EURUSD Technical Analysis 2015, 01.03 - 08.03: Daily Bearish during the Monthly Breakdown with 1.1097 Key Support Level

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newdigital, 2015.02.27 17:25

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

The euro was the loser in week that saw the dollar retreat and make a comeback. The first week of the new month is packed: rate decisions in Australia, Canada, the UK and the euro-zone, GDP data from Canada and Australia and a full buildup to the US Non-Farm Payrolls. These are the main market movers on FX Calendar. Join us as we explore the highlights of this week.

Janet Yellen managed to send mixed signals and was analyzed as dovish. However, was she preparing us for the removal of forward guidance? Her colleague Bullard was quite bullish. US data came out mixed: jobless claims rose to 313,000, and CPI declined 0.7% due to continued slide in oil prices, while Core CPI surprised with a 0.2% rise and maintained a stable 1.6% y/y figure. The latter number trumped the others and allowed the dollar to make a comeback. In the euro-zone, the Greek list was approved and the crisis is off for now. Data has been somewhat upbeat. UK GDP remained supportive of the pound while in Australia, speculation mounts about an RBA cut. We’ll get lots of answers now.

1. US ISM Manufacturing PMI: Monday, 15:00. Manufacturing activity in the U.S. expanded mildly in January, reaching 53.5, after posting 55.5 in December. The lukewarm reading raised concerns over the health of the economy. Economists expected a stronger reading of 54.9. New Orders declined 4.9 points to 52.9, Production Index was 1.2 points below 57.7 posted in December and Employment Index registered a 1.9 points decline to 54.1. The headline number for February is expected to rise to stand at 53.4 points.
2. Australian rate decision: Tuesday, 3:30. The Reserve Bank of Australia surprised markets in February with a rate cut of 0.25% to 2.25%. This was the first change since August 2013.The RBA noted that the recent drop in oil prices were not enough to boost growth and global economy is also expanding in a moderate pace. Inflation is expected to remain slow, domestic demand is forecast to weaken and the unemployment rate is expected to increase. We think that the RBA could cut again.
3. Canadian GDP: Tuesday, 13:30. Canada’s economy unexpectedly contracted 0.2% in November, prompting talks of a second rate cut in six weeks. Economists expected a small decline of 0.1%. Sluggish activity in manufacturing, mining oil and gas extraction lead to this decline. The BOC noted that if economic data remain weak in early 2015, it could lead to another rate cut. On a yearly base, Gross domestic product grew 1.9%, the lowest year-on-year advance since the 1.9% of March 2014. A +0.1% growth rate is on the cards now.
4. Australian GDP: Wednesday, 0:30. Australia’s gross domestic product grew by a mere 0.3% in the third quarter, reaching a 2.7% expansion, in the 12 months to September. Economists forecast a 0.7% growth for the quarter and 3.1% for the year. However, policymakers noted the GDP was only marginally lower than expected. Despite the rise in unemployment, exports are getting stronger and will lead to expansion in 2015. Expectations stand at +0.7% q/q.
5. US ADP Non-Farm Payrolls: Wednesday, 13:15. The U.S. private sector added 213,000 jobs in January, missing analysts’ forecasts of 224,000. December’s private payrolls were revised up to 253,000 from the previously reported 241,000. Despite the weaker than expected data economists believe that the U.S. labor market is expanding at a solid pace. A similar gain of 218K is predicted now.
6. Canadian rate decision: Wednesday, 15:00. The Bank of Canada surprised markets by cutting its key overnight lending rate by a quarter of a percentage point to 0.75%. The ongoing decline in oil prices posed a threat to Canadian economic growth. Bank of Canada governor Stephen Poloz said the revenues from oil exports will be reduced on top of sluggish investment and employment in the energy sector. The rate cut was aimed to rebalance the economy. The Central Bank also downgraded its growth forecast for 2015, from 2.4% to 2.1% and expect a mere 1.5% growth in the first six months.
