EURUSD Technical Analysis 2015, 19.04 - 26.04: Bear Market Rally with reversal possibilities

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newdigital, 2015.04.17 15:51

Forex Weekly Outlook April 20-24 (based on forexcrunch article)

Inflation data in New Zealand and Australia, Poloz and Stevens’ speeches, German ZEW Economic Sentiment and German Ifo Business Climate, US Unemployment Claims and Durable Goods Orders are the highlights of this week. Here is an outlook on the top events on Forex calendar.

Last week, US data disappointed with weaker than expected housing and employment data as well as soft retail sales.  Jobless claims rose 12,000 to 294K, building permits came reached 1.04 million while forecasted 1.08 million and housing starts hardly recovered with 0.93 million. Retail sales registered a 0.9% increase, below the 1.1% rise predicted and Core sales gained 0.4% far below the0.7% expected. However, the Philadelphia Fed Manufacturing Index surprised with 7.5 points vs. 5 in the previous months exceeding forecasts for a 6.5 points reading. Will the US data stabilize this week?

1. New Zealand Inflation data: Sunday, 23:45. Consumer prices in New Zealand declined by 0.2% in the fourth quarter of 2014, amid lower oil and vegetables prices. This was the first decline since the fourth quarter of 2012. Analysts expected rates to remain unchanged and expected an annual growth of 0.9% rather than the 0.8% reported. However, international air fares edged up 7.3%, while domestic air fares expanded 8.3%. Housing costs were also a positive contributor to inflation in the December quarter. Consumer prices are expected to decline once more by 0.2%.
2.  Stephen Poloz speaks: Monday, 15:05. BOC Governor Stephen Poloz is scheduled to speak in New York. Poloz may talk about the central bank’s decision to keep its key overnight lending rate unchanged and about his bright forecast for Canadian growth despite the current slowdown forced by the oil price collapse.
3. Glenn Stevens speaks: Monday, 17:30. RBA Governor Glenn Stevens is expected to speak in New York. He may refer to The RBA’s decision to leave the cash rate unchanged at 2.25%, despite talks of a rate cut.
4. Eurozone German ZEW Economic Sentiment: Tuesday, 10:00. German investors’ sentiment remained positive in March, climbing for the fifth time to 54.8 from 53 in February amid rising domestic demand. However concerns about Greece and Ukraine clouded future outlook. Analysts expected a higher figure but predict optimism will grow in the coming months after the fog, surrounding Greece and Ukraine, clears. Investors sentiment is expected to rise to 56.
5. Australian inflation data: Wednesday, 2:30. Australian inflation in the last quarter of 2014, rose 0.2% following 0.5% rise reported in Q3. The reading was below expectations reflecting lower prices for transport, due to the ongoing decline in oil prices, as well as for healthcare. Falling fuel prices are the main cause for the tame inflation in the fourth quarter. But Core inflation a more precise measure posted a 0.7% gain reaching an annual 2.3% just above the bottom of the RBA’s 2-3% target range. CPI is forecasted to gain 0.1%.
6. US Unemployment Claims: Thursday, 13:30.  The number of Americans filing initial claims for unemployment aid increased by 12,000 to 294,000, rising for the second straight week. However, the number of jobless workers is still low. The four-week average, edged up by 250 to 282,750, nearly the same as in the prior week. The total number of Americans seeking aid declined to 2.27 million, the lowest in more than 14 years. The number of claims is expected to reach 90,000 this week.
7. Eurogroup Meetings: Friday. The Eurogroup meetings attended by Finance Ministers from the euro area will be crucial for Greece. Unless a funding agreement is reached, Greece will not get the third aid program from the ECB, resulting in a default. Athens has not received bailout aid since August last year and has been hard pressed to cover payments amid a cash crunch, resorting to measures such as borrowing from state entities to tide it over.
8. Eurozone German Ifo Business Climate: Friday, 9:00. German Ifo business climate edged up to 107.9 in March from 106.8 in February, beating forecast for 107.3. Optimism about current conditions rose as well as six months outlook. Strong growth and low oil prices boosted domestic demand. Ifo economists believe expansion will continue in the coming months.
9. US Core Durable Goods Orders: Friday, 13:30. Orders for long lasting goods declined in February by 1.4% contrary to forecast of 0.3% gain. Meanwhile, core orders fell 0.4% posting the fifth straight monthly decline. The weak figures suggest softening in domestic demand despite growth in employment. However, economists expect growth will increase in the coming months.

