Written by Anthony Darvall

U.S. Dollar Trading (USD) bargain hunting began in Asia with stocks staging a modest rally around the globe. US Company Earnings were quite positive but after the bell IBM released results that missed expectations and US futures turn negative. In US stocks, DJIA +56 points closing at 10154, S&P +6 points closing at 1071 and NASDAQ +19 points closing at 2198. Looking ahead, June Housing Starts forecast at 0.57mn and Building Permits forecast at 0.58mn.

The Euro (EUR) hit day lows after Ireland was downgraded by Moody's but the dip was short lived and the market rallied aggressively towards 1.3000. With the stress test results just days away the market is trading cautiously in a tight range. EUR/USD traded with a low of 1.2869 and a high of 1.2994 before closing at 1.2940. Looking ahead, PPI Forecast at 0.2% in June vs. 0.3% previously m/m.

The Japanese Yen (JPY) the USD/JPY found support with crosses and lifted to test resistance above Y87 before settling just below the figure. Nikkei was closed on Monday so Tuesday's session will be twice as important both for sentiment and the Yen. Overall the USDJPY traded with a low of 86.50 and a high of 87.24 before closing the day around 86.80 in the New York session.

The Sterling (GBP) some weak housing data lead to the Pound under performing across the board with EUR/GBP surging to break above 0.8500 before Cable found support in the lower 1.5200 region. July Rightmove House Prices fell 0.6% vs. 0.3% rise earlier in June. Overall the GBP/USD traded with a low of 1.5200 and a high of 1.5354 before closing the day at 1.5240 in the New York session. Looking ahead, June Public Sector Net Borrowing forecast at 13.1bn vs. 16bn previously.

The Australian Dollar (AUD) struggled to reclaim the 0.8700 handle even as the sentiment improved in New York with the market cautious after Friday's big move down to get caught long on earning surprises. With RBA Governor Stevens speaking today focus has turned the August Rate decision which also depends heavily on Q2 CPI. Overall the AUD/USD traded with a low of 0.8631 and a high of 0.8721 before closing the US session at 0.8690. Looking ahead, RBA minutes released form the July Meeting. RBA Governor Stevens Speaks.

Oil & Gold (XAU) fell another leg as demand for the Euro continued to lessen Golds position as an alternative investment. Overall trading with a low of USD$1177 and high of USD$1195 before ending the New York session at USD$1182 an ounce. Oil made marginal gains tracking the stock market higher. WTI Oil Closed +$0.53 at $76.50 a barrel.

TECHNICAL COMMENTARY

       

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2480

1.2709

1.2960

1.3094

1.3416

USD/JPY

85.87

86.27

87.05

88.50

89.16

GBP/USD

1.4857

1.5172

1.5235

1.5472

1.5816

AUD/USD

0.8450

0.8622

0.8725

0.8871

0.9000

XAU/USD

1157.00

1166

1182

1218

1244.00

OIL/USD

75

77.00

77.15

78.00

80.00

Euro - 1.2960

Initial support at 1.2709 (July 15 low) followed by 1.2480 (July 6 low). Initial resistance is now located at 1.3094 (May 10 high) followed by 1.3416 (April 27 high)

Yen - 87.05

Initial support is located at 86.27 (July 16 low) followed by 85.87 (Nov 30 2009 low). Initial resistance is now at 88.50 (July 15 high) followed by 89.16 (July 12 high).

Pound - 1.5235

Initial support at 1.5172 (July 14 low) followed by 1.4857 (Jun 25 low). Initial resistance is now at 1.5472 (38.2% retrace of 1.6878-1.4231) followed by 1.5816 (Feb 17 high).

Australian Dollar - 0.8725

Initial support at 0.8622 (July 8 high) followed by the 0.8450 (June 7 high). Initial resistance is now at 0. 8871 (July 14 high) followed by 0.9000 (Big Level).

Gold - 1182

Initial support at 1166 (May 21 low) followed by 1157 (May 5 low). Initial resistance is now at 1218 (July 13 high) followed by 1244 (July 1 high).

Oil - 77.15

Initial support at 77.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 78.00 (Intraday Resistance) followed by 80.00 (Intraday Resistance).