Mar 21, 2010

Forex Crunch EUR/USD Outlook – March 22-26

Forex Crunch EUR/USD Outlook – March 22-26

EUR/USD Outlook – March 22-26

Posted: 20 Mar 2010 08:04 AM PDT


The Euro had a bad week, mostly due to another bad development in the Greek crisis. The upcoming week consists of a major German survey among other events. Here’s an outlook for 9 moving events in the Euro zone, and an updated technical analysis for EUR/USD.

EUR/USD graph with support and resistance lines marked. Click to enlarge:

EUR/USD Forecast

I had big doubts in the rise of the Euro and claimed it’s probably a rise before the plunge. Indeed, Thursday and Friday’s sessions sent EUR/USD 200 pips down. Let’s start the review. The technical analysis will follow:

  1. Belgium NBB Business Climate: Published on Tuesday at 14:00 GMT. This wide survey of 6,000 businesses tends to move the Euro, despite coming from a small country. Last month saw a disappointment as the index remained unchanged at -7 points. A negative number means worsening economic conditions. A rise to -4.1 is predicted this time, still in the negative zone.
  2. French Flash PMI: Published on Wednesday at 8:00 GMT. France is the first country to publish the initial releases of purchasing managers’ indices. Manufacturing PMI is predicted to edge up from 54.9 to 55 points and services PMI from 54.6 to 54.9 points.
  3. German Flash PMI: Published on Wednesday at 8:30 GMT. 30 minutes after France, the continent’s largest economy publishes its figures. Here, there’s a significant difference between the strong manufacturing sector where PMI is expected to remain high, around 57.2 and the services sector, which is expected to rise remain at around 52 points.
  4. Flash PMI: Published on Wednesday at 9:00 GMT. The last release is for the whole continent. Manufacturing PMI is expected to remain unchanged at 54.2 points and services PMI to edge up from 51.8 to 52 points. Note that all the figures are above 50 – indicating economic expansion.
  5. German Ifo Business Climate: Published on Wednesday at 9:00 GMT. Contrary to other European surveys and indicators, this one stable and continues to improve steadily. If it indeed rises from 95.2 to 95.8 points, it will have a positive impact on the Euro. It’s a major market mover.
  6. Industrial New Orders: Published on Wednesday at 10:00 GMT. The total value of purchase orders has risen nicely in the past two months. After rising by 0.8% last month, a stronger rise of 2.1% is expected this time, supporting the Euro.
  7. GfK German Consumer Climate: Published on Thursday at 7:00 GMT. This survey of 2,000 consumers fell from the peak score of 4.3 points and is recently stable at 3.2 points. It’s predicted to edge down to 3.1 points in the upcoming release.
  8. French Consumer Spending: Published on Thursday at 7:45 GMT. The continent’s second largest economy has seen strong volatility in its consumers behavior. After a rise of 2.1% in spending, it fell by 2.7% last month. A modest rise of 0.3% is predicted this time.
  9. M3 Money Supply: Published on Thursday at 9:00 GMT. The amount of money in circulation usually rises, but the current stagnation and current crisis brought it to a standstill and even a drop during two months – November and December. Last month’s 0.1% rise will probably be followed by a drop of 0.1% this time.

EUR/USD Technical Analysis

EUR/USD had a good start to the week, rising above the 1.3780 resistance line and getting close to the important 1.3850 line. But this was only a rise before the plunge – after a second attempt to break higher failed, EUR/USD fell sharply and closed at 1.3530.

Most lines haven’t changed since last week’s outlook. EUR/USD is now standing on the minor line of 1.3530. Looking up, there are several additional minor lines to watch – 1.3680 provided some support during the recent fall. 1.3780 worked as a resistance line before the attempt to break higher.

The major resistance line is 1.3850 – the failure to breach this line puts downside pressure on the Euro. If this line is broken, the next line of resistance is at 1.40, followed by 1.42.

Looking down, 1.3423 continues to provide strong support. This line was tested in May 2009 and three times during the end of February and the beginning of March.

A break of 1.3423 will send the Euro tumbling down, with the next significant line of support being only at 1.3080.

I am bearish on EUR/USD

Apart from the Greek crisis, Germany’s stagnant economy and high unemployment continue to weigh on the Euro. The sharp falls might be followed by additional ones.

This pair receives many interesting coverages on the web. Here are my favorites:

  • Casey Stubbs discusses the fall of the Euro after the failed attempt to break higher, using his 4 hour charts.
  • James Chen sees bearishness continue after the wedge breakdown.
  • The Geek Knows summarizes the week and looks forward.
  • Dan Cook, on TheLFB, marks three out of three for the US dollar.

