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EUR/USD Technical Analysis: Euro Snaps 3-Day Loss Streak (based on dailyfx article)

Resistance
 Support
1.09301.0804
1.1056
1.0647
1.1213
1.0394

The Euro paused to digest losses above the 1.08 figure against the US Dollar having turned lower as expected. Near-term support is at 1.0804, the 61.8% Fibonacci expansion, with a break below that exposing the 76.4% level at 1.0647. Alternatively, a reversal above the 50% Fib at 1.0930 clears the way for a test of the 38.2% expansion at 1.1056.

 

AUD Resuming Downtrend Backed by FX Sentiment & Volume Analysis (adapted from dailyfx article)

  • AUDUSD trading volume was muted on recent counter-trend price spike
  • Volatile Corrective Pattern looks to have finished at the 38.2% Fib Level

The recent spike in AUDUSD happened on muted volume, which favors prior trend. Combining the lack of volume on the terminal move in an addition to the following factors of sentiment and chart patterns. This article will guide you through what to look for on the chart while adding sentiment and volume analysis to see if the trend is ready to resume or rather a reversal is underway.

Technical analysis looks for potentially repeatable patterns that can provide an edge, so long as risk is managed. The chart above shows AUDUSD traced out a clean broadening pattern (diverging red trend lines), which communicates trend interruption more than trend reversal and often favors a new low is likely in a larger downtrend.

 
2015-05-28 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Unemployment Claims]

if actual < forecast (or previous data) = good for currency (for USD in our case)

[USD - Unemployment Claims] = The number of individuals who filed for unemployment insurance for the first time during the past week. Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

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"In the week ending May 23, the advance figure for seasonally adjusted initial claimswas 282,000, an increase of 7,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 274,000 to 275,000. The 4-week moving average was 271,500, an increase of 5,000 from the previous week's revised average. The previous week's average was revised up by 250 from 266,250 to 266,500."

"The advance seasonally adjusted insured unemployment ratewas 1.7 percent for the week ending May 16, an increase of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemploymentduring the week ending May 16 was 2,222,000, an increase of 11,000 from the previous week's unrevised level of 2,211,000. The 4-week moving average was 2,221,250, a decrease of 8,500 from the previous week's unrevised average of 2,229,750. This is the lowest level for this average since November 25, 2000 when it was 2,211,250."

==========

 

A fresh factor will drive EUR/USD declines - Deutsche Bank (based on forexlive article)

Cleaner positioning. "Equally, positioning metrics suggest that dollar longs have being pared back. A regression of currency manager index returns against the DXY now points to flat positioning, while the IMM shows a greater than 50% paring back in dollar longs," Deutsche Bank notes.

All about the Fed. "History has been all about the ECB, but the dominant driver of FX is now likely to be the Fed. On that front, monetary policy could come back in focus sooner than many expect," Deutsche Bank argues.

Euro still a good short. "While market focus is very likely to shift to the other side of the Atlantic, EUR/USD is still a good vehicle to express dollar longs. To start with, the euro is a consistent underperformer around Fed turning points," DB advises.

Negative euro flows. "Beyond that, the European flow picture remains very negative. The recent VaR shock in bund yields is likely to further discourage, rather than encourage fixed income inflows," Deutsche Bank adds.

 

Appraising AUDUSD, USDJPY Breakouts with Fundamentals (based on dailyfx article)

  • Breakout scenarios are most often identified by technical patterns, but fundamentals play a key role
  • A break that doesn't develop around a unifying catalyst has a much higher probability of a quick stall
  • Follow through is further heavily dependent on the fundamental current that carries it

Is USDJPY's massive breakout destined to extend its run or will it suffer the same fate as AUDUSD which saw its 0.79 breakout stall almost immediately? While many concern themselves only with the 'break' part of breakout scenarios, it is the follow through that determines whether there is a significant trading opportunity at hand. For AUDUSD, the 0.7900 break was a remarkable technical break from a period of extended consolidation; but its effort to generate traction contradicted the impact of an RBA rate cut. Further, monetary policy divergence between the Aussie and US Dollars provided a serious headwind to follow through. What does the fundamental backdrop look like for USDJPY moving forward? We discuss that in today's Strategy Video.


