EURUSD Technical Analysis 2014, 07.12 - 14.12: Ranging or Bearish?

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newdigital, 2014.12.05 16:29

Forex Weekly Outlook December 8-12

Rate decision in New Zealand and in Switzerland, US Retail sales, Unemployment claims, Producer prices and Consumer sentiment are the major events for this week. Here is an outlook on the highlights coming our way.

Last week, Non-Farm Payrolls posted a superb job gain of 321,000 in November. The release also showed a 0.4% rise in wages. The unemployment rate remained unchanged at 5.8%. This was the biggest jobs gain since 2012, far above average of 224,000 a month over the past year. Economists expected an expansion of 231,000 positions. This excellent release demonstrating the ongoing improvement in the job market cannot go unnoticed. The Fed will have to reexamine its zero rates policy in the coming weeks.

1. NZ Rate decision: Wednesday, 20:00. New Zealand’s central bank maintained its Cash rate in September at 3.50%, implying they will keep monetary policy on hold until the end of next year, contrasting the U.S. Federal Reserve plans of raising rates. Low inflation and slowing global growth were the reasons behind the decision to keep rates unchanged. Rates are expected to remain unchanged.
2. Australian Employment data: Thursday, 0:30. Australia’s job market added 24,100 jobs in October. Full-time positions expanded by 33,400 while part-time roles declined by 9,400. The jobless rate remained unchanged at a 12-year high of 6.2%, suggesting a weaker labor market amid the economy’s transition from mining-driven growth. The participation rate edged up to a seasonally adjusted 64.6% compared to 64.5% in the previous month. These figures indicate a modest improvement and a positive trend. Australia is expected to gain 15,200 jobs in November, while the unemployment rate is predicted to reach 6.3%.
3. Switzerland rate decision: Thursday, 8:30. The Swiss National Bank kept its Libor rate at the minimum low of 0.0% to 0.25%, in line with market prediction. SNB policymakers also issued updated forecasts for growth and inflation revealing a moderate pickup in the coming months. The Central Bank expects GDP growth to reach 2% in 2015. Inflation is expected to reach 2% in 2014 and only 0.6% in 2015. Libor rate is expected to stay unchanged this time.
4. US retail sales: Thursday, 13:30. U.S. consumers increased their spending in October, reaching $444.5 billion, on a seasonally adjusted basis, rising 0.3% compared to September’s decline of 0.3%. Economists expected a smaller rise of 0.2%. Consumers were more optimistic and made more purchases. October’s core sales, excluding autos, edged up 0.3% from a 0.2% decline in September. Analysts predicted a 0.2% gain in October. Falling gasoline prices helped to increase domestic expenditures leading to stronger holiday sales. Retail sales are expected to gain 0.3% in November while core sales are predicted to rise 0.1 %.
5. US Unemployment claims: Thursday, 13:30. The number of initial claims for unemployment benefits fell back below the 300,000 line last week, indicating continued growth in the labor market. He reading was broadly in line with market forecast. The four-week average increased by 4750 to 299,000 still near post-recession low. However, the sharp decline could be attributed to Thanksgiving holiday. The number of new unemployment claims is expected to be 299,000 this time.
6. US PPI: Friday, 13:30. The producer price index gained 0.2% in October amid a pickup in inflation. Prices for many products increased despite a decline in wholesale gas costs. Automakers contributed to inflation by introducing 2015 car models. Beef prices jumped 6% and pork prices surged 8.1%. Meanwhile, core PPI excluding the volatile categories of food and energy, increased 0.4%. However, the rise in PPI does not reflect a trend, since the ongoing declines in fuel prices boost sales boosting inflation. The producer price index is predicted to fall 0.1% in November.
7. US Prelim UoM Consumer Sentiment: Friday, 14:55. U.S. consumer sentiment edged up in November to a more than seven-year high of 89.4 points, compared to 86.4 posted in September. Economists predicted a reading of 87.3. The ongoing growth in the employment market and the sharp drop in gasoline prices, boosted sentiment. Current economic conditions increased to 103.0 from 98.3 beating forecast of 98.8. Consumer expectations increased to 80.6 from 79.6, exceeding the 80.2 forecast. However, expectations for income gains remained low despite rising and came in below inflation forecasts. One-year inflation expectation declined to 2.6% from 2.9%, while its five-year inflation outlook was also at 2.6%. U.S. consumer sentiment is expected to improve further to 89.6 this time.

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newdigital, 2014.12.07 12:23

EUR/USD trading forecast for Monday (based on binarytribune article)

Friday’s trade saw EUR/USD within the range of 1.2271-1.2393. The daily low has also been the lowest level since August 16th 2012. The pair closed at 1.2379, gaining 0.01% on a daily basis, while losing 0.58% for the whole week.

Fundamentals

Euro zone German industrial output

Germany’s seasonally adjusted index of industrial production probably fell 0.2% in October compared to a month ago, according to market expectations, following a 1.4% expansion in September. Annualized industrial output contracted 0.1% in September, after another 1.9% decline in August. The index reflects the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case industrial output shrank more than anticipated, this would mount selling pressure on the euro. Destatis is to publish the official data at 7:00 GMT on Monday.

