EURUSD Technical Analysis 2014, 14.12 - 21.12: Bearish Breakout

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newdigital, 2014.12.13 11:22

Forex Weekly Outlook Dec.15-19

The US dollar retraced some of the previous gains but managed to retrace the retracement as well. Japan’s Lower House Elections, UK inflation and employment data and the most important event: the last Fed decision for the year are the main highlights for this week. Follow along as we explore the Forex market movers.

The US consumer is certainly upbeat: US retail sales release showed Americans spent 0.7% more in November compared to the previous month and core sales followed suit. Also confidence is high, the highest since January 2007 according to UoM. This is partially attributed to the collapse in oil prices, which is hurting the Canadian dollar. In the euro-zone, the highly anticipated TLTRO fell short of predictions, strengthening the notion that QE is coming to the old continent. The antipodean currencies took different directions: the Aussie got a target of 0.75 from the central bank, while the New Zealand’s central bank seemed upbeat. Volatility continues being high despite the upcoming holidays. And now, we have the most important central bank speaking out:

1. Japan Lower House Elections: Sunday. Japanese Prime Minister Shinzo Abe’s ruling party is expected to win sweeping victory according to media projection. Abe’s Liberal Democratic Party (LDP) is expected to take 303-320 seats of the powerful chamber’s 475 seats, reaching “super majority” needed to override votes in the upper house. The elections were called after Abe decided to push back the next sales tax hike as the previous one threw the country into recession. With high expectations, a failure to win a convincing majority could send the yen soaring and USD/JPY plunging down.
2. UK inflation data: Tuesday, 9:30. UK inflation edged up to an annual rate of 1.3% in October, following 1.2% in the previous month. Analysts expected CPI to remain at 1.2%. Prices in the recreation and culture sectors increased while transport costs, as well as food and non-alcoholic beverages, fell. Despite this rise, the Bank of England warned the inflation rate could dip to as low as 1% in the coming months. However, the small rise in the rate of inflation is unlikely to alter the central bank’s decision to keep its key interest rate at 0.5% for the time being. Inflation is expected to reach 1.2% in November.
3. German ZEW Economic Sentiment: Tuesday, 10:00. German economic sentiment rebounded in November, rising 15.1 points from October to 11.5. Analysts expected a modest improvement of 4.5 points towards 0.9 points. The recent encouraging signs of growth in the Eurozone suggesting the economy is stabilizing, contributed to the rise in sentiment. Economic sentiment is expected to edged up to 19.8 in December.
4. UK Governor Mark Carney speaks: Tuesday, 10:30. Mark Carney, head of the Bank of England is scheduled to hold a press conference and talk about the Financial Stability Report in London. Despite elevated household confidence, as well as other economic indicators, including a recent positive trend in wage growth, the Eurozone struggling economy poses the major threat to the UK’s recovery.
5. US Building Permits: Tuesday, 10:30. The number of permits for single- and multi-family housing edged up 4.8% in October, reaching a 1.08 million-unit pace, the highest since June 2008. The sharp rise in October was preceded by another increase in the prior month indicate a recovery trend in the housing market. However, the recent acceleration in demand is expected to boost wages and contribute to economic growth. The number of permits for single- and multi-family housing is forecasted t reach 1.06 million.
6. UK employment data: Wednesday, 9:30. The number of unemployed in the UK fell by 20,400 in October, reaching 931,700, the lowest level since August 2008. The sharp drop continued a positive trend in the UK labor market with an 18,400 fall in September and a 33,400 decline in August. The ongoing improvement in the job market is an encouraging sign that wages will eventually pick-up and boost UK’s domestic economy. Claimant Count Change is expected to drop by 19,800 this time. It is also important to note wages: a rise of 1.3% is expected in average hourly earnings. The unemployment rate is predicted to tick down to 6% from 5.9% last time.
7. US inflation data: Wednesday, 13:30. U.S. consumer prices remained unchanged in October, following September’s rise of 0.1%. Analysts expected a 0.1% decline in October. On a yearly base, consumer price index also remained unchanged from September’s increase of 1.7%. Excluding food and energy costs core consumer prices gained 0.2% in line with market forecast. On an annual basis, core CPI rose 1.8%, and remains below the Federal Reserve’s target of 2.0%. CPI is expected to decline 0.1%, while core CPI is predicted to gain 0.1%.
