FOREX TRADING

Daily Technical Analysis

EURUSD Outlook

The EURUSD had a moderate bullish momentum yesterday. On h4 chart below we can see that price slipped above the bullish flag but bullish momentum seems limited so far. I still prefer a bullish scenario but we need a convincing movement above the flag and 1.3700 area to continue the bullish scenario targeting 1.3830 region this week. Immediate support at 1.3580. Break below that area could be a threat to the bullish flag upside scenario and lead us back into no trading zone testing 1.3530/00 area.

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Euro 1.3650

Initial support at 1.3500 (Apr 9 high) followed by 1.3341 (Apr 9 low). Initial resistance is now located at 1.3741 (Mar 18 high) followed by 1.3819 (Mar 17 high)

Yen 93.25

Initial support is located at 92.58 (April 13 low) followed by 92.25 (0.382 of 88.14-94.79). Initial resistance is now at 93.77 (Apr 9 high) followed by 94.27 (Apr 7 High).

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• USD: Lower, retail sales beat expectations, inflation remains subdued, inventories rise
• JPY: Higher, improving risk sentiment, BOJ to maintain easy policy as the economy improves
• EUR: Higher, industrial output rises, Moody’s warns of a possible downgrade of Greek debt
• GBP: Higher, campaign promises to reduce the UK budget deficit
• CAD and AUD: AUD & CAD higher, equity and commodity markets rally, revaluation of the SGD

Overview

The USD traded lower Wednesday pressured by improving risk appetite and in reaction to report that Singapore has revalued the SGD. Improvement in risk appetite is attributed to firmer equity market trade sparked by report of better than expected earnings at Intel and J.P. Morgan Chase and strong US retail sales data. The revaluation of the SGD confirms improving economic outlook in Asia and that the impact of the global financial crisis has passed. EUR underperformed with gains limited by a statement from Moody’s that there is greater than 50% chance of a Greek rating cut in the next 12 to 18 months. GBP traded higher supported campaign promises to reduce the UK deficit. Commodity currencies traded higher supported by firmer equity markets and in reaction to spillover from revaluation of the SGD. USD traded lower despite speculation that the Fed may be moving closer to changing its policy guidance and dropping the "extended period" language from its policy statement. The Medley group suggests that the Fed may soon change its policy guidance and the Fed’s discount minutes suggest that some members seek 25bps hike in the discount rate. In his prepared statement before the Congressional Economic Committee Fed chairman Bernanke made no reference to the "extended period" language. The USD traded to the days lows after Bernanke’s testimony as he gave no indication the Fed is planning a change in it "extended period" language. Bernanke said that US growth is still restrained. US economic data was mixed with retail sales rising much more than expected and core CPI flat. Business inventories rose to the highest level since July as business’ restock to meet improving demand. Today’s US economic data is a mixed bag for Fed policy outlook. The strengthening of the retail sales and inventory demand may encourage Fed rate hike speculation but with inflationary pressures subdued the Fed can maintain low yields for long time. Focus turns to Thursday’s release of US jobless claims and manufacturing and industrial activity.

Today’s US data:

March CPI came in as expected at 0.1% .The core inflation rate was unchanged at 0.0%. March retail sales rose by 1.6%, a rise of 1.2% was expected. Ex. autos retail sales rose by 0.6%. Business inventories for February came in at 0.5%, a rise of 0.3% was expected.

Upcoming US data:

On April 15th April Empire Manufacturing Index will be released expected at 23.75 compared to 22.78 last month along with initial jobless claims for the week ending 04/10 expected and 451k compared to 460k last week. March industrial production, capacity utilization and the April Philly Fed will also be released on April 15th. Industrial production is expected to rise by 0.4% compared to 0.1% last month. Capacity utilization is expected at 73.1 compared to 72.7 last month and the Philly Fed is expected at 19 compared 18 in March. On April 16th March housing starts, building permits, and April University of Michigan consumer sentiment will be released. March housing starts are expected at 590k compared to 575k last month with building permits expected at 620k compared to 612k last month. Michigan consumer sentiment is expected at 74 compared to 73.6 last month.

