Posted: 24 Mar 2010 02:24 AM PDT

EUR/USD finally made the long waited drop – it tumbled down below 1.3423 in a very convincing way.The drop continues. The move has a big potential.

EUR/USD began the move from the previous lows of 1.3440, pierced through the historic line of 1.3423 (May 2009), then temporarily relaxed at 1.34 before moving lower. It almost touched 1.3350 before bouncing slightly higher to 1.3377 at the time of writing. The move isn’t over. Let’s examine it:

The next significant technical barrier is only at 1.3080, This was the line where EUR/USD began the long term upwards move in March 2009. So, the move has a great potential. 50% of the 1.3423 to 1.3080 range is at 1.3250. EUR/USD could approach these levels rather quickly.

This came just one week after EUR/USD tested the important resistance level of 1.3850. The failure to break this level was also a failure to remain in the uptrend channel. I then wrote that EUR/USD is rising only to plunge later. And now the plunge came.

The main fundamental reason for this plunge is the Greek crisis. The major European countries failed to resolve the issues with the European Union, and called the International Monetary Fund (IMF) for help. Calling the IMF means a delay in a resolution and a blow for Europe’s internal strength. Needless to say, this is bad for the Euro.

The speed of the fall eased on the release of another fundamental event: the German Ifo Business Climate. This survey was better than other indicators in recent months, and also now, it reached the highest score in 10 month, exceeding expectations and reaching 98.1 points.

The next major events that will impact the pair come from the US: durable goods orders and new home sales today, jobless claims and Ben Bernanke’s testimony tomorrow and Final GDP on Friday. The European indicators in the rest of the week are less important, but the news from Greece, especially from the politicians, will shake the pair.

In addition to the move against the dollar, the Euro is falling also against other currencies. EUR/GBP made a significant drop from 0.8980 to 0.8930. EUR/AUD, that already fell to a decade low a few weeks ago, reached a 13-year low at 1.46.

It’s interesting to note that EUR/CHF is going up. After reaching an all time low under 1.4230, this cross is rising now. It looks like an intervention from the Swiss National Bank is happening. Only hours ago I wrote about a possible intervention on EUR/CHF.

EUR/USD is providing action, finally out of range.

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EUR/CHF at All Time Low – Massive Intervention Underway?

Posted: 23 Mar 2010 11:21 PM PDT

EUR/CHF is trading in the lowest level ever. Technicians will see it going further down, but the SNB might force it to go in the other direction. Will we see EUR/CHF rock on Friday? Updates on this cross.

EUR/CHF is now trading at 1.4244, the lowest level this pair ever traded in. It broke below the previous record of 1.4297 reached in October 2008, at the height of the global crisis, when the Swiss Franc was initially sought as the “safe haven” currency.

Throughout most of of 2009, the pair traded above 1.50. This psychological round number was not solely eyed by traders – also the Swiss National Bank guarded this line. The Euro zone is Switzerland’s main trading partner, and a weak Euro is bad for the Swiss economy, which is doing well. But support was lost:

Since mid-December, EUR/CHF began dropping. Despite some interventions by the central bank, the pair continue to deteriorate. In recent weeks, officials from the SNB made firm statements promising to act against the “excessively low levels of EUR/CHF”. The most recent “verbal intervention” came from SNB Governing Board Chairman Philipp Hildebrand this week.

This recent statement came after a week of deterioration from 1.46, which was the bottom in March 2009. EUR/CHF held on to 1.46 for some time, also backed by interventions, but after breaking this level, it deteriorated quickly – mostly due to the uncertainty about the Greek crisis.

Will the SNB move from talking to acting? They’ve also seen that these interventions are often short lived -the markets have a will of their own. A very massive intervention is needed, not just a spike.

If the cross continues to drop, the next technical level is 1.40, a round number. Looking up, 1.46 now serves as a resistance line. An intervention in the Swiss Franc will not be limited to EUR/CHF, but will also move USD/CHF. Currently at 1.0620, the next resistance line is 1.0650, quite close. It’s followed by 1.0730, 1.0830 and 1.09, which is a strong resistance line.

As we’ve seen earlier this year, interventions from the SNB usually came on Friday – sometimes during the quiet Asian session. Will we see this happening this week as well?

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Forex Daily Outlook – March 24th 2010

Posted: 23 Mar 2010 02:00 PM PDT

A busy day expects forex traders. The British budget release, American new durable goods orders and new home sales, New Zealand’s GDP and lots of European figures will rock the markets today. Let’s see what’s awaiting us:

Flash purchasing managers’ indices pour in during the European morning. France starts with its manufacturing and services figures. Germany follows, and the data for the whole continent is then released. All the figures are expected to edge up slightly. This will promise a choppy morning for EUR/USD. And there’s more in Europe:

German Ifo Business Climate continues the influx of European figures with an expected rise from 95.2 to 95.8 points. This highly regarded survey has been significantly better than other European indicators so far. A drop here will hurt the Euro.

The last European indicator today is the Industrial New Orders which are expected to rise by 2% after a more modest rise last month – 0.8%.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs’ latest analysis.

In Britain, the government will present make the Annual Budget Release. Alistair Darling, the British Chancellor of the Exchequer is expected to show a big budget – meaning a big deficit – hurting the British Pound. The presentation of the budget will take time – this includes presenting economic forecasts for the years to come. High volatility is expected.

For more on the British Pound, check out the GBP/USD forecast.

In the US, Durable Goods Orders are predicted to rise by 0.6% after a drop of 1% last time. Core Durable Goods Orders, which shot up by 2.6% last month, are expected to climb by 0.8%.

Another important release is New Home Sales. After Existing Home Sales were in line with expectations, remaining almost unchanged, new sales are predicted to follow, ticking up from 309K o 318K.

Later in the US, FOMC member Thomas Hoeing will make a public appearance. He’s the only member that voted to change the tone of the FOMC statement – make it more hawkish. Will he repeat this stance now?

EUR/CHF is dropping, and the Swiss National Bank doesn’t like it at all. A member of the central bank, Thomas Jordan, will make a public appearance and might move the Swissy.

Another speech is due in Canada – the governor of the BOC, Mark Carney, will talk in Ottawa and might send some hints about the bank’s monetary policy. Read more about the loonie in the Canadian dollar forecast.

GDP in New Zealand is expected to follow its neighbor Australia with a rise of 0.8% in the fourth quarter. The economy grew by 0.2% in the third quarter. High volatility is expected in NZD/USD.

That’s it for today. Happy forex trading!

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Forex technikal and fundamental analysis

Mar 24, 2010

Forex Crunch EUR/USD Breaks Down – Long Road Down

Forex Crunch EUR/USD Breaks Down – Long Road Down

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