EURUSD Technical Analysis 2015, 01.02 - 08.02: Total Bearish with Possible Ranging; Monthly Breakdown Continuing

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newdigital, 2015.01.31 10:11

Forex Weekly Outlook February 2-6 (based on forexcrunch article)

US ISM Manufacturing PMI, Rate decision in Australian and the UK, US Trade Balance and important employment data including the big NFP event. These are forex market movers for this week. Check out these events on our weekly outlook

Last week US jobless claims plunged 43,000 to a 15 year low indicating the labor market strides in the right direction. Economists expected claims to tick down to 301,000. Earlier that week, the Fed held its monthly monetary policy meeting, repeated the “patience” wording regarding a possible rate hike. However the policy makers were more concerned about international developments and their possible effect on US future growth. The Fed also stated that the labor market has improved further and household spending rose moderately, boosted by low energy prices. Will the US economy continue to improve?

1. US ISM Manufacturing PMI: Monday, 15:00. Manufacturing PMI declined in December, coming in at 55.5 following 58.7 in the previous month. Economists forecasted a higher reading of 57.6. Manufacturing output is constantly expanding; however, the rate of growth has eased in the fourth quarter. Companies express growing uncertainty about the outlook in 2015, especially regarding exports. Regarding the fall in oil prices, some ISM members think it would have a good impact on the manufacturing sector while others disagree. Manufacturing PMI is expected to reach 54.9 this time.
2. Australian rate decision: Tuesday, 3:30. Australia’s central bank has kept its interest rate at a record low for 17 months amid the economic transition from mining investment. Many economists believe a rate cut is in order since the economic growth has not picked up to offset the sharp decline in mining investment. Low interest rates may boost investments in the non-mining sectors. In addition. Falling commodity prices like iron and oil will weaken export revenues. No change in rate is expected now.
3. NZ employment data: Tuesday, 21:45. New Zealand’s Unemployment rate was better than expected in the third quarter, falling to 5.4% from 5.6 in the prior quarter. Employment expanded 0.8%, higher than the 0.5% gain reached in the second quarter and better than the 0.6% rise forecasted by analysts. However, on a yearly base, employment expanded 3.2%, below the 3.7% seen in the previous quarter. New Zealand’s employment market is predicted to grow by 0.8, while the unemployment rate is expected to drop to 5.3%.
4. US ADP Non-Farm Employment Change: Wednesday, 13:15. U.S. private sector employment gained 241,000 jobs in December, beating forecasts of a 227,000 job addition. The increase was broad based and was not affected by oil-related companies that experienced a dramatic fall in crude prices, suggesting the US labor market is resilient and does not depend on any one industry. U.S. private employment is expected to gain 221,000 this time.
5. US ISM Non-Manufacturing PMI: Wednesday, 15:00. Service sector activity expanded at the slowest pace in six months, reaching 56.2 in December, after posting 59.3 in November. Economists expected a reading of 58.2. New Orders Index was 2.5 points lower than 61.4 registered in November. Employment Index declined 0.7 points, reaching 56.0 and Prices Index plunged 4.9 points to 49.5. Service sector is forecasted to grow to 56.6.
6. UK rate decision: Thursday, 12:00. The Bank of England policymakers voted unanimously to leave rates at s record-low in January amid tumbling inflation. Both Martin Weale and Ian McCafferty, formerly opposing such a move, had a change of heart as falling oil prices threatened to weaken further the already subdued inflation. The ongoing improvement in the unemployment rate and wage growth didn’t persuade MPC members to vote for a change in policy. Following this statement, economists pushed back their forecast for a rate hike to early 2016.
7. US Trade Balance: Thursday, 13:30. The U.S. trade deficit contracted in November to an 11-month low reaching $39 billion, the smallest since December 2013. Falling crude oil prices helped to strengthen domestic demand, but exports fell 1.0% to $196.4 billion in November, suggesting the slowing global economy may start to affect the US market. Economists expected deficit to reach $42.3 billion. U.S. trade deficit is expected to contact further to$38 billion.
8. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment dropped sharply to a 15 year low, indicating the US labor market continues to strengthen. However, the unbelievably low figure can be also attributed to a holiday-shortened week. The 43,000decline was much better than the 301,000 addition forecasted by analysts. The four-week moving average, fell 8,250 last week to 298,500. The number of claims is expected to reach 277,000 this time.
9. Canadian employment data: Friday, 13:30. Canada’s labor market had another mild setback in December, shedding 4,300 positions after contracting 10,700 jobs in November. The unemployment rate remained unchanged at 6.6%. Full-time employment in December grew by 53,500 jobs, while part-time work dropped by 57,700 indicating the overall picture is quite positive. The 12-month gain was 185,700 positions, an increase of 1.0% , while the six-month moving average for employment growth was 22,100 jobs, up from 21,300 in November.Canada’s labor market is expected to increase by 5,100 jobs, while the unemployment rate is expected to reach 6.7%.
10. US Non-Farm Employment Change and Unemployment rate: Friday, 13:30. U.S. job growth edged up in December, rising 252,000 after a revised jump of 353,000 in November. Meanwhile, the jobless rate declined to a 6.5 year low of 5.6%. However, despite the positive figures, wages did not increase in December a worrisome sign which may compel the Fed to leave rates unchanged for an extended period. Us job market is expected to add 231,000 positions. The unemplolyment rate is forecsted to remain unchanged.