Further reading:

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GBP/USD Outlook – March 22-26

Posted: 20 Mar 2010 08:03 AM PDT


The Pound fell in the past volatile week. The upcoming week contains inflation figures and the budget release among other indicators. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.

GBP/USD graph with support and resistance lines marked. Click to enlarge:

GBP/USD forecast

Britain enjoyed a significantly smaller number of unemployed people. At first it seemed that this surprising figure will send the Pound beyond 1.5350, but these hopes were shattered and the Pound fell sharply. Let’s start the review. The technical analysis will follow:

  1. CPI: Published on Tuesday at 9:30 GMT. British prices have risen and went beyond the government’s target of 1-3%. Mervyn King, head of the BOE, was forced to write a letter explaining the situation and the measures he’ll take. He wasn’t impressed from this rise and expects to see prices fall back in line. After reaching an annual rate of 3.5%, prices are expected to fall back to 3.1%. If so, King’s confidence will be proven correct. Core CPI is also expected to edge down - from 3.1% to 3% and RPI (Retail Price Index) is expected to remain unchanged at 3.7%.
  2. BBA Mortgage Approvals: Published on Tuesday at 9:30 GMT and overshadowed by the inflation numbers. The British Bankers Association dominates about two third of Britain’s mortgages, and precedes the official release by the government. After a sharp and disappointing drop from 45.7K to 35.1K last month, another fall is predicted this time – to 34.3K.
  3. CBI Realized Sales: Published on Wednesday at 11:00 GMT.  This survey of both retailers and wholesalers showed higher sales volume last month, when the score surprised and reached 23 points. This exceeded the negative expectations and pushed the Pound higher. The score is expected to drop from 23 to 20 points this time.
  4. Annual Budget Release: Published on Wednesday at 12:30 GMT. Alistair Darling, the Chancellor of the Exchequer, will probably bring a big budget to parliament. Less than two months before the general elections, the government will probably avoid cutting the big deficit. This will probably hurt the Pound. Darling already did it in the past. It’s also important to note the economic projections that accompany the budget release. They’ll also move the Pound.
  5. Retail Sales: Published on Wednesday at 9:30 GMT. In the past five months, this important economic indicator fell short of economists’ expectations. Last month was a big disappointment, with a fall of 1.8% in sales volume. A rise of 0.6% is predicted this time.
  6. Revised Business Investment: Published on Friday at 9:30 GMT. The revised version will probably be slightly better than the initial release – a drop of 5.6% rather than 5.8% in investment. The big picture remains bleak – 7 consecutive months of squeezes in investments.

GBP/USD Technical Analysis

At the beginning of the week, GBP/USD tested the 1.5220 resistance line and bounced back down to 1.50. It later managed to break this line and test important 1.5350 line. It shortly traded above this line, but the gains didn’t hold and it fell to close just above 1.50.

The lines haven’t significantly changed since last week’s outlook. GBP/USD trades in a range between 1.50, a round psychological number and 1.5220, which is a minor resistance line.

Looking up, 1.5350 remains a major line of resistance, providing support for the pair last year and also one month ago. It was successfully tested now as well.

Above, 1.5520 provides a minor resistance line, working as both support and resistance recently. Even higher, 1.5833 provides a strong line of resistance after being a strong support line before the collapse.

Looking down, 1.4870 is the next line of support under 1.50. This line was a bottom for the Pound recently. The stronger support line appears at 1.4780 – a line that was of importance last year, and also now provided support for the Pound after it collapsed.

A break of 1.4780 will lead the Pound to test 1.44, a support line that was successfully tested in May 2009.

I am bearish on GBP/USD.

After really good employment numbers weren’t enough for GBP/USD to break higher, this week’s budget deficit will probably weigh heavily on the Pound.

Further reading:

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AUD/USD Outlook – March 22-26

Posted: 20 Mar 2010 08:02 AM PDT


After testing higher ground, the Aussie finished the week almost unchanged. The upcoming sees a speech by the RBA governor among other events. Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD.

