FOREX TRADING

EUR/USD closed higher due to short covering on Monday as it consolidated some of this month’s decline. The mid-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. If its renews this month’s decline, the 38% retracement level of the 2008- 2009-rally crossing is the next downside target.

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Momentum Remains Light

The currency market came to a standstill during European trading hours, after a smoothly trending Asian session that had the dollar sold. The range-bound trading pattern is in-line with the light trading volumes observed overnight, which did not allow the market to move anywhere decisively, or at least to test any important price points. Ahead, the market is expected to pick up some additional momentum during the U.S. open, but nothing out of the ordinary that could test easily the 4 Hour chart ranges that will need to break if a trend reversal can follow through.

Dollar Index Technical View: TheLFB Member Charts

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Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push higher on Thursday, topped at 1.4417 but closed lower at 1.4353. This fact lead me to a conclusion that price might be in consolidation phase. It’s too early for bullish scenario, but the bearish scenario is not over yet, not until we have consistent move above 1.4420 area. Break above that area should trigger further bullish momentum towards 1.4585 area. The bias is neutral in nearest term. Immediate support at 1.4250 area. Break below that area should continue the bearish scenario testing 1.4170 – 1.4127 area and keep the bearish scenario intact.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD bearish momentum was stopped yesterday. The pair failed to move consistently below 1.4250 and the Dollar was weaken significantly after new home sales number unexpectedly fell to 355K. Price topped at 1.4365 and closed at 1.4328. On h4 chart below, we can see that the bearish channel has been violated to the upside indicating potential threat to the bearish outlook. Remember that the bearish momentum in the last three weeks has been attempting to test the long term key support level at 38.2% Fibonacci retracement of 1.2456 – 1.5143 around 1.4127 area. Although it’s too early to say that the bearish momentum is over, the bearish channel violation should keep the long term bullish scenario remains intact convincingly. The bias is bullish in nearest term testing 1.4420 area. Immediate support at 1.4270 – 1.4250 area. Break below that area should keep the bearish scenario intact  testing 1.4170 – 1.4127 area. Break above 1.4420 should be seen as bearish failure and trigger bullish scenario back towards 1.4620 area.

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USD Lower, US New Home Sales Plunge 11.3%

• USD: Lower, USD drops from three month high, new home sales post an unexpected decline
• JPY: Higher, US two-year bond yields trade above Japanese two-year yields
• EUR: Higher , EU Libor rates fall to record low
• GBP: Lower, BOE may expand quantitative ease in early 2010, mortgage approvals rise
• CAD and AUD: AUD & CAD higher, China and Russia may add CAD reserves

Overview

Today’s US economic data was mixed with personal income and personal consumption reported slightly below expectation. Michigan consumer sentiment improved. New home sales posted an unexpected sharp decline in October. USD traded lower after the release of much weaker than expected new home sales report. USD traded in a narrow range Wednesday drifting lower from a 3 1/2 month high reached in overseas trade. USD is supported by rising US bond yields and optimism about the US recovery. The main feature of the trade was a focus on the debate over whether the BOE plans to expand quantitative and continued underperformance of the GBP. The Bank of England minutes confirm that the BOE voted unanimously to maintain the current level of asset purchases and interest rates at the December policy meeting. The Daily Mail reports that the BOE may be considering expanding its asset purchases by £25 billion in early 2010. (more…)

Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push higher yesterday, topped at 1.4331 but further bullish momentum was rejected as price whipsawed to the downside, break below 1.4250, bottomed at 1.4216 and closed at 1.4253. Looks like the double bottom support failed to prevent the bearish pressure a this phase. This fact should lead us to further bearish scenario with technical target at 38.2% Fibonacci retracement of 1.2456 – 1.5143 around 1.4127 area which is a key support level from longer term point of view. Break below 1.4127 should be a potential threat to the long term bullish outlook. Immediate resistance at 1.4300 – 1.4330 area. We have seen a very strong bearish momentum this month with no sign of significant upside correction.

