Apr 25, 2010

Forex Crunch EUR/USD Outlook – April 26-30

Forex Crunch EUR/USD Outlook – April 26-30

EUR/USD Outlook – April 26-30

Posted: 24 Apr 2010 11:00 AM PDT


The upcoming week has many employment and inflation figures, as well as speeches from Trichet. Here’s an outlook for this week’s events, and an updated technical analysis for EUR/USD.

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

EUR USD forecast

We’ve seen many good European figures in the past week – this included rising prices and rising business confidence. All these struggled with the never ending Greek troubles, that continue to be a burden on the Euro. OK, let’s start:

  1. Jean-Claude Trichet talks: The president of the ECB will speak in multiple occasions this week, mostly in a trip to the US. Any comments about the Greek debt crisis or the state of the economies will shake the Euro. The first appearance will be in a New York conference on Monday at 16:30 GMT, on a light day. The second appearance will be in a conference in Chicago, on Tuesday at 13:15 GMT. Later on Tuesday, at 9:15 GMT, Trichet will talk at the Kellog School of Management in Evanston. Trichet returns to Europe and delivers a speech in Munich on Thursday at 11:30 GMT.
  2. German GfK Consumer Climate: Published on Tuesday at 6:00 GMT. This survey of 1000 consumers didn’t move in the past three months, exactly like the German economy. Last week’s surveys were better than expected. This time, it’s predicted to edge up from 3.2 to 3.4 points, showing a tiny improvement in sentiment.
  3. German CPI: Published during Wednesday. The different German states release their consumer prices indices during the day to build the initial release of German CPI. After a surprising rise of 0.5% last month, prices are expected to edge up by 0.1% this time. After German producer prices jumped, a higher rise won’t be a big surprise.
  4. German Unemployment Change: Published on Thursday at 7:55 GMT. A significant drop int he number of unemployed people was reported last month – 31,000. Expectations were for a rise. Economists are optimistic this time, and another drop of 11,000 is expected this time, helping to stabilize the falling Euro.
  5. M3 Money Supply: Published on Thursday at 8:00 GMT. The reduction in the amount of money in circulation, seen 3 times in recent months, is an expression of the slowdown. A squeeze is expected for the fourth time – but only 0.1% this time.
  6. CPI Flash Estimate: Published on Friday at 9:00 GMT. European figures come to a climax on Friday with the simultaneous release of inflation end employment together. European inflation is expected to rise by an annual rate of 1.4%, like last month. A stronger rise will be a problem for Trichet. Raising the rates can hurt the recovery.
  7. Unemployment Rate: Published on Friday at 9:00 GMT. Europe’s unemployment rate stands at around 10% in the past 4 months. The rate varies between Germany and France which have stronger economies, and countries like Spain, that has an unemployment rate of nearly 20%. The average 10% is expected to remain unchanged. A drop will be a great relief.

EUR/USD Technical Analysis

The Euro had another weekend gap, this time lower. It then climbed to 1.3520, which is a new minor resistance line (didn’t appear in last week’s outlook). It then began dropping, past 1.3380 and down under 1.3267, reaching a new year-to-date low at 1.3201 before making a comeback and closing just under 1.3380.

Looking down, 1.3267, the previous yearly low, is the initial support line – it was breached only for a few hours. Below, 1.3080 is the next line of support, being the the place where the Euro began the long-term run in 2009.

Looking up, 1.3520 is a minor resistance line on the way up. 1.37, which was a peak two weeks ago when hopes were high, is a stronger line of resistance. The strongest line is 1.3850. The Euro’s failure to break this line sent it down.

I continue being bearish on the Euro.

Despite improving figures, the Euro-zone’s debt problems, especially with the never-ending Greek story, continue to point downwards.

The Euro gets excellent analysis on the web. Here are my favorites:

  • Kathy Lien explains the deteriorating situation of Greece in a TV interview.
  • James Chen analyzed EUR/USD before the breakdown and sees a continuation of the bearish sentiment.
  • Casey Stubbs provides a free signal to short EUR/JPY.
  • TheLFB analyze the impressive last minute comeback and discuss the Greek issues.
  • TheGeekKnows reviews the week and looks forward.

Further reading:

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

GBP/USD Outlook – April 26-30

Posted: 24 Apr 2010 10:00 AM PDT


A volatile week ended with a disappointment – weak British growth. Now, the Pound expects a relatively light week, with a few housing figures standing out. Here’s an outlook for the British events and an updated technical analysis for GBP/USD, two weeks before the elections.

