By Forex District – The Dollar advanced across the board as investors locked in profits ahead of this weekend’s G8 Finance Minister’s meeting. There could be a great deal of information and statements released over the weekend that could potentially impact the short term moves in the Forex market.

However, there is not much expected to come out of the G8 meeting in regards to Foreign Exchange, yet investors need to be attentive to any statements focusing the Dollar. As usual, the G8 will probably reaffirm its stance in a strong and stable financial system and release a statement as follows “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We continue to monitor exchange markets closely, and cooperate as appropriate.”

Any noted concern over the weakness of the Dollar could potentially impact the currency in the near term. However, it could be met by an expected wave of  selling pressure by middle of next week. The G8 is anticipated to focus on the recovery process and ways on how nations should withdraw financial stimulus.

Comments from Japan’s Finance Minister Yosano also helped the Dollar strengthen, ahead of the G8 meeting, as he reaffirmed his full support to the United States. Yosano expressed his nation’s confidence in U.S. debt as “unshakable” and said the USD’s global reserve status is secure.

The Dollar rose against the Euro dropping below the 1.40 level from 1.4170 high (yesterday). GBP/USD fell to as low as 1.6329 from the 1.66, while the AUD/USD fell to as low as 0.8057 from a 0.8220 high. The pairs, however, were able to hold onto key support levels with the EUR/USD unable to drop below 1.3950, the AUD/USD below 0.80 and the GBP/USD below the 1.6200. Nevertheless, a near term caution was recommended as the G8 could provoke the currency market to gap into Sunday’s open and the pairs to fall below the aforementioned levels.

The University of Michigan consumer confidence came in slightly weaker than expected at 69.0 from 69.5 forecast. Though, the data showed the fourth consecutive monthly increase since the February 2009 low of 56.3. This marks the highest reading in nine months as consumer’s became more optimistic about the economic and their financial outlook.

The U.S. price index for imports on goods and services for the month of May increased by 1.3%, following a revised 1.1% in April, the Department of Labor reported today. On a year per year basis, overall imports have declined by 17.6%, however, April’s reading posts the third consecutive jump and the largest since July of last year.

Euro fell below 0.85

As the Euro fell against the Dollar, it also weakened against the Pound as EU economic data signals continued weakness in fundamentals. Industrial production declined by 1.9% in April compared with March 2009, according to a report by the Eurostat. Data reports the eighth consecutive monthly decline and follows an upwardly revised March reading of -1.4% from -2.0%.

Data was much weaker than anticipated as economists expected the rate of contraction to moderate to -0.4%. On an annual basis, April industrial production fell by 21.6% compared with same period last year.

Looking ahead…

U.S. Treasury Secretary Timothy Geithner will host a press conference following the G8 Meeting of Finance Ministers Saturday June 13, 2009. Investors need to be attentive to his statement, as these combined with the G8 statement could guide price action at the start of next week.

Originally Posted at ForexDistrict

Dollar/Yen made an insignificant downward movement yesterday. This confirms the consolidation phase of the currency couple and the unclear movement direction, till trading range is within the triangle formation on the 1 hour chart. Immediate support is 97.25, followed by 96.00. The nearest resistance is 98.40. The CCI indicator just crossed down the 100 line on the 1 hour chart, indicating potential downward pressure.
Technical resistance levels: 98.40 99.80 101.00
Technical support levels: 97.25 96.00 95.85

By Back Bay FX – EUR/USD has just broken through the bottom it’s recent support line (noted in BLUE on the below image). The start of that support is the same level (1.3780 – 1.3800) as we say as a launching pad for EUR/USD back in late May (see BLUE circle on below image.) We suspect that the pair will re-test those levels by Tuesday of next week.

Importantly, if the 1.3780 level is breached and holds below that for day or so, we suspect that we will see a slow move down towards the 1.3600 level which is the midpoint of a previous range seen in mid-May.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions and Accucharts for the below image.

EUR/USD has created one of our favored chart patterns.

In the below 30 minute timeframe chart, EUR/USD has created a false break out (See previous post regarding EUR/CAD) on the lower Bollinger Band. It has since revisited that level and held. We feel that the 1.4195 – 1.4200 level is a short-term support level.

We buy at market (current ask 1.4206) with a Stop Loss level at 1.4172, and a Target Level of 1.4265

Stay Nimble!

Stephen LEahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Sol and Accucharts for the below image.

by: Back Bay FX

GBP/JPY has been trading in a range that is well-defined by the 2 hour time frame Bollinger Bands. In the below snapshot, the pair has bounces off the midline and seems to be continuing it’s move higher. Yet that midline is a very important level.

We will use a Buy Limit order to go long GBP/JPY (current bid at 158.15) at 157.70. Our Target Level is just below the top Bollinger Band at 160.10. We will enter a Stop Loss at 157.65 which would indicate a solid break of the midline support level.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

Thanks to FX Solutions and Accucharts for the below image.