Bank Recommendations 15.11.2006

Deutsche Bank

EUR USD (1.2810) Despite the ECB’s Wellink describing the interest rates as ‘damn low’ and a new high on the ZEW survey’s current conditions measure, the euro looked rather lethargic in the European morning. Later in the day, soft US consumer spending and PPI data provoked a rush of fresh bids. But the rally was forcefully capped once again – this time at 1.2870. As traders realised it was not going anywhere, they bailed out of long positions and the argument closest at hand at the time was a comment by the French Prime Minister. Although Dominique de Villepin’s call for close cooperation amongst monetary authorities on managing the eurozone exchange rate was immediately viewed as a call for a weaker euro, it was little more than a convenient excuse for shedding long positions in a market that could not follow-through to the upside. Everyone knows that this was blatant electioneering on the part of the French PM and knows even better what ECB President Trichet’s response will be to it. The still relatively buoyant volatility means that traders have not really gone back to sideways trading mode. For today, therefore, we take advantage of the latest setback to immediately enter into a bullish strategy for target 1.2975. However, should the single currency show any sign of weakness, our tight risk-limit at 1.2780 must defend the new engagement.

USD JPY (117.85) The dollar initially lost ground after the release of the Japanese GDP
number yesterday. However, it did not take long for traders to see the soft side in the number and to convince themselves that the next BoJ rate hike might now only be on the cards for mid-2007. Our view on the dollar remains unchanged for the time being. A continued push to the upside would run into resistances at 118.30 and then at 119.00. Only a dip below the critical 116.25 would set off an alarm bell and open the downside for more weakness to 113.50.

EUR JPY (150.95) Yesterday’s comments from de Villepin at the Airbus meeting also
refuelled the debate about the impact of a strong euro on exports. However, this discussion is nothing new and has been around the block a couple of times. The single-currency was in any event searching for the downside when the news broke and almost pulled back onto our 150.50 support. Any return there today would provide an opportunity to enter into a bullish strategy. The target would then be 153.80. The risk-limit in the event of a positive orientation would be set at 150.10.

GBP USD (1.8940) Cable peaked at 1.9040 before shaking off more than a big-figure later in the day as the UK CPI stabilised. This clearly left Sterling bulls on the edge ahead of the BoE inflation report. Should 1.8925 be undercut, we would expect the correction to continue to 1.8845/55 before higher again. This zone can even be used for entering another bullish strategy. However, only once 1.9050 is overtaken, will Sterling find itself in stable territory again.

AUD USD (0.7640) The Aussie weakened again yesterday but it is bound to run into supports at 0.7615 and at 0.7570. The best overhead hurdle is visible at 0.7695. Above the latter we would reenter a bullish strategy for target 0.7855.

IFR Markets

EUR/USD
Shorts in play after price started to move substantially away from the 1.2830-35 mark and now tests close to 1.2800 again. Hourly studies are bearish and the 10-day MA at 1.2785 is expected to come back under threat. Price now trading back below the broken uptrend (1.2820) and with daily trend studies ticking south 1.2680 is a viable target.

Resistance:
1.2940(S) Daily High Aug 21 Flat On A Failure
1.2900(S) Daily High Nov 10, 1% Buy A Break Above
1.2870(M) Failure High Nov 14 Sell A Failure
1.2835(M) Hourly Highs Nov 14 & 15 Buy Stops Above

Support:
1.2785(S) 10-Day MA Cover On A Bounce
1.2750(M) Daily Lows 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
Continued choppy trading in a rough 117.00/118.50 range but bullish momentum is now picking up on the daily charts and we are now looking for a break above the Ichimoku Cloud again. Will buy a move through here but keep target and stop levels relatively tight until the range top around 118.50/60 yields.

Resistance:
119.35(M) Daily High Oct 25 Take Profit, Buy Break
118.75(M) Daily High Oct 27 Flat On A Failure
118.60(S) Daily High Nov 9 Flat On A Failure
118.10(M) Ichimoku Cloud Top Buy A Break Above

Support:
117.10(M) Daily Low Nov 14 Buy A Bounce
116.90(M) Ichimoku Cloud base Buy A Bounce
116.60(M) Daily Low Nov 1 Sell A Break Below
116.20(S) 200-Day M/A Cover On A Bounce

GBP/USD
We have sold the break of 1.8925 as downside pressures continue. Hourly studies are close to oversold levels but show no signs of rebounding as yet. The daily charts favor lower after 2 consecutive closes below the daily trend line. 1.8770 is now eyed with 1.8665 the target beyond. Keep stops above 1.8980 resistances.

Resistance:
1.9155(M) Daily High Nov 13 Flat On A Failure
1.9090(M) Prev Trendline Support Buy A Break Above
1.9025(M) 10-Day MA Sell A Failure
1.8980(M) Hourly Resistance Nov 15 Buy Stops Above

Support:
1.8870(M) Daily Low Oct 27 Cover On A Bounce
1.8835(M) 1% MA Band Base Cover On A Bounce
1.8770(M) 61.8% Of 1.8520 - 1.9180 Cover On A Bounce
1.8665(S) Daily Lows Oct 18 & 19 Take Profit, Sell Break

USD/CHF
After booking profits after the initial failure at 1.2375 price has decided to rally higher again and we have gone long with the break above the latter. The daily charts remain biased to the topside above the 10-day MA now opens the way for a run at the high 1.2500s where we have placed our target. Stops below 1.2455 support.