JPY

JPY initially traded lower pressured by improving risk appetite as equity markets rally and by dovish comments from BOJ Governor Shirakawa. JPY turned higher for the day as Bernanke made no reference to "extended period" language in hiss testimony before Congress today Equity markets rallied in reaction strong earnings reports at a number of major US companies including Intel and J.P. Morgan Chase and better than expected US retail sales. Shirakawa says that the BOJ will maintain easy policy as the economy improves. Shirakawa says that the Japanese economy is improving due to the recovery in global trade. There are reports that the BOJ may revise up its CPI forecast for 2011/ 2012 in April 30th BOJ economic outlook release. Today’s report of better than expected US earnings and retail sales fuels speculation that the Fed may soon change its policy guidance. A change in the Fed’s policy guidance could set the stage for an earlier Fed rate hike. With the BOJ committed to maintaining easy monetary policy yield differential is moving in favor of the USD. Bloomberg carried a report which says that analysts at SBI Liquidity Market see the possibility the USD may rise to 105 JPY as the Fed increases interest rates. JPY downside was limited by report that Singapore revalued the SGD. The SGD revaluation may encourage speculation that China may soon revalue the Yuan. In theory revaluation of Asian currencies will make Japanese exports more competitive and may increase demand for the JPY.

On April 15th revised February industrial output will be released expected to fall by 0.9% compared to a 2.7% rise in the original report.

Key technical levels to watch in USD/JPY include support at 92.57 the April 13th low with resistance at 94.27 the April 7th high.

EUR

EUR traded higher but underperformed despite report of improving EU industrial output and risk appetite. EU February industrial output rose by 0.9%, a 0.1% rise was expected. EUR gains were limited by ongoing concern about sovereign debt risks in southern Europe. Moody’s says there is a greater than 50% chance of a Greek sovereign debt rating cut in the next 12 to 18 months. Focus is shifting to fiscal risks in Portugal. EU officials said that there is a risk that Portugal’s deficit could reach 90% of GDP by 2013 and that Portugal must take additional actions to bring its deficit back in line with the EU stability pact. In addition, German press reports that a number of German professors plan to protest against the Greek rescue package in the constitutional court. Despite today’s report of stronger EU industrial output the ECB is expected to maintain accommodative policy to offset the risk to the EU recovery from reduced deficit spending in peripheral European nations. Yield differential is moving in favor of the USD as the ECB is seen on hold for the remainder of 2010 and the Fed may be considering dropping its extended period language and shifting its policy giant guidance in preparation for an earlier rate hike. In his testimony before Congress Bernanke made no reference to a change in the Fed policy statement and the EUR rallied to the days high.

On April 14th EU industrial production will be released expected flat compared to a 1.7% rise last month. On April 16th EU March CPI will be released expected at 0.9% compared to 0.3% last month along with the February trade balance expected at -1bln compared to -8.9bln in January.

The technical outlook for the EUR is mixed as EUR holds above 1.3600. Expect EUR support at 1.3545 the April 13th low with resistance at 1.3692 the April 12th high.

GBP

GBP traded higher supported by improving risk appetite and campaign promises to reduce the UK deficit. Stronger earnings at Intel and J.P. Morgan, strong US retail sales and firmer equity markets helped to boost risk appetite. Bloomberg reports that promises by UK labor leader Brown and the conservative challenger Cameron to take action to reduce the record UK budget deficit may help to limit selling pressure of the GBP. The Bloomberg report however notes that neither party has detailed how they plan to tackle the UK budget deficit. The latest UK election polls suggest that the election will result in a hung parliament with neither party winning a majority. The UK election will be held on May 6th and the UK sovereign debt rating is at risk for a downgrade if the election results in a hung parliament and a hung parliament fail to take action to reduce the UK budget deficit. The head of the conservative party Cameron made reference to the speculative attacks against the Greek markets because of Greek fiscal troubles and he stated that his party will start earlier and go faster and further than the Labor Party to make needed budget cuts. In addition some analysts indicate that even if the election ends in hung parliament it may not necessarily derail budget cuts as coalition of parties could work together to reduce UK spending. UK election uncertainty contributes to uncertainty about the outlook for BOE policy. If the UK election results in more aggressive action to reduce spending the BOE may increase accommodation to offset the economic drag of reduced government spending. Recent UK economic data suggest that the UK economy is improving and inflation rising. Tuesday the UK reported a 9.5% jump in exports and 0.9% rise in house prices. Earlier in the week the UK reported a sharp jump in input prices. The improvement in the UK economic outlook and rising inflation may encourage the BOE to end its asset purchases and move towards normalization of monetary policy.