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newdigital, 2015.04.17 18:54

EURUSD tests resistance again (based on forexlive article)

The EURUSD - like the AUDUSD (and also the USDCAD) - has seen the price action complete a full lap in trading today. The price moved higher in London morning session, but subsequently fell all the way down to the days lows when NY traders entered.  

The weekend flows can wreck havoc. Greece will be in play over weekend (and going forward).  As a result geo-political risk have the potential to lead to more squaring up and choppy trading action -especially in the next hour.

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newdigital, 2015.04.18 06:54

EUR/USD: Momentum Shifts - BTMU (based on efxnews article)

EUR/USD is still trading within the 1.05-1.10 range that has been mainly intact for most of March and April, and in that sense the best bias to have for the week ahead is probably neutral, notes Bank of Tokyo Mitsubish (BTMU).

"The momentum though appears to be shifting back toward a higher move with EUR/USD moving that way in the aftermath of the monetary policy press conference by President Draghi. While the ECB is a little more upbeat we do not think that will help the euro," BTMU adds.

"The IMF/G20 gathering in Washington may well result in some comments on the dollar – a G20 statement may refer to FX in a slightly different way and this is a risk to the upside for EUR/USD. Any sense that officials are getting more worried about the speed of dollar strength may prompt selling. However, this is unlikely to be sustained for long – the reality is that monetary policy divergence is set for some considerable time," BTMU argues.

"Greece will remain an issue and given the risk that this could go right to the wire, this is a clear downside risk for EUR/USD if there’s a sense next week of no progress being made toward a resolution and the release of additional funds for Greece," BTMU adds.

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newdigital, 2015.04.19 08:11

EUR/USD Weekly Fundamental Analysis, April 19 – 24, 2015 – Forecast (based on fxempire article)

The EUR/USD soared to a near term high at 1.0808 after the release of inflation data and strong comments from Mario Draghi on Thursday.  USD outlook has become more balanced which is likely to drive near‐term USD weakness but over the medium term the USD should still be supported. The DXY USD index is flirting with a break below its 50‐day MA, a level it hasn’t traded through since July, accordingly technically the USD index is shifting and a close below here today would be important. The fundamental side has likely caught up to the data surprises, which have continued to be disappointing for the US.

The euro is stronger, having rallied back above 1.08 and moving towards its 50‐day MA. Fundamental data was essentially as expected with inflation in line with the flash estimate. Greece continues to be a core focus, with April 24th’s Euro‐Area meetings particularly important. German and French yields continue to fall, driving an increased focus on the risks around bond scarcity for the ECB QE program.

Data released this week showed the Eurozone is fighting its way out of deflation, as prices rose for the second month straight, easing fears it could enter into a prolonged period of price falls. The single currency area’s annual inflation rate rose to -0.1 per cent in March, up from -0.3 per cent a month earlier, according to its official statistics agency. This was in line with analysts’ expectations.

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newdigital, 2015.04.19 12:42

Weekly outlook: April 20 - 24 (based on investing.com article)

The dollar ended the week lower against a basket of other major currencies on Friday as investors pushed back expectations for higher U.S. interest rates after a recent run of soft economic data dampened optimism on the recovery.

The dollar shrugged off data on Friday showing that U.S. consumer prices were higher for a second successive month in March.

The Labor Department reported that the consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.

Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October.

