Consolidation of Last Weeks Moves; Some Levels to Watch

FX market continues to trade mostly within narrow ranges. The USD is on the weaker side with the exception of the NZD that collapsed a full cent after an earthquake hit New Zealands Christchurch yesterday. A high volatility is also seen in EURCHF that fell right to the psychological 1.20 level. Multiple currency pairs trade near key levels.

London is open today but the rest of the most important European financial centers are closed for holiday. The only data released during the London session was Italian Industrial Production for April that improved from 0.7% to 1.0%, well above market expectations of 0.2%.

There are no economic data releases scheduled for todays New York session. Even Trichets speech at the School of Economics in London due at 10:00 am ET is not likely to have any impact on the market. Under these circumstances, technical studies and overall market sentiment become more relevant.

Some technically significant areas to pay attention to:

EURUSD trades near 50% fib. retracement of the run from 3968 to 4695 at 4331. This support level is a significant one because it coincides with 5/20 highs and also with 6/1 lows. Euro experienced a considerable depreciation last week and waiting for signs that would confirm whether the move signaled a start of a new trend or only a liquidation of existing longs might be sensible.

GBPUSD zone between 6209 and 6165. The upward sloping trendline from 12/2010 could provide support around the 6165 area. This zone also coincides with 4/18 low. 6209 is 38.2% fib. ret.

USDCAD 9980 level. USDCAD has been trading with an upward bias. Should price break to the upside, it is likely to stall at 9980 level which is given by multiple lows/highs and also by 38.2% fib. ret. of the fall from 0852 to 9446. Risk off environment and higher lows pattern seen on the daily chart would indicate that upside break is likely.

USDCHF 8555-8565 zone. EURCHF lost almost 150 points since yesterdays open. This fall pulled USDCHF lower. If USDCHF is able to recover, zone around 8560 should provide resistance as 38.2% fib. ret. is at 8563 and 5/5 lows are at 8555.