7. US ISM Non-Manufacturing PMI: Wednesday, 15:00. The U.S. services activity remained strong in early 2015 but employment slackened. ISM non manufacturing purchasing managers index reached 56.7 in January, nearly unchanged from 56.5 in December. Analysts expected the index to reach 56.6. The majority of responders were positive towards business conditions. The new orders index increased to 59.5 from 59.2 in December. Business activity edged up to 61.5 from 58.6 but the employment component declined to 51.6 in January from 55.7. A similar figure of 56.5 points is on the cards now.
8. UK rate decision: Thursday, 12:00. Bank of England policymakers voted unanimously to keep rates on hold in February but raised the possibility for the first time that it could cut interest rates below 0.5% if inflation weakens further. British inflation plunged to 0.3% in January, the lowest level since records began in 1989 and far below the BoE’s 2% target. The BoE noted it may cut rates below zero in the coming months. BoE policymaker Martin Weale said the bank will need to start raising interest rates sooner than investors expect as inflation recovers from current low levels. No changes are expected.
9. Euro zone rate decision: Thursday, 12:45. The European Central Bank announced the start of a massive government bond-buying program to pump billions in new money into the euro zone economy starting from March until the end of September 2016. ECB President Mario Draghi said that by September 2016, more than 1 trillion euros will be added from quantitative easing. The ECB is trying to restore inflation to its target of just below two percent; consumer prices fell in December, but there are doubts, and not only in Germany, over whether printing fresh money will work. No change is expected now, but Draghi has a lot to talk about: the ECB’s role in the Greek crisis, how Draghi sees inflation evolving after the stabilization in oil prices, hopes for growth and more. The president of the ECB usually moves markets
10. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits edged up unexpectedly last week to 313,000, from 282 in the prior week. The 31,000 rise was the biggest jump since December 2013. Economists expected claims to reach 288,000. The four-week average increased to 294,500 from a revised 283,000 the week before. Chair Janet Yellen noted in her congressional testimony this week that there are still too many unemployed, wage growth is still slow and inflation remains well below the Fed’s objectives.
11. US Non-Farm Payrolls report: Friday, 13:30. The US economy added 257,000 jobs in January, exceeding expectations of a 230,000 jobs gain, reconfirming the strength of the US economy. The economy has created more than 1 million new jobs in the last three months and the private sector has added 11.8 million jobs over 59 straight months of job growth, extending the longest streak on record. Wages in the private sector also increased, with a rise of 12 cents in average hourly earnings to $24.75. Over the last 12 month average wages have increased by 2.2%, up from a previous estimate of 1.9%. However, despite the increase in new jobs, the unemployment rate increased slightly from 5.6% to 5.7%. Economists believe the rise may be a result of the huge surge in the labor force increasing statistical noise, but can also reflect growing optimism about the chances of gaining work. Estimations currently stand at a gain of 241K, an unemployment rate of 5.6% and a rise of average hourly earnings of 0.2% m/m.
12. US Trade Balance: Friday, 13:30. The U.S. trade deficit widened sharply in December reaching $46.6 billion 17.1% higher than in the previous month. . It was the biggest percentage increase since July 2009. The trade gap suggested a downward revision to the fourth-quarter gross domestic product. Imports increased 2.2% to $241.4 billion, and imports of non-petroleum products edged up to a record high, a sign of strengthening in the domestic economy and a strong US dollar. Exports declined 0.8% to $194.9 billion in December. A narrower deficit of 41.6 billion is on the cards now.

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newdigital, 2015.02.28 16:51

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

The EUR/USD pair fell hard during the course of the week, closing towards the bottom of the range. That being the case, looks as if the EUR/USD pair will probably fall from there, heading to the 1.11 handle next, and then the 1.10 level. Any rally this point time should be a nice selling opportunity and we believe that the 1.15 level is massively resistive. We like rallies the show signs of resistance, as it offers value in the US dollar. If we break down below the 1.10 level, this market could very well fall to the parity level next.

