Currency Technicals

WEEKLY OUTLOOK- 04.06.07 to 06.06.07

K Venkatraman

EUR/USD
The euro despite the chance of Trichet being hawkish this week is getting into a narrow range. The pair is well supported at the 1.3400 levels from where we have seen it bouncing back on Friday. But the strength shown will be dissipating soon and it will be capped at 1.3520. A break of the 1.3520 will propel the pair for a re-attempt to the 1.3660 areas. Any negative bias will be limited to 1.3340.

Expected range for the week 1.3340-1.3525.

Supports: 1.3425/1.3390**/1.3360*/1.3340/1.3310
Resistance : 1.3470*/1.3510*/1.3535**/1.3585



GBP/USD
The pair which is one of the most volatile is ironically mellowed down in a narrow range which is very rare and this has prompted a lot of people to buy vols. We expect a range of 1.9725-1.9925. Break of this will decide the direction but with the BoE more likely to pause this week a break out is unlikely. Any break of 1.9925 will push it to the 2.0030 regions. EUR/GBP action can provide clues for any sterling moves.

Supports : GBP : 1.9725**/1.9690***/1.9640
Resistances: 1.9860**/1.9915*/2.0005*/2.0075


USD/JPY
This pair is the mostly watched pair by equity strategists. Carry traders are having a heyday and this is reflected on the charts. The reversal in the USD/JPY will be the prelude to a widely expected meltdown in worldwide equities. As predicted in our last report the pair has attempted strong resistance at 122.10. The pair looks very bullish going forward and a break above this will make the pair attempt 122.65 and beyond. Support at 120.50 -120.70 region is strong.

Expected range 121.40-122.95.

Supports: JPY : 121.70**/120.40*/121.05***
Resistances: 122.10*/122.65**/122.95


USD/CHF

The CHF has been playing second fiddle only to the yen on carry trades. The pair may find good support at 1.2180. Upside barriers at 1.2330-1.2355 are equally strong. Expected range 1.2180-1.2430. Break below 1.2215 will lead to attempt of 1.2180.

Supports : 1.2255*/1.2230**/1.2180
Resistances: 1.2330*/1.2370***/1.2430

USD/INR
From one of the most volatile currencies in the world it is now the most docile as the RBI and rest of the market participants are at loggerheads to each other. Upside is capped at 40.80. The 40.50 seems to provide good support. Expected range 40.13-40.69. May initially move to 40.69 and then reverse direction to test 40.50. Break below 40.50 will make the pair test 40.37 and then 40.10.

Supports: 40.50**/40.30*/40.37*/40.10*
Resistance: 40.65*/40.77*/40.88*/41.07


Gold Spot
The strong support at 652 held well and the Sharp move has distorted the charts. Now the range may be between 662-682.Break above that will trigger test of 692. Beginning of the month also could be a reason for a sharp up move similar to the big fall during Jan 2007. Overall range of 652-692 is what the market getting used to for the past 3-4 months.

Supports : 667*/664/669/662/651***
Resistances: 672***/679**/683***


Silver Spot
The momentum with which the market has turned has made the charts look very bullish for test of 14.14. one more session will confirm the outlook. Expected range 13.33-14.14

Supports : XAG:13.59/13.42/13.33/13.22
Resistance: 13.75*/13.88***/13.98***/14.14**