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

GBP/USD forecast

The past week saw rising inflation and later an improvement in jobs – all positive figures for the Pound – but the Pound is indirectly affected also by the Greek troubles and every economic indicator is interpreted in the context of the elections – a complication of the political situation isn’t Pound-positive. OK, let’s start:

  1. BBA Mortgage Approvals: Published on Tuesday at 8:30 GMT. The British Bankers Association accumulates data from its members – about two thirds of mortgages. This is a good gauge for the housing sector. After reaching a peak of 45,700 monthly approvals, they fell to the area of 35,000. This goes hand in hand with a pause in the rise of house prices. A rise to 39,300 is predicted now.
  2. CBI Realized Sales: Published on Tuesday at 10:00 GMT. The Confederation of British Industry has shown that retailers and wholesalers expect a higher volume of sales in the past two months. The positive score of 13 will probably be followed by a better one – 16. This tends to shake the Pound.
  3. Nationwide HPI: Published on Thursday at 6:00 GMT. Britain’s second earliest report on house prices showed that prices dipped by 0.8% two months ago, but then made a recovery. They’re now predicted to rise by 0.4%. The housing sector weighed on the whole economy during the crisis.
  4. GfK Consumer Confidence: Published on Thursday at 23:00 GMT (midnight UK). A week before the general elections, this consumer survey is expected to rise from -15 to -14. It probably reflects the situation quite well – improving but negative.

GBP/USD Technical Analysis

The Pound began the week with a big gap – it fell as low as 1.5195 before climbing back above the pivotal 1.5350 line, peaking at 1.5472 and closing at 1.5370, 10 pips higher than last week.

I’ve added a few lines on top of last week’s outlook. The current range for the Pound is 1.5350 to 1.5520 – which was a peak two weeks ago, and also worked as a support line in the past.

Looking up, the next line of resistance is very strong – 1.5833 – the failure to break this line sent the Pound down in recent months. Above, 1.6260 is a distant resistance line.

Below, 1.5195, the past week’s low provides immediate support. It’s followed by a stronger line at 1.5120 – a line that held the pair a few times in recent weeks.

Lower, 1.4975 is the next minor support line, and it’s followed by the year-to-date low of 1.4780 – also a support line in the past. A break of this line will lead the pair towards 1.44, but that’s too far now.

I remain neutral on GBP/USD.

Inflation and employment are on the rise, but the economy’s growth rate is too slow. Also politics contribute to the high volatility, but not to a choice of direction. We’ll probably see lots of action, but no long term moves till the elections.

Further reading:

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AUD/USD Outlook – April 26-30

Posted: 24 Apr 2010 09:00 AM PDT


Quarterly inflation figures, as well as other indicators, will shape the direction of the Aussie this week. Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD.

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

aud usd forecast

Following the recent rate hike, there were doubts about the next move. At the beginning of the week, the meeting minutes suggested a further rate hike, but Glenn Stevens cooled the expectations in a speech towards the end of the week. Inflation is one of the keys. Let’s start:

  1. NAB Quarterly Business Confidence: Exact publication time is unknown at the moment – delayed from last week. National Bank Australia’s quarterly version of its survey of 1,000 businesses has been positive in the past 2 quarters, scoring 16 and 18 points. A small drop can be seen this time.
  2. PPI: Published on Tuesday at 1:30 GMT. Constray to consumer prices, producer prices fell in the past quarter (0.4%) and missed expectations in the past 4 quarters. This time, a rise of 0.7% is expected in the PPI.
  3. Guy Debelle talks: Starts speaking on Tuesday at 22:30 GMT. After Glenn Stevens downplayed the option of a rate hike in the upcoming decision, the RBA Assistant Governor will also have a chance to send hints. Will they be in line with Stevens?
  4. CPI: Published on Wednesday at 1:30 GMT. Q4 CPI was slightly better than expected – 0.5%. Despite rate hikes since that release, consumer prices are predicted to rise by 0.9% this time. Glenn Stevens might have to re-think his statement about rates “reaching normal levels” if prices rise by over 1% in Q1. As there still uncertainty about the next meeting, this is one of of the key indicators, and will rock the Aussie. Also note the Trimmed Mean CPI (= Core CPI) which is expected to rise by 0.7%.
  5. CB Leading Index: Published on Thursday at midnight GMT. Many of the 7 components of this index have already been released. Nevertheless, the release always moves the Aussie. The index is moving between drops and rises every month. The 0.2% drop last time will probably be followed by a rise this time.
  6. HIA New Home Sales: Published during Friday. The Housing Industry Association shows strong moves in home sales. A leap of 9.5% two months ago was followed by a 5.2% drop last time. A modest rise is predicted this time.
  7. Private Sector Credit: Published Friday at 1:30 GMT. Credit has been steadily growing in recent months, showing that consumers are ready to spend more. A third consecutive rise of 0.4% is predicted in this indicator.

AUD/USD Technical Analysis

After starting lower, the Aussie moved higher, but failed to break the 0.9327 resistance line once again. It then fell and bounced back only at the 0.9170 support line, to close at 0.9274.

I’ve added some lines on last week’s outlook. The current range is between the minor support line of 0.9250 and 0.9327, a line that proved strong many times in the past.

Higher, 0.9366 is a minor line of resistance, followed by 0.9405, the 2009 high, which is still a strong barrier.