8. Fed decision: Wednesday, 19:00, press conference at 19:30. In the last FOMC gathering in October, the Fed ended QE3 as expected, ending all doubts. Their bullish view of the labor market gave a boost to the dollar. The main focus of this meeting is the “considerable time” phrase related to the timing of the first rate hike. There is speculation that the Fed will alter the phrasing and call for patience on the rate hikes. Given the recent jobs report, which finally included a rise in wages, there is also a chance that the Fed totally removes this wording thus hinting of an earlier rate hike, perhaps even in March. In addition to the statement, the Fed releases its forecasts, including the famous “dot chart”. The last release showed rates rising to 1.375 on average by the end of 2015. Will this average be pushed back with lower inflation expectations? And last but not least, Fed Chair Janet Yellen meets the press and reporters will likely try to extract some more specific wording about the timing of rate hikes. There are quite a few wild cards here and volatility is certainly expected to be wild. All in all, an upbeat view on the US economy should keep the dollar bid, while dovish caution, something that the Fed does very often, would weigh on the greenback.
9. NZ GDP: Wednesday, 21:45. New Zealand’s economy expanded at the fastest pace in 10 years in the second quarter, as Gross domestic product edged up 3.9% on a yearly base and 0.7% from the first quarter. Both readings exceeded market forecast. Strong domestic demand is the major growth force in New Zealand’s economy, but surging exports to China have also contributed to this expansion. Gross Domestic Product is expected to gain 0.7% in the third quarter.
10. German Ifo Business Climate: Thursday, 9:00. German business sentiment rebounded in November, reaching 104.7 from 103.2 posted in the prior month. The reading was better than the 103 points forecasted by analysts, signaling the downturn trend in German economy has halted. The slowdown in economic activity was led by the euro-area partners’ sluggish demand and a sharp drop in exports to Russia. The third quarter growth rate reached just 0.1% after a 0.1% contraction in the first quarter. However recent economic data suggest an ongoing improvement in the German economy. German business sentiment is expected to improve further to 105.6.
11. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits dropped 3,000 last week, reaching 294,000, staying below the 300,000 level. Analysts expected claims to reach 299,000. However, despite the fall in weekly claims, the number of continuing claims increased from 2.372 million to 2.514 million. The 4-week moving average increased to 299,250, from 299,000 posted last week. The number of initial claims for unemployment benefits is expected to reach 297,000 this week.
12. US Philly Fed Manufacturing Index: Thursday, 15:00. The Philly Fed manufacturing survey jumped from 20.7 in October to 40.8 in November posting the highest reading since December 1993. The big rise suggests increased growth in manufacturing activity. New orders and shipments showed similar improvement this month. Employment was higher and the outlook indicator showed expected growth will continue over the next six months. Manufacturing activity in the Philadelphia area is predicted to rise to 26.3 this time.
13. Japan rate decision: Friday. The Bank of Japan’s November Statement revealed the bank is willing to step up its operations of quantitative and qualitative monetary easing and presented its assessment of the outlook of the Japanese economy. The Policy Board members stated the weaknesses in demand after the consumption tax hike implementation. Prime Minister Shinzo Abe announced he would postpone the 2 percentage point tax hike scheduled for next October and also called for a general election.

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newdigital, 2014.12.13 13:27

EUR/USD forecast for the week of December 15, 2014, Technical Analysis (based on fxempire article)

The EUR/USD pair broke higher during the course of the week, but as you can see struggled at the 1.25 handle. This is an area that has been resistive in the past, so it makes sense that we would run into resistance again. We believe that the downtrend is most certainly still in effect, but we do not have a resistant candle to start selling yet. Because of this, we are on the sidelines as far as longer-term trades are concerned, but we certainly wouldn’t be interested in buying this market.

