Dollar opened at Y82 48 and soared through a reported barrier

USD/JPY

Range:82.37 – 83.05

Support:82.50

Resistance: 83.30

Dollar opened at Y82.48 and soared through a reported barrier at Y82.50 on Japanese megabank and retail investor demand as risk returned to the table. The dollar posted a high of Y83.01 and possibly tripped another barrier at Y83.00. Stops lie ahead at Y83.30, Y83.50 and Y83.70 with offers in front at Y83.00/10 and Y83.25/30. Comments from Fed’s Fisher, Bullard and Plosser yesterday fuelled the dollar with expectations of QE2 finishing on schedule without extension. A firmer Nikkei also added to the cause. Strong demand was also seen in the euro-yen which opened at Y116.39 and soared to Y116.96 with a break of the Y117.03 (May14 high) opening the way to Y118.73 (May 13 high). Nikkei reported today that the Japanese government is likely to create an emergency budget of Y2 trillion for the earthquake/tsunami disaster relief and will aim to submit it to parliament next month.

EUR/USD

Range: 1.4058 – 1.4128

Support: 1.4050

Resistance:1.4130

Several commentators have suggested that the rate looks ‘happy’ to pivot the $1.4100 level into Friday’s key US employment report. Early pressure on yen into Asia provided an early lift for euro-yen, in turn taking euro-dollar to early highs of $1.4128. Dollar-yen then overtook euro-yen as the dollar gained a general boost on Fed Fisher comments that he would vote against extending QE beyond June, this dollar demand also weighed back against the euro to take the rate to lows of $1.4070. Recovery attempts remained below $1.4100 with rate settling between $1.4070/00 ahead of the European open. Sovereign demand seen in place to $1.4070, a break to open a deeper move toward $1.4050/40 (Tues low $1.4047), with stronger support seen in place between $1.4020/00. Resistance remains at $1.4125/30, stronger between $1.4145/55 with stops noted on a break of $1.4160. EMU confidence indexes due at 0900GMT ahead of US ADP at 1215GMT.

Gold

Precious metals traded slightly lower yesterday as commodity prices fell on the back of easing MENA tensions which initially dragged oil prices lower. This impacted on Gold and Silver, with some further profit-taking still in evidence following fresh highs of last week. Gold opened at $1420.30 and slipped down just ahead of the major support at $1410 with a low of $1411.10 before turning sharply higher to $1423.45, but fell back to close out the day at $1418.50. Asian markets saw the metal trade down to $1414.60 earlier this morning before picking up to $1420.50. Silver closed out on Tuesday at $37.07 after opening at $37.14 yesterday, and has picked up to $37.37 in Asia this morning. Gold has support at $1410 and resistance at $1423.50. Silver has support at yesterday’s low of $36.53 and resistance at Friday’s high of $37.78.

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