FOREX TRADING

USD-CHF 1.0230/33…Resistance at 1.0245-60 wait and watch

R: 1.0245-60 / 1.0291-300
S: 1.0141 / 1.0050 / 1.0012-00

Dollar-Swiss has broken above the Resistance at 1.0150 today and is currently trading above 1.0200. The pair tested the Resistance region of 1.0245-60 and is currently trading lower. In the US sessions today, we may see the pair move in a range of 1.0175-250, however there are less chances of a break above the Resistance region of 1.0260 today. The suggested Max high for the day is 1.0244. (more…)

EURJPY

Presumably, the price forms a correctional wave iv of (iii). Probably, it takes the form of a horizontal Triangle. However considering that overcoming of conditional critical level can break its geometry, it is possible a wave (iv) of (iii) accept other form. But anyhow, if the assumption is true, after its end it is possible to expect falling of pair as impulse or Diagonal Triangle construction v of [iii].

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Currency pair USD/CHF

The assumption is visible about, the wave termination iv of (iii) was a little premature. However while, expectations have not changed. Probably, the wave iv of (iii) has become a deep Zigzag which by the present moment is finished. If the assumption is true, it is possible to expect continuation of a descending trend as an impulse or a Diagonal Triangle v of (iii).

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EUR/USD closed lower on Friday as it extends last week’s decline. The low-range close sets the stage for a steady to lower opening on Monday. Stochastics and the RSI remain bearish signalling that sideways to lower prices are possible near-term. If it extends last week’s decline, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would temper the bearish outlook.

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In the longer term in the $ index, been warning over the last few weeks of the increasing big picture negatives, and in turn raising the risk for at least a few months of correcting lower. The market reached a high at Jun 7th at 88.70 (testing the bearish trendline from Nov 2005), and has weakened since (see weekly chart below). At this point there are 2 potential, big picture scenarios: 1) the market is forming a large pennant/triangle since the March 2008 low at 70.70, with at least another few months of correcting lower toward 81.35/50 (50% retracement from the Nov low at 75.25), and even the base of the pattern/bullish trendline from 70.70 (currently at 75.30/45) ahead. 2) the market stabilizes over the next week or so before a final upleg back to the 88.70 high, the Mar 2009 high at 89.60 and even temporarily above, before completing a more major high. Note that the still evident longer term negatives including the seasonal chart which topped early in June (see 2nd chart below), an overbought market after the sharp gains since last Nov and the continued $ bullishness (or at least eur/$ pessimism), support the view that an important is in place (or at least nearly and would suggest that any new highs would be limited in the bigger picture, if they do indeed occur). At this point, the confidence is not yet very high in either scenario, so would maintain the longer term neutral bias (switched on June 14th at 83.60, and from the bullish bias that was put in place on Dec 5th at 75.95). Remember, one of the most difficult (yet valuable) things to do in the market is to have no position when the risk/reward just doesn’t justify participating. And as this point for the bigger picture in $ index, that appears to be the case.

Nearer term in the Jun 14th email, said that the likelihood that the upmove from at least the March 17th low at 79.50 was complete, had increased (5 waves up). The market has indeed continued lower from there, but recently finding support just above 85.00 (May 21st low, 38% retracement from 79.50). Though there is potential for a more significant decline (see longer term above), the market is short term oversold leaving open scope for at least another few days of ranging higher first. Note too may be forming a large head and shoulders pattern (see “ideal” scenario in red on daily chart/3rd chart below), fitting this view, but confidence level is not yet very high. So for now, would use a nearby bounce toward 86.80/90 (50% retracement from the Jun 7th high at 88.70, higher entry/lower risk), and initially stopping on a close above 87.65/75 (the neckline of the possible head and shoulders pattern is seen at 87.40/50, and want to leave just a bit of room above). Also, finally took profits on the April 30th buy at 81.65 on the Jun 14th break below the bullish trendline from May 21st (then at 87.00, closed at 86.50 for at 485 tick profit). (more…)

Good morning from wonderful Hamburg and welcome. This week, Switzerland surprised us not only in playing soccer winning versus Spain in world cup but also the nations’ currency gained against a basket of currencies, which was partly caused by news about claims against other countries. We wish you a nice weekend and good luck in trading