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USD Rallies as Existing Home Sales Rise by 7.4%

• USD: Higher, bigger than expected downward revision in Q3 GDP, existing home sales surge
• JPY: Lower, BOJ to combat deflation, government says BOJ effectively set inflation target
• EUR: Lower , Moody’s downgrade of Greece debt rating, German consumer confidence falls
• GBP: Lower, smaller than expected upward revision in UK Q3GDP
• CAD and AUD: AUD lower & CAD higher, Australia’s LEI declines, Canada’s GDP expected to rise

Overview

USD and equity markets continue to trade higher as the inverse correlation for the USD and risk appetite breaks. Investors are liquidating short USD positions and unwinding USD carry trades before year-end. Optimism about the US recovery and speculation that the Fed will begin to withdraw stimulus sooner than expected supports the USD. EUR traded lower as Moody’s cut Greece’s sovereign debt rating and in reaction to report of an unexpected decline in German consumer confidence. EUR downside was is limited by gains in cross trade to the GBP and JPY with GBP pressured by report of smaller than expected revision in UK Q3 GDP and JPY pressured by BOJ pledge to fight deflation and set an inflation target. Commodity currencies traded mixed despite improving equity market trade pressured by weaker crude prices as OPEC leaves oil production levels unchanged. AUD was pressured by report of an unexpected drop in Australia’s LEI. CAD continued to outperform supported by optimism about improving growth outlook in North America. Today’s US economic data was mixed with Q3 GDP revised down more than expected and existing home sales rising more than expected. USD traded to the day’s highs after the release of better than expected existing home sales. USD continues to benefit from improving outlook for the US recovery. Today’s US existing home sales report fuels optimism about the US recovery. (more…)

Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push higher yesterday, topped at 1.4372 but further bullish momentum was rejected as price closed lower at 1.4273. This fact should keep the pressure on Euro re-testing 1.4250/60 support area today. The bias remains to the downside targeting 1.4172 – 1.4127 area today but we need consistent move below 1.4250/60 to continue the bearish scenario since we seems to have a double bottom support around that area as you can see on my h4 chart below. Immediate resistance at 1.4350/70 area followed by 1.4400 – 1.4450 area. Break above 1.4450 area should be seen as potential threat to the bearish outlook.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD made indecisive movement on Friday, formed a Doji on daily chart. Price attempted to push lower, bottomed at 1.4260 but closed higher at 1.4336. The rejection to move below key support level 1.4250 was not a surprise for me. It was a ‘normal’ upside correction on weekend after a significant bearish week, and overall the bearish scenario still in control, reflected on the bearish channel (red channel) as you can see on my h4 chart below. Break below 1.4250 should trigger further bearish momentum targeting 1.4170 – 1.4127 area, which is an important support area in longer term. Immediate resistance is seen at 1.4400 – 1.4450 area. Break above that area should lead us into no trading zone

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Daily FX Report

Good morning from beautiful Hamburg and welcome to the last Daily FX Report of this week. Right in time for the weekend it began to snow this night and increased our hope for white Christmas. However, we wish you a prosperous last trading day and a nice weekend

Markets review

In the early Tokyo trading hours the JPY gained against the USD on speculation that Japanese exporters will bring its overseas earning home before the end of the year. The Bank of Japan decided at its meeting today to keep the borrowing costs at the same low level and left the key interest rate at 0.1 percent. The EUR/USD stopped its losing streak during the Asia session and rose to 1.4412 at its highest level having the currency pair lost yesterday up to 1.59 percent. Economists expect that a German report will show that the business confidence rose to the highest level since July 2008 today. Ben Bernanke won backing for a second term as chairman of the Federal Reserve. The U.S. Banking Committee voted 16-to-7 to recommend Bernanke’s nomination to the full Senate. The AUD/USD touched its weakest level in more than two months and headed for the biggest weekly drop since February after U.S. jobless claims unexpectedly increased while the U.S index of leading indicators rose in November for its eighth consecutive month by 0.9 percent. The CAD declined to a three-week low versus the USD as a drop in global stocks reduced demand for commodity-linked currencies

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Daily Technical Analysis

EURUSD Outlook

The EURUSD continued its bearish momentum yesterday, bottomed at 1.4303 and closed at 1.4348 after break below 1.4500. The bias remains to the downside targeting at least 1.4250. However, as you can see on my daily chart below we have CCI divergence indicating potential upside minor correction and potential profit taking activity on Friday testing 1.4450 resistance area, but long position is not recommended at this phase. Break below 1.4250 should trigger further bearish momentum towards 1.4170 area and potentially testing 1.4000 support area in longer term point of view.

