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GOLD Fundamentals (based on dailyfx article)
Fundamental Forecast for Gold: Bearish
Gold prices are off for a second consecutive week as the commodity rout continued with the precious metal off by more than 1% to trade at 1155 ahead of the New York close on Friday. The losses come amid ongoing strength in the greenback as the EURUSD drifted deeper into 12year lows. However with prices now coming into a key area of technical support and major event risk on tap next week, the short-side of the trade may be at risk near-term.
Disappointing US retail sales data this week cooled the dollar’s rally temporarily as the weaker print dampened the argument that lower energy prices would drive more consumer spending. Still, the Fed remains on course to raise rates later this year as the labor market recovery continues to approach maximum employment and although inflation remains subdued, the central bank expects “transitory” factors to subside in the medium-term. Look for the dollar to maintain its footing as higher interest rate expectations continue fuel demand with gold to remain under pressure amid weak inflation and strength in the greenback.
The FOMC policy meeting next week will be central focus for markets with Chair Janet Yellen and company releasing the updated quarterly projections on growth, inflation and employment. The subsequent press conference will be of particular interest as market participants attempt to ascertain the Feds timeline for normalizing monetary policy. A more cautionary stance could offer a reprieve to the recent sell-off in bullion which will open next week just above a critical support zone.
Last week we noted, “bottom line: looking lower while below Friday’s highs with support expected into 1150.” From a technical standpoint, gold ended a 9-day losing streak on Friday, the longest in nearly 40years and leaves the precious metal just above a critical region of support defined by longer-term Fibonacci relationships as well as the 2014 lows at 1150. This support zone is backed by 1137. A break below this threshold risks sharper losses for bullion with subsequent support objectives seen at 1125/30, 1099 & the 2010 low at 1044. Interim resistance stands at 1172/73 and this level will serve as our near-term bearish invalidation level with a breach above targeting trendline resistance off the January highs which converges on a basic 23.6% retracement of the yearly range at 1185 heading into mid-next week. Bottom line: its downtrend at support- with major even risk next week likely to offer a catalyst for price action on either a recovery back into the yearly trendline, or a continuation of the broader primary downtrend.
The dollar stormed the board, with the euro and the pound standing out as the biggest losers. The Fed decision is the key event in a week that also features rate decision in Japan and Switzerland, employment data from the UK and the US and many more. These are the major events on FX calendar. Join us as we check on the highlights of this week.
The US job market demonstrated renewed strength with a 36,000 fall in the number of jobless claims, reaching 289,000. However, retail sales disappointed, dropping 0.6% in February as harsh weather reduced sales and affected growth in the first quarter. Also consumer confidence slipped. Will the US economy shake off winter slowdown? For the US dollar it did not really matter. EUR/USD reached levels last seen over 12 years ago, with parity seeming closer and also the previously strong pound gave in. The Aussie was supported by jobs data, the kiwi by an upbeat central bank and the loonie was hit by oil. Let’s start,
Nikkei forecast for the week of March 16, 2015, Technical Analysis
The Nikkei had a very positive week over the last five sessions, pulling back to the ¥18,500 level. By doing so, we found enough buyers to turn things back around and form a positive candle. With that being the case, the market looks like it’s ready to go to the ¥20,000 level, which of course has been our longer-term target yet again. We believe the pullbacks continue to offer value, and that ultimately we will go even higher than the ¥20,000 level. The ¥18,000 level below that is massively supportive, as it was once resistive. We are not interested in selling this market until we break down way below there. We do not see that happening anytime soon, so we will simply stay on the sidelines if we pullback, which of course offers a bit of support at various levels below. We think that the buyers will look to take advantage of the liquidity offered by the Bank of Japan going forward, and will do so in the form of buying Japanese stocks.
The Japanese yen has been looming large in the equation lately, and as it loses value, it’s very likely that the Nikkei will continue to respond positively to doing so. We believe that the Nikkei will not only a ¥20,000, but probably levels well be on that given enough time. We believe this is more or less a long-term buy-and-hold type situation, and with that we are essentially in the “buy only” camp. We have no scenario in which we are willing to sell the Nikkei as long as we are above at least ¥18,000, and probably even ¥17,000. If we break down below there, then of course a lot of things have changed, but ultimately it would take a significant amount of change in the attitude of the market to have that happen at this point in time. With that, we are bullish and remain so for the foreseeable future as we can’t even seem to hang onto losses for any real length of time at this point.