 
2015-05-29 02:00 GMT (or 04:00 MQ MT5 time) | [NZD - NBNZ Business Confidence]

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

[NZD - NBNZ Business Confidence] = Level of a diffusion index based on surveyed manufacturers, builders, retailers, agricultural firms, and service providers. It's a leading indicator of economic health - businesses react quickly to market conditions, and changes in their sentiment can be an early signal of future economic activity such as spending, hiring, and investment.

==========

  • Business confidence and firms’ signals on the employment, investment and activity front are receding. They’re receding from high levels though, so let’s keep it in perspective.
  • The growth side of the economy still looks okay; optimism is just progressively being tempered. There are risks though, and declines are looking more trend-like.
  • Inflation expectations fell to a historical low. A low headline inflation rate will be playing a role, but it’s notable that inflation expectations are tracking below the inflation target midpoint; that’s unusual.


 

Trading News Events: U.S. Gross Domestic Product (GDP) (based on dailyfx article)

A marked downward revision in the preliminary 1Q U.S. Gross Domestic Product (GDP) report may drag on the greenback and spur a near-term rebound in EUR/USD as the Federal Reserve looks to carry its zero-interest rate policy into the second-half of 2015.

What’s Expected:


Why Is This Event Important:

Even though the Fed pledges to look past the economic weakness drive by transitory factors, a larger-than-expected contraction in the growth rate may spur a further delay in the central bank’s normalization cycle as it undermines expectations for a stronger recovery.

Nevertheless, increased business outputs paired with the expansion in private-sector credit may offer a better-than-expected GDP print, and prospects for a stronger recovery may spur a bullish reaction in the dollar as the Fed remains on course to remove the zero-interest rate policy (ZIRP) in 2015.

How To Trade This Event Risk

Bearish USD Trade: Growth Rate Contracts 0.9% or Greater

  • Need to see green, five-minute candle following the GDP report to consider a long trade on EURUSD.
  • If market reaction favors a short dollar trade, buy EURUSD with two separate position.
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit; set reasonable limit.
Bullish USD Trade: 1Q GDP Report Exceeds Market Forecast
  • Need red, five-minute candle to favor a short EURUSD trade.
  • Implement same setup as the bearish dollar trade, just in reverse.
Potential Price Targets For The Release
EURUSD Daily


  • Failure to preserve the near-term downward trending channel may generate a larger rebound in EUR/USD and spur a consolidation phase in the days ahead.
  • Interim Resistance: 1.1180 (23.6% expansion) to 1.1210 (61.8% retracement)
  • Interim Support: 1.0790 (50% expansion) to 1.0800 (23.6% expansion)

4Q 2014 U.S. Gross Domestic Product (GDP)
EURUSD M5: 19 pips price movement by USD - GDP news event:



Even though the preliminary 4Q U.S. GDP print was revised down to an annualized 2.2% from an initial forecast of 2.6%, the print still managed to exceed market expectations for a 2.0% rate of growth. At the same time, Personal Consumption was also revised down to 4.2% from 4.3%, while the core Personal Consumption Expenditure (PCE) remained unchanged at 1.1% during the same period. The better-than-expected GDP reading may keep the Fed on course to normalize monetary policy in 2015 as the central bank anticipates a stronger recovery in the year ahead. The greenback strengthened following the report, with EUR/USD slipping below the 1.1200 handle to end the North American session at 1.1189.