AUD/USD graph with support and resistance lines marked. Click to enlarge:

AUD/USD Forecast

AUD/USD Technical Analysis

The Australian dollar indirectly enjoyed the unwinding of the Greek crisis, about a month ago. As fears were strong in the past week, the Aussie’s rise was erased, despite the good fundamentals. Let’s start the review. The technical analysis will follow:

  1. New Motor Vehicle Sales: Published on Monday at 00:30 GMT. In Australia, vehicle sales are an important gauge of the economy. They are published early in the week, with no other figures around them, so they could shake the Aussie. After six straight months of rises, sales dropped by 3.4% last month. A rise is predicted this time.
  2. Philip Lowe talks: Starts speaking on Wednesday at 22:40 GMT. Dr. Philip Lowe is an influential member of the RBA, serving as assistant governor. He might indicate the fate of the next Australian rate decisions. Many analysts think that Australia will raise the rates on a monthly basis – will Lowe indicate a break in the upcoming meeting, after the last hike to 4%.
  3. RBA Financial Stability Review: Published on Thursday at 00:30 GMT. The Australian financial system showed strength in the current crisis. This report, published only twice a year, can shed light on the current situation. A positive report on financial institutions can help the Aussie.
  4. Glenn Stevens talks: The speech begins on Thursday at 22:15 GMT. Following Lowe’s speech, his boss will also speak. If he speaks about the currency or future policy, AUD/USD will rock. This isn’t the agenda of the conference he’s attending, so the speech won’t necessarily have an impact.
  5. CB Leading Index: Published on Thursday at 23:00 GMT. 7 indicators compose this index – most of them already released. Nevertheless, it still moves the Aussie. Last month’ rise of 0.6% followed two months of drops. A rise is predicted this time.

AUD/USD Technical Analysis

At the beginning of the week, AUD/USD broke above 0.9190, peaking at 0.9250. These gains didn’t hold, and it fell below this level.

Note that some technical levels were modified since last week’s outlook. The current range of AUD/USD is 0.9090 to 0.9190.

Looking up, 0.9327 is a very strong line of resistance, being tested many times during 2009 and the beginning of 2010. A break of this line will lead to the 2009 high of 0.94.

Looking down, the next line of support below 0.9090 is 0.8980, which was a bottom before the pair rose to the current levels. Even lower, 0.8735 was the low level in December 2009, and it provides further support.

The last line of support is 0.8567, which was a support line many months ago and also the place where the Aussie bounced before the recent range.

I am bullish on AUD/USD.

Australia’s strong economy never suffered recession, enjoys a strong job market and excellent trade with China. Less fear in the markets, and it will continue rising.

Further reading:

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USD/CAD Outlook – March 22-26

Posted: 20 Mar 2010 08:01 AM PDT


USD/CAD was just 60 pips away from parity but retreated on the greenback’s strength. It’s still in a tight range close to this ultimate line. This week doesn’t have too many Canadian events, so this week’s outlook will be mostly technical.

USD/CAD graph with support and resistance lines marked. Click to enlarge:

USD/CAD Forecast

Friday’s stronger-than-expected rise in prices helped the Canadian dollar remain stable while other currencies surrendered to the US dollar. Also in the past we’ve seen a strong reaction to CPI figures.

  1. Leading Index: Published on Tuesday at 12:30 GMT. Canada’s leading index is based on many figures that were already released, but it still tends to be significantly different from expectations, moving the loonie. Last month’s 0.9% rise is expected to be followed by a rise of 1% this time.
  2. Mark Carney talks: Starts speaking on Wednesday at 17:00 GMT. The Bank of Canada is very consistent and clear with its statement about the rates – they won’t move until the end of the second quarter. Time goes by – Q2 is very close. In his public appearance, Carney might hint about the rates and speak about the state of the economy.

USD/CAD Technical Analysis

At the beginning of the week, USD/CAD went up, above the 1.02 resistance line. This was a false break that didn’t get too far. The pair then returned to the downtrend and stopped at 1.0060 before it bounced back.

The lines are similar to last week’s outlook. The pair is bound between two important lines – 1.02, which was the 2009 low and parity – 1.0000. This tight range could continue to characterize USD/CAD trading also in the next week.

Above 1.02, 1.04 is the next important line of resistance, serving as a clear support and resistance line during the recent month, and also the bottom line of a big range.

Higher, 1.0680 is a minor resistance line, being a swing high a few weeks ago. The more important line appears at 1.0780, the top boundary of the previous long-term range.

Even higher, a strong US dollar will meet further resistance at 1.0850, a past peak, and much stronger resistance at 1.1130, a line that stopped the pair many times in the past.

Looking down beyond parity, 0.98 served as a support and resistance line during the last period that USD/CAD traded below parity. Even lower, 0.97 is the next line of resistance.

I am bearish on USD/CAD

All the Canadian parameters, including employment and GDP support further strength. Parity is a huge psychological barrier, so we might see range trading for another week.

Further reading:

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