Sep 19, 2010

Forex Crunch NZD/USD Outlook – September 20-24

Forex Crunch NZD/USD Outlook – September 20-24

NZD/USD Outlook – September 20-24

Posted: 18 Sep 2010 10:00 PM PDT


GDP leads the pack of economic indicators that will move the kiwi in the upcoming week. Here’s an outlook for the events in New Zealand and an updated technical analysis for NZD/USD.

NZD/USD daily chart with support and resistance lines on it. Click to enlarge:

NZD USD Forecast September 20-24

The RBNZ decided to leave the interest rate unchanged at 3%. While this was expected, the gloomy statement was a burden on the kiwi. We’ll now get an overall picture of the economy:

  1. Visitor Arrivals: Monday, 22:45. The economy of New Zealand is dependent on tourism, making this indicator important. Last month saw a rise of 1.4%, double the previous month. This time, the number will probably fall.
  2. Credit Card Spending: Tuesday, 3:00. This indicator complement the retail sales figure, as a significant portion of consumption is done via credit cards. Strong rises were seen in recent months – 3.4%, 4.5% and 2.7%. A rise is expected this time as well, but it will probably be more modest.
  3. Current Account: Tuesday, 22:45. This quarterly figure is of high importance, despite being published rather late and after the related trade balance number has already been released. Q1 was a big surprise – a small surplus was reported on top of expectations for a deficit in the current account. Q2 will probably see a surplus as well.
  4. GDP: Wednesday, 22:45. New Zealand enjoys economic growth for a full year. The growth rate in Q4 of 2009 and in Q1 of 2010 exceeded expectations, 0.9% and 0.6% respectively. As the unemployment rate jumped, and retail sales slumped, the growth rate will probably be weaker this time, at 0.5%.

NZD/USD Technical Analysis

The kiwi began the week higher – it traded between 0.7290 to 0.7350 (appeared last week as well). An attempt to break higher bounced just under 0.74 and the pair fell down to support at 0.72. Another recovery sent the pair to close at 0.7246.

The past week’s low of .7210 now provides minor support for NZD/USD. The next support line is very close – 0.7160 capped the pair in June and provided support recently.

Lower, 0.71 worked as a stepping stone in the recent ascent and is a minor support line. Below, the round number of 0.70 is already a strong line. It’s followed by 0.69, which capped the pair when it was trading lower, during the turmoil in May.

Looking up, 0.7290 is the immediate line of resistance, followed by 0.7350, which is now a strong resistance line.

Above, the next line of resistance is very close – 0.74 – it capped the pair just this week, and also in July. This double top is key resistance. Above, 0.7440 which held the pair for a few consecutive days at the beginning of the year, is the next line of resistance.

I remain bearish on NZD/USD.

With the pause in rate hikes, and the expected weaker GDP, the kiwi is likely to under-perform.

Further reading:

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AUD/USD Outlook – September 20-24

Posted: 18 Sep 2010 05:00 PM PDT


After reaching a two year high, we’ll get to hear the views of the central bank about the economy. Here’s an outlook  for the Australian events and an updated technical analysis for AUD/USD.

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

aud usd forecast September 20-24

The steaming hot Chinese economy contributed to the Aussie’s gains and the two-year high. Also the greenback’s weakness had its role. Will this continue?

  1. Glenn Stevens talks: Monday, 3:30. The head of the RBA always rocks the currency with his speeches. His appearance in Shepparton, very early in the week, is likely to provide a strong start for the week. Any comments about the exchange rate will naturally have a stronger impact.
  2. Monetary Policy Meeting Minutes: Tuesday, 1:30.  The recent rate decision left the Cash Rate unchanged at 4.50%. Nevertheless, the Australian economy is definitely warming up, as seen in employment and GDP. It will be interesting to see if any of the participants considered a rate hike in the near future.
  3. MI Leading Index: Wednesday, 1:30. 9 economic indicators build this composite index. In the past three months, this indicator hardly moved. A rise above 0.5% or a negative outcome will have a strong impact, even though most of the components have already been released.

AUD/USD Technical Analysis

The Aussie began the week with an impressing break above the all-important 0.9327 line, mentioned in last week’s outlook. It then pushed forward and went as high as 0.9469 before losing ground and closing at 0.9359, just under the 0.9366 line.

This 0.9366 line, which was a stubborn peak in April, will be an important pivotal line at the beginning of the week. Above this line, 0.9405 was the 2009 high and serves as the next line of resistance.

Above, the past week’s peak at 0.9469 provides further resistance – this is the current two year high. Even higher, we’re back to lines last seen in 2008.

0.9536 worked as a resistance line when the Aussie was pushing up, and then provided support just before the big collapse. Another line is 0.9650, which capped the pair for several months and was broken only temporarily before the big crisis.

Looking down from current levels, the important 0.9327 now turns into a strong support line. It already worked as such in the past week. Lower, 0.9277 capped the pair before it leaped upwards in a weekend gap and is a minor support line now.

Lower, 0.9220 capped the pair in August and provided support in April – it’s a strong line now. Even lower, 0.9180 is a minor line of support, after working as resistance on the way up.

It’s then followed by 0.9080 which capped the pair in July and 0.90 – the round psychological number.

I remain bullish on AUD/USD.

The Aussie finally unleashed its potential, riding on Chinese figures, risk appetite, and also on its own fundamentals, such as the recent and great jobs report. If there isn’t any major disaster, the pair can continue upwards.

Further reading:

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USD/JPY Outlook – September 20-24

Posted: 18 Sep 2010 11:00 AM PDT


USD/JPY saw a very exciting week with the intervention finally happening and sweeping the markets. The upcoming week is light in terms of events, so the technicals will play a bigger role. Here’s an outlook for Japanese events and an updated technical analysis for USD/JPY.

