Bank Recommendations

Deutsche Bank

EUR USD (1.3335) It was a little smaller, but last week’s Euro rally was almost a carbon copy of the previous week’s. There was even a small pop higher in very early trade this morning – just like last Monday. This debunks the notion that the single-currency’s exit from its lengthy sideways range had something to do with the US Thanksgiving holiday: liquidity played a role in the size of the move, but not the direction. Somebody (in trouble) has had to consistently buy euros over the entire period. As a consequence, day-traders have limped from one short-squeeze to the next. It is interesting to note, in this context, that the latest surge higher began about thirty minutes ahead of the publication of the ISM data on Friday. Indeed, the growing popularity of the US ‘hard landing’ idea has much to do with a desire to explain short-term losses rather than a genuine belief that the Fed is hopelessly misguided (although it will be very interesting to see how Mr Lacker votes at the next meeting). Objective achieved. The euro overtook our target-level on Friday, so we immediately opened a further upside goal at 1.3650. We suspect, as last week, that range-traders will again be out trying to pick a top. News today that the ECB has revised downwards its inflation projections – to one that includes rates below the 2 percent target as early as 2008 – may provide the ammunition they need. Our downside risk-limit is to be set at 1.3240.

USD JPY (115.55) The current objective is at 114.20. The dollar’s brief rally during Friday’s session was precisely what we needed to step into this new bearish strategy as, shortly before the publication of the US ISM adapt, the dollar started to fall again. Overnight, it hit a sub-$115 low. For today too, the level 114.90 is also likely to provide some intermediate support. To the upside, the risk limit to the bearish view can already be set at 116.30/40.

EUR JPY (153.90) The cross scrambled to yet another new high on Friday – without us sadly as the pre-required dip to establish a bullish strategy was not forthcoming. For today, we step back from the dip-buying preference as, even following a modest correction, the risk-reward profile of a bullish strategy would not be good. We still see a potential to 154.60, if not to 155.10. Supports stand at 153.45/50 and at 153.05.

GBP USD (1.9770) The current objective remains at 2.0315. Cable’s rally continued on Friday without any ado. Not even the worse-than expected UK PMI could ‘save’ those who were looking for a correction judged by many to be long overdue. By the end of the day, traders instead had to talk about prospect that a slowing US economy might do what benign inflation could not, i.e. prompt the Fed to cut rates. Cable closed at practically the high of the week. The latest development now allows us to tighten the risk-limit on our bullish strategy to 1.9680.

AUD USD (0.7855) The current objective remains at 0.8170. The A$ reached 0.7925 on Friday, its highest level since March 2005. But this morning, probably as a result of fresh short-sales, it slipped back again. We continue to monitor the already tightened risk-limit at 0.7835. To the upside, we reckon with initial supply at 0.7950 and at 0.7980 now.

IFR Markets

EUR/USD
Ease continues and the long trade is in danger. Hourly studies still show scope for further weakness and the stop at 1.3295 could be hit if 1.3305 yields. The daily charts are heavily overdone on the topside and 1.3365 could be a short term top on the charts. Will flat fails on another rejection for profit if given the chance.

Resistance::
1.3580(M) Daily High Jan 3 05 Flat On A Failure
1.3495(M) Daily High Jan 4 05 Flat On A Failure
1.3480(M) Weekly High Mar 7,14 05 Take Profit, Buy Break
1.3365(M) Daily High Dec 3 Flat On A Failure

Support:
1.3305(M) Hourly Support Dec 4 Sell Stops Below
1.3220(M) Pullback Low Dec 1 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
Short was stopped out in Asian trade as price hit the 115.75 stop level late in the session. Hourly studies eased back slightly but are now heading higher again and price is likely to test the 115.85 high again. The daily charts are oversold and show signs of bouncing again, 115 looks set to hold but if this is not the case then go with a break.

Resistance:
117.65(M) Ichimoku Cloud Base Flat On A Failure
117.50(M) Daily Low Nov 15, 17 Sell A Failure, Buy Break
116.55(M) Daily High Nov 30 Sell A Failure
115.85(M) Failure High Dec 4 Expect Stalling

Support:
115.00(M) Daily Low Dec 1 Sell A Break Below
114.70(M) Daily Low Aug 10 Cover On A Bounce
114.00(M) Daily Low Aug 4 Cover On A Bounce
113.45(S) Trend Low Jul 10 Take Profit, Sell Break

GBP/USD
Price continues to ease and the pair has pushed below support at 1.9750 leaving the path open for further weakness towards the 1.9690 level which is where stops are below. Daily charts are trying to maintain a bull bias but price is below the 1.9846 top from Friday and unless we can match this on the day then corrective easing could be seen.

