USD: The dollar appears to be back in vogue today as a quasi risk off day seems to be in the offing. In additional to mixed global equity market action, the trade is also seeing quasi deflationary price action in a host of physical commodity markets and a rather thin scheduled report slate. The Dollar might have made even more upside overnight if it were not fighting a stronger Chinese currency in the wake of dialogue from the PBOC. While the US Dollar will see some private weekly chain store sales readings this morning, that news might not have a lasting influence on exchange rates. The trade is already looking ahead to upcoming US and Chinese factory data and the trade is also looking ahead to Fed Chairman Bernanke testimony to a Congressional panel on Wednesday. At least to start today the US Dollar looks to win by default and also because it looks to maintain its macro economic and interest rate differential edge relative to most currencies. In fact, the Dollar is a on a positive footing today. Initial support is seen at 84.12 and the path of least resistance is pointing upward, with little in the way of resistance seen until 84.40.
EUR: The Euro might draft some support from favorable comments on the direction of the German economy from the Bundesbank overnight but that news was partially countervailed by discussion of the value of asset purchases from an EU official overnight. From a technical perspective, the Euro saw a gap filled on the upside yesterday, but to more effectively turn the tide in favor of the bull camp, might require a recovery back above 129.32 in the June Euro contract. However, the failure to hold above 128.45 could shift the tables on the bull camp and leave the bias in the market pointing downward.
GBP: The Pound has already forged a fresh downside breakout on the charts and in turn has reached the lowest level since April 4th. Weaker than expected UK inflation readings have rekindled easing fears again as inflation readings saw the lowest year over year change since September of 2009. In the face of additional slack UK data, the Pound might be poised to return the March consolidation lows just above the 1.50 level. In order to throw off the bearish bias in the June Pound now, probably requires a rally back above 1.5278.
JPY: Apparently the Yen bounce was short lived and comments from the BOJ over the weekend were taken in the wrong context. With ongoing strength in the Chinese currency and ongoing strength in the Dollar, the Yen looks to remain in a downward motion on the charts but perhaps the rate of decline will slow because of clarified comments from the BOJ. Initial support in the June Yen today is seen at 96.80 and a fall below that level could prompt another wave of knock on selling pressure and a move down to an even lower trading range ahead.
CHF: Now that the Swiss seems to have corrected the oversold condition that was put in place with the early May washout and a recovery effort has waned, that could set the stage for a decline to fresh new lows for the move. Initial support is pegged at 103.01 and then again down at 102.91. In the event that talk of additional EU easing, is joined by fresh hawkish commentary from the US Fed Chairman later this week, that could easily project the Swiss quickly into lower lows for the move.
CAD: Weakness in commodities and residual strength of the US Dollar has the Canadian in a negative track to start the Tuesday trade. In the near term, it could take a stronger than expected Canadian retail sales reading on Wednesday to alter the downward bias on the charts. Initial support and a near term target in the June Canadian is seen down at 97.06 but we also don’t think that the Canadian has the fundamental economic weakness to fall to and below the May spike low of 96.73.