critical) at 1.2775. Overhead, the 1.2975 supply point is the most important supply point.

USD JPY (117.55) The dollar reversed its fortunes over most of the trading yesterday as
market participants started to focus on the prospect of a softer Japanese GDP number. Traders clearly shared the concerns about the Japanese economy expressed by former official, Takenaka. Not too long ago traders were rather eager to see the next rate hike, but yesterday they considered the risk of over-tightening seemed reason enough to short the yen. When the GDP came in stronger than expected this morning some of these bets were squeezed. We reckon with the first support at 116.70. It is only below the critical 116.20 demand point where we expect to see further weakness down to 113.50. To the upside, 118.10 and 118.70/90 both mark supply points.

EUR JPY (150.80) The cross gave back all its gains after the release of the Japanese GDP data this morning. It is clear that also here some day-traders had positioned themselves for a weaker number, but these bets ended up being shaken out. The euro still holds on to its stable situation despite the setback and remains in a position to crack 151.90 and rally to 153.70. To the downside, we expect it to run into buying interest at 150.50 and then at 149.40.

GBP USD (1.9035) Many market participants viewed yesterday’s UK PPI data as too much of a mixed bag to read anything into it. Nevertheless, Cable’s retreat violated our risk limit. Good support is now visible at 1.8985. But we would turn bullish again only beyond 1.9070, where would already start eyeing 1.9200.

AUD USD (0.7665) The A$ continued its downward correction yesterday. We expect the
weakness to extend to 0.7570, which also marks the next support. Resistance stands at 0.7665 and at 0.7710. The latter also marks the bullish trigger for target 0.7850.

EUR/USD
1.2845 stalls and the pais is easing lower in favor of our short trade. 1.2825 is interim support ahead of the key 1.2795/2800 level. Hourly studies now bearish and favro a retest here. Daily trend indicators are heading south again but looking for a clear break of the trendline at 1.2795 to confirm. Target 1.2680.

Resistance:
1.3070(M) Daily High Apr 25 05 Flat On A Failure
1.3035(M) 2% MA Band Top Take Profit, Buy Break
1.2940(S) Daily High Aug 21 Flat On A Failure
1.2900(S) Daily High Nov 10, 1% Stop & Reverse Above

Support:
1.2795(S) Uptrnd (1.2525) Low 13/11 Cover On A Bounce
1.2750(M) Daily Low Nov 7, 8 Cover On A Bounce
1.2680(M) Daily Low Oct 31 Take Profit, Sell Break
1.2645(M) Daily High Oct 20 Cover On A Bounce

USD/JPY
Lots of noise being generated by the daily charts and studies, with prices flailing around but not getting anywhere for more than a week. Only reasonably tradable events are occurring on the hourlies when overbought or oversold extremes are reached - mid range now - and reinforced by divergences. Flat, but favor fading 117.00/118.60 wides.

Resistance:
119.70(M) Daily High Oct 24 Flat On A Failure
119.35(M) Daily High Oct 25 Flat On A Failure
118.75(M) Daily High Oct 27 Flat On A Failure
118.60(S) Daily High Nov 9 Sell A Failure, Buy Break

Support:
117.10(M) Daily Low Nov 14 Buy A Bounce
116.60(M) Low Nov 1, Ichimoku Base Sell A Break Below
116.20(S) 200-Day M/A Cover On A Bounce
116.05(M) Daily Low Sept 22 Cover On A Bounce

GBP/USD
1.9050 held late Asia and protected our short trade. Hourly studies are now heading south again from close to overbought levels and 1.9000 and 1.8975 supports have been breached intraday. The daily charts favor the downside as well especially after the break and close of the trendline yesterday. Price action holds below here again today.

Resistance:
1.9215(M) Daily Highs Apr 20 & 21 05 Flat On A Failure
1.9180(M) Daily High Nov 10 Sell A Failure, Buy Break
1.9155(M) Hourly High Nov 13 Sell A Failure
1.9050(M) 10-Day MA, Nov 10 Low Buy Stops Above

Support:
1.8950(S) Daily Low Nov 6, 20 M/A Take Profit, Sell Break
1.8855(M) 1% MA Band Base Cover On A Bounce
1.8665(S) Daily Lows Oct 18 & 19 Take Profit, Sell Break
1.8580(M) Pullback Low Oct 16

USD/CHF
Yesterday"s higher high and close confirmed the previous day"s hammer reversal on the candles and the bias is now to the topside. Daily trend studies are yet to follow though so caution prevails. Those playing the long side should keep target and stop levels tight. Intraday 1.2405 is support and we will buy dips to here.