The technical outlook for GBP is positive as GBP holds above 1.5400. Expect near-term support at 1.5335 the April 13th low with resistance at 1.5575 the February 23rd high.

CAD

CAD traded higher supported by improving risk appetite, firmer equity markets and spillover from the revaluation of the SGD. The improvement in risk appetite is attributed to better US earnings reports and strong US retail sales data. Firmer equity market trade is fueled by optimism about the global recovery and encourages demand for growth led currencies like the CAD. The revaluation of the Singapore dollar reflects an upgrade of growth estimates in Singapore. The upgrade of growth estimates in Singapore point to stronger Asian growth. Stronger Asian growth is positive for commodity demand and Canadian exports. CAD was also supported by gains in cross trade to the EUR with EUR pressured by concern about a possible downgrade of the Greek debt rating and fear that strikes in Greece may derail the Greek government’s effort to reduce its deficit. There were no major Canadian economic reports released in today’s trade. Tuesday Canada reported a surge in its trade surplus as imports and export sales rise. The trade balance report confirms improving outlook for the Canadian economy. Monday Canada reported improvement in housing starts. The improvement in Canada’s trade surplus and housing data may increase speculation that the BOC may move the time table forward for tightening of monetary policy. Last month BOC Governor Carney said that he was open to consideration of a rate hike as early as June 1st. The BOC pledged to maintain record low yields until June as long as inflation remains in check.

On April 16th February manufacturing shipments will be released expected at 1.6% compared to 2.4% last month.

The technical outlook for CAD is mixed as USD/CAD holds above1.0000. Look for near-term support at 0.9870 the May 30th low with resistance at 1.0105 the April 8th high.

AUD

AUD traded higher supported by SGD revaluation and improving risk appetite as equity markets firm. The revaluation of the SGD reflects stronger growth outlook in Singapore and the revaluation points to stronger Asian growth. Australia is a major exporter to Asia and improved outlook for Asian growth is a positive for the Australian economy. Stronger than expected US retail sales and better than expected earnings at Intel and J.P. Morgan contributed to improving risk appetite fueling demand for growth led currencies like the AUD. AUD was also supported by a surge in metals prices. There was little reaction to report that Australia’s April Westpac consumer confidence index declined by 1% to 116.1 or speculation that the Fed may soon change its policy guidance. Tuesday Australia reported that its business conditions index rose to the highest level since January 2008. Despite the improvement in Australia’s business conditions index recent Australian economic data as been mixed. Monday Australia reported that housing finance came in weaker than expected. AUD is trading a 19 month high versus the USD despite uncertainty about RBA policy outlook. The RBA’s Debelle said interest rates are close to normal levels. Debelle’s comments may dampen RBA rate hike speculation. Recent AUD strength has been partly a reflection of RBA rate hikes and RBA rate hike speculation. Last week the RBA raised interest rates 25bps to 4.25% and left the door open for future rate hikes. Debelle’s comments and mixed Australian economic data suggest that the RBA may elect to pause in its rate hike cycle. RBA policy uncertainty has been offset by optimism about the global recovery and improving risk sentiment.

The technical outlook for the AUD is positive as the AUD rallies above 9300. Expect AUD support at 9273 the April 14h low with resistance at 9389 the April 12th high.

By Michael J. Malpede

Easy Forex

Michael J. Malpede is Chief Market Analyst with Easy-Forex® and has previously been featured on Bloomberg TV, Bloomberg radio, Reuters, MarketWatch, Wall Street Journal, Chicago Tribune, Chicago Sun Times, Toronto Star and Nikkei press. In analyzing the markets, he draws from 29 years of Foreign Exchange Research as a Foreign Exchange Analyst.

