FOREX TRADING

Currency Crosses Pairs Analysis

EUR/GBP

Current level – 0.9054

Longer term bias remains neutral to bullish for the pair, closing above both bearish trendlines confirms some upside for the week ahead.

Intraday: Yesterdays brake below the trendline isnt confirming a retrace yet. Although the cross is making an effective pullback its loosing bullish momentum and we dont discard a further retrace to 0,8980-0,9000 support zone

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Forex Technical Analysis

EUR/USD

Current level – 1.3801

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

The pair almost reached the target area with today’s high at 1.3818 and we still favor a reversal below that zone, that should initiate a downtrend for 1.3530, en route to 1.3440. Nevertheless, current intraday bias is still positive with a crucial level at 1.3715 and on the 1 h. chart only a break below 1.3655 will signal, that the prolonged consolidation has ended.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a bullish momentum yesterday, topped at 1.3782 and closed at 1.3771. This fact should keep the bullish scenario targeting 1.3850 intact. The technical evidence that price is in a potential bullish momentum even reversal after touched the triple bottom formation seems stronger now especially if price able to break above 1.3850 area today targeting at least 1.4020/50 area this week. Immediate support at 1.3740 area. Break below that area should lead us back into no trading zone testing 1.3650 area but as long as price still move inside the bullish channel the bullish scenario remains intact.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD failed to continue its bullish momentum yesterday, bottomed at 1.3640 and closed at 1.3674 after bad US TIC long term purchases number triggered risk aversion. This fact leads me to a no trading zone in nearest term as direction is unclear but the bullish reversal scenario triggered by the triple bottom formation should remain intact as long as price still move inside the bullish channel with technical bullish target at least at 1.3850. We will have ZEW economic sentiment and CPI number from the Euro zone which is expected to be the catalyst today. Good result should trigger further upside momentum and keep the bullish scenario intact while bad result should trigger significant bearish momentum and potential threat to the bullish outlook testing 1.3530 support area.

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Daily Technical Analysis

EURUSD

The EURUSD had a significant technical movement on Friday by break above the major bearish channel, confirms the bullish reversal scenario after formed triple bottom formation around 1.3450/35 area. While technical outlook is bullish in nearest term targeting 1.3850 before aim for 1.4025/50 region, on fundamental side Euro is supported by rising risk appetite but note that the we have not seen convincing solution on Greek debt crisis so actually the fundamental foundation for Euro bullishness remains fragile and any negative news from the Euro zone or the US could weigh on the Euro and be a potential threat to the technical bullish view as risk aversion could increase and give advantage to the Dollar. Immediate support at 1.3700. Break below that area should be seen as a serious threat to the bullish scenario testing 1.3550/30 area.

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This was basically a week of continuing consolidation, except for the USD/CAD which is looking seriously at the parity scenario. The coming weeks may be crucial as the markets test important powerlines. We have short-term consolidations/corrections in pairs such as EUR/USD, GBP/USD, EUR/GBP, and GBP/JPY. But we are also testing long-intermediate-term consolidation in USD/JPY, EUR/GBP, and AUD/USD as well.

EUR/USD Test of Rounded Bottom

Daily: The EUR/USD pair continues to be supported above the 1.3450 support. This week, the market closed above 1.35 and appears to be creating a rounded bottom.

Today’s rally so far heightens that probability but is still premature to call it a reversal signal. The market needs to break above the declining trendline preferably followed by a pullback. This would confirm a reversal and a target could be the 1.42 area, which is the support from a consolidation zone.

4H: The 4H time-frame shows the market in a current swing breaking out from a triangle pattern. A swing projection is to the 1.3820 area, and the market is nearing.

The completion of the rounded bottom is tested here. If the market can eventually break above 1.3820 during this current bullish cycle, the market may go to 1.42.

However the momentum is overbought so there might be a slightly correction in the near-term. Then if the market breaks above, get ready for a pullback to confirm.

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USD Mixed, Trade Deficit Narrows as Exports Decline

• USD: Mixed, jobless claims decline, trade deficit narrowed by 6.6%, global recovery may be slowing
• JPY: Lower, Q4 GDP revised lower, BOJ ease speculation
• EUR: Higher, rumor of Russian intervention, SNB reaffirms its intervention policy
• GBP: Higher, inflation expectations at a two-year high
• CAD and AUD: AUD & CAD lower, China rate hike fears, Canada’s capacity use and trade balance improve

Overview

The USD and JPY opened lower Thursday despite weaker equity market trade and a modest dip in risk appetite as European and US equity markets traded lower. The USD received a temporary boost after the release of economic data from China which showed any unexpected rise in inflation and strong retail sales and industrial production. China’s inflation rate rose to a 16 month high accelerating by 2.7% in February. The Chinese inflation report generates speculation that China will raise interest rates sooner than expected as the Chinese economy may be overheating. Chinese rate hike fears dampened risk appetite, pressured equities and supported the USD. USD erased early gains with GBP supported by a BOE inflation survey which shows that inflation expectations in the UK are at a two-year high. Rising UK inflation expectations may dampen speculation that the BOE will expand its asset purchases. EUR traded mixed and remained range bound. The EUR was initially supported by report of Russian intervention to slow ruble gains and the SNB’s reaffirmation of its intervention policy. Commodity currencies were mixed with AUD gains limited by risk of a rate hike from China and report of weaker than expected Australian employment data. CAD traded lower despite report of stronger than expected Canadian capacity use and a bigger than expected Canadian trade surplus. JPY traded lower pressured by report of a downward revision in Japans Q4 GDP and by BOJ ease speculation.

S&P says that the USD will maintain its reserve role status as long as US financial markets are sound and government spending is sustainable. S&P went on to say that the US reserve currency status cannot be taken for granted. According to S&P foreign investors could begin to reduce USD holdings if the US fails to address its fiscal deficit and debt. S&P said that the US could lose its AAA credit rating if the government did not address the fiscal outlook. There was limited reaction to report that US February foreclosures were up but were the smallest in four years. US economic data was mixed with jobless claims posting a modest decline and the US trade deficit unexpectedly narrowed in January. The narrowing of the US trade gap reflects a bigger drop in imports than exports. Exports declined for the first time in eight months. USD traded higher after the release of the US trade balance as the report generates concern the global recovery may be slowing. Focus turns to Friday’s release of Michigan consumer sentiment.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD didn’t make significant movement yesterday. Overall price still consolidation in range area of 1.3450/35 – 1.3735/50. The bias remains neutral both in nearest and medium term but the long term outlook remains bearish. For me, there are two technical events that must take place in this situation to give us clearer direction, a break above the major bearish channel confirming bullish reversal scenario towards 1.4025/50 or a break below the triple bottom around 1.3450/30 area to confirm bullish failure and continue the major bearish scenario towards 1.3100. Immediate support at 1.3530. Break below that area could trigger further bearish pressure re-testing 1.3450/35 area. On the other hand, break above 1.3735/50 area should be seen as a serious threat to the major bearish scenario at least targeting 1.3850 region.

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