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newdigital, 2015.02.28 17:10

EUR/USD Monthly Technical Analysis for March 2015

The EUR/USD posted an inside move and lower close during February. The chart pattern indicates impending volatility and trader indecision, but with a bias to the downside. The close at 1.1193 indicates the consolidation around the major Fibonacci level at 1.1211 may be over, setting the stage for a possible breakdown under the January low at 1.1097.

During February, the market held up considerably well after Greece agreed to an extension of its bailout agreement with the Euro Zone. Some of the consolidation was a spillover from January when the European Central Bank finally announced the long-awaited stimulus plan.

With the Euro Zone still facing growth issues, traders are still heavily short, so any bottoming action will likely be fueled by short-covering rather than aggressive buying. The European Central Bank should leave interest rates unchanged while allowing its stimulus to do its work so the main focus this month will be on the U.S. Non-Farm Payrolls report on March 6.

A strong report will be bearish for the EUR/USD because it will bring the Fed closer to raising rates. Traders are currently pricing in a potential rate hike in June although Fed Chair Janet Yellen said late last month that the central bank was in no hurry to raise interest rates because of a struggling labor market and low inflation.

Weak jobs data won’t necessarily be bullish for the EUR/USD, but it will encourage position-squaring and short-covering, but any gains will be limited.

Technically, the main trend is down on the monthly chart. The close under the long-term Fibonacci level at 1.1211 indicates weakness. If a fresh round of selling pressure starts after the U.S. jobs report then sellers will go after the low for the year at 1.1097. Crossing to the bearish side of a steep downtrending angle at 1.10793 will put the market in an extremely weak position.

The tone of the market this month will be determined by trader reaction to 1.1211. If this area holds as support and momentum gets strong then look for the short-covering rally to extend into at least 1.1687.

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newdigital, 2015.03.01 04:02

Forex technical analysis: EURUSD review for February 2015 and preview for March (based on forexlive article)

The month of February was a "take a breather" month for the EURUSD. That is not much of a surprise given the trend month in January, which saw the pair have an oversized 1003 pips trading range. In February the range was a more modest 357 pips.  

For most of the month, the pair was preoccupied with the headline news from Greece. That "can was kicked down the road" with a four month extension of the loan agreement. Although, there will likely need to be another bailout down the road, the EU (and the market) will deal with that later.  For now there was no Greek exit (or Grexit) and although that bullet was dodged the EURUSD remained in a consolidative range for much of the month. 

The uncertainty from the event (and countless headlines) gave traders the incentive to like the market not love it.  Although the net shorts remained throughout the month (at least from the weekly commitment of traders reports), the action was more two way with a move higher followed by a move lower.  Apart from a strong US employment report at the beginning of the month, the US data was more mixed/disappointing in the month. This too helped contribute to some of the up and down choppy action.

With Greece, settled, traders made a play to the downside on the next to last trading day of the month. The extension to the downside on February 26th, turned the technical bias to the downside going into the new trading month.

Some technical highlights:

• The high for the month extended up to 1.1533. The high was able to stay below the November 2005 low at the 1.1639 level. This remains a key level on the topside that if the price can stay below, the bears are more comfortable and in control
• The low could not extend below the January 2015 low (at 1.1097).  As a result, there were "no new lows going back to 2003" in the month.The 1.1097 level is a target level to get and stay below in March for the trend down to resume.
• The price closed below the 1.12092 level. This is the 61.8% retracement of the move up from the 2000 year low to the 2008 year high. This will be a close resistance level for traders into the new trading month.
• The price closed the month below the prior month close at 1.12785 area (more bearish).