After all, we are heading towards the end of the year, and the liquidity will all but disappear. With that, we think that short-term traders only can be bothered to be in this marketplace, and that sudden erratic corrections can occur at any time. I have a yellow box drawn on the chart which for me signifies when the trend changes. If we get above there, extensively the 1.30 handle, we could see the market go much higher. Probably to the 1.135 level would be the next target at that point time, but it takes a lot for that to happen in our opinion.

More than likely, the market will probably do very little over the next couple of weeks, at least as far as anything along the lines of a substantial move. Ultimately, the market could bounce a bit from here and offer a selling opportunity but we would need to see the resistive candle form in order to do so. Perhaps we may get a little bit of a late December surprise, but ultimately we feel that this market is going to continue going lower once the liquidity returns the marketplace.

Looking at the longer-term charts, we believe that the 1.2050 level is the target given enough time, and as a result we are not interested in buying under any circumstances, even though we do recognize that a bit of a bounce could happen. We believe that 2015 will be very hard on the Euro as well.

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newdigital, 2014.12.14 09:29

EUR/USD Weekly Outlook (based on investing actionforex article)

EUR/USD's rebounded last week indicated short term bottoming at 1.2246. Further recovery could be seen back to 1.2599 resistance. Considering bullish convergence condition in daily MACD, break of 1.2599 will be the first sign of medium term bottoming and bring stronger rebound to 1.2886 key resistance next. On the downside, break of 1.2246 is needed to confirm fall resumption. Otherwise, we'd expect more corrective trading ahead.

In the bigger picture, overall price actions from 1.6039 long term top is viewed as a corrective pattern. Fall from 1.3993 is tentatively viewed as the third leg of such pattern and should target 1.1875 low and below. On the upside, break of 1.2886 resistance will bring some consolidations first before staging another decline.

In the long term picture, EUR/USD turned into a long term consolidation pattern since reaching 1.6039 in 2008. Such consolidation is still in progress. And break of 1.2042 will likely pave the way to 61.8% retracement of 0.8223 to 1.6039 at 1.1209. Before that, EUR/USD would continue to engage in sideway trading between 1.1875 and 1.5143 in medium term.

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newdigital, 2014.12.14 17:43

Forex - Weekly outlook: December 15 - 19

The dollar gained ground against the euro on Friday following the release of strong U.S. economic data and surged to more than five year highs against the commodity-exposed Canadian dollar as oil prices continued to drop.

EUR/USD was up 0.44% to 1.2461 in late trade. The dollar was boosted after data showing U.S. consumer sentiment rose to an almost eight-year high in December.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7. Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day. On Monday the index rose to a five year high of 89.53.

The dollar also pushed higher against the yen, with USD/JPY at 118.77 in late trade, off lows of 118.05.

Elsewhere, the Canadian dollar fell to five-and-a-half year lows, with USD/CAD hitting highs of 1.1590, before easing back to 1.1578 in late trade.

Oil prices dropped to their lowest level in five years on Friday after the International Energy Agency cut its forecast for global oil demand for the fifth time in six months.

Canada is a major oil exporter and the currency's sensitivity to crude prices has intensified as prices continued to tumble.

The Russian ruble fell to record lows against the dollar on Friday and the Norwegian krone fell to 11-year lows after rate hikes by both countries central banks on Thursday failed to offset the selling pressure brought to bear by the continued decline in oil prices.

USD/RUB jumped 3.23% to 58.20 late Friday while USD/NOK was up 0.98% to settle at 7.36 after hitting highs of 7.39 earlier, the most since September 2003.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. Japan’s central bank is also to hold a policy setting meeting next week. The euro zone is to produce what will be closely watched reports on private sector activity.

Monday, December 15

• Japan is to publish reports on the Tankan manufacturing and non-manufacturing index.
• Switzerland is to publish data on producer price inflation.
• In the euro zone, Germany’s Bundesbank is to publish its monthly report.
• The U.K. is to release private sector data on industrial order expectations.
• Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• China is to publish the preliminary reading of its HSBC manufacturing index.
• In the U.K., the Bank of England is to publish its financial stability report. BoE Governor Mark Carney is to hold a press conference about the report.
• The U.K. is also to release data on consumer inflation, which accounts for the majority of overall inflation.
• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• Canada is to produce data on manufacturing sales and foreign securities purchases.
• The U.S. is to publish reports on building permits and housing starts.
• Later in the day, New Zealand is to release data on its current account.

