EURUSD Daily Technical Analysis - possible daily reversal to bullish with 1.0878 resistance level

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Press review

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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Press review

newdigital, 2015.04.23 10:33

• 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.

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“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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Press review

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.

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EURUSD, M5, 2015.04.24

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