The speech from ECB president Trichet may still be supportive to the Euro in general terms. But the succeeding reports starting with the German Economic sentiments and the US retail sales figures may well dictate the direction of the major pairs. Although, friendly reports are expected for the USD, the next reports on the FOMC and interest rate decision would support the USD towards the end of the year's trading. As it is well above the perceived numbers that we have written from our previous market view analysis. The US Core CPI numbers on Wednesday and following that would be the UK retail sales, US Jobless claims and a portion of the Phillie Fed Manufacturing index will be the final factors for the week ahead.Position adjustments are expected and we do anticipate more volatility from a sensitive market as it closes for the year. On a technical stand point we remain USD moderately friendly with wider swings and would be more influential an setting the pace for the market rather the other currency pairs. the trading range for the USDX is still within the 78.68-81.45 basis points. No further breakouts of this range is expected until next year.
For the rest of the currency pairs, the EURUSD will stil be more susceptible to the direction of the cross rate EURGBP. It so happens that the current price of 0.8402 is just above a MA trend line support of 0.8330-50 range, as we do see a slight corrective move. Nothing really significant for the start of the week.
The current technical chart configuration of both pairs like the USDJPY and the USDCHF is inclined to move higher ahead of the news. And this is what needs to be understood that market participants may consider pricing-in the equivalent levels before the news and would react opposite to its intended outcome. Thus confusing market traders of the market's ability to do otherwise. The price page indicator should be considered in watching the price behavior relative to its chart formation to get un-bias opinion before trading.
As mentioned that the more likely scenario for the GBPJPY is to move higher when it was at the levels of the 129.80-130.30 and it did. The potential trend higher is not over as it is just the first leg of its trend in the making. That would to the USDJPY in a position to go higher in a ladder-like manner where swing trades can be made. However, as the weeks end towards the month, relative volumes would be depreciating. And making the market again susceptible to major players changing hands and book-squaring.
The corresponding chart support ing this analysis is found in our website: http://www.megatrade101.com/