MetaTrader Trading Platform Screenshots

EURUSD, M5, 2015.05.29

MetaQuotes Software Corp., MetaTrader 5

EURUSD M5: 42 pips rangeprice movement by USD - GDP news event

EURUSD, M5, 2015.05.29, MetaQuotes Software Corp., MetaTrader 5, Demo

MetaTrader Trading Platform Screenshots

GBPUSD, M5, 2015.05.29

MetaQuotes Software Corp., MetaTrader 5

GBPUSD M5: 59 pips range price movement by USD - GDP news event

GBPUSD, M5, 2015.05.29, MetaQuotes Software Corp., MetaTrader 5, Demo


MetaTrader Trading Platform Screenshots

USDCAD, M5, 2015.05.29

MetaQuotes Software Corp., MetaTrader 5

USDCAD M5: 83 pips price movement by USD - GDP news event

USDCAD, M5, 2015.05.29, MetaQuotes Software Corp., MetaTrader 5, Demo

MetaTrader Trading Platform Screenshots

AUDUSD, M5, 2015.05.29

MetaQuotes Software Corp., MetaTrader 5

AUDUSD M5: 20 pips rangeprice movement by USD - GDP news event

AUDUSD, M5, 2015.05.29, MetaQuotes Software Corp., MetaTrader 5, Demo




 

Forex Weekly Outlook June 1-5 (based on forexcrunch article)

ISM Manufacturing PMI, Rate decisions in Australia, the UK and the Eurozone, GDP data from Australia, Employment data from Canada as well as important labor figures from the US including the all-important NFP release. These are the highlights event on forex calendar.  Join us as we explore the market-movers of this week.

U.S. second GDP estimate was released, indicating the economy contracted 0.7% in the first quarter, amid harsh winter storms, strong dollar weighing on exports and labor disputes at West Coast ports. While the first estimate a month ago, showed 0.2% growth. Economists say the first quarter GDP reading is not accurate and expect a pick-up in the next quarter.  Also upbeat data in Durable goods orders and Consumer sentiment fuels optimism about US economic growth.