Markets review

Yesterday, the CHF gained versus a basket of currencies after a report showed that UBS AG and Credit Suisse Group AG’s financial claims versus Greece, Portugal, Ireland, Italy and Spain amounted to 60.3 billion CHF ($53.3 billion) at the end of 2009. The claims include 11.3 billion CHF versus the countries’ government, 25.5 billion CHF versus banks and 22.4 billion against the private sector, according a financial stability report that was published by the Swiss National Bank. The EUR also gained reaching its biggest weekly gain versus the USD in a year on optimism that Europe’s debt crisis is easing after demand for Spain’s bond auction increased. Yesterday, Spain sold 3 billion euros ($3.71 billion) of 10-year bonds at an average yield of 4.864 percent. The nation also sold 30-year bonds at 5.908 percent. Yesterday, EU leaders agreed to disclose how banks perform on stress tests with a view to show investors the financial system can withstand financial shocks. The biggest loss we saw in CHF crosses was in the GBP/CHF. The Pair fell over 370 pips over the past three trading days. This week, the pair fell more than 1.50 percent.

The JPY advanced for a fifth day versus the USD after Prime minister Naoto Kan pledged to reduce the world’s largest public debt, saying he’d consider the opposition Liberal Democratic Party’s proposal to raise the consumption tax to 10 percent. ‘Unless we work on fiscal rehabilitation, an international organization such as the International Monetary Fund could control our fiscal management,’ Kan said yesterday. ‘We must rehabilitate our finances with our own power without relying on other countries.’ The USD/JPY fell for a fifth day after it reached a daily low at 90.74. The currency pair lost over 80 pips this week. The EUR/JPY gained for a second week by reaching a level of 112.70. (more…)

Good morning from Germany and welcome. The global rally in the stock market seems to have a big influence on the FOREX market after we could see huge movements in higher-yielding currencies during the past trading days.

We wish you a great trading day and good luck for your favorite team in the FIFA World Cup!

Markets review

The JPY dipped against higher-yielding currencies before a report today is expected to show that U.S. industrial production expanded in May by the most in four months after Japanese demand for services rebounded in April. According to a survey output at U.S. factories, mines and utilities increased 0.9 percent in May, which would be the most since January, after a 0.8 percent gain in April. Yesterday, the Fed Bank of New York said that its manufacturing gauge advanced for an 11th month. Today, the Trade Ministry in Tokyo said that Japan’s tertiary index, which captures 63 percent of the economy, gained 2.1 percent in April from March, snapping a two-month fall. The Median forecast of 21 economists was for a 2.5 percent gain. Having the Japanese currency bearish, the Asian shares gained as the MSCI Asia Pacific of regional shares climbed 0.9 percent. Demand for higher yielding currencies increased after the MSCI World Index gained 1.6 percent yesterday. The EUR extended its recovery against the USD as the S&P 500 yesterday climbed 2.4 percent to 1,115.23. The EUR/JPY recovered from yesterday as the pair reached a high at 113.03, which was the highest peak since June 4th. Yesterday, the EUR/USD reached a high of 1.2349, extending the recovery from its four-year low at 1.1876.

As we already reported, the global rally in the stock market has increased demand for higheryielding currencies. Having an interest rate of 4.5 percent in Australia and 2.75 percent in New Zealand, both currencies gained against the JPY and the USD. Yesterday, the AUD/USD gained for a second time after it crossed its technical resistance around 0.8520 while the NZD/USD gained to a high of 0.6991 before recovering to 0.6950. The NZD/JPY also gained as it reached a peak at 63.94. Today, the pair pulled a bit back and reached a level around 63.60. The AUD/JPY pulled a little back after it gained for a third day by touching a high at 79.30 (more…)

Sunrise Market Commentary

• Core bonds profit from surprise drop in US retail sales
  On Friday, markets started the session in a positive mood, but a disappointing US retail sales release spoiled the game. Investors picked up core bonds again going into the weekend. This week, we look out whether the cautious easing of tensions on the intra-EMU government bond market can be maintained.
• Euro enters calmer waters
  On Friday, EUR/USD basically tracked the swings in global investor sentiment. As was the case for the stock markets, the damage from a poor US retail sales release was only temporary in nature. EUR/USD regained even the 1.2150 resistance area. This suggests that the single currency might be entering calmer waters. EUR/GBP tested also the lows, but the test was rejected and a nice rebound occurred.

The Sunrise Headlines

• On Friday, US Equities opened lower after a weak retail sales report, but reversed their losses in the last hour of trading. This morning, Asian shares start the week in a positive mood.
• Herman Van Rompuy, president of the European Union, has blamed the strength of the euro in recent years for blinding the eurozone to its underlying fiscal problems.
• New Zealand’s central bank chief warned this morning that the country needed to cut its high debt or face punishment by markets with higher lending rates and the risk that its debt servicing costs may become intolerable. (more…)

EUR/USD

Resistance: : 1,1980/ 1,2000-10/ 1,2045-50 1,2100/ 1,2130/ 1,2170
Support: 1,1910-15/ 1,1870/ 1,1810-30/ 1,1780/ 1,1730/ 1,1700/ 1,1650

Comment: Euro has formed an upward reaction from yesterday’s lows but the outlook remains the same.