Looking at the hourly chart (see below):

• The price moved below the month swing lows on the next to last trading day of the month. Those lows came in between 1.12605 and 1.12790. Into March, that is the risk for shorts. Stay below that ceiling area, and the bears remain in control.  Putting it another way, "The price should not trade back above the 1.12605-79 area.". If it does, there should be further upside momentum in March.
• The low in trading on Friday found support against a low trend line.  A break below that line is the next downside target for the pair.  That level comes in at 1.1173 area (and moving lower as each hour passes).

Overall, the EURUSD stayed steady for most of February, but ended the month with a more bearish bias.  If that bearish trend continues into March, the pair would next look  toward the 1.0917 high from October 1999, or - on a stretch and trend month - the September 2003 low at 1.0759.   
Conversely, if the market does not find the follow through selling, and there is a move back above the 1.1209 then 1.1260-79 area, the pair would be back in the bellow the the February trading range and I would not be surprised to see the 1.1500 area again.

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newdigital, 2015.03.01 16:45

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

The euro pared back gains against the dollar on Friday after data showed that the U.S. economy expanded modestly in the final three months of 2014, supporting expectations for higher interest rates.

The Commerce Department reported that U.S. gross domestic product grew at an annual rate of 2.2% in the last three months of 2014, down from an initial estimate of 2.6% but ahead of expectations for a downward revision to 2.1% growth.

Other reports showed that U.S. pending home sales rose to a one-and-a-half year high in January and consumer sentiment also remained strong.

The February reading of the University of Michigan's consumer sentiment index was revised up to 95.4 from the preliminary reading of 93.6. While this was down from the previous month final reading of 98.1, it was the second highest level since January 2007.

EUR/USD was at one-month lows of 1.1194 in late trade, off earlier highs of 1.1244.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, ended the day almost unchanged at 95.29, not far from Thursday’s one-month highs of 95.43.

The dollar rallied on Thursday after stronger-than-forecast data on U.S. durable goods orders added to indications that the economic recovery is on track.

Earlier in the week, Federal Reserve Chair Janet Yellen said that if the economy keeps improving as the bank expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

EUR/JPY was up 0.15% to 133.9 late Friday, recovering from earlier one-month lows of 133.43.

In the week ahead, Friday’s U.S. employment report will be closely watched, while Thursday’s European Central Bank monetary policy meeting will also be in focus.

Monday, March 2

• The euro zone is to produce preliminary data on consumer prices and a report on unemployment.
• In the U.S., the Institute of Supply Management is to report on manufacturing activity.

Tuesday, March 3

• In the euro zone, Spain is to report on the change in the number of people employed.

Wednesday, March 4

• The euro zone is to release revised data on service sector output, as well as a report on retail sales.
• The U.S. is to release the ADP non-farm payrolls report, while looks at private sector jobs growth. Later in the day, the ISM is to report on services sector activity.

Thursday, March 5

• In the euro area, Germany is to release data on factory orders.
• The ECB is also to announce its monetary policy decision. The rate announcement will be followed by a post-policy meeting press conference with President Mario Draghi.
• The U.S. is to release the weekly report on initial jobless claims and data on factory orders.

Friday, March 6

• The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings and a report on the trade balance.

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newdigital, 2015.03.02 10:10

Weekly Trends, Signals: S&P 500, Gold, Crude Oil, EURUSD, KOSPI, RTS (based on investting.com article)

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newdigital, 2015.03.03 05:11

EUR/USD Drops Below 1.12 (based on marketpulse article)

he dollar edged up on Monday, with an index that tracks the greenback against major currencies touching an 11-year peak even after soft economic data.

The euro, which is off nearly 10 percent in the last three months, had been up by as much as a third of a percent against the dollar on Monday but surrendered gains and last traded flat at $1.1192.

The yen went through 120 against the dollar for the first time since Feb. 12. The dollar was last up 0.50 percent to 120.09 yen, marking a three-week high for the dollar against the yen.  The dollar index was last up 0.14 percent at 95.427 after earlier going as high as 95.514, its highest since September 2003.