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newdigital, 2015.01.31 14:26

NASDAQ forecast for the week of February 2, 201 find, Technical Analysis

The NASDAQ as you can see fell during the beginning part of the week, finding the 4600 level for support. We bounce from there, and as a result we ended up forming a hammer, and it now looks as if the market is trying to build up enough pressure to break out to the upside. The 4800 level above should be broken eventually, but at this moment in time it’s been a bit resistive and therefore we may have to take some time. With that, if we can break above that level we believe that the market will then head to the 5000 handle.

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newdigital, 2015.01.31 14:33

S&P 500 forecast for the week of February 2, 2015, Technical Analysis

The S&P 500 fell during the course of the week, testing the 2000 level as a supportive area. That being the case, it appears of the market is ready to go back and forth and eventually go higher. The 2100 level of course is a target, but once we get above there we feel that the market to continue the uptrend that we have seen for so long. However, this week is of course the nonfarm payroll number, so we feel that the market should react to that but ultimately is in an uptrend for a reason.

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newdigital, 2015.01.31 15:34

EUR/USD forecast for the week of February 2, 2015, Technical Analysis

The EUR/USD pair broke higher during the course of the week, but fell at the 1.14 level to turn things back around and form a little bit of a shooting star. That being the case, we feel that the market is going to continue lower, trying to reach the 1.10 level. Ultimately, we believe that rallies continue to offer selling opportunities, and a break below the 1.10 level probably opened the door way to the 1.00 level in the longer run. We have absolutely no interest in buying this pair although we recognize it has been oversold.

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newdigital, 2015.02.01 19:19

EUR/USD weekly outlook: February 2 - 6 (based on investing.com article)

The euro dipped against the dollar and yen on Friday, after data showed that deflation in the single currency bloc deepened in January and amid growing concerns over Greece's future in the euro zone.

Eurostat said that the annual rate of euro zone inflation fell by 0.6% in January, after a 0.2% slip in December. Economists had expected an annual decline of 0.5%.

Meanwhile, Greece’s new government said it will not cooperate with the International Monetary Fund and the European Union and will not seek an extension to its bailout program, underlining fears over a clash with its international creditors.

EUR/USD fell 0.27% to close at 1.1287. For the week, the pair rose 0.71%, the first weekly gain in seven weeks.

The euro ended the month down 6.71% against the dollar after European Central Bank unveiled a €1.2 trillion quantitative easing program last week.

Elsewhere, EUR/GBP dipped 0.21% to settle at 0.7496 on Friday, paring the week’s gains to 0.19%, while EUR/JPY slumped 0.93% to close at 132.66.

Meanwhile, the dollar remained in demand as investors reacted to data showing the U.S. economy grew less than expected in the fourth quarter.

The Commerce Department said in a report that the economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the week at 95.00, down 0.01% for the day and 0.33% lower on the week.

The dollar had strengthened broadly on Thursday after the Federal Reserve indicated that interest rates could start to rise around mid-year.

Following its policy meeting on Wednesday, the Fed said it would keep rates on hold at least until June and reiterated its pledge to be patient on raising interest rates, while acknowledging the solid economic recovery and strong growth in the labor market.

In the commodities market, oil prices scored their biggest one-day gain since June 2012 amid indication that U.S. producers may be pulling back on new production in response to low prices.

Nymex oil futures surged $3.71, or 8.33%, to $48.24 a barrel, while London-traded Brent prices soared $3.86, or 7.86%, to $52.99.

Gold was also well-supported, with prices tacking on $23.30, or 1.86%, to close at $1,279.20 following the release of weaker than expected U.S. GDP data.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.