USD/JPY daily chart with support and resistance lines on it. Click to enlarge:

usd jpy forecast September 20-24

Note that Monday and Thursday are official holidays in Japan. The yen will still move. Let’s start:

  1. All Industries Activity: Wednesday, 3:30. This indicator shows the change in purchases made by businesses. A subset of this data was already reflected a week earlier. Nevertheless, as the only indicator this week, it will probably move the yen. A rise of 1.1% is expected now.

USD/JPY Technical Analysis

Dollar/yen began the week following the downtrend channel, going below the 83.34 level (mentioned in last week’s outlook) and reaching a new 15 year low of 82.87. And then the BOJ came in – the massive intervention sent USD/JPY 300 pips higher, breaking the downtrend channel and quite a few resistance lines. It remained in a narrow range until the end of the week, closing at 85.79.

USD/JPY is now in a narrow range that characterized its trading after the intervention – 85.60, which the BOJ may be guarding and the small double top of 85.90.

Looking up, the next line of resistance is 86.34, which provide support twice in July and worked as resistance in August. The next line is close – 86.90, which was a support line in June.

Above, 88.10 was a peak in July, before the strong fall and now served as resistance. Higher, 89.15 was a double top almost three months ago, and it’s followed by 89.76, that provided support a long time ago.

Looking down below the guarded 85.60 line, the next line of support is at 84.80, which provided support in August. This is followed by the 83.34 line and the new 15 year low at 82.87.

I remain bullish on USD/JPY.

The intervention was massive and I believe that the BOJ will continue working hard to keep the currency weak, also during the Japanese holidays and might send the pair out of the narrow range – to the upside.

Further reading:

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EUR/USD Outlook – September 20-24

Posted: 18 Sep 2010 06:00 AM PDT


The Euro enjoyed the dollar’s weakness and will now face  many important surveys and PMI figures among other indicators. Here’s an outlook for European events and an updated technical analysis for EUR/USD.

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

eur usd forecast September 20-24

The speculation from Goldman Sachs that the Federal Reserve will print more dollars helped the Euro make gains, despite mediocre economic indicators. Will this continue?

  1. Jean-Claude Trichet talks: Starts speaking on Sunday, 17:00 (before markets open). The president of the European Central Bank often releases statements that rock the markets, as he comments about the overall situation. In his speech in Tallinn, he might set the opening tone for the week.
  2. Industrial New Orders: Wednesday, 9:00. The Euro-zone enjoyed 5 months of growth in the value of orders made with manufacturers. The past two months were especially strong: 4.1% and 2.5% growth rates, exceeding expectations. So this time, orders are expected to fall by 1.2%..
  3. NBB Business Climate: Wednesday, 13:00. This wide survey of 6000 businesses has improved in recent months, but remained negative, meaning that conditions are expected to be worse. From -5.1 points, this Belgian survey will probably edge up, but still remain in negative territory, -4.9.
  4. Consumer Confidence: Wednesday, 14:00. This survey relates to consumers and is also in negative territory. This  official survey by the European authorities is expected to edge up edge up from -12.
  5. Flash PMI: Thursday. France begins at 7:00, Germany continues at 7:30 and the all-European figures are released at 8:00. Purchasing managers’ indices for the manufacturing and services sectors are all positive – with a score above 50 points – meaning economic expansion, but there are differences. The French services sector is the strongest, with a score of above 60 points, while the all-European manufacturing PMI is the weakest. All these indicators are expected to remain almost unchanged now, making very marginal drops. If any index slides under 50, the Euro will suffer, but there’s a bigger chance of seeing choppy trading without any significant trend change.
  6. German Ifo Business Climate: Friday, 8:00. This is the most important survey of the week. 7,000 businesses are surveyed for this indicator, that tends to be much more optimistic than the negative ZEW survey. After climbing to 106.7 points, the IFO survey will probably tick up once again, boosting the Euro towards the end of the week.

EUR/USD Technical Analysis

The Euro traded steeply higher during most of the week, breaking many lines on the way. Friday’s break of the important 1.3110 resistance line (mentioned in last week’s outlook) was a false break, and the pair closed just under 1.3050.

EUR/USD is around 1.3050, which which seems like a pivotal line. Looking up, 1.3110 remains a strong resistance line, after working as such in July, and serving as support a few months ago.

Higher, 1.3160, the past week’s high, is a minor resistance line. Stronger resistance appears at 1.3267, which supported the pair back in April.

Higher, August’s peak of 1.3334 is the next line of resistance, followed by 1.3430 which was a support line at the beginning of the year.

Looking down, there are many minor support lines – 1.2960 is the first one, after working in the past week. Lower, 1.2920 is already a stronger line, working as resistance several times in August and September.

The next line of support worked as support in the past week – 1.2830. Lower, 1.2770 was the top border of range trading recently. 1.2665 was the other side of that range trading, and now works as minor support.

Lower, 1.2610 is a very strong support line, holding the pair recently. There are many more lines below, but they’re too far now.

I remain bearish on EUR/USD.

While the Euro enjoyed the dollar’s weakness, its own troubles never went away. We got a second reminder this week – Irish debt issues which directly affect the stronger countries as well.

Here are some additional excellent reviews on this pair:

  • Casey Stubbs reports that the Euro is tesing a trend line.
  • James Chen’s strength / weakness meter puts the Euro at the top of the list this time.
  • Andriy posts technical levels for the EUR/USD and other pairs on a weekly basis.
  • Jamie Coleman reports that also the Spanish regions of Andalusia and Catalonia suffer from credit downgrades.
  • Mohammed Isah marks the next levels for EUR/USD.
  • TheGeekKnows writes a review of the past week looks forward.

Further reading:

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