The report came after data earlier in the week showed that U.S. retail sales for March came in below expectations. Another report, showing a larger-than-forecast drop in industrial output pointed to a slowdown the first quarter.

The dollar was lower against the yen for a sixth straight session on Friday, with USD/JPY at 118.93 in late trade. The pair ended the week down 1.06%.

The dollar fell to two-week lows against the Swiss franc, with USD/CHF sliding 0.43% to 0.9519.

The euro was up 0.43% to 1.0808 late Friday, bringing the week’s gains to 1.89%.

The single currency strengthened in spite of concerns that Athens is no closer to reaching an agreement on economic reforms for bailout funds with its creditors, fuelling fears that Greece could be forced out of the euro zone.

The pound also gained ground against the dollar, with GBP/USD hitting one-month highs of 1.5054 on Friday, before pulling back to 1.4958 in late trade.

Sterling’s gains were held in check amid uncertainty over the outcome of parliamentary elections due to take place on May 7.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down to 97.62 late Friday. The index ended the week down 1.9%.

In the week ahead, investors will be looking ahead to reports on the U.S. housing sector and data on durable goods orders for further indications on the strength of the recovery.

In the euro zone, Tuesday’s ZEW report on German economic sentiment and Thursday’s reports on private sector activity will be in focus.

Monday, April 20

• New Zealand is to release data on consumer price inflation.
• Reserve Bank of Australia Governor Glenn Stevens is to speak at an event in New York.

Tuesday, April 21

• The RBA is to publish the minutes of its latest policy meeting, giving investors insight into how officials view the economy and their policy options.
• In the euro zone, the ZEW Institute is to report on German economic sentiment.
• Canada is to publish a report on wholesale sales.

Wednesday, April 22

• Japan is to publish data on the trade balance.
  
• Australia is to publish data on consumer price inflation.
  
• The Bank of England is to publish the minutes of its latest meeting.
  
• Later in the day, the U.S. is to release data on existing home sales.

Thursday, April 23

• Australia is to release private sector data on business confidence.
• China is to release private sector data on manufacturing activity.
• Switzerland is to publish data on the trade balance.
• The euro zone is to release survey data on private sector economic activity, while Spain is to release its employment report.
• The U.K. is to release reports on retail sales and public sector borrowing.
• Later Thursday, the U.S. is to report in initial jobless claims and new home sales.

Friday, April 24

• In the euro zone, the Ifo Institute is to report on German business climate.
• The U.S. is to round up the week with a report on durable goods orders.

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newdigital, 2015.04.19 18:29

EUR/USD weekly outlook: April 20 - 24 (based on investing.com article)

The dollar was lower against the euro for a fourth consecutive session on Friday as expectations for higher U.S. interest rates waned, despite data showing an uptick in inflation in March.

EUR/USD was up 0.43% to 1.0807 in late trade and ended the week with gains of 1.89%.

The dollar shrugged off data on Friday showing that U.S. consumer prices were higher for a second successive month in March.

The Labor Department reported that the consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.

Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October.

The report came after data earlier in the week showed that U.S. retail sales for March came in below expectations. Another report, showing a larger-than-forecast drop in industrial output pointed to a slowdown the first quarter.

The string of weak data added to the view that the Federal Reserve could push back hiking interest rates until late 2015 from midyear.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down to 97.62 late Friday. The index ended the week down 1.9%.

The single currency gained in spite of concerns that Athens is no closer to reaching an agreement on economic reforms for bailout funds with its creditors, fuelling fears that Greece could be forced out of the euro zone.

Earlier in the week European Central Bank President Mario Draghi said the bank expects to fully implement its trillion-euro quantitative easing program. He also played down concerns that the asset purchase program will struggle to find enough euro zone bonds to buy.

In the week ahead, investors will be looking ahead to reports on the U.S. housing sector and data on durable goods orders for further indications on the strength of the recovery.