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USD Higher Supported by Unwind of Dollar Carry Trades

• USD: Higher, unwind of carry trades sparked by Fed optimism about the US recovery, Greek fiscal problems
• JPY: Lower, Kan welcomes USD/JPY at 90, budget uncertainty
• EUR: Lower, Greek debt downgrade, construction output declines
• GBP: Lower, retail sales decline
• CAD and AUD: AUD & CAD lower, spike in risk aversion, Canada’s inflation rises/investment flows strong

Overview

USD surged to a three-month high with the EUR pressured by S&P downgrade of Greece’s debt rating and in reaction to Fed optimism about the US economy. S&P lowered Greece’s debt rating by a notch. The downgrade of Greek debt generates concern about the EU fiscal outlook. The Fed says that the US economy is picking up and deterioration of the labor market is abating. Although the Fed stopped short of signaling when it will begin to hike interest rates the Fed is moving closer to the end of its ease cycle and the USD is supported by unwind of USD carry trades. Bloomberg reports that unwind of the USD carry trade may be the biggest threat to the global economy in 2010. According to the report everyone is borrowing in USD at zero rates and using the funds to buy higher yielding assets around the globe. As the Fed moves away from zero interest rates the USD may rally as carry trades are unwound and this will reduce liquidity for equities and commodities markets. GBP was pressured by report of unexpected decline in UK retail sales. Commodity currencies traded lower tracking weaker equity markets with CAD trading lower despite report of higher than expected Canadian CPI. JPY trades lower despite weaker equity market trade pressured by a broad USD gains versus Europe and concern about Japan’s budget outlook. Today’s US economic data was mixed with jobless claims posting an unexpected rise and LEI and the Philly Fed coming in stronger than expected. Today’s US data fits with the Fed’s forecast of improving US economy with limited jobs growth.

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Good morning and welcome to Varengold’s Daily FX Report. The Fed didn’t surprise the FOREX market yesterday and left its key interest rate at 25bps. The market still spends more attention to the economic data of the U.S. and is waiting especially for the leading indicators today

Markets review

The USD extended its winning streak and climbed to a three-month high against the EUR as signals that the U.S. economic will recover with a faster pace increased the demand for the USD. Thus the USD strengthened versus 15 of its 16 major counterparts on concern that the U.S. initial jobless claims slowed and the outlook for the world’s largest economy improved for the eighth month. The Federal Reserve said yesterday after its decision to leave the key interest rate constantly that the economy is strengthening and the most special liquidity facilities will expire on Feb. 1, 2010. Standard & Poor’s followed Fitch Ratings and downgraded Greece credit rating to BBB+. The EUR/USD fell during the Asia session below the 1.4400 level and the GBP/USD also weakened to 1.6241 from yesterday’s closing at 1.6334.

AUD/USD declined to the lowest level within the last six weeks as investors pared bets that the central bank will raise interest rates, after the central bank Governor denoted the temporary end of rate hikes.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push higher yesterday, topped at 1.4589 after some good results of manufacturing and services PMI data, but further bullish momentum was rejected as the pair closed lower at 1.4529. This fact should keep my bearish scenario targeting 1.4450 and 1.4250 this week remains intact. On h1 chart below we can see that price still trapped in a range area of 1.4585 – 1.4500 area indicating consolidation but the bias remains to the downside. We need a consistent move below 1.4500 area to continue bearish momentum towards 1.4450 – 1.4400 area today. Immediate resistance at 1.4589 area (yesterday’s high) and the trendline resistance area (red). Break above those area could be a threat to my bearish scenario and lead us into no trading zone.

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Forex Technical Analysis

EUR/USD

Current level-1.4572

EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated between the 50- and 200-Day SMA, currently projected at 1.4793 and 1.3523.

With the recent break below 1.4607 the downtrend has been renewed towards 1.4450 support zone and the intraday bias is negative with a resistance at 1.4607. Crucial on the upside already is 1.4660 (more…)