Monday, February 2

• In the euro zone, Spain is to release data on the change in the number of people employed.
• In the U.S., the Institute of Supply Management is to release data on manufacturing activity. The country will also produce a report on personal income and spending.

Tuesday, February 3

• The U.S. is to release data on factory orders.

Wednesday, February 4

• The euro zone is to publish a report on retail sales.
• The U.S. is to release a report on ADP nonfarm payrolls. Later in the day, the Institute of Supply Management is to release data on non-manufacturing activity.

Thursday, February 5

• The U.S. is to produce its weekly report on initial jobless claims in addition to data on the trade balance.

Friday, February 6

• The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.

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newdigital, 2015.02.01 19:22

Forex - Weekly outlook: February 2 - 6 (based on investing.com article)

The U.S. dollar was mostly lower against its major counterparts on Friday, as investors reacted to data showing the U.S. economy grew less than expected in the fourth quarter.

The Commerce Department said in a report that the economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the week at 95.00, down 0.01% for the day and 0.33% lower on the week.

The dollar slid lower against the safe haven yen, with USD/JPY down 0.69% to 117.50 in late trade, amid weakness in U.S. equities following the lackluster GDP data.

The Dow Jones fell 251.90 points, or 1.45%, while the S&P 500 declined 26.26 points, or 1.3%.

Meanwhile, the euro was under pressure after data showed that deflation in the single currency bloc deepened in January and amid growing concerns over Greece's future in the euro zone.

Eurostat said that the annual rate of euro zone inflation fell by 0.6% in January, after a 0.2% slip in December. Economists had expected an annual decline of 0.5%.

Greece’s new government said it will not cooperate with the International Monetary Fund and the European Union and will not seek an extension to its bailout program, underlining fears over a clash with its international creditors.

The Canadian dollar was also hard-hit after Statistics Canada said the country's gross domestic product fell 0.2% in November, compared to expectations for a 0.1% downtick and after a 0.3% gain in October.

The Australian dollar weakened to a five-and-a-half year low against the greenback amid growing expectations for an interest rate cut in Australia next week.

Elsewhere, the Swiss franc strengthened against the other major currencies on Friday, amid heightened expectations for further intervention by the Swiss National Bank in the currency market (USD/CHF, EUR/CHF).

Meanwhile, the dollar rallied 1.74% against the Russian rouble to end at 70.05 after Russia's central bank unexpectedly cut its benchmark interest rate to 15.0%, one month after surprising markets by hiking rates to 17.0%.

In the commodities market, oil prices scored their biggest one-day gain since June 2012 amid indication that U.S. producers may be pulling back on new production in response to low prices.

Nymex oil futures surged $3.71, or 8.33%, to $48.24 a barrel, while London-traded Brent prices soared $3.86, or 7.86%, to $52.99.

Gold was also well-supported, with prices tacking on $23.30, or 1.86%, to close at $1,279.20 following the release of weaker than expected U.S. GDP data.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.

Central bank policy meetings in the U.K. and Australia will also be in focus.

Monday, February 2

• China is to release a report on the HSBC manufacturing index.
• In the euro zone, Spain is to release data on the change in the number of people employed.
• The U.K. is to publish its manufacturing index.
• In the U.S., the Institute of Supply Management is to release data on manufacturing activity. The country will also produce a report on personal income and spending.
  

Tuesday, February 3

• Australia is to release data on building approvals and the trade balance. Later in the day, the Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
• The U.K. is to publish a report on construction sector activity.
• The U.S. is to release data on factory orders.
  

Wednesday, February 4

• New Zealand is to release data on the change in the number of people unemployed and the unemployment rate.
• Elsewhere, China is to publish its HSBC service sector index.
• The euro zone is to publish a report on retail sales.
• The U.K. is to publish a report on service sector activity.
• The U.S. is to release a report on ADP nonfarm payrolls. Later in the day, the Institute of Supply Management is to release data on non-manufacturing activity.
• Canada is to publish its Ivey PMI.
  

Thursday, February 5

• Australia is to publish data on retail sales.
• The Bank of England is to announce its monetary policy decision.
• The U.S. is to produce its weekly report on initial jobless claims in addition to data on the trade balance.
• Canada is also to report on its trade balance.
  

Friday, February 6

• The RBA is to publish its monetary policy statement.
• The Swiss National Bank is to publish a report on foreign currency reserves.
• The U.K. is to produce a report on the trade balance.
• Canada is to report on building permits and the change in the number of people employed and the unemployment rate.
• The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.