In the euro zone, Tuesday’s ZEW report on German economic sentiment and Thursday’s reports on private sector activity will be in focus.

Tuesday, April 21

• In the euro zone, the ZEW Institute is to report on German economic sentiment.

Wednesday, April 22

• The U.S. is to release data on existing home sales.

Thursday, April 23

• The euro zone is to release survey data on private sector economic activity, while Spain is to release its employment report.
• Later Thursday, the U.S. is to report in initial jobless claims and new home sales.

Friday, April 24

• In the euro zone, the Ifo Institute is to report on German business climate.
• The U.S. is to round up the week with a report on durable goods orders.

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newdigital, 2015.04.20 06:41

EURUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Euro: Neutral

• The ECB press conference initially invited limited volatility, but EURUSD eventually settled higher.
• The bearish technical formation in the USDOLLAR Index portends to a stronger EURUSD.

The Euro treaded water last week, losing ground against half of its major counterparts and gaining a bit more against the other three. The worst performance came against the Swiss Franc (EURCHF -0.91%), while the best performance came against the US Dollar (EURUSD +1.87%). In a week ripe with strife – be it on the political front, with more debt bantering with Greece, or on the monetary front, in the form of the European Central Bank’s third policy meeting of the year – the Euro fared reasonably well, all things considered.

With respect to the ECB meeting, President Mario Draghi has made it quite clear that market-borne talk of the QE program being tapered ahead of its projected September 2016 finale are premature at best, and misguided at worst. Before asset purchases cease, the ECB needs to see a stabilization in both actualized and expected inflation, which haven’t happened yet: core inflation resides at a mere +0.6% y/y; and the 5y5y inflation swaps closed the week at 1.693%, right at the four-week/20-day average of 1.678%. ‘Taper talk’ probably becomes more realistic once core inflation crosses the +1.2% y/y threshold, or if the 5y5y inflation swaps move above 1.800%.

For now, the Euro remains a weak buy against a basket of its major counterparts due to its deflating yield appeal and further crystallization as a funding currency. The Euro has lost and continues to lose its appeal as a growth currency as the differential between the short-end and the long-end of the yield curve (in Germany the 2s10s spread fell to 0.347% on Friday from 0.638% on January 1) decreases; and its appeal as a funding currency increases as rates towards the long-end drop into negative territory (German yields out to 9-years are negative).

The drop in sovereign yields decreases the demand for Euros. With nominal yields falling and inflation expectations holding stable (and even slightly rising), real returns on fixed income investments are decreasing; in turn, this fuels demand for higher yielding/riskier EUR-denominated assets like equities; or forces Euro-Zone-based investors to look outside the region for opportunity – which means capital needs to be converted from Euros into foreign currencies. This is the “portfolio balancing channel” effect that ECB President Mario Draghi has been discussing since the beginning of the year.

The Euro’s appeal, therefore, is rooted in the oversized short position currently in the market, which at least in context of EURUSD, could help propel covering in the very near-term (as was seen again this past week). As of March 14, there were 212.3K net-short contracts held by speculators in the futures market, off from 215.3K a week earlier (and down from the 226.6K seen during the week ended March 31, 2015). Otherwise, market participants are viewing the drop in Euro-Zone yields as a sign that the ECB will keep rates for an extended period of time, well-beyond the projected September 2016 finsih for its QE program: the Morgan Stanley ‘months to first rate hike’ index currently resides at 56.5, suggesting a December 2019 or January 2020 rate hike at the earliest.

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newdigital, 2015.04.21 07:08

Forex technical analysis (VIDEO): EURUSD starts the week more bearish. Can it continue? (based on forexlive article)

The EURUSD started the day at the highs and wandered lower in trading as the week got started. Will the bearishness continue this week? What levels will keep the bears in control.

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newdigital, 2015.04.21 16:00

EUR/JPY, EUR/USD Triangles Continue to Develop Downside Potential (based on dailyfx article)

• EURJPY, EURUSD triangles begin to favor more downside.
• EURGBP double top remains valid towards 0.7063.