Resistance:
2.0100(S) Monthly High Sept 1992 Take Profit, Buy Break
2.0045(M) Daily High Sept 9 92 Flat On A Failure
2.0000(M) Key Psychological Level Flat On A Failure
1.9846(S) Daily High Dec 1 Flat On A Failure

Support:
1.9690(M) Hrly Highs/Lows Dec 1 Sell Stops Below
1.9635(M) Pullback Low Dec 1 Buy A Bounce
1.9545(M) Daily High Nov 29 Buy A Bounce
1.9435(M) Daily Low Nov 29 Buy A Bounce

USD/CHF
1.1900 the base on the charts as corrective rallies kick in. Shorts remain favored but we have been stopped out of current trade as price breaks the 1.1975 level where stops were above. Hourly studies are close to overbought levels though and risk is for more easing action. Will sell fails for another run at 1.1900 but cover bounces.

Resistance:
1.2205(M) Nov 23 lo, Hrly Hi Nov 24 Take Profit, Buy Break
1.2185(M) Daily Range Low Aug 21 Flat On A Failure
1.2115(M) Daily High Nov 29 Sell Failure, Buy Break
1.2015(M) Prior Daily Range Low Sell A Failure

Support:
1.1900(M) Yearly Low 06 (Dec 1) Sell A Break Below
1.1880(S) Daily Low May 4 05 Cover On A Bounce
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
Easing against our long trade but 153.45 is seen as support ahead of 153.05 where stops are below. Hourly studies are bearish and there is scope for futrhr weakness but we are looking for the former to hold. Daily charts are bullish still but overbought, will flat further failures for a profit if given the chance.

Resistance:
174.75(M) Synthetic Yearly High 92 Take Profit, Buy Break
162.40(M) Synthetic Yearly High 98 Take Profit, Buy Break
155.55(M) 2% MA Band Top Take Profit, Buy Break
154.15(M) Hourly High Dec 4 Flat On A Failure

Support:
153.45(M) Hourly Support Dec 1 Buy A Bounce
153.05(M) Pullback Low Dec 1 Sell Stop Below
152.50(M) 10-Day MA Buy A Bounce
151.80(M) Nov 24 Hi, Gap Bottom Buy A Bounce, Sell Break

EUR/GBP
0.6748 rejects and price is easing again. 0.6715 is close to coming back under pressure intraday but hourly studies are oversold and there is risk for another rebound out of the latter. Will cover the bounce for profit if this is the case. Daily charts are bearish and close to oversold levels so 0.6715 could be a short-term base.

Resistance:
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
0.6745(M) Hourly Resistance Dec 4 Buy Stops Above

Support:
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
0.6670(M) Oct 31 Trend Low Cover On A Bounce
0.6610(M) Trend Low Jun 10 05 Take Profits, Sell Break

EUR/CHF
1.5930 stalls again although with the hourly studies still ticking north there remains scope for a further push higher and a retest of 1.5935 intraday. The daily charts are bullish and we will go with a break of the latter for a run into the 1.60s. Keep stops relatively tight below 1.5860.

Resistance:
1.6090(S) L-T Channel Top Take Profit, Buy Break
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 Sell Failure, Buy Break

Support:
1.5860(M) Range Low Nov 30, Dec 1 Buy A Bounce
1.5830(M) Nov 27 Low, Bolli Buy A Bounce
1.5800(M) Daily Low Sep 28 Buy A Bounce, Sell Break
1.5755(S) Trend Low Sep 25 Cover On A Bounce

USD/CAD
1.1420 is under pressure as the pullback continues after an early rejection from 1.1460 which is ahead of the fresh trend highs from Friday at 1.1465. Hourly studies are ticking lower now and scope is seen to levels below 1.1400. Daily charts are trying to maintain a bull bias but will need to match Friday"s high.

Resistance:
1.1625(M) 38.2% 1.2730 -1.0930 Take Profit, Buy Break
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 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
0.7845 has propped and the pair has bounced. Failing so far to get past 0.7880 as hourly studies falter on the rebound from oversold levels. The daily charts are rolling over from overbought levels with the slow stocks on the verge of a negative cross which would generate a sell signal.

Resistance:
0.7990(M) Mar 8, 9 2005 Highs Take Profit, Buy Break
0.7965(M) 2% M/A Band Flat On A Failure
0.7955(M) Dbl Top Mar 9 & 16 05 Flat On A Failure
0.7925(M) Daily Hi Mar 22 05, Dec 1 Sell A Failure, Buy Break

Support:
0.7820(M) Daily Low Nov 29 Buy A Bounce, Sell Break
0.7775(M) Daily Low Nov 28 Cover On A Bounce
0.7760(M) Daily Low Nov 27 Cover On A Bounce
0.7730(M) Daily Low Nov 23 Buy Bounce, Sell break