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newdigital, 2015.02.02 08:51

EUR/USD Technical Analysis: Corrective Bounce Seen Ahead (based on dailyfx article)

• EUR/USD Technical Strategy: Flat
• Support: 1.1206, 1.1074, 1.0859
• Resistance:1.1339, 1.1444, 1.1659

The Euro may be preparing correct upward against the US Dollar after putting in a bullish Morning Star candlestick pattern. A daily close above falling trend line resistance at 1.1339 exposes the 23.6% Fibonacci retracement at 1.1444. Alternatively, a reversal below the 14.6% Fib expansion at 1.1206 opens the door for a challenge of the 23.6% threshold at 1.1074.

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newdigital, 2015.02.03 05:35

EUR/USD Monthly Technical Analysis for February 2015 (based on fxempire article)

The EUR/USD finished sharply lower during January after the European Central Bank announced it will begin buying Euro Zone sovereign debt in an effort to revive the economy and prevent it from sliding into economic stagnation.

The plan is for the ECB to buy 60 billion Euro, or $69 billion, of government bonds a month until at least September 2016, or until there’s a “sustained adjustment in the path of inflation” toward the central bank’s target of 2 percent. The total stimulus package amounts to about 1.1 trillion Euros.

With the central bank planning to use newly printed Euros to fund its program, the Euro is expected to remain under pressure against the U.S. Dollar for close to two years. Sure there may be a few short-covering rallies along the way, but until there is meaningful improvement in the Euro Zone economy, the bias should be to the downside for this Forex pair.

The key fundamental factors driving the ECB into its decision are weak Euro Zone inflation of about -0.2 percent and 11.5 percent unemployment that may still be trying to find a bottom.

On January 29, the U.S. Federal Open Market Committee maintained its pledge to be “patient” on raising interest rates. Fed members noted global risks, saying they will monitor “international developments” when deciding how long to keep rates low. It also raised its view of the economy and labor market, but expressed concerns about low inflation, saying it even anticipates inflation to fall further in the near term.

Traders interpreted the Fed’s statement to signal the central bank will begin raising rates perhaps as early as June. With the Fed set to raise rates and the ECB just starting its quantitative easing program, the interest rate differential is heavily favoring the U.S. Dollar at this time.

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newdigital, 2015.02.03 17:29

Fed's Bullard downplays 'international' nod in FOMC statement (based on reuters article)

A top Federal Reserve official on Tuesday downplayed the Fed's nod to international developments in its latest policy statement, saying it was simply an acknowledgement of constant U.S. central bank discussion on the potential impact of global market events.

St. Louis Federal Reserve Bank President James Bullard said the Fed always takes international events into account and, in his view, the insertion of the word "international" was a recognition of that.

Bullard repeated his view that the Fed needs to raise rates sooner and then move gradually higher after that. He also said that the oil price plummet is distorting market-based inflation expectation measures, and that these measures should be set aside until energy prices stabilize.

Bullard was speaking at the annual Delaware Economic Forecast event at the University of Delaware.

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newdigital, 2015.02.03 17:31

Fed should delete 'patient' from next policy statement: Bullard (based on reuters article)

The Federal Reserve should delete the word "patient" from its next policy statement, a top Fed official said on Tuesday, which would give the central bank more flexibility on when to raise interest rates.

St. Louis Fed President James Bullard said if the Fed removes "patient" from its next policy statement in March, it does not mean the central bank has to hike at the next meeting.

Removing the word at the next meeting gives the Fed better "optionality", Bullard said.

Bullard is not a voting member on this year's policy-setting committee.

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newdigital, 2015.02.04 06:24

Two reasons to worry if you’re short EUR/USD (adapted from forexlive article)

Not many people out there are recommending euro longs but BAML is out with a couple of reasons to be worried if you’re short.

1) They note that last week’s inflows into European equities were the largest since June and included both the core and periphery. “We have argued that open-ended QE is negative for the Euro, but persistent equity inflows could slow and eventually even reverse the downward EUR trend,” they say.

2) Economic surprises are reversing. “US data surprises went into negative territory last week for the first time since August, whilst EZ data surprises are back in positive territory for the first time March 2014,” BAML says.

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newdigital, 2015.02.04 18:30

2015-02-04 15:00 GMT (or 17:00 MQ MT5 time) | [USD - ISM Non-Manufacturing PMI]

• past data is 56.2
• forecast data is 56.3
• actual data is 56.7 according to the latest press release

if actual > forecast (or actual data) = good for currency (for USD in our case)

[USD - ISM Non-Manufacturing PMI] = Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry. It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.