Resistance:
1.2710(M) Oct 19, Oct 24 Highs Take Profit, Buy Break
1.2610(M) 61.8% Of 1.2775 - 1.2350 Flat On A Failure
1.2580(M) Daily High Nov 6 Take Profit, Buy Break
1.2550(M) 200-day MA Flat On A Failure

Support:
1.2455(M) Hourly Support Nov 15 Sell Stops Below
1.2400(M) Hrly Trendline (1.2350) Buy A Bounce
1.2350(M) 1% MA Env Base, BB Buy A Bounce, Sell Break
1.2290(M) Range Low, Dly Low Sept 25 Cover On A Bounce

EUR/JPY
P151.10/15 stalling gains intraday as hourly studies threaten to peak in overbought territory. Risk is for pullbacks again and we will look to use dips as fresh buying opportunities. The daily charts are biased to the tospide in spite of overbought levels and above 151.45 targets the mid 152s.

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

Support:
150.45(M) 38.2% Of 148.85 - 151.45 Buy Bounce, Sell Break
150.20(M) Daily Low Nov 7, 8 Cover On A Bounce
149.90(M) Daily Low Nov 6, 61.8% Cover On A Bounce
149.45(M) Nov 3 Low, Cloud Top Take Profits

EUR/GBP
Another new trend high this morning as price tests 0.6770. Stalling around here initially and we are looking to use dips as fresh buying opportunities. Daily charts continue to favor the topside and a push into the 0.6800s looks achievable. On the topside target the 200-day MA at 0.6825.

Resistance:
0.6895(M) Jul 12 Lo, Jun 14 Hi Flat On A Failure
0.6825(M) 200 Day M/A Take Profit, Buy Break
0.6795(M) Daily High Sept 29 Flat On A Failure
0.6770(M) Daily High Oct 6 Buy A Break Above

Support:
0.6740(M) Hourly Uptrend Fm 0.6700 Buy A Bounce
0.6695(M) Daily Low Nov 7,8,9 Buy Bounce, Sell Break
0.6680(S) Daily Low Nov 2,3,6 Cover On A bounce
0.6670(M) Oct 31 Trend Low Take Profit, Sell Break

EUR/CHF
The rally continues and has broken 1.5990 resistance thus triggering a buy signal. We are long for a 1.6160 target but will flat a failure at 1.6075 ahead for a profit. The underlying trend continues to the topside on the daily charts. Trend indicators are ticking north again here and 1.6075 is viable. Stops below 1.5930.

Resistance:
1.6235(M) Jan 1999 High Flat On A Failure
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 Flat On A Failure

Support:
1.5960(M) Hourly Support Nov 15 Expect Stalling
1.5930(M) Daily Low Nov 14 Sell Stops Below
1.5910(M) Daily Low Nov 13 Buy A Bounce, Sell Break
1.5860(M) Oct 19, 31 Lows Take Profit, Sell Break

USD/CAD
Now consolidating below 1.1405 tops but with hourly studies threatening to bounce from oversold levels another run at this level is on the cards. The daily charts are trying to maintain a bull bias on trend indicators but yesterday"s price action formed a Doji on the candles which if confirmed today could point to lower levels.

Resistance:
1.1460(M) Jul 24 Peak, 1-yr TL Take Profit, Buy Break
1.1440(M) 1% M/A Band Flat On A Failure
1.1420(M) Trend High Oct 17 Flat On A Failure
1.1405(M) TL Fm Jul 24, High Nov 14 Buy A Sustained Break

Support:
1.1335(M) Nov 9 Hi, Hrly Sppt Buy A Bounce
1.1290(M) 21 and 200 Day M/A Buy A Bounce
1.1260(M) Daily Lows Nov 7 & 10 Buy A Bounce
1.1175(M) Daily Low Oct 30, 61.8% Buy A Bounce, Sell Break

AUD/USD
Daily studies remain bearish, with room to run and the trend is down. Our strategy is to set shorts into a failure at the initial resistance at 0.7675/80 looking for a move to the Fibo support at 0.7550. Hourlies are at neutral levels but threatening to roll over again. Pullbacks expected to be shallow as oversold levels are close.

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) Daily Hi Nov 10, 50% Fibo Sell Failure, Buy Break
0.7680(M) Daily High Nov 13 Sell A Failure

Support:
0.7615(M) Daily Low Nov 13, 1% Buy Bounce, Sell Break
0.7550(M) 61.8% Of 0.7415 - 0.7770 Cover On A Bounce
0.7525(M) Daily Lows Oct 16, 17 Cover On A Bounce
0.7490(M) Daily Low Oct 13 Cover On A Bounce