EUR/JPY, EUR/USD Triangles Continue to Develop Downside Potential (based on dailyfx article)
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.
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.
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),
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
if actual > forecast (or previous data) = good for currency (for AUD in our case)
[AUD - CPI] = Change in the price of goods and services purchased by consumers. Consumer prices account for a majority of overall inflation. Inflation
is important to currency valuation because rising prices lead the
central bank to raise interest rates out of respect for their inflation
"THE ALL GROUPS CPI
AUDIO - The BECC Report with Scott McCormick
Markets surged on good earnings and easing by China. Will the momentum continue? Scott McCormick
joins Merlin for a look at what Bonds, Equities, Commodities &
Currencies have to say about our markets. The duo looks at earnings
season and answer some questions about how to trade earnings and news
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
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.
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.
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.
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.
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.
“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. "
EURUSD Mid-Day Outlook (based on actionforex article)
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.
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.