EUR/USD Technical Analysis: Resistance Now Above 1.12 (based on dailyfx article)
The Euro continues to push higher against the US Dollar having reversed as expected
after showing a bullish Morning Star candlestick pattern. Near-term
resistance is at 1.1266, the 38.2% Fibonacci retracement, with a break
above that on a daily closing basis exposing the 50% level at 1.1515.
Alternatively, a move back below the 1.0959-1.1040 area (23.6% Fib,
March 18 high) clears the way for a test of the March 31 low at 1.0712.
Focus Now Turns to 1.15 for EUR-USD
Analysts are now talking about 1.15 being achievable. The question on everyone's mind is this - will 1.10 finally break and lead to higher levels for the euro?
"We still believe the gains in the EUR/USD are corrective, but purely
technically alone this range breakout can allow for some upside
extension. 1.1275-1.1500 is a very strong technical resistance zone to
be mindful of in that regard," says a morning forecast note from Lloyds
AUDIO - Spotting the Patterns with Bill Henner
Economic data and the fed proved to be the major market movers on Wednesday, yet special guest Bill Henner
spotted something different. With 25 years of floor trading experience
in Chicago, Mr. Henner is no stranger to market patterns. The duo
discuss the current market condition as well as what Bill has gleaned
from the charts.
EUR/USD May Target Mid-$1.1500s; USD/JPY Best Bet for USD Gains (based on dailyfx article)
The ECB's QE trade has consisted of three components in
2015: a weaker Euro; higher bond prices/lower bond yields; and higher
equity markets. This week especially, we've seen that trend reverse, and
quite quickly: the Euro has rallied; German yields, especially at the long-end, have shot higher; and equity markets across the Euro-Zone have slipped.
is thus a split in the US Dollar's prospects, depending upon where you
look. In EURUSD, the potential for a move into the mid-$1.1500s seems
possible given the potential double bottom nature of the recent
consolidation breakout, boosted by the extreme Euro short positioning
seen in the futures market. On the other hand, if the US Dollar is to
continue its recovery after the shelling it took over the past two
weeks, then USDJPY may offer the best opportunity, given that the market
is the least short the Japanese Yen since Q4'12 - right before Abenomics began and the Yen's meltdown commenced.
Forex Weekly Outlook May 4-8 (based on forexcrunch article)
The US dollar experienced a very turbulent week, tumbling
down and recovering, but not against the euro. Close elections in the
UK, an important rate decision in Australia, employment data from New
Zealand, Australia, Canada and the all- important US non-Farm Payrolls
release are key events. These are the highlight events on Forex calendar
for this week. Here is an outlook on the top events coming our way.
The Federal Reserve downgraded its economic outlook amid soft growth data.
The Fed admitted recent