The sideways move is clear in the hourly chart, and it should be just a pause in terms of the downtrend, as our next targets are now set at 1,1870-90 or even lower towards 1,1800-30 area. We should keep in mind that basic targets from the downward break and the weekly chart are set at 1.1650-00.

Upward reactions towards 1,2015-20 are within the ranges of the short term downtrend, that is formed since Friday’s sharp decline. Above these levels, euro could move towards 1,2120 or even 1,2160-70, where the last base was formed. Reactions should remain below these levels, to keep our lower targets valid..

STRATEGY: We remain bearish, trying sell orders at 1,1950 and 1,1990, with stop above 1,2050 and target at 1.1900 and 1.1830. Sell orders will be tried again at 1,2120 and 1,2160, with stop above 1,2200.

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The British Pound pulled back from a weekly high of 1.4765 as investors scaled back their appetite for risk, and the exchange rate may continue to trend lower during the U.S. trade as market sentiment falters. Meanwhile, the European Commission proposed to increase the supervision of credit rating agencies as they seek ‘increased transparency’ for those firms, and said they will announce a detailed outlook of the plan later today as policy makers try to contain the debt crisis.

Trading Tactics

A clear uptrend could be an opportunity to Buy GBP/USD.

The buying point is at 1.4704; Pivot point is the take profit at 1.4880;

Fibonacci 38.2% is the stop loss at 1.4560

The selling point is at 1.4540; previous support is the take profit at 1.4350;

Fibonacci 23.6% is the stop loss at 1.4650

Technical: Sterling forms a higher high and continues the minor uptrend. A move back higher could set up a test of 1.4880

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice MACD crosses the signal line upwards; Momentum and RSI (Relative Strength Index) are in an uptrend; stochastic oscillator is in overbought area. (more…)

Good morning and welcome to the first Daily FX Report of June 2010 and we’re curious if the EUR may continue its bearish trend or if the markets will trust Europe’s policy makers again. However, today we expect some interesting economic data from Europe as well as the U.S. and the rate decision in Australia.

We wish you a nice and successful trading day.

Markets review

The EUR started bearish into the June and fell against 14 of its 16 most-traded counterparts, extending its longest monthly decline versus the USD in 10 years; on concern Europe’s efforts to reduce budget deficits will derail the region’s recovery. The 16-nation currency weakened against the GBP for a second day before a report may show today that the unemployment rate in Italy, Europe’s fourth-biggest economy, increased and the index of executive and consumer sentiment in Euro-Zone tumbled. The EUR/CZK tumbled from 25.5055 at its opening to 25.1815 at its closing after parties that pledged to cut spending on the most votes in parliamentary elections ended on May 29th.

The CAD strengthened versus the USD for the second day on speculation that the Bank of Canada will increase the key interest rate today. Furthermore the CAD benefits after a report showed on Monday the economy expanded at the fastest pace in a decade in the first quarter of 2010. Statistics from Canada said that the gross domestic product climbed 6.1 percent in the period from January to March, more than forecasted.

The Reserve Bank of Australia let the key interest rate unchanged at its meeting today. Even before the meeting the AUD weakened for the third day versus the USD on speculation the central bank may signal a slower pace for future increases.

The NZD rose also for the second day against the USD as swaps traders bet New Zealand’s central bank will increase benchmark interest rate from a record low on June 9th. (more…)

Sunrise Market Commentary

• Global bonds hammered, as risk appetite returns pushing equities sharply higher
  Yesterday’s trading was dominated by a return of risk appetite. As usual, the turnaround was much more violent in the US bond markets than in EMU with US yields higher by up to 18 basis points while German yields limited the rise to 6 basis points. The re-steepening of the curve in the US was pronounced, but less so in Germany.
• EUR tries to move away from the lows
  Yesterday, the euro profited from a rebound in global risk appetite, even as the link between EUR/USD and the equity markets was not one-to-one. Nevertheless, a retest of the lows was again rejected, suggesting that there is still room for a technical rebound. Sterling was supported by rumours on the Prudential/AIA deal.

