Feb 7, 2010

Forex Crunch EUR/USD Outlook – February 8-12

Forex Crunch EUR/USD Outlook – February 8-12

EUR/USD Outlook – February 8-12

Posted: 06 Feb 2010 07:04 AM PST


The Euro broke down once again, and lost key support this time. The upcoming week is full with events, culminating with the initial releases of GDP on Friday. Here’s an outlook for this week’s events, and an updated technical analysis for EUR/USD, with a look downwards.

EUR/USD chart with support and resistance lines marked on it. Click to enlarge:

Apart from the Euro’s own weakness, it was also hurt by American Non-Farm Payrolls, which seemed confusing at first, but then confirmed the break of the support line with the Euro diving down. Let’s start the review. The technical analysis will follow.

  1. Sentix Investor Confidence: Published on Monday at 9:30 GMT. 2,800 investors and analysts are surveyed about their economic mood. It has been negative since May 2008, quite some time. Lately it has been improving and reached a score of -3.7. It’s expected to edge up to -2.3, closer to turning positive.
  2. German Final CPI: Published on Tuesday at 7:00 GMT. One month of strong rises in prices was probably followed by a drop that erased it. December’s 0.8% rise was followed by a drop of 0.6% in January, according to the initial release. This will probably be confirmed.
  3. French Industrial Production: Published on Wednesday at 7:45 GMT. Europe’s second largest economy has seen a nice rise of 1.1% in its industrial output, after months of drops. Another rise, of 0.6%, is predicted in this important indicator.
  4. ECB Monthly Bulletin: Published on Thursday at 9:30 GMT. This report shows what the European policymakers saw when making their last rate decision. This might shed some more light on the shaky Eurozone.
  5. German Prelim GDP: Published on Friday at 7:00 GMT. Europe’s largest economy is the driver of the whole continent. Germany was relieved of recession already in Q2 of 2009, but hasn’t been that strong since then. This early report for Q4 is expected to show that the economy grew by a very modest 0.1%, much less than the 0.7% rise in Q3. This is very fragile. An outcome of 0% or renewed contraction will badly hurt the Euro. Note that French GDP (exp. 0.5%) and Italian GDP (exp. 0.1%) are released later. They are of smaller importance, but any contraction will weigh on the Euro as well.
  6. French Prelim Non-Farm Payrolls: Published on Friday at 7:45 GMT. The main job number for France is released only once per quarter – this makes it an important event. The French job market squeezed by 0.6% in Q3, and is now expected to grow by 0.2%. France’s unemployment rate is lower than the zone’s 10% unemployment rate.
  7. Flash GDP: Published on Friday at 10:00 GMT. 3 hours after the first release of German GDP, the first release of GDP for the whole continent is expected to be better – growth of 0.4%, exactly as in Q3. This will conclude a choppy Friday morning for EUR/USD.
  8. Industrial Production: Published on Friday at 10:00 GMT. The continent’s industrial output is released after the main countries already did it, but it’s still a market mover. The nice rise of 1% last month is predicted to be followed by small 0.3% rise this time.

EUR/USD Technical Analysis

EUR/USD was a big loser this week, losing the all-important 1.3750 and closing at 1.3667. Every week in the past 4 weeks saw the Euro losing another range – about 900 pips in total.

1.3750 was an important support line, and now supplies the first line of resistance – strong resistance. Above that, 1.40 is a round number that served as a support line before. 1.42 is the next line, being both a nice support and a nice resistance line recently.

1.4450 served on both sides in many occasions. In past weeks I’ve mentioned more lines, but they are two far now.

Looking down, 1.3580 was the low in the past week, and also a peak in April 2009. This is a minor support line. 1.3420 is already a more significant support line, working as such in a few occasions during the spring of 2009.

Even lower, there’s already a big distance to the next line – 1.3080. From this spot, EUR/USD began a leap that began the long-term upward trend. It probably won’t be tested this week.

I remain bearish on EUR/USD.

Everything is going against the Euro: its own troubled countries on the flanks, a high unemployment rate and dollar strength. The fast moves might indicate a more relaxed week this time, but the general direction remains down.

This popular pair receives many great analyses on the web. Here are a few:

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

AUD/USD Outlook – February 8-12

Posted: 06 Feb 2010 07:03 AM PST


Like other currencies, the Aussie surrendered to the dollar before and after the NFP. The upcoming week brings important employment figures among other events. Here’s an outlook for the events in Australia and an updated AUD/USD technical analysis.