Looking down, 0.9170 continues to work as a support line, followed by 0.9090 and 0.90 – which was a swing low, and also a round number. Further down, 0.8735, December’s low, is a distant support line.

I remain bullish on AUD/USD.

Australian fundamentals, China’s growth, the high interest rate and the rising price of commodities continue to support the currency.

Further reading:

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NZD/USD Outlook – April 26-30

Posted: 24 Apr 2010 08:00 AM PDT


A rate decision stands out in this week’s kiwi events. Here’s an outlook for the events in New Zealand and an updated technical analysis for NZD/USD.

NZD/USD chart with support and resistance lines marked. Click to enlarge:

New Zealand dollar forecast

The kiwi managed to close the week higher, despite weaker-than expected CPI. This will probably be reflected in the rate decision.

  1. NBNZ Business Confidence: Published on Wednesday at 3:00 GMT. A day before the rate decision, the central bank releases this important survey of 1500 businesses. It always rocks the kiwi. In the past 10 months, this index has been positive – indicating optimism, although it dropped last month. At 42.5 points, it’s predicted to edge up.
  2. Rate decision: Published on Wednesday at 21:00 GMT. Alan Bollard, the governor of the RBNZ, doesn’t have a reason to raise the rates. Retail sales disappointed, and the quarterly inflation we’ve seen last week rose by 0.4% – very modest. So, the Official Cash Rate will probably remain unchanged at 2.5%. Canada will probably raise the rates before New Zealand. The kiwi will move by the wording of the RBNZ Rate Statement which will provide an economic overview and perhaps hints for future policy.
  3. Trade Balance: Published on Wednesday at 22:45 GMT. New Zealand enjoys a surplus in its balance in the past two months. This surplus is expected to rise from 321 to 372 million, indicating growing exports.
  4. Building Consents: Published on Thursday at 22:45 GMT. This important housing figure, called building permits in other countries, jumped by 5.9% last month, following two negative months. A small rise is expected this time.

NZD/USD Technical Analysis

The kiwi traded between 0.7050, a new minor resistance line (added on last week’s outlook) and 0.7177, a safe distance from the strong resistance line of 0.72.

Looking down, stronger support is found at 0.70, a round number that already provided support in the past. Lower, 0.68 is another significant support line, last tested in February. Even lower, 0.6685 is in the distance.

Looking up, 0.7320 is the next resistance line, followed by 0.7440 which was tested for several days at the beginning of the year.

I am neutral on NZD/USD.

The weak CPI and the American recovery counter the rise in commodity prices – a rate hike will probably have to wait for some time. I see more range trading.

Further reading:

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

USD/CAD Outlook – April 26-30

Posted: 24 Apr 2010 07:00 AM PDT


The battle for parity will continue in the upcoming week, as Canadian GDP will be published together with the same American figure. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

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

usd cad forecast

The Canadian dollar had an exciting week. The BOC made it clear that a rate hike is coming, but Friday’s weak CPI and retail sales prevented the loonie from winning the week. The governor of the BOC, Mark Carney, will continue moving the loonie this week:

  1. Mark Carney talks: Carney testifies in parliament in two sessions – on Tuesday at 19:30 GMT and on Thursday at 14:30 GMT. In these sessions, Carney will make an overview of the economic situation, and may give some more hints about the imminent rate decision. The big question is if it will come as soon as June 1st, or on the next meeting scheduled for July 20th.
  2. GDP: Published on Friday at 12:30 GMT. Canada is unique with a publication of the GDP on a monthly basis. January saw a grow rate of 0.6%, which is quite strong, and February is expected to be slightly slower – 0.5%. We will probably continue seeing Canada continue the strong growth of Q4 well into 2010. This will rock the loonie.
  3. RMPI: Published on Friday at 12:30 GMT, and overshadowed by the GDP release. The Raw Materials Price Index is an important indicator for Canada’s commodity oriented economy. Last month saw a surprising rise of 0.4% in prices. A stronger rise is expected this time – 0.%.

USD/CAD Technical Analysis

The pair began the week with a climb to test the 1.02 resistance line. It proved strong – USD/CAD fell quickly below parity, reaching a new low at 0.9930. It then made another move above parity, but finally closed at 0.9988 – the first weekly close under 1.

The lines haven’t changed since last week’s outlook. Parity continues to be the pivotal point for the pair. Above, 1.01 is a minor resistance line, working as such in recent weeks. 1.02 is already a very strong line – the 2009 low worked as a strong support line.

Above, 1.03 is another minor support line, and it’s followed by 1.04 – being the bottom line of the long-term range.

Looking down, the first significant resistance line is at 0.98, which was a support line during the last time that the pair was trading lower. It’s followed by 0.97, which is a stronger line of support.

I remain bearish on USD/CAD.

The upcoming rate hike, together with improving jobs, rising oil prices, a growing economy and the symbolic weekly close under parity should all help the pair continue lower.

Further reading:

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