Please note that Forex trading (OTC Trading) involves substantial risk of loss, and may not be suitable for everyone. This report is provided by Easy- Forex® for informative purposes only. In no way it is a recommendation by Easy-Forex® for you to engage in any trade. It is your sole responsibility and you will have no claims with regards to this report against Easy-Forex®. If you do not agree to this, you are strongly advised not to use this report. Hence, Easy-Forex® shall not be held responsible for any outcome of trading decisions, in regards with this report or similar reports.

EUR/USD

Current level – 1.3633

EUR/USD is in a downtrend, after peaking at 1.5146 (Nov.25,2009). Technical indicators are neutral, and trading is situated below the 50- and 200-Day SMA, currently projected at 1.4793 and 1.4169.

Yesterday’s downward attempt bottomed at 1.3545, bouncing all the way up to 1.3667. The lack of trend dynamics here justifies a neutral outlook on the 1h. chart, but on the lower frames a break below 1.3618 support is to be expected, for one more slide towards 1.3497.

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EUR/GBP

Current level – 0.8848

Longer term bias remains bullish for the pair, the pullback to the bearish trendline has been completed, testing bullish longer term trendline.

Intraday: 0,8800 provided intraday support, a break above 0,8850/60 could spark a rally towards 0,8900.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push lower yesterday, bottomed at 1.3546 but whipsawed to the upside and closed higher at 1.3612 and keep moving higher around 1.3645 at the time I wrote this comment. On h4 chart below we have a bullish flag formation indicating potential bullish scenario especially if price breakout above the flag targeting 1.3750 before testing 1.3830 area. Immediate support at 1.3610/00 area. Break below that area should lead us into no trading zone re-testing 1.3530 area.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD failed to continue its bullish momentum yesterday. Price attempted to push higher, topped at 1.3691 but further bullish pressure was rejected as price whipsawed to the downside, bottomed at 1.3566 and closed at 1.3591. Looks like price now is trying to fill the gap and testing 1.3530 area. Break below that area could trigger further bearish momentum testing 1.3450 region. Initial resistance at 1.3700. Break above that area could trigger further bullish momentum testing 1.3750 – 1.3830 area.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a moderate bearish momentum yesterday, bottomed at 1.3325 and closed at 1.3342. The fact that price so far able to stay below 1.3350 should continue the bearish outlook towards 1.3267 area before aim for 1.3100. Another movement back above 1.3350 could lead us into no trading zone in nearest term, leaves the door open for another upside correction testing 1.3400 – 1.3450 but the main bias should remain to the downside.

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EUR/USD

Current level – 1.3387

EUR/USD is in a downtrend, after peaking at 1.5146 (Nov.25,2009). Technical indicators are neutral, and trading is situated below the 50- and 200-Day SMA, currently projected at 1.4793 and 1.4169.

Yesterday’s slide bottomed at 1.3355 and current rebound is corrective in nature, preceding next sell towards 1.3267 lows. The minor consolidation above 1.3355 is expected to be limited below 1.3424 and crucial on the upside is 1.3460 resistance.

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EUR/GBP

Current level – 0.8775

Longer term bias remains bullish for the pair, the pullback to the bearish trendline has been completed, expect some consolidation between 0,88- 0,91.

Intraday: a 50 pip bounce off key support zone was made, but the pair was incapable of holding the bearish pressure breaching the minor bullish trendline. Target lays around 0,8700 – 0,8680 (bull trendline)

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a bearish momentum yesterday after violation of the minor bullish channel, bottomed at 1.3355 and closed at 1.3396. Overall my technical outlook remains bearish for this pair but the bias is neutral in nearest term. We need a consistent move below 1.3350 to continue the bearish scenario testing 1.3267 before aim for 1.3100. On the upside, I will pay attention to the key resistance at 1.3450. Break above that area should trigger further bullish momentum towards 1.3530 region and surely diminish the bearish outlook.