AUD/USD chart with support and resistance lines marked on it. Click to enlarge:

The Aussie suffered from a disappointing rate decision. Glenn Stevens left the rates unchanged at 3.75%, weakening the Aussie, despite the good fundamentals of the Australian economy, with employment being strong. This week we’ll get fresh job data. Let’s start:

  1. NAB Quarterly Business Confidence: Publication time is unknown. The release has been delayed. National Bank Australia release a quarterly figure in addition to a monthly one. 1,000 businesses are asked about the economic conditions. In Q3, this number rose above 0, meaning improving conditions. It’s expected to be positive also for Q4.
  2. Westpac Consumer Sentiment: Published on Tuesday at 23:30 GMT. This survey, done also with the Melbourne Institute, checks the pulse of he consumers. After two months of drops, this indicator posted a nice rise last month – 5.6%. This time, the number will probably be closer to 0.
  3. Home Loans: Published on Wednesday at 00:30 GMT. The housing sector has a strong impact on the economy and has showed a slowdown in the past two months. Last month’s disappointing drop of 5.6% is expected to be followed by a similar 4.7% fall this time – low expectations indeed.
  4. MI Inflation Expectations: Published on Thursday at midnight GMT. Rising inflation didn’t convince the central bank to raise the rates. We’ll now get another, unofficial look, courtesy of the Melbourne Institute. The past few months have seen stable price expectations from consumers – 3.5%. A more significant rise is necessary for a rise.
  5. Employment Data: Published on Thursday at 00:30 GMT. Australia enjoys a healthy job market. Last month’s numbers were great, with the unemployment rate dipping to 5.5%, the lowest in 8 months. This time it’s predicted to edge back up to 5.6%. The accompanying and no less important figure, Employment Change, has shown better-than-expected gains in the past four months, including 35,200 jobs gained last month. But now, economists are careful again, and expect a gain of 15,100 jobs.

AUD/USD Technical Analysis

After closing last week’s trade under 0.8950, the Aussie continued south. During most of the week it traded in a range between 0.8950 and safely above 0.8735, December’s low. After this line was breached, AUD/USD fell as low as 0.8578, very close to the 0.8567 support line, closing at 0.8670.

Looking below 0.8567, which was October’s low, 0.8477 is the next line of support. It served as a strong resistance line during the summer, before the Aussie broke upwards. This is an important line.

Even lower, 0.8240 was the resistance line beforehand, and also worked as a support line before the next push upwards. Given the new low levels, I had to add new lines on last week’s outlook.

Looking up, there are many lines now. 0.8735 is the first line of resistance, followed by the mighty 0.8950. Higher, 0.9090 is a minor resistance line, followed by 0.9170. 0.9322 is the next line, and it’s very strong. These areas were seen just a few weeks ago, and now seem far away.

I am neutral on AUD/USD.

The Aussie sure lost its mojo after the disappointing rate decision. I believe that strong employment figures will keep from more falls during this week.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

GBP/USD Outlook – February 8-12

Posted: 06 Feb 2010 07:03 AM PST


The Pound sure was a victim of the dollar’s storm, especially after the Non-Farm Payrolls. It’s at a nine-month low. The upcoming week consists of an important report by the BOE among other events. Here’s an outlook for British events and an updated technical analysis for GBP/USD.

GBP/USD chart with support and resistance lines marked on it. Click to enlarge:

GBP USD forecast

Mervyn King “missed” an opportunity to hurt the Pound in the rate decision. He’ll get another chance this week, with the release of the Inflation report. Also note the interesting NIESR GDP estimate. Let’s start the review. The technical analysis will follow:

  1. BRC Retail Sales Monitor: Published on Tuesday at midnight GMT. This figure is sometimes referred to as the “mini-retail sales”. The British Retail Consortium surveys its own members and gives an early indicator to the retail sales figure that is published later. In the past month it made a nice annualized rise of 4.2%. This time it’s predicted to be softer.
  2. RICS House Price Balance: Published on Tuesday at midnight GMT and slightly overshadowed by the previous figure. This housing price figure shows the balance between areas with rising prices and areas with dropping once. After reaching a peak of 35% in November, the balance fell back to 30%, and this week’s release is predicted to show another dip to 29%.
  3. Trade Balance: Published on Tuesday at 9:30 GMT. Britain has a steady deficit in the trade balance, squeezing in recent months. Last month’s 6.8 billion deficit is expected to be followed by 6.6 this time.
  4. Manufacturing Production: Published on Wednesday at 9:30 GMT. This major indicator of the economy remained unchanged in the past two months, disappointing the Pound. This time, a rise of 0.4% is predicted. Note that it’s accompanied by the general industrial production figure, but manufacturing, 80% of the industry, moves the markets more.
  5. BOE Inflation Report: Published on Wednesday at 10:30 GMT. This is an important quarterly event, in which the central bank projects the inflation and economic growth for a long time forward. Mervyn King dismissed the rising inflation after it almost got out of the government’s target. Will he continue this stance? With the release of the report, King will hold a press conference and will give a general look at the economy.
  6. NIESR GDP Estimate: Published on Thursday at 15:00 GMT. This independent institute foresaw the ongoing recession in Q3, and was more correct than economists on the poor Q4 growth rate. With a fresh monthly estimate, we’ll get to see how the British economy performed at the end of Q4 and in January 2010. This doesn’t always move the markets immediately, but has an impact on the mood.
  7. CB Leading Index: Published on Friday at 10:00 GMT. Although this compound figure is based on figures that were already released, it does give a good general picture and tends to move the Pound. Last month saw a rise of 0.9%, similar to previous months. A similar number will probably follow.

