DJ ASIA DAILY FOREX OUTLOOK -

Majors
Wed Jul 21 19:38:00 EDT 2010
SINGAPORE (Dow Jones)--Following are expected trading ranges and outlooks for nine major
currency pairs today:

Immediate Range Larger Range

USD/JPY 86.71-87.36 86.46-87.58
EUR/USD 1.2730-1.2838 1.2707-1.2913
AUD/USD 0.8712-0.8842 0.8665-0.8859
NZD/USD 0.7073-0.7195 0.7041-0.7301
GBP/USD 1.5123-1.5252 1.4989-1.5334
USD/CHF 1.0483-1.0543 1.0446-1.0560
USD/CAD 1.0406-1.0501 1.0346-1.0586
EUR/JPY 110.68-111.95 109.29-112.83
EUR/GBP 0.8372-0.8478 0.8361-0.8531

(Ranges are calculated using recent high and lows, information on the placement of option
strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)

USD/JPY - to consolidate with risks skewed lower. Pair undermined by unwinding of JPY-
funded carry trades amid increased risk aversion (VIX fear up 7.15% at 25.64) as Wall Street
suffered losses (DJIA down 1.07%, Nasdaq off 1.58%) after Fed Chairman Bernanke signaled
U.S. central bank not planning any new stimulus measures near term to bolster recovery despite
"somewhat weaker outlook" for economy. USD/JPY also undermined by Japan exporter sales,
lower U.S. Treasury yields, expectations Fed will keep interest rates at record lows near zero
well into 2011. But USD/JPY losses tempered by USD demand for import settlements; fear of
Japan official jawboning against further JPY strength. Data focus: 0430 GMT Japan May all-
industry activity index, 0600 GMT Japan May revised machine tool orders, 1230 GMT U.S. July
17 weekly jobless claims, 1330 GMT Fed Chairman Bernanke presents Monetary Policy Report
to House Financial Services Committee, 1400 GMT U.S. June leading indicators, June existing
home sales. USD/JPY daily chart mixed as stochastics bullish near oversold, but MACD still in
bearish mode. Support at 86.71 (hourly chart), then at 86.46 (Monday's low) and 86.25 (Friday's
low); breach would target psychological round-numbered levels of 86.00, 85.00, then 84.81
(Nov. 27 bottom). Resistance at 87.36 (hourly chart), then at 87.58 (Tuesday's high); breach
would expose upside to 88.00 (previous base set July 13), then 88.43 (July 15 high), 89.11-89.15
band (July 14 high-July 12 high) and 89.42-89.47 band (June 29 high-June 28 high).

EUR/USD - to consolidate with risks skewed lower. Pair undermined by negative risk sentiment;
worries about results of European bank stress tests due tomorrow & whether criteria for tests will
prove credible enough to convince markets; "German newspaper, Handelsblatt, is running a story
suggesting that the stress tests have low credibility among portfolio managers," says BNP
Paribas; talk SNB had been selling euros yesterday possibly to lighten its EUR120 billion
holding (as at end of 2Q). Data focus: 0730 GMT German July flash PMI, 0800 GMT euro zone
July flash PMI, 0900 GMT euro zone May industrial new orders. EUR/USD daily chart mixed as
MACD bullish, but stochastics falling from overbought; bearish parabolic stop-and-reverse
signal hit at 1.2793 yesterday. Support at 1.2730 (yesterday's low); breach would target 1.2707
(July 15 low), then 1.2680 (July 14 low) and 1.2520 (July 13 low). Resistance at 1.2838 (hourly
chart); breach would expose upside to 1.2923 (yesterday's high), then 1.3028 (Tuesday's high),
1.3093 (May 10 high) and 1.3124 (38.2% Fibonacci correction of decline from Nov. 25 high of
1.5144 to June 7 low of 1.1875).

AUD/USD - to consolidate. Pair undermined by unwinding of long-AUD carry trades on

heightened risk aversion, uncertainty about results of European bank stress tests due tomorrow.
But AUD/USD losses tempered by Aussie-U.S. yield gap, rising expectations RBA will hike
rates next month. AUD/USD daily chart still positive-biased as MACD & stochastics in bullish
mode. Support at 0.8712 (hourly chart); breach would expose downside to 0.8665 (Tuesday's
low), then 0.8631 (Monday's low), 0.8619 (July 8 low) and 0.8593 (55-day moving average).
Resistance at 0.8842 (hourly chart), then at 0.8859 (yesterday's high) and 0.8871 (2-month high
set July 14, near 100-day moving average); breach would expose upside to 0.8964 (200-day
moving average), then psychological 0.9000 and 0.9026 (May 13 high).