Wednesday, December 17

• Japan is to publish a report on its trade balance.
• The U.K. is to release data on the change in the number of people employed, the unemployment rate and average earnings. In addition, the BoE is to publish the minutes of its latest policy meeting.
• The euro zone is to produce revised data on consumer price inflation.
• Canada is to publish a report on wholesale sales.
• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.
• New Zealand is to release data on gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.

Thursday, December 18

• Switzerland is to report on its trade balance.
• The Ifo Institute is to release a report on German business climate.
• The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• New Zealand is to release private sector data on business confidence.
• The Bank of Japan 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 bank will hold a press conference following the announcement.
• Germany is to release a report by Gfk on consumer climate.
• The U.K. is to release data on public sector net borrowing, as well as a private sector report on retail sales.
• Canada is to round up the week with reports on retail sales and consumer inflation.

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newdigital, 2014.12.14 17:46

EUR/USD weekly outlook: December 15 - 19

The euro gained ground against the dollar on Friday, but gains were held in check following a strong report on U.S. consumer sentiment, while falling oil prices and fears over political uncertainty in Greece continued to fuel risk aversion.

EUR/USD was up 0.44% to 1.2461 in late trade, extending its pullback from the two-year trough of 1.2246 struck on Monday.

The dollar found support after data showing U.S. consumer sentiment rose to an almost eight-year high in December.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7.

Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices. The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, recovered from session lows of 88.12 following the report to settle at 88.34, still off 0.26% for the day. On Monday the index rose to a five year high of 89.53.

Investors remained wary in the wake of a surprise decision by the Greek government to bring forward a parliamentary vote for president to next week from February.
The move raised the prospect of snap elections if Prime Minister Antonis Samaras’ candidate is not approved by parliament, which could see the anti-bailout Syriza party take power.

Economic reports pointing to a slowdown in China and the ongoing decline in oil prices also fuelled risk aversion.

Oil prices hit lows not seen since 2009 on Friday, with Brent below $62 per barrel and US crude down to $57 a barrel after the International Energy Agency cut its forecast for global oil demand for the fifth time in six months.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. The euro zone is to produce what will be closely watched reports on private sector activity.

Monday, December 15

• In the euro zone, Germany’s Bundesbank is to publish its monthly report.
• Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.

Tuesday, December 16

• The euro zone is to publish preliminary data on private sector activity, while Germany and France are to also to publish data on private sector growth.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• The U.S. is to publish reports on building permits and housing starts.

Wednesday, December 17

• The euro zone is to produce revised data on consumer price inflation.
• The U.S. is to release data on consumer inflation and the current account. Later Wednesday, the Federal Reserve is to publish its rate statement and economic projections for the next two years. Fed Chair Janet Yellen is to hold what will be a closely watched press conference.

Thursday, December 18

• The Ifo Institute is to release a report on German business climate.
• The U.S. is to release data on initial jobless claims and manufacturing activity in the Philadelphia region.

Friday, December 19

• Germany is to release a report by Gfk on consumer climate.

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newdigital, 2014.12.15 06:27

EUR/USD Technical Analysis: Buyers Targeting 1.25 Figure (based on dailyfx article)

Resistance	Support
1.2501	1.2373
1.2658	1.2246
1.2913	1.2146

The Euro advanced against the US Dollar as expected having completed a bullish Morning Star candlestick pattern. Near-term resistance is at 1.2501, the 14.6% Fibonacci retracement, with a break above that on a daily closing basis exposing the 23.6% level at 1.2658. Alternatively, a reversal below wedge top resistance-turned-support at 1.2373 clears the way for a test of the December 8 low at 1.2246.

Prices are too close to resistance to justify entering long from a risk/reward perspective. On the other hand, the absence of a defined bearish reversal signal suggests that taking up the short side is premature. With that in mind, we will remain flat for now.