GBP/USD Technical Analysis

Continuing the fall from last week, the Pound traded in a range between 1.5833, December’s low, to 1.6070, which is a new resistance line (didn’t appear last week). Near the end of the week it collapsed, lost the 1.5833 and eventually the almighty 1.5720 line that wasn’t breached in 9 months. The close at 1.5640 is very bearish.

The first and most important resistance line is at 1.5720. Last time it got close to this line, the Pound climbed back in and made a nice comeback. Those days are gone.

Higher, 1.5833 and 1.6070 are the next resistance lines. 1.6270 is the next line, successfully working as such in the past weeks. There more lines above, but they’re too far now.

Looking down, strong support appears at 1.5350. This was the resistance line before the Pound broke upwards, and also served as a resistance line about one year ago.

Even lower, 1.50 played a role as a support and resistance line at the beginning of 2009. It’s also a round number. Even lower, 1.4350 is an important line of support, but the Pound is too far from it. At least now…

I’m bearish on the Pound

Despite some good signs from Britain, the loss of the important support line gets me back to the bearish sentiment. A speech by Mervyn King this week will probably weigh on the Pound as well.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

USD/CAD Outlook – February 8-12

Posted: 06 Feb 2010 07:01 AM PST


The Canadian dollar retreated against the greenback on a wild week  but was less damaged than other currencies. The upcoming week provides a double-feature trade balance release among other events. Here’s an updated outlook for Canadian events and an updated technical analysis for USD/CAD.

USD.CAD chart with support and resistance lines marked on it. Click to enlarge:

USD/CAD Forecast

Canadian employment figures were excellent, with a nice drop in the unemployment rate to 8.3% and a nice gain in jobs. This saved USD/CAD from rising above 1.0750 while the dollar was raging after the NFP. This will be felt also in the upcoming week. Let’s start the review:

  1. Housing Starts: Published on Monday at 13:15 GMT. Last week’s Building Permits rose by a lower-than-expected scale, far from the huge leap seen two months ago. This related housing number, housing starts posted a nice surprise last month, rising to 175K. This time, the number is predicted to edge up to 180K. This usually has a significant impact on the loonie.
  2. BOC Deputy Governor Pierre Duguay talks: As the deputy to Mark Carney, Duguay has a strong influence on the bank’s policy. The last rate decision didn’t see a change in the schedule for a rate hike. Duguay might relate to this decision.
  3. Trade Balance: Published on Wednesday at 13:30 GMT, together with the American trade balance. Canada’s balance is almost totally balanced – a small deficit of 0.3 billion was seen last month, following a surplus of the same scale. A smaller deficit is predicted this time, only 0.1 billion. The simultaneous release of the American and Canadian figures means a volatile time for USD/CAD.
  4. NHPI: Published on Thursday at 13:30 GMT. The New Housing Price Index posted small and steady gains in the past 5 months, with a neat 0.4% rise last month. A rise of the same scale is predicted this time as well.

USD/CAD Technical Analysis

The Canadian dollar had a good start to the week, with USD/CAD reaching down to 1.0540, which is a new line of the graph. It later went up and pushed the limits of th 1.0750 line from last week’s outlook. I’ve now moved the line to a safer spot – 1.0780.

The close around 1.07 means that the loonie didn’t lose the wider range. The bottom of the range is at 1.04, a line that was tested many times. Below that, 1.02 was the 2009 low and was tested a few weeks ago as well.

Looking up, 1.0850 was the previous top before the loonie entered the range. Even higher, 1.1130 is a very important resistance line, tested several times in 2009.

I remain bearish on USD/CAD

The rise of USD/CAD comes only from the dollar’s strength. This strength wasn’t enough to make the pair lose the current range. The excellent Canadian job figures proved again that the Canadian economy is doing well.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.
posted by

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)