DAX forecast for the week of March 16, 2015, Technical Analysis
The DAX broke higher during the course of the week, as we cleared to fresh new highs. That being the case, the DAX will offer buying opportunities every time it pulls back, and that’s exactly how we are going to approach this market. We believe that there is massive support below for this market, which of course will offer plenty of buying opportunities below. Ultimately though, we believe that looking for value as the best way to play this marketplace. We are overbought, so being patient will be necessary for those of you who are not already long.
NASDAQ forecast for the week of March 16, 2015, Technical Analysis
The NASDAQ as you can see fell hard during the course of the week, as the 5000 level offered enough resistance the previous week. Ultimately, we feel that the market should continue to find support though at lower levels. As you can see on the chart, the 4800 level was previous resistance, so it should now be support. If we can get some type of supportive candle, we would be a buyer in that general vicinity, and would also buy supportive candles all the way down to the 4600 level.
S&P 500 forecast for the week of March 16, 2015, Technical Analysis
The S&P 500 broke down during the course of the week, as you can see on the chart. However, we think that the real support is closer to the 2000 level, so having said that we are bearish for the short-term but recognize that longer-term traders will have the ability to buy supportive candles below. Those supportive candles will give us an opportunity to take advantage of the longer-term uptrend, which of course has been very steady over the last several months. We have no interest whatsoever in selling this market.
Gold forecast for the week of March 16, 2015, Technical Analysis
The gold markets as you can see fell during the course of the week, testing the $1150 level. Because of this, we feel that the market will more than likely continue to drop a bit this week, as the real support is closer to the $1140 region. Ultimately, we will have to see what happens at the $1140 level, so for long-term traders this is a market that’s probably best left alone until we either get a supportive candle there, or break down below that level on a weekly close.
EUR/USD forecast for the week of March 16, 2015, Technical Analysis
The EUR/USD pair broke down during the course of the week slicing through the 1.05 level at the end of the Friday session. Because of this, looks like the market is ready to continue going much lower, and a break down below the bottom of the range should send this market looking for the parity level given enough time. Ultimately, if we rally at this point in time it should just simply be thought of as value in the US dollar as it is the favored currency by Forex traders around the world.
EUR/USD weekly outlook: March 16 - 20 (based on investing.com article)
The euro dropped to 12-year lows against the dollar on Friday as mounting expectations for higher U.S. interest rates bolstered investor demand for the greenback.
EUR/USD hit lows of 1.0462, the weakest since January 9, 2003 before pulling back to 1.0496 in late trade, still down 1.31% for the day.
The single currency had already weakened broadly this year after the European Central Bank unveiled a trillion-euro quantitative easing program in January.
The euro turned sharply lower after the bank started asset purchases on Monday, pushing euro area bond yields to new lows.
Lower bond yields make the single currency less attractive to investors at a time when expectations are building that the Fed could start rising interest rates mid-year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, advanced 1.22% to 100.32 late Friday, a level last reached in April 2003.
Sentiment on the euro was also hit by uncertainty over Greece’s future in the euro zone, after euro area finance ministers rejected proposed economic reforms put forward by Athens in exchange for more loans.
The euro was also lower against the pound, with EUR/GBP at 0.7116, holding above the seven-year low of 0.7013 set on Wednesday. The common currency fell to a 20-month low against the yen, with EUR/JPY hitting lows of 126.91 before easing back to 127.36 at the close.
In the week ahead, investors will be focusing their attention on Wednesday’s Federal Reserve policy statement to see if it would drop its reference to being patient before raising rates. Tuesday’s ZEW report on German economic sentiment will also be closely watched.
Monday, March 16
Tuesday, March 17
Wednesday, March 18
Thursday, March 19
EURUSD Daily Pivot Point Support / Resistance (based on dailyfx twitter account)