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newdigital, 2014.12.15 16:25

Technical analysis for EURUSD and AUDUSD (based on dailyfx article)

• EUR/USD has moved steadily higher since finding support early last week ahead of the 15th square root relationship of the year’s high in the 1.2250 area
• A daily close over the 2nd square root relationship of the year’s low at 1.2470 will turn us positive on the exchange rate
• Weakness below 1.2360 is needed to reinstill downside momentum in the euro
• A very minor turn window is eyed on tomorrow/Wednesday

EUR/USD Strategy: Flat. Aggressive traders could look to buy on weakness into Wednesday.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
EUR/USD	1.2360	1.2415	1.2425	1.2470	1.2495

• AUD/USD fell to a new low for the year on Monday before rebounding again off a median line related to the 2013 high
• Our near-term trend bias is lower in the Aussie while below .8405
• A close under .8205 is needed to set off a new leg lower in the rate
• A turn window of some importance is eyed right here
• A close above .8405 would turn us positive on AUD/USD

AUD/USD Strategy: Like holding only a reduced short position until after this turn window.

Instrument	Support 2	Support 1	Spot	Resistance 1	Resistance 2
AUD/USD	.8125	.8205	.8225	.8280	.8405

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newdigital, 2014.12.17 06:01

EUR/USD Technical Analysis: Euro Pops to One-Month High (based on dailyfx article)

• EUR/USD Technical Strategy: Flat
• Support: 1.2491, 1.2397, 1.2340
• Resistance:1.2566, 1.2642, 1.2735

The Euro advanced against the US Dollar as expected having completed a bullish Morning Star candlestick pattern. Near-term resistance is at 1.2566, the 50% Fibonacci retracement, with a break above that on a daily closing basis exposing the 61.8% level at 1.2642. Alternatively, a reversal below the 38.2% Fib at 1.2491 clears the way for a test of the 23.6% retracement at 1.2397.

Our long-term outlook calls for a broadly stronger US Dollar against its key counterparts. With that in mind, we will treat the ongoing EURUSD bounce as a chance to get short at more attractive levels once a clear-cut trade setup presents itself rather than a buying opportunity.

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EURUSD M5: 13 pips price movement by USD - CPI news event

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newdigital, 2014.12.18 17:03

EUR/USD Technical Analysis: Prices Retreat Below 1.24 Mark (based on dailyfx article)

• EUR/USD Technical Strategy: Flat
• Support: 1.2324, 1.2249, 1.2173
• Resistance:1.2418, 1.2569, 1.2676

The Euro turned sharply lower against the US Dollar, with sellers reclaiming a foothold below the 1.24 figure. A daily close below the intersection of falling wedge top resistance-turned-support and the 38.2% Fibonacci expansion at 1.2324 exposes the 50% level at 1.2249. Alternatively, a turn above the 23.6% Fib at 1.2418 opens the door for a challenge of the December 16 high at 1.2569.

Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined bullish reversal signal suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.

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newdigital, 2014.12.19 03:52

EUR/USD - Euro Sinks As Yellen Hints At Rate Hike In Mid-2015 (adapted from seekingalpha article)

EUR/USD is steady on Thursday, following the euro’s sharp losses following the Federal Reserve statement on Wednesday. In the European session, the pair is trading slightly above the 1.23 line. On the release front, German Ifo Business Climate rose to 105.5 points. Later in the day, the US will release Unemployment Claims and the Philly Fed Manufacturing Index.

The shaky euro took another tumble on Wednesday, courtesy of the Federal Reserve. Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, but not before April. The news sent the euro sprawling, as the currency lost about 170 points on Wednesday.

There was good news out of Germany, the locomotive of the Eurozone. Ifo Business Climate, a key indicator, improved to 105.5 points, up from 104.4 a month earlier. The strong reading was very close to the forecast of 105.4 points. We’ll get a look at consumer confidence on Friday, with the release of GfK German Consumer Climate. The markets are expecting a strong reading of 8.9 points.

Meanwhile, Eurozone inflation remains at low levels, and there were no surprises as Eurozone CPI dipped to 0.3% in November, down from 0.4% a month earlier. Persistent efforts from the ECB have not improved matters, and the danger of deflation has risen with the crash in oil prices. Germany has not been immune to weak inflation, with German Final CPI coming in at a flat 0.0% in November.