Sentix Investor Sentiment

Confidence among investors in the Euro zone probably continued to worsen during the current month, with the corresponding index coming in at a reading of -13.5. In November it stood at -11.87. If so, this would be the fourth consecutive month, during which the gauge occupied negative territory. The index is based on results from the SENTIX survey, one of the most prominent surveys, reflecting investors’ opinion in Germany. It encompasses 2 800 respondents, with 510 of them being institutional investors. Respondents present their expectations regarding ten different markets for a period of one and six months. Readings above zero indicate that respondents were predominantly optimistic, while readings below zero show pessimism. Lower-than-expected readings would have a bearish effect on the common currency. The official index value is due out at 9:30 GMT.

ECB Draghi remarks

At the press conference on Thursday European Central Bank President Mario Draghi noted that bank policy makers would wait until early next year in order to determine whether Euro area economy is in need of additional monetary stimulus.

ECB Governing Council expects to take into consideration a proposal to widen the bank’s asset purchases, meaning the inclusion of sovereign debt, at the upcoming policy meeting on January 22nd, Bloomberg reported.
”We’re looking for the euro to go down to $1.07 by the end of 2015,” Marvin Barth, head of European foreign-exchange strategy at Barclays Plc in London, said on Friday in an interview with Bloomberg Television. ”You’ve reached a tipping point in people’s expectations to where the euro is likely to go. The ECB is providing a significant amount of accommodation in conjunction with negative deposit rates.”

Pivot Points

The central pivot point for the pair is at 1.2348. In case EUR/USD manages to breach the first resistance level at 1.2424, it will probably continue up to test 1.2470. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2546.

If EUR/USD manages to breach the first key support at 1.2302, it will probably continue to slide and test 1.2226. With this second key support broken, the movement to the downside will probably continue to 1.2180.

The mid-Pivot levels for Monday are as follows: M1 – 1.2203, M2 – 1.2264, M3 – 1.2325, M4 – 1.2386, M5 – 1.2447, M6 – 1.2508.

In weekly terms, the central pivot point is at 1.2385. The three key resistance levels are as follows: R1 – 1.2500, R2 – 1.2620, R3 – 1.2735. The three key support levels are: S1 – 1.2265, S2 – 1.2150, S3 – 1.2030.

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newdigital, 2014.12.07 20:16

Forex - Weekly outlook: December 8 - 12

The dollar rallied to fresh multi-year highs against a basket of other major currencies on Friday after a particularly strong U.S. employment report prompted investors to bring forward expectations for a hike in U.S. interest rates.

The Labor Department reported that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The unusually strong data saw investors bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 before the report.

The dollar has strengthened in recent months on the back of the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan, who are expected to continue monetary easing.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

USD/JPY hit seven year highs 121.69 and was last at 121.43, up 1.38% for the day. For the week, the pair jumped 2.17%.

EUR/USD fell to two-year lows of 1.2272 and settled at 1.2281, off 0.78% for the day.

The euro had moved broadly higher on Thursday after European Central Bank President Mario Draghi indicated that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

Sterling fell to 15-month lows, with GBP/USD down 0.56% to 1.5583 in late trade, while USD/CHF ended at 18-month highs of 0.9790.

The Canadian dollar fell to more than five year lows against the greenback on Friday, following the release of unexpectedly weak domestic jobs data.

Statistics Canada reported that the Canadian economy shed 10,700 jobs last month, compared to expectations for jobs growth of 5,300.

USD/CAD hit highs of 1.1476 before pulling back to 1.1435 in late trade, still up 0.46% for the day.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

China is to produce what will be closely watched reports on trade, consumer prices and industrial production. Central banks in New Zealand and Switzerland are also to hold policy setting meetings next week.

Monday, December 8

• Japan is to release final data on third quarter gross domestic product and a report on the current account.
• China is to publish data on the trade balance, the difference in value between imports and exports.
• Switzerland is to publish reports on retail sales and consumer price inflation, which accounts for the majority of overall inflation.
• Later Monday, Canada is to produce data on building starts and housing permits.

Tuesday, December 9

• Australia is to publish private sector data on business confidence.
• The UK is to publish a report on industrial and manufacturing production.

Wednesday, December 10

• Australia is to produce private sector data on consumer sentiment, as well as official data on home loans.
• Japan is to report on its BSI manufacturing index.
• China is to publish data on the consumer price index.
• The U.K. is to release data on the trade balance.
• Later in the day, the Reserve Bank of New Zealand 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 announcement is to be followed by a press conference.