NZD/USD - to consolidate with risks skewed lower. Pair undermined by unwinding of long-
NZD carry trades on elevated risk aversion, concerns about results of European bank stress tests
due tomorrow. But NZD/USD losses tempered by Kiwi-U.S. yield advantage. NZD/USD daily
chart mixed as MACD in bullish mode, but stochastics neutral. Support at 0.7073 (hourly chart),
then at 0.7041 (Tuesday's low) and 0.7027-0.7019 band (Monday's low-July 8 low, near 100-day
moving average); breach would expose downside to 0.6974 (previous cap set July 6), then
0.6960 (55-day moving average). Resistance at 0.7195 (yesterday's high); breach would expose
upside to 0.7301 (July 15 high), then 0.7325 (April 30 reaction high) and 0.7441 (Jan. 14
reaction high).

GBP/USD - to trade lower; spotlight on 0830 GMT UK June retail sales (expected +0.4% on
month, +1.3% on year). Pair undermined by heightened investor risk aversion; worries about
UK's fiscal outlook after more-than-expected UK public sector borrowing in June; concerns over
negative impact of fiscal consolidation on UK economy; yesterday's release of July BOE MPC
meeting minutes hinting at downside growth risks for UK economy. GBP/USD daily chart
negative-biased as stochastics falling from overbought, MACD staged bearish crossover against
its exponential moving average. Support at 1.5123 (yesterday's low); breach would expose
downside to 1.4989 (100-day moving average), then 1.4946 (July 12 low), 1.4871 (July 1
reaction low) and 1.4854 (June 25 low). Resistance at 1.5252 (hourly chart); breach would
expose upside to 1.5334 (yesterday's high), then 1.5350 (Monday's high), 1.5471 (July 15 high)
and 1.5498 (April 26 reaction high).

USD/CHF - to consolidate. Pair undermined by unwinding of short-CHF carry trades on higher

investor risk aversion; CHF demand on softer EUR/CHF cross. But USD/CHF losses tempered
by broadly firmer USD undertone. Daily chart still positive-biased as MACD & stochastics in
bullish mode, although inside-day-range pattern completed yesterday. Resistance at 1.0543
(yesterday's high), then at 1.0556-1.0560 band (Tuesday's high-Monday's high); breach would
expose upside to 1.0617 (July 14 high), then 1.0645 (July 13 high), 1.0675 (July 12 reaction
high) and 1.0697 (July 2 high). Support at 1.0483 (yesterday's low), then at 1.0449-1.0446 band
(Tuesday's low-Monday's low); breach would expose downside to 1.0396 (low on both July 15 &
Friday), then 1.0363 (Jan. 25 reaction low), 1.0127 (Jan. 11 reaction low) and parity.

USD/CAD - to consolidate with risks skewed higher; spotlight on 1230 GMT Canada May retail
sales & 1430 GMT BOC quarterly monetary policy report; central bank expected to reiterate
cautious approach to monetary policy outlined in Tuesday's statement when it raised its policy
rate by 25 bps to 0.75%. USD/CAD underpinned by increased investor risk aversion, stronger
global USD, surprise 0.1% drop in Canadian May wholesale sales (vs forecast for 0.4% rise),
weaker oil prices (Nymex crude settled down $1.02 yesterday at $76.56/bbl). USD/CAD daily
chart mixed as MACD neutral, stochastics in bearish mode. Resistance at 1.0501 (yesterday's
high); breach would expose upside to 1.0586 (Tuesday's high), then 1.0606 (July 7 high), 1.0677
(July 6 reaction high) and 1.0851 (May 25 reaction high). Support at 1.0406 (hourly chart);
breach would expose downside to 1.0346 (yesterday's low), then 1.0278-1.0273 band (July 15
low-July 13 low), 1.0178 (June 22 low) and 1.0133 (June 21 reaction low).

EUR/JPY - to consolidate with risks skewed lower. Cross undermined by unwinding of carry
trades amid increased risk aversion, worries about results of European bank stress tests due
tomorrow. Daily chart mixed as stochastics falling from overbought, but MACD still in bullish
mode. Support at 110.68 (July 13 low); breach would expose downside to 109.29 (July 7 low),
then 109.12 (July 6 low) and 107.47 (July 1 low). Resistance at 111.95 (hourly chart); breach
would expose upside to 112.83 (yesterday's high), then 113.37-113.40 band (Tuesday's high-July
15 high), 114.16 (June 3 reaction high) and 114.40 (May 21 reaction high).

EUR/GBP - to consolidate. Daily chart mixed as MACD bullish, but stochastics bearish at
overbought. Support at 0.8372 (yesterday's low), then at 0.8361 (Friday's low); breach would
target 0.8323 (July 15 low), then 0.8317-0.8312 band (July 14 low-July 13 low) and 0.8288 (July
7 low). Resistance at 0.8478 (yesterday's high); breach would expose upside to 0.8531 (high hit
on both Monday & Tuesday), then 0.8547 (May 28 high), 0.8591 (100-day moving average) and
0.8754 (200-day moving average).

Disclaimer
(This article is general financial information, not personalized investment advice, as it does not
consider the unique circumstances affecting an individual reader's decision to buy or sell a
specific security. Dow Jones does not warrant the accuracy, completeness or timeliness of the
information in this article, and any errors will not be made the basis for any claim against Dow
Jones. The author does not invest in the instruments or markets cited in this article.)