| EUR/USD Outlook – March 29 – April 2 Posted: 27 Mar 2010 07:04 AM PDT 
The Euro had a bad week, losing an important support line. The upcoming week consists of many employment and inflation figures. Here’s an outlook for the events that will move the Euro, and an updated technical analysis for EUR/USD, looking down. EUR/USD chart with support and resistance lines marked. Click to enlarge: 
The breakdown of the Euro has many reasons: two of them are in the flanks of the continent – Portugal, with a credit downgrade, and Greece, with an ongoing debt crisis. These issues will continue to be a burden on the Euro. Let’s start the review. The technical analysis will follow:
- German Prelim CPI: Published on Monday. German prices rose by 0.4% last month, which is a healthy rise. But this figure is quite volatile – after a strong rise 3 months ago, a big drop followed. A rise in consumer prices is a must for a hike of the interest rate. A rise of 0.4% is predicted this time.
- Consumer Confidence: Published on Monday at 9:00 GMT. This official survey of 2,300 European consumers has been stable in recent months, scoring -17 last month – exactly as expected. The negative score means that consumers are pessimistic. The score was much lower during the height of the global crisis. The score will probably remain unchanged.
- German Import Prices: Published on Tuesday at 6:00 GMT. After a leap of 1.7% last month, a more modest rise of 0.5% is predicted this time. Import prices don’t seem to have a significant impact on consumer prices.
- German Unemployment Change: Published on Wednesday at 7:55 GMT. After 6 consecutive months of drop in the number of unemployed people, the past two months saw a rise – at least it was a smaller rise than expected. Germany’s job market is significantly better than most of the continent. A rise of 10,000 unemployed people is expected this time.
- CPI Flash Estimate: Published on Wednesday at 9:00 GMT. Two days after the German figure, the initial estimate for the whole continent is due. This figure is more stable, rising between at around 1% (annualized) in the past three months. Also here, a stronger number is necessary for a rate hike. It’s predicted to edge up from 0.9% to 1.1%.
- Unemployment Rate: Published on Wednesday at 9:00 GMT. Europe’s unemployment rate currently stands at 9.9%. The drop below the double digit figure of 10% is a small psychological relief – though Europe has other problems. If expectations are met, and the rate gets back to 10% - this will hurt the Euro.
- German Retail Sales: Published on Thursday at 6:00 GMT. The continent’s largest country and economic locomotive showed a drop of 0.5% in retail sales last month, weaker than expected. A rise of 0.3% is predicted this time.
- Final Manufacturing PMI: Published on Thursday at 8:00 GMT. The initial release for Manufacturing PMI surprised with a score of 56.3 points. This will probably be confirmed in the final release.
EUR/USD Technical Analysis The Euro began the week with a drift around the bottom of the range. It then made the big collapse below 1.3423, and all the way up to 1.3267, before making a partial recovery and closing at 1.3409. I’ve slightly modified the support and resistance lines from last week’s outlook. EUR/USD is now capped by 1.3435, an extension of the previous 1.3423 support line. This is a very strong resistance line. From the bottom, 1.3267, the past week’s low supports the Euro. This is also 50% of the range between 1.3435 to 1.3080, the next major support line. 1.3080 was an important line before the Euro made its long term move against the dollar during most of 2009, and provides strong support. Below, 1.2880 is the next significant line of support. Looking up above 1.3435, many minor resistance lines appear: 1.3530, 1.3640 and 1.3780 are all minor hurdles within the previous range. The most important resistance line up there is at 1.3850 – the recent failure to break this line sent the Euro down. I am bearish on EUR/USD. The Greek accord isn’t enough – not for Greece and not for other European troubles. As long as 1.3435 isn’t breached, the direction continues to be down. The recovery near the end of the week could be another rise before a plunge. This pair receives many interesting articles on the web. Here are my favorites: - Casey Stubbs analyzes the break with his 4-hour charts and asks if more will come.
- Jack Crocks on TheLFB analyzes the what he calls the Euro-land’s surrender regarding responsibility.
- The Geek Knows reviews the week and looks forward to the next week.
- John Rowa, on IntegrityFXPlus, asks if the Euro is headed for a plunge on Monday.
- Kathy Lien explains why the credit downgrade of Portugal is so damaging for the Euro.
Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| GBP/USD Outlook – March 29 – April 2 Posted: 27 Mar 2010 07:03 AM PDT 
The Pound finished the week lower. The upcoming week consists of the final GDP and 8 other moving events for the Pound. Here’s an outlook for the British events and an updated technical analysis for GBP/USD, as the Pound is closer to cliff. GBP/USD chart with support and resistance lines marked. Click to enlarge: 
Alistair Darling was this week’s star – his budget release contained no new hope for the currency. Also weaker inflation weighed on the Pound. OK, let’s look towards the next week. The technical analysis will follow: - Halifax HPI: Publication time unknown at the moment. This isn’t the UK’s earliest home price report. Nevertheless, it’s a highly regarded one, since its based on the internal figures that HBOS holds – a very wide survey. After 7 months of rises, this index fell by 1.5%, disappointing the markets. A smaller drop is expected this time.