  1. US ISM Manufacturing PMI: Monday, 14:00. U.S. manufacturing growth remained unchanged in April, posting 51.5. The reading was lower than the 52.1 anticipated by analysts. New orders increased to 53.5 from 51.8 in March but employment fell to contraction. However, April’s figure still reflects growth. The manufacturing sector os expected to expand further to 52.8.
  2. Australian rate decision: Tuesday, 4:30. The Reserve Bank of Australia cut interest rates by 25 basis points to a record low of 2% in its May meeting. Analysts anticipated the move. RBA governor Glenn Stevens noted in his previous statement that additional cuts might take place in order to sustain growth. However, economists do not expect further cuts in the coming months. Analysts expect rates to remain unchanged in June.
  3. Australian GDP: Wednesday, 1:30. Australia’s economy continued to expand at a mild pace in the fourth quarter of 2014 growing 0.5% compared to 0.4% in the third quarter. Economists expected a higher figure of 0.7%. Data was more encouraging in the non-mining sectors and consumer spending also improved. However, domestic demand still did not react to lower interest rates, lower petrol prices and the weaker currency, therefore may require additional rate cuts to spur growth. The economy is expected to grow by 0.6% this time.
  4. Eurozone rate decision: Wednesday, 11:45. The European Central Bank kept interest rates unchanged in April, at a record low 0.05% and maintained overnight deposits at minus 0.20%, to prevent banks from stacking excess reserves with the central bank. Mr. Draghi stated that the Eurozone has finally turned a corner after years of recession with renewed growth. While a weak euro spurs exports due to cheaper products, low oil prices are raising the purchasing power of the region’s consumers and businesses. The ECB is expected to inject over 1 trillion euros through September 2016 into the eurozone economy via bond purchases in hope of raising inflation back to the ECB’s medium-term target of just below 2%. The ECB is not expected to change rates this time.
  5. US ADP Non-Farm Employment Change: Wednesday, 12:15. US Private sector employment increased by 169,000 jobs in April according to the April ADP National Employment Report. The reading missed predictions for a 199,000 gain and was preceded by a 175,000 increase in March. April job gains fell below 200,000 for the second straight month. However, the collapse of oil prices and the rising dollar weighed on job creation.  US Private sector is forecasted to grow by 200,000 in May.
  6. US Trade Balance: Wednesday, 12:30. US trade deficit rose in March to $51.4 billion due to a surge of 7.7% in imports. Trade deficit reached a 6-1/2 years high, indicating the economy contracted in the first quarter. However, growth accelerated in April, suggesting the first quarter contraction was only temporary. Economists forecast trade deficit to rise mildly to $41.2 billion. In a separate report, the Institute for Supply Management showed the services sector rose to 57.8 in April, the highest since November. Meanwhile, exports increased only by 0.9% in March. US trade deficit is expected to improve to 44.2bl in April.
  7. US ISM Non-Manufacturing PMI: Wednesday, 14:00. Service sector activity edged up in April to 57.8 up from 56.5 in March. The big increase was higher than the 56.2 forecasted by analysts. The reading raised optimism that the U.S. economy has rebounded from the soft patch in the first quarter. The New Orders Index rose 1.4 points from March to 59.2. The Employment Index inched 0.1 points to 56.7 from the March reading of 56.6. The Prices Index declined 2.3 points from 52.4 reaching 50.1, indicating prices increased in April for the second consecutive month, but mildly. US Service sector activity is expected to reach 57.2 this time.
  8. UK rate decision: Thursday, 11:00. The Bank of England policy makers chose to continue maintaining rates at a record low of 0.50%, This policy was introduced more than six years ago. Savers received lower returns, but mortgage borrowers benefited having lower payments. The Bank’s QE remained at £375bn. The BOE is expected to raise inflation towards 2%, however, the rate stood at 0% in both February and March. Officials stated that inflation could also turn negative at some point in the coming months because of the fall in oil prices. The Bank expects rates to remain on hold until at least the first quarter of next year. Economists expect the Bank of England will keep its monetary policy unchanged.
  9. US Unemployment Claims: Thursday, 12:30. The number of Americans filing new claims for unemployment benefits increased last week to 282,000, rising more than anticipated but remains positive. Analysts expected claims to decline to 271,000. Despite the volatility of this weekly reading, the number of jobless claims has been generally declining since 2009, indicating a positive trend in the US labor market. The four-week moving average rose by 5,000 to 271,500 last week. The number of jobless claims is expected to reach 277,000 this week.
  10. Canadian employment data: Friday, 12:30.  The Canadian job market shed 19,700 positions in April. This disappointing release can be explained by the unexpected rise of 28,700 jobs in March. However, broader economic data still suggests the Canadian economy is recovering and should rebound in the coming months. The unemployment rate remained unchanged for the third straight month at 6.8%. The Canadian economy added 46,900 full-time positions and shed 66,500 part-time jobs. The Canadian economy is expected to gain 10,200 new jobs, while the unemployment rate is expected to remain at 6.8%.
  11. US Non-Farm Employment Change and Unemployment rate: Friday, 12:30. US job-creation rebounded in April with a 223,000 job addition, following March’s disappointing revised release of 85,000 positions. The unemployment rate fell to 5.4%, the lowest since May 2008, compared to 5.5% in Match. Wage growth accelerated at a slower than expected pace inching 0.1% in average hourly earnings compared to 0.2% rise in March. All in all, the NFP report suggests the economy is nearing full employment as defined by the Fed indicating growth in the coming months. US labor market is expected to grow by 224,000 and the unemployment rate is expected to remain at 5.4%.
 

AUDIO - Income Generation with Darek Zelek (based on fxstreet article)

Traditional investment advisors point investors to the bond market to generate income, yet that is a dangerous undertaking in these markets. Master trader, Darek Zelek joins Merlin for a look at how he uses options to grow his portfolios and generate the desired rate of return he is looking for. The duo look at several examples of options trades on assets like Oil and Gold.


 

US Dollar Fundamentals (based on dailyfx article)

Fundamental Forecast for Dollar: Neutral

  • Despite the downgrade in 1Q GDP this past week, hawkish speculation surrounding the Fed outlook fed the Dollar
  • NFPs, the PCE deflator and Fed speak will offer rate speculation milestones; while risk trends and cross winds stir



"Interest rate forecasting has proven the most tangible motivator for fundamental traders these past months, but it is not the only game in town for price and volatility. Risk trends should not be underestimated for its heavy influence over the market. Volatility measures in different capital markets look dangerous, but not as dangerous as equity indexes like the S&P 500 and Shanghai Composite. Meanwhile, the ‘relative’ factor to exchange rates should have us also looking at Greece, the RBA rate decision and other event risk that can buoy or crush the Dollar’s most liquid counterparts."

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