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• USD: Higher, pending home sales surge, non- manufacturing ISM beats expectations, Dow approaches 11k
• JPY: Higher, diminished threat of BOJ ease, Yuan revaluation speculation
• EUR: Lower, pressured by rising US bond yields/strong US employment, housing and services data
• GBP: Higher, election polls point to a Conservative majority diminishing the risk of a hung parliament
• CHF: Mixed, EUR/CHF rebounds from record low on SNB intervention
• CAD and AUD: AUD lower & CAD higher, rumors that the RBA will hold monetary policy steady Tuesday

Overview

USD traded mixed to firmer Monday extending Friday’s gains versus the EUR and weakening versus the JPY and commodity currencies. USD traded higher Friday supported by report that the US economy added the most jobs in three years and in reaction to the rise in 10 year bond yields to a 10 month high. The main focus of Monday’s trade was UK election polls, Yuan revaluation speculation and strong US data. UK election polls show that the Tories have a 10 point lead over Labor. A Tory victory would reduce the risk of a hung parliament and may diminish concern about an imminent downgrade of the UK’s sovereign debt rating. The U.S. Treasury will delay the April 15th currency report on China in hopes that the delay will encourage China to strengthen the Yuan. JPY edged higher supported by Yuan revaluation speculation and diminished ease speculation. Recent weakness of the JPY will diminish the odds of the BOJ rate cut at this week’s policy meeting. AUD traded lower pressured by rumors that the RBA will hold rate policy steady at Tuesday’s policy meeting. Today’s US economic data was positive with pending home sales posting an unexpected rise and non manufacturing ISM beat expectations. The pending home sales rise may reflect the fact that the home buyers tax credit will expire at the end of April. The employment component and the business outlook of the non-manufacturing ISM posted strong gains. CFTC commitment of traders for last week showed that speculators increased USD long positions the highest level since February 23rd. Bullish USD sentiment is rising with US bond yields. US ten-year yields are approaching 4% as the US economy improves.

This week’s main focus will be central bank policy meetings in Australia Tuesday, Japan Wednesday and Europe Thursday. The RBA is expected to hike rates 25 basis points to 4.25% but the RBA policy decision is a close call. The BOJ is expected to leave monetary policy unchanged in reaction to recent weakness of the JPY. The ECB and BOE are expected to remain on hold.

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Daily Technical Analysis

EURUSD Forecast:

The EURUSD failed to continue its bullish momentum on Friday. The major bearish channel still hold so far indicating the major bearish scenario remains intact but the bullish correction also still intact as price still move inside the minor bullish channel (white channel). We need a violation to one of those channels to see clearer direction. Violation to the bearish channel could be seen as potential bearish failure and a new bullish phase targeting 1.3817 and 1.4000 area while violation to the bullish channel could end the bullish correction phase testing 1.3100 area. Immediate resistance at 1.3569 (March 23 high). Break above that area could trigger further bullish momentum towards 1.3650 and could be a serious threat to the bearish scenario. Initial support at 1.3450. Break below that area could be seen as the end of the bullish correction and continue the major bearish scenario.

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Daily Technical Analysis

EURUSD Forecast:

The EURUSD continued its bullish momentum yesterday. On h4 chart below we can see that price is now struggling around the upper line of the major bearish channel indicating critical technical phase as a break above the bearish channel could be seen as bearish failure and a beginning of bullish phase. Immediate support at 1.3520/30. Break below that area should keep the bearish scenario intact testing 1.3450. Initial resistance at 1.3650/80 area. Break above that area could trigger further bullish momentum testing 1.3750 even 1.3817 as bullish reversal scenario confirmed. Fundamental focus today will be on US NFP. A good result may support the Dollar and keep the bearish scenario intact while a bad result may support the bullish reversal scenario.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a bullish momentum yesterday, topped at 1.3547 and closed at 1.3508 after positive results of Euro zone unemployment and CPI data. The bias is bullish in nearest term. On daily chart below we can see that price is now ready to test the bearish channel indicating critical technical phase with potential bullish reversal scenario. However, as long as the bearish channel valid, the main trend remains bearish. Trend exist until it’s broken. Immediate resistance at 1.3580 – 1.3600 area. Break above that area could be a serious threat to the bearish outlook at least testing 1.3817 and a beginning of a new bullish phase. Initial support at 1.3530. Break below that area should keep the bearish scenario intact testing 1.3450.

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