Thursday, December 11

• Japan is to release data on core machinery orders and tertiary industry activity.
• RBNZ Governor Graeme Wheeler is to testify before the Finance and Expenditure Select Committee in Wellington. His comments will be closely watched.
• Australia is to publish data on the change in the number of people employed and the unemployment rate.
• The Swiss National Bank is to announce its libor rate and publish its monetary policy assessment. The bank is to hold a press conference to discuss the monetary policy decision.
• Later Thursday, Bank of Canada Governor Stephen Poloz is to speak at an event in New York.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• China is to release data on industrial production and fixed asset investment.
• The euro zone is to publish a report on industrial production.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

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newdigital, 2014.12.07 21:07

EURUSD weekly outlook: December 8 - 12

The euro dropped to two-year lows against the dollar on Friday after the U.S. nonfarm payrolls report for November showed that the U.S economy added jobs at the fastest rate in nearly three years, highlighting the diverging recovery in the U.S. and the euro zone.

The Labor Department reported that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The report also showed that average hourly earnings rose by a larger than forecast 0.4% and were 2.1% higher on a year-over-year basis.

EUR/USD fell to two-year lows of 1.2272 and settled at 1.2281, off 0.78% for the day. For the week, the pair was down 1.24%.

The unusually strong jobs report prompted markets to bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 ahead of the data.

The euro had moved broadly higher on Thursday after European Central Bank President Mario Draghi indicated that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

He said the bank could potentially change the size, scale and composition of its existing stimulus programs and added that governing council remained unanimous that it would take further measures if needed.

The ECB also substantially revised down its forecasts for growth and inflation and warned that the latest forecasts do not take into account the recent steep drop in oil prices.

The bank now expects the euro zone economy to grow by just 0.8% this year, 1.0% in 2015 and 1.5% in 2016. It cut its inflation forecast for this year to just 0.5% from 0.6% and to 0.7% in 2015 from 1.1%.

The euro rose to six-year highs against the yen on Friday, with EUR/JPY at 149.23 in late trade.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday data on U.S. retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

The euro zone economic calendar is light, with no major economic reports scheduled for release except for Friday’s report on industrial production.

Monday, December 8

• Germany is to publish data on industrial production while research group Sentix is to publish a report on euro zone investor confidence. Meanwhile, the Eurogroup of finance ministers are to meet in Brussels.

Tuesday, December 9

• Germany is to publish data on the trade balance.

Wednesday, December 10

• France is to publish data industrial production.

Thursday, December 11

• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• The euro zone is to publish a report on industrial production.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

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newdigital, 2014.12.07 21:17

EUR/USD forecast for the week of December 8, 2014, Technical Analysis (based on fxempire article)

The EUR/USD pair initially tried to rally during the course of the week, but found the 1.25 level to be far too resistive. That being the case, the market fell rather hard. However, we believe that there is still more downtrend left in this market, and we had to the 1.2050 level. Ultimately, we believe that you cannot buy this market, and it is not until we get above the 1.30 level that we would even consider buying. Obviously, that’s not going to happen anytime soon as there is still plenty of bearish pressure.

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newdigital, 2014.12.08 05:38

EUR/USD Technical Analysis: Wedge Pattern Hints at Bounce (based on dailyfx article)

• EUR/USD Technical Strategy: Short at 1.2710
• Support: 1.2279, 1.2213, 1.1974
• Resistance:1.2455, 1.2529, 1.2683

The Euro may be preparing to rebound against the US Dollar as prices carve out a bullish Falling Wedge chart formation. A daily close above the 1.2360-86 area marked by the 14.6% Fibonacci expansion and the November 21 close exposes the wedge top at 1.2440. Alternatively, a reversal below the 1.2213-38 zone (wedge floor, 23.6% level) opens the door for a challenge of the 38.2% Fib at 1.1974.

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Something Interesting in Financial Video December 2014

newdigital, 2014.12.09 06:06

EUR/USD slumps, USD/JPY jumps, Crude slides as USD advances post NFP

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newdigital, 2014.12.10 06:19

Video: Another Fundamental Theme Threatens to Drive Euro Lower (based on dailyfx article)

• There are three venues of major concern for the Euro: ECB stimulus, capital flight and a return to crisis
• To this point, the central bank's vows to leverage monetary policy have strong armed the currency lower
• Turmoil in Greece however has set in motion the existing pieces of a return to regional financial fears
  

Can EURUSD break below 1.2200 before the year closes? The natural liquidity drain expected of the final weeks of the trading year works against such significant change. However, a strong fundamental driver can overwhelm the stand often taken by the remaining market participants and even draw those on vacation back to their terminals. For the Euro, there are multiple avenues of concern. The ECB's stimulus efforts have proven a key driver to this point, but the decision on a full-scale QE program seems to have been pushed back to 2015. However, two other lesser-appreciated critical themes are starting to stir. The implications of capital flight in the event of global risk aversion is still a difficult threshold to cross. Alternatively, a revived Euro-area financial fear between rising bond yields, struggling economies and austerity standoffs looks to be unfolding. In today's Strategy Video, we take a look at the Euro and what it would take to catalyze the next big leg for the currency...even before year end.

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EURUSD, M5, 2014.12.10

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