Canada Housing Starts come in at 150.1K. Better than expected but lower than last month. Watching 1.0589 in $USDCAD

The expectation was for a decline to 148.0 from 157.3 last month. The actual level came in at 150.1 K. 

The USDCAD has moved back below the old 2009 low of 1.0589 level today and remained below as dollar selling was the order of the day. The low 1.0531 which was above yesterdays low of 1.0526.  This should give shorts some concern. However, until the price extends back above the 1.0589 level, the bears remain in charge.  On a move above 1.0589, we should see additional momentum.    On the downside, the 1.0552 level will be watched as support.  Look for buyers against this level.

No change in ECB rate as expected. Trichet and Initial Claims at 8:30 AM. Watch 1.4735 support

The Initial Claims are expected to come in at the 543K vs 551K yesterday.  Trichet’s comments will be of interest.  He commented after the G7 meeting last week that he was pleased with the US intentions for a strong dollar.  We will see if he makes a similar comment today.

From a technical view, the EURUSD also moved steadily higher overnight.  The pair moved above the 200 bar MA on the 5 minute chart initially (See comment from yesterday that discusses this key level – CLICK HERE). From there the price started the move up.  The pair has dipped below the 100 bar moving average on the 5 minute chart recently. This is the first dip since late yesterday. The level comes in at the 1.4764 level.  Watch this level.  A move below the 200 bar MA and the 38.2% retracement of the move up from yesterday at 1.4738/35 respectively will confirm intraday bearishness.  A move back above the 1.4764 level will likely move toward another test of the highs.

GBPUSD moves higher today. NO rate change. Watching 1.6035 support.

GBPUSD moved higher overnight. The BOE announced no rate change. This was as expected.  The Quantitative Easing was kept the same.  The BOE did say it would complete the asset purchase program but will review whether to extend it next month.  Whether they extend it next month is dependent on economic conditions.

The GBPUSD stayed above the 100 and 200 hour MA at the opening and moved toward trendline resistance at the 1.6011 level.  After consolidating/correcting, the pair moved through trendline resistance and through resistance at the 1.6035 level (38.2% retracement of the move down from Sept 23rd high).  The corrections down from the high for the day at the 1.6093 has moved to 1.6035 – raising the importance of the level today.   The bounce off this level is encouraging for the pair.  The next upside target is the 1.6118 level (midpoint of the move down from the September 23rd high).

On the downside, the the 1.6035 level will remain a key support level.  The 100 bar MA on the 5 minute chart (blue line in chart below) is currently below that level at the 1.6029 level but moving higher.  Watch this level for buying support. 

If the 1.6035 level gives way, a further move back down to the 1.6000 level is the next target.  The 200 bar MA and the trendline that was broken on the topside earlier today (see hourly chart) both come in at that level currently (see chart below).

ECB and BOE rate decision (and words) will likely dictate the next move

Tomorrow morning at 7:00 AM the BOE will announce the results of it’s interest rate decision.  No change in rates is expected. The same can be said with regard to the ECB Rate decision (at 7:45 with Trichet press conference at 8:30 AM).  ECB officials have been adament that the time is not right to raise rates.  Whether they discussed a time table may be something that might carry some weight, however.  I don’t expect it.   What the market might be interested in hearing from Trichet is any comments he may have in regard to dollar strength.  After the G7 Meeting he did comment on how he appreciated the US stated preference for a strong dollar.  A strong EURO makes exports more expensive abroad. It also makes export earnings more difficult for multi nationals as Euros repatriated back to the EUROzone are done at a more expensive Euro rate.  The opposite effect is thought to have helped US multinationals which will begin to announce earnings next week, in the current quarter. 

From a technical basis, the EURUSD maintained a bid above the 100 hour MA today which keeps the bullish bias. The price moved to a low of 1.4650 today.  The 100 hour MA is currently at 1.4644.    A move below the 100 hour MA would be needed to spoil the bullish bias for the pair.

On the shorter term 5 minute chart, the price is also above the 100 bar MA  at the 1.4678 currently which is bullish for the pair.  The price has not been able to get above the 200 bar MA, however, which stands at the 1.4693 level.  A move above this moving average confirms the shorter term bullish bias as well.   The 1.4719 level is the next upside target level (high price from Dec 2008 which has been a sticky price for the EURUSD and one that would likely attract some sellers.

In addition to the 100 hour MA, shorter term traders might look to sell on a break of the 100 bar MA on the 5 minute chart. The level comes in at the 1.4678 level but expect the resulting move to be shallow with support at 1.4654 likely to provide support.

In the UK the BOE is still faced with a sluggish recovery. They toyed with the idea of raising quantitative easing in the past but it is not likely they change their stance at this point.  Any comments that come out of the decision will be scrutinized, but most of the action will likely come from what Mr Trichet has to say rather than what the BOE does.  The GBPUSD is back above the 100 and 200 hour MA at the 1.5926 and 1.5934 levels and has upside resistance against the wedge trendline at the 1.6015 level. A move back below the 100 hour MA (1.5926) is likely to wander down toward the low for the day at the 1.5857 level

Market is trying to break one way or another, but needs the momentum on the move

The USDCHF has moved above the 1.0344 level and moved to a high of 1.0358.  The pair should find support against the 100 hour MA at the 1.0335 level now.  We should also see additional momentum to the upside for the pair. 

GBPUSD broke above the 100 and 200 hour MA at the 1.5927 and 1.5935 levels respectively.  The price should find support against the 100 hour MA at the 1.5925 level currently and see additional upside momentum. 

The EURUSD moved below support at the 1.4654 level, but has moved quickly back higher (trading at 1.4670 currently).  This suggests further upside momentum.

The USDJPY moved below the 88.82 level (close from yesterday) and traded down to a low of 88.44.   Good channel support remains at the 88.20 level for the pair.

$EURGBP moves lower helping the GBPUSD. Watching support at the 0.9189 level.

The EURGBP is moving lower, contributing to the GBPUSD rise.  The EURGBP is now down looking to test the 100 hour MA at the 0.9189 level.  A move below the 100 hour MA changes the bias to the downside with confirmation on a move below the 200 hour MA at the 0.9178.   It should also continue the positive bias for the GBPUSD. Watch the level closely.

$GBPUSD makes a break to the upside. The 1.5927 level should now be downside support

The GBPUSD has made a break to the upside.  The pair moved through the 100 and 200 h0ur MA at the 1.5927 and 1.5935 levels respectively and spurted up to a high of 1.5970.  The move above should now find buying support at the levels with a stop if the price should dip below the 1.5927 level.  The market should move higher with a test of the upper trendline the next target for the pair. That level comes in at 1.6019 currently (see chart above)

$USDCHF stalling at the 100 and 200 hour MA. Watching 1.0335 break w/ momentum move above 1.0344

The 100 and 200 hour MA in the USDCHF comes  in at the 1.0331 and 1.0335 levels respectively.  The high for the day has extended to 1.0343 and 1.0341  but the price momentum has been reversed each time. This indicates some hesitation.  The midpoint of the last 5 day range comes in at the 1.0344 level.

The price is back up testing the MA level.  If the price is able to move back above the level again, confirmation of the direction would come on a break of the 1.0344 level.  The next level to target would be the 1.0369 level.

On a longer term basis, the last leg down failed to take out the low for 2009 at the 1.0188 level.  The low yesterday reached the 1.0236 level.  A move above the 100 hour MA could ignite a bigger move to the upside with a longer term move toward 1.0507 not out of the question. This level corresponds with the 38.2% retracement of the summer move down.  It is also where the trendline from the summer bottoms came in before the move down in September.