- Net Lending to Individuals: Published on Monday at 8:30 GMT. Credit used by the consumers is a good gauge of economic activity. This has risen from 1.5 to 2 billion last month, showing that consumers are willing to spend more. A drop to 1.8 billion is predicted this time.
- Spencer Dale talks: Starts speaking on Monday at 16:45 GMT. As the chief economist of the BOE, Dale has an influence on the central bank’s decisions and his opinion about the economy can move the markets. Speaking in Surrey, Dale might follow his boss Mervyn King by pushing the Pound lower.
- Nationwide HPI: Published on Tuesday at 7:00 GMT. This house price index showed the same trend as the one produced by Halifax – a sudden drop in prices after a long period of rises. The 1% drop is expected to be followed with a 0.2% rise.
- Final GDP: Published on Tuesday at 8:30 GMT. There were many doubts about the British growth in Q4. While politicians were celebrating the end of British recession, a deeper dive into the numbers showed that the real reason for growth in Q4 was a downwards revision of data in Q3. Anyway, this 0.3% growth rate will probably be confirmed in the final release.
- Current Account: Published on Tuesday at 8:30 GMT and overshadowed by the GDP, although it’s a quarterly figure. Britain saw a nice drop in its deficit in the previous quarter – 4.7 billion – the lowest figure in many years. Also in Q4 of 2009, the deficit is expected to remain relatively low – 4.6 billion.
- GfK Consumer Confidence: Published on Tuesday at 23:00 GMT (midnight of Wednesday in the UK). This Consumer Confidence Barometer has been negative for many years, indicating pessimism among its 2,000 surveyed consumers. After advancing to -13, the number retreated and now stands on -14. A return to -13 is expected now.
- Manufacturing PMI: Published on Thursday at 8:30 GMT. Britain’s manufacturing sector is doing quite well. In the past 5 months, it has been above the critical 50 point mark, indicating economic expansion. It’s now predicted to edge up from 56.6 to 56.8 points. This is a big market mover for the Pound.
- BOE Credit Conditions Survey: Published on Thursday at 8:30 GMT and overshadowed by the PMI. This quarterly report gives a look into the financial system which has suffered badly during the crisis. A better report should support the Pound.
GBP/USD Technical Analysis The Pound began the week with a rise above 1.51, but from there it was all downhill. GBP/USD dropped in waves and bottomed at 1.4798, just 18 pips above the all-important support line of 1.4780. The support and resistance liens have slightly changed since last week’s outlook. 1.4780 is the year-to-date low and also worked as a resistance line back in the spring of 2009 – this is a strong support line. On the other side of the range, 1.5110 provides a minor resistance line, being the past week’s high. Looking up, 1.5350 is already a major resistance line. It supported the pair for some time, and the break of this started the big collapse. The lines above belong to the previous range – 1.5520 is a minor resistance line, and 1.5833 is a strong and far resistance line. Looking down, the next line of support under 1.4780 is only at 1.44, an important line that worked as a support line at the beginning of 2009 and also a few months later. Even lower, 1.4130 is the next significant line. I remain bearish on GBP/USD. The British economy is still struggling, a credit downgrade is looming and the uncertainty around the elections (as seen in the budget) are all weighing on the Pound. Will it follow the Euro and lose the important line of 1.4780? Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| AUD/USD Outlook – March 29 – April 2 Posted: 27 Mar 2010 07:02 AM PDT 
The Aussie suffered from the dollar’s strength in the past week. The upcoming week is packed with Aussie related figures. Here’s an outlook for the events that will move the Aussie, and an updated technical analysis for AUD/USD. AUD/USD chart with support and resistance lines marked. Click to enlarge: 
The Aussie lost the important 0.9090 line that it broke above on March 8th. Although it put up a fight, the greenback’s strength was probably too much for it. OK, let’s start the review. The technical analysis will follow: - HIA New Home Sales: Publication time unknown at the moment. House prices are rather volatile in Australia. The Housing Industry Association reported a big leap in prices last month – 9.5%. This followed a small drop. A smaller rise is expected this time.
- Guy Debelle talks: Starts speaking on Tuesday at 2:00 GMT. Dr. Guy Debelle speaks once again, and can hint on the rate decision in the following week. There’s no consensus on the decision, after it rose to 4% last time. So, his word will probably shake the markets.
- Retail Sales: Published on Wednesday at 00:30 GMT. Consumer behavior has been quite a see-saw in Australia, but they have been on the rise in most months. Last month’s nice rise of 1.2% will probably be followed by a 0.3% rise this time.
