Wednesday, November 10, 2010

Forex market research


The rally of the EURUSD which started from the 1.18 level has halted at the resistance mark of 1.43.The market is now turning lower posting a high of 1.4282 and currently trading above the 1.38 mark.

The market is expected to be under pressure with immediate support at 1.3696 (20th Oct, 2010 low and also 23.6% retracement of the intermediate rally) and break below the same may push rates lower towards the support pegged at 1.3334 (top of August 06, 2010).On the higher side 1.4110-1.4150 will mark as resistance for the correction.

As per our analysis the EURUSD should decline towards 1.33 marks in the short term.

Implication to the USDINR: The USDINR generally gains tracking the EURUSD decline. While the Indian rupee has domestic fundamental which has been dominant from past few weeks will keep major gains in check. We see recovery towards 44.80-45.00 on decline in the EURUSD to 1.3300. The downside is seen limited at 44.20-44.30 in the short term

USDINR Nov trading Strategy: Buy the future contract at 44.20-44.10 targeting 44.80-45.00 with stop loss below 43.80

Implication to the EURINR: The EURINR cross is derived from EURUSD and USDINR move. When the EURUSD declines to 1.33 and the USDINR reaches at 45.00 the EURINR should come down towards 59.85. In a conservative view, we expect the EURINR to test 60.20-60.30 mark.

Trading Strategy: EURINR Nov: Sell 50% at 61.55-61.60 and remaining 50% at 61.80-61.90 targeting 60.00. Preferred stop loss at 62.30.

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