Short-term technical indicators are close to turning outright negative for various EUR-crosses. For EURJPY and EURUSD, this potentially means continuation outside of their recent triangls after breaking the uptrends from last week's lows (although in EURUSD, a longer-term triangle may be in the works). For EURGBP, we've seen the key topside resistance level respected throughout the consolidation, keeping the double top intact.

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newdigital, 2015.04.21 17:10

ECB Mulls Tightening Noose Around Greek Banks (based on rttnews article)

The European Central Bank is exploring measures to reduce the Emergency Liquidity Assistance to Greek banks, reports said Tuesday, citing people with knowledge of the discussions. ECB Staff have suggested an increase in the haircuts banks take on the collateral they offer for emergency funding from the Bank of Greece, both Bloomberg and CNBC said.

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newdigital, 2015.04.22 06:25

As DXY Consolidates, GBP/USD, EUR/USD Start To Rally - BofA Merrill (based on efxnews article)

While Bank of America Merrill Lynch didn't expect the USD Index DXY to remain within its recent corrective range trade (currently consolidating between 99.92 & 96.58), BofA now thinks that this longer than anticipated consolidation has done no damage to the larger bull trend.

"Absent a sustained break off 96.58/95.94 we look for a bullish resolution towards 103.85 (Triangle objective) ahead of 106.00 (long term upside target)," BofA argues.

It is a slightly different story for GBP/USD, according to BofA, as the setup here is for a more directional correction higher.

"In the sessions ahead we look for a push to 7m channel resistance at 1.5232 ahead of swing targets at 1.5350 and potentially beyond before the long term downtrend resumes for a push towards 1.35/1.40 (secular range lows), BofA projects.

Turning to EUR/USD, BofA advises bulls to watch the 55d average around 1.0992.

"While we remain long term EUR/USD bears, targeting 1.0283/1.000, in the near term the pair is stuck in a choppy corrective range between 1.0462 (Mar-16 low) and the 55d avg (now 1.0992)," BofA notes.

"Bulls need a sustained break of the 55d to point to a greater correction than anticipated, exposing the 1.1261/1.1534 February congestion zone," BofA advises

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newdigital, 2015.04.22 09:21

EURUSD Technical Analysis: Digesting Gains Above 1.07 (based on dailyfx article)

The Euro is digesting gains against the US Dollar after rising as expected after showing a bullish Morning Star candlestick pattern. Near-term resistance is at 1.1040, the March 18 high, with a break above that on a daily closing basis exposing the 38.2% Fibonacci retracement at 1.1266. Alternatively, a move back below the March 31 low at 1.0712 clears the way for a test of the 1.0461-1.0554 area (March 13 low, 23.6% Fibonacci expansion).

We see the Euro trend as broadly bearish, in line with our long-term outlook. As such, we will approach on-coming gains as corrective in the context of a larger structural decline and position for opportunities to enter short after the move higher is exhausted. In the meantime, we remain flat.

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newdigital, 2015.04.23 05:57

EUR/GBP: Breaks Down; EUR/USD: Excellent Selling Pattern - BofA Merrill (based on efxnews article)

EUR/GBP is resuming its larger downtrend, following the break of 0.7174/0.7166, notes Bank of America Merrill Lynch.

"We look for a test and break of the Mar-11 low at 0.7014, ahead of the 0.6900/0.6800 region. Bounces should not exceed the Apr-19 high at 0.7245," BofA projects.

Turning to EUR/USD, BofA notes that while the 1.0500-1.1000 range is still intact, its correction is turning increasingly in a 'Triangular' pattern.

A Triangular Correction, according to BofA, is a range defined by two contracting trendlines.

"This is one of our favorite patterns and should provide an excellent opportunity to go short for a move toward 1.0000 once the pattern completes," BofA argues.