==========

"The report was issued today by Anthony Nieves, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management^® (ISM^®) Non-Manufacturing Business Survey Committee. "The NMI^® registered 56.7 percent in January, 0.2 percentage point higher than the December reading of 56.5 percent. This represents continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased to 61.5 percent, which is 2.9 percentage points higher than the December reading of 58.6 percent, reflecting growth for the 66th consecutive month at a faster rate. The New Orders Index registered 59.5 percent, 0.3 percentage point higher than the reading of 59.2 percent registered in December. The Employment Index decreased 4.1 percentage points to 51.6 percent from the December reading of 55.7 percent and indicates growth for the eleventh consecutive month. The Prices Index decreased 4.3 percentage points from the December reading of 49.8 percent to 45.5 percent, indicating prices contracted in January when compared to December. According to the NMI^®, eight non-manufacturing industries reported growth in January. Comments from respondents vary by industry and company; however, they are mostly positive and/or reflect stability about business conditions."

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newdigital, 2015.02.05 05:27

EUR/USD Drops Below 1.1350 on Renewed Greece Worries (based on marketpulse article)

The euro took a spill early on Thursday after the European Central Bank said it will no longer accept Greek bonds as collateral for its liquidity operations, dealing a blow to Athens which is seeking debt relief from euro zone lenders.

The common currency last traded at $1.1331, having fallen as far as $1.1315. It has completely reversed a short-covering rally that lifted it to $1.1534 on Tuesday.

It shed a full cent after the ECB surprised markets late on Wednesday by announcing it would reimpose minimum credit rating requirements for Greek bonds, effectively shifting the burden on to the Greek central bank to finance its lenders.

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newdigital, 2015.02.06 10:57

Trading News Events: U.S. Non-Farm Payrolls (based on dailyfx article)

A 230K rise in U.S. Non-Farm Payrolls (NFP) accompanied by faster wage growth may heighten the appeal of the greenback and spur a short-term selloff in EUR/USD as it boosts expectations of seeing the Federal Open Market Committee (FOMC) normalize monetary policy in mid-2015.

What’s Expected:

Why Is This Event Important:

Indeed, a further improvement in labor dynamics may put increased pressure on the Fed to raise the benchmark interest rate sooner-rather-than-later, but the subdued outlook for inflation may prompt the central bank to further delay its normalization cycle as price/wage growth remains weak.

However, the rise in planned job-cuts paired with the slowdown in private-sector consumption may generate a weaker-than-expected NFP print, and a dismal employment report may generate a larger correction in EUR/USD as it drags on interest rate expectations.

How To Trade This Event Risk

Bullish USD Trade: Job/Wage Growth Exceeds Market Expectations

• Need red, five-minute candle following the release to consider a short trade on EUR/USD
• If market reaction favors a long dollar position, sell EUR/USD with two separate position
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit; set reasonable limit

Bearish USD Trade: U.S. Employment Report Disappoints

• Need green, five-minute candle to favor a long EUR/USD trade
• Implement same setup as the bullish dollar trade, just in the opposite direction

Potential Price Targets For The Release
EUR/USD Daily

• Long-term outlook for EUR/USD remains bearish as the RSI retains the downward trend carried over from back in October 2013.
  
• Interim Resistance: 1.1600 pivot to 1.6110 (61.8% expansion)
  
• Interim Support: 1.1300 (161.8% expansion) to 1.1310 (100% expansion)

Impact that the U.S. Non-Farm Payrolls report has had on EUR/USD during the previous month

Period	Data Released	Estimate	Actual	Pips Change (1 Hour post event )	Pips Change (End of Day post event)
DEC 2014	01/09/2015 13:30 GMT	240K	252K	-35	+25

December 2014 U.S. Non-Farm Payrolls

EURUSD M5: 46 pips price movement by USD - Non-Farm Employment Change news event :

U.S. Non-Farm Payrolls (NFPs) beat market forecasts as the economy added 252K jobs in December following an upwardly revised 353K expansion the month prior. At the same time, the unemployment rate narrowed more-than-expected to an annualized 5.6% to mark the lowest reading since August 2008. However, Average Hourly Earnings unexpectedly slowed to 1.7% during the same period amid forecasts for a 2.2% print, and the weakening outlook for inflation may push the Fed to further delay its normalization cycle as it struggles to achieve the 2% target for price growth. Nevertheless, the initial bullish reaction in the greenback was short-lived as EUR/USD worked its way back above the 1.1800 handle, with the pair ending the day at 1.1839.

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EURUSD M5: 124 pips price movement by USD - Non-Farm Employment Change news event