- Building Approvals: Published on Wednesday at 00:30 GMT and overshadowed by retail sales. Also this figure has been “wild” recently. rises of over 5% and over 10% were followed by a dive of 7%. Economists continue to be expect more moderate moves – a rise of 2.2% is predicted this time.
- Private Sector Credit: Published on Wednesday at 00:30 GMT, and overshadowed by the previous releases. Credit has been on the rise in recent months – with very steady moves here. Last month’s rise of 0.4% is expected to be followed with a rise of the same size. This is a volatile time for AUD/USD.
- AIG Manufacturing Index: Published on Wednesday at 22:30 GMT. The Australian Industry Group showed that manufacturing is expanding in the past two months. This index, with scores similar to PMI, rose to 53.8 points, the highest level in over two years. This result will probably be repeated.
- MI Inflation Gauge: Published on Wednesday at 23:30 GMT. Economists at the Melbourne Institute have seen inflation ease to the lowest level in 5 months – only 0.1%. Stronger inflation, as seen in the last CPI release, is necessary for seeing further rate hikes. A similar rise is predicted this time.
- Trade Balance: Published on Thursday at 00:30 GMT. Australia’s deficit has been below expectations in the past few months, aiding the currency. This time, the deficit is predicted to widen from 1.18 to 1.37 billion. A better result will boost the Aussie.
- Chinese Manufacturing PMI: Published on Thursday at 1:00 GMT. After reaching a peak at 56.6 points, purchasing managers in China’s manufacturing sector eased their expectations, and the index fell to 52 points, still above the 50 mark – still expecting economic expansion. A rise back to 55.2 points is predicted now. China is Australia’s main trade partner, and Chinese strength kept the Aussie higher in the past year.
- Commodity Prices: Published on Thursday at 5:30 GMT. Australia’s commodity-oriented economy is enjoying the recovery in prices. This year-over-year indicator showed an annual drop of 9.7% last time, the lowest since April 2009. A smaller drop is predicted this time.
AUD/USD Technical Analysis The Aussie failed to break above the 0.92 line at the beginning of the week, and it began deteriorating from there, eventually losing the important 0.9090 support line that it struggled to break on March 8th. Some line were modified since last week’s outlook. The current range of AUD/USD is between the 0.9090 line, that turned back to a resistance line, and 0.8980 – a support line a few weeks ago and also now. Looking above, 0.92 is the next resistance line, but quite a minor one. Even higher, 0.9327 is a strong resistance line that the Aussie tested several times in recent months. 0.94, the 2009 high is above. Looking down below 0.8980, 0.8735 is the next important support line. It was December’s low. Even lower, the 0.8567 line is the 2010 low and also served as a support line in the past. I am neutral on AUD/USD. Australia has an excellent economy, and this is seen in the strong job market. Nevertheless, when the US dollar shows such strength, the Aussie cannot rise. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
| USD/CAD Outlook – March 29 – April 2 Posted: 27 Mar 2010 07:01 AM PDT 
The Canadian dollar retreated from its move towards parity. The upcoming week isn’t very eventful, but it includes the important release of the GDP. Here’s an outlook for Canadian events and an updated technical analysis for USD/CAD. USD/CAD chart with support and resistance lines marked. Click to enlarge: 
The dollar’s strength, best seen against the Euro, didn’t skip the Canadian dollar, that suffered from the greenback’s strength. Let’s start: - RMPI: Published on Thursday at 12:30 GMT. The Raw Materials Price Index is a good gauge for the loonie, as exports of commodities make a significant portion of the economy. Prices are in a see-saw, switching from a rise to a fall every month. Last month saw a rise of 3.3% after dropping by 1.7% in the previous month.
- GDP: Published on Wednesday at 12:30 GMT. Canada publishes its Gross Domestic Product every month – different than most countries that publish it on a quarterly basis. Last month, GDP surprised with a rise of 0.6%, completing a 5% annual growth rate for Q4 of 2009. Growth is expected to be seen in January as well.
USD/CAD Technical Analysis USD/CAD traded higher in the past week, breaking above 1.02 and reaching 1.0300, a safe distance from the next significant resistance line of 1.04. The support and resistance lines have been slightly modified from last week’s outlook. Looking up, 1.0300 is a minor line of resistance, being the recent peak. Higher, 1.04 is an important resistance line, serving as a support and resistance line for many months. Even higher, 1.0680 is the next line of resistance, followed by 1.0780, which provides strong support. They are followed by 1.0850 and 1.1150, but that’s far away. Looking down, 1.02 continues to be a line of importance, but less significant than it used to be. The ultimate support line remains parity – 1.0000. USD/CAD got 60 pips from it before retreating. Even lower, 0.98 is the next support line. I remain bearish on USD/CAD. The Canadian job market looks good, and this will probably be reflected in the GDP. Note that parity with the greenback continues to be a very tough barrier. Further reading: Want to see what other traders are doing in real accounts? Check out Currensee. It’s free. |
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