"For now, stay patient. Gains should not exceed the 55d at 1.0967, while a break of 1.1053 points to a larger correction than anticipated," BofA advises.

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newdigital, 2015.04.23 10:33

2015-04-23 09:00 GMT (or 11:00 MQ MT5 time) | [EUR - Manufacturing PMI]

• past data is 52.2
• forecast data is 52.6
• actual data is 51.9 according to the latest press release

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

[EUR - Manufacturing PMI]  = Level of a diffusion index based on surveyed purchasing managers in 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.

==========

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:

“The weaker rate of expansion is a big disappointment, given widespread expectations that the ECB’s quantitative easing will have boosted the fledgling recovery seen at the start of the year. However, it’s too early to draw firm conclusions about whether growth is faltering again and the effectiveness of policy. Although the PMI has pulled back from March’s recent high, the index remains above the average seen in the first quarter and is indicative of the eurozone  economy growing at a reasonably robust quarterly rate of 0.4% at the start of the second quarter. "

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newdigital, 2015.04.23 17:50

EURUSD Mid-Day Outlook (based on actionforex article)

Daily Pivots:

• (S1) 1.0687
• (P) 1.0744
• (R1) 1.0779

No change in EUR/USD's outlook in spite of the mild recovery today. Consolidation pattern from 1.0461 is still in progress and stronger rise cannot be ruled out. But near term outlook stays bearish as long as 1.1096 support turned resistance holds and downside breakout is expected. Below 1.0461 will extend larger down trend to next fibonacci level at 1.0283.

In the bigger picture, overall price actions from 1.6039 long term top is viewed as a corrective pattern. Fall from 1.3993 is the third leg of such pattern and should target 100% projection of 1.6039 to 1.2329 from 1.3993 at 1.0283 next. On the upside, break of 1.2042 support turned resistance is needed to indicate medium term reversal. Otherwise, outlook will stay bearish.

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newdigital, 2015.04.24 05:52

EUR/USD, USD/JPY - Goldman Sachs (based on fxnews article)

Goldman Sachs updates its outlook on EUR/USD and USD/JPY noticing that the latest messages form the ECB and BoJ seem to be 'lost in translation'. The following are the key points in GS' note along with its latest forecasts for EUR/USD and USD/JPY.

1- "When central banks are implementing QE – as the ECB and Bank of Japan clearly are – they deliver two basic messages. First, they comment on whether the current pace of asset purchases is still appropriate and, when it isn’t, they provide more accommodation, as the BoJ did in October. Second, because QE is controversial, they sing the praises of asset purchases, pointing to rising inflation expectations and an improving growth picture," GS argues.

2- "We think this is what happened towards the end of the ECB press conference on Apr. 15, when President Draghi made favorable comments on the inflation and growth picture. The market heard exit, but in our view this is a clear case of “lost in translation." GS adds.

3- "After all, President Draghi earlier in the press conference argued forcefully that focus on early exit is premature and that having this debate now is like “quitting a marathon after 1k.” Our European economists continue to expect “full implementation” of ECB QE, meaning an unchanged pace of asset purchases through at least Sep. 2016. This is key to our view that a cyclical recovery in the Euro zone is not a force for EUR/USD higher," GS clarifies.

4- "There was more “lost in translation” in Governor Kuroda’s speech on Apr. 19. The market picked up headlines that “the underlying trend of inflation has improved markedly,” but the more important message in the speech, in our opinion, is that low inflation momentum is threatening to pull inflation expectations lower (Exhibit 4), which will then set the stage for additional monetary easing," GS notes.

5 "Our Japan Chief Economist forecasts additional stimulus for July by way of duration extension of JGB purchases (akin to "Operation Twist" in the US). Given how small speculative long $/JPY positioning now is, we think there is room for the market to catch up with real story in Japan, which is that another round of monetary easing is coming," GS adds. 

GS targets EUR/USD at 1.00 in 6-months and USD/JPY at 125 over the same end of period.