Resistance:
1.2630(M) 61.8% Of 1.2775 - 1.2405 Flat On A Failure
1.2615(M) 1% MA Band Top Flat On A Failure
1.2550(M) Dntrend Line Fm Oct 13 Buy A Break Above
1.2475(M) 10-Day MA Buy A Break Above

Support:
1.2405(M) Nov 1, Nov 9 Lows Buy A Bounce
1.2345(M) 1% MA Env Base, BB Buy A Bounce, Sell Break
1.2290(M) Range Low, Dly Low Sept 25 Cover On A Bounce
1.2275(M) Daily Low Sept 4,7 Cover On A Bounce

EUR/JPY
151.30 capped and we have opted to book profits on the long trade as the cross pulls away from here. Hourly studies are rolling over mid range and while the signal is not strong dips back towards 150.60 are on the cards. Daily charts are top heavy and threatening to collapse so now sidelined until a clearer picture emerges.

Resistance:
153.35(M) 2% MA Band Top Flat On A Failure
152.65(M) Aug 98 Lo, LT Chnl Top Take Profit, Buy Break
152.00(M) 1% M/A Band Flat On A Failure
151.45(M) Daily High Nov 9,13 Sell A Failure, Buy Break

Support:
150.60(M) Daily High Nov 6, 7 Sell A Break Below
150.20(M) Daily Low Nov 7, 8 Cover On A Bounce
149.90(M) Daily Low Nov 6 Cover On A Bounce
149.45(M) Daily Low Nov 3 Cover On A Bounce

EUR/GBP
0.6750 has been breached and our short trade has been stopped out at 0.6755. Hourly studies are on the verge of rolling over again and risk is for easing to test interim support at 0.6730. 0.6710 is the first key levek on the downside and we will considerselling a break of these averages. Daily charts close to overbought levels.

Resistance:
0.6895(M) Jul 12 Lo, Jun 14 Hi Flat On A Failure
0.6820(M) Failure High Sept 11 Take Profit, Buy Break
0.6795(M) Daily High Sept 29 Flat On A Failure
0.6770(M) Daily Hi Oct 6, 1% Buy A Break Above

Support:
0.6710(M) 10 & 21-Day MA Sell A Break Below
0.6695(M) Daily Low Nov 7,8,9 Cover On A Bounce
0.6680(S) Daily Low Nov 2,3,6 BB Cover On A bounce
0.6670(M) Oct 31 Trend Low Take Profit, Sell Break

EUR/CHF
Shorts in play, after another failure at 1.5950, which was also Friday"s high. We are encouraged by the bearish cross from the daily slow stochastic and now looking for a push below yesterday"s base at 1.5910 for a run into the 1.5800s and a chance at our 1.5860 target. Hourly studies are ticking south. Stops are above 1.5950 double highs.

Resistance:
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, BB Sell A Failure, Buy Break
1.5950(M) Highs Nov 10 & 13 Buy Stop Above

Support:
1.5910(M) Daily Low Nov 13 Cover On A Bounce
1.5860(M) Oct 19, 31 Lows Take Profit, Sell Break
1.5845(M) 61.8% Of 1.5755 - 1.5990 Cover On A Bounce
1.5825(M) Daily Low Oct 2 Cover On A Bounce

EUR/CHF
Shorts in play, after another failure at 1.5950, which was also Friday"s high. We are encouraged by the bearish cross from the daily slow stochastic and now looking for a push below yesterday"s base at 1.5910 for a run into the 1.5800s and a chance at our 1.5860 target. Hourly studies are ticking south. Stops are above 1.5950 double highs.

Resistance:
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, BB Sell A Failure, Buy Break
1.5950(M) Highs Nov 10 & 13 Buy Stop Above

Support:
1.5910(M) Daily Low Nov 13 Cover On A Bounce
1.5860(M) Oct 19, 31 Lows Take Profit, Sell Break
1.5845(M) 61.8% Of 1.5755 - 1.5990 Cover On A Bounce
1.5825(M) Daily Low Oct 2 Cover On A Bounce

AUD/USD
0.7669 stalled gains just shy of the 0.7670 stop level. Hourly studies have now rolled over in overbought territory and risk is for pullback action again. 0.7615 was the low yesterday and we are looking for a retest here. That said will cover bounces out of this level as the daily charts show topside potential again.

Resistance:
0.7795(M) Trend High May 11 Flat On A Failure
0.7770(S) Daily High Nov 1 Flat On A Failure
0.7700(M) Hrly Hi Nov 10, 50% Fibo Sell A Failure
0.7670(M) Hourly High Nov 14 Buy Stop, Sell Fail

Support:
0.7615(M) Daily Low Nov 13 Cover On A Bounce
0.7550(M) 61.8% Of 0.7415 - 0.7770 Take Profit, Sell Break
0.7525(M) Daily Lows Oct 16, 17 Cover On A Bounce
0.7490(M) Daily Low Oct 13 Cover On A Bounce