The Sunrise Headlines

• US equities storm ahead, as investors’ concerns about the funding and debt crisis ease, making them again more optimistic on the growth outlook. S&P rose by 3.3%, led by the cyclicals (financials, energy and materials). Asian equities rallied moderately overnight for the third day in a row.
• Japanese consumer prices marked their 14th month of annual declines in April, but if one excludes the effect of the scrapping of school tuition fees the outlook may not be so bad. Strong April retail sales support that assessment.
• Commodities rebound, as waning risk aversion suggests global growth might stay strong. Oil extends gains and reaches two-week high above $75/barrel.
• Spanish parliament approves by one vote the austerity measures, but the razorthin majority raises the prospect of early elections.
• US CP statistics show the decline in outstanding amounts slowed in recent week, but the foreign financial CP continues to decline, suggesting US funds are diminishing exposure on European banks.
• Prudential shares halted in HK trading, as AIA renegotiations on the price tag restarted. Rumours affected sterling trading yesterday.
• In the UK, GfK consumer confidence declined for the third month in a row.
• Today, attention focuses on the release of US Chicago PMI, the Swiss KOF sentiments survey and Swedish GDP. The Italian BTP auction will get a lot of attention in the European debt markets. (more…)

Good morning from sunny Hamburg and welcome. We approach the end of the week and the NZD could climb versus all of its most traded counterparts in contrast to the EUR. The EUR dropped against its most major counterparts. Also we are going to report about the USD and the CAD. However, we wish you a successful trading day

Markets review

The NZD strengthened versus all of its 16 major counterparts before a report forecast may show that the nation reached a trade surplus for a fourth month in April. The NZD could retrace some of its yesterday`s drop of more than 1% before a statistics bureau report signalized that economists estimate will show a surplus of 455 million NZD. The NZD and the AUD climbed on speculation that their declines in May, on concern Europe`s debt crisis will slow global growth, have been too rapid. The NZD increased 0.4% against the USD and touched 0.6656. The JPY decreased versus the NZD as much as 0.5% and traded at 59.89. The AUD rose 0.3% to 0.8237 versus the USD. Also the JPY has lost 0.3% against the AUD and reached 74.10. The Current benchmark interest rates are 4.5% in Australia and 2.5% in New Zealand, compared with 0.1% in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations. The risk in such trades is that currency market moves will erase profits.

The CAD dropped to near the lowest in six months against the USD as crude oil, the biggest export commodity, fell from intraday highs and U.S. stocks slipped on concern a sovereign debt crisis in Europe will worsen. This month, the CAD has been losing 4.9% against the USD. The CAD lost 0.3% versus the USD and dropped to 1.0706. Furthermore the Canada`s Government bonds fell in May.

The EUR weakened against 13 of its 16 major counterparts before a release forecast to show that French consumer confidence fell in May and on concern that the region`s debt crisis will lead to slower economic growth. The EUR was at 1.2170 versus the USD and dropped to 109.47 against the JPY

Technical analysis

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EURO

The pair is facing a difficulty in breaching the pivotal support of 1.2600 due to the positive effect from momentum indicators. We still see that the direction is bearish over an intraday basis; where targets start with the breach of the mentioned support level and head toward 1.2510 – 1.2480. it is vital that trading remain below 1.2790 to prevail.

The trading range for today is among the key support at 1.2450 and the key resistance at 1.2790.

The short term trend is to the downside as far as 1.3770 remains intact with targets at 1.2450.

Support: 1.2600, 1.2560, 1.2510, 1.2490, 1.2450
Resistance: 1.2665, 1.2700, 1.2740, 1.2790, 1.2840

Recommendation Based on the charts and explanations above our opinion is selling the pair with the breach of 1.2600 targeting 1.2490 and stop loss above 1.2700, might be appropriate

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GBP/JPY

Having a deeper look at the hourly chart, we will see how 4 waves have been completed already and now the market should drop to a new low below 130.00 zones over short term basis to complete the 5 waves from the areas of 146.00. Therefore, possible bearishness could be seen over intraday basis. A breakout below the trend line, which carried the correctional movements from 129.80 to the current levels, could cause acceleration.

The trading range for today is among key support at 132.50 and key resistance at 143.60.

The general trend over short term basis is to the downside, targeting 126.80 as far as areas of 150.70 areas remain intact.

Support: 137.30, 136.20, 135.50, 135.00, 134.25
Resistance: 138.60, 139.75, 140.50, 141.50, 142.25

Recommendation Based on the charts and explanations above our opinion is, selling the pair with a breakout below 137.90 targeting 135.00 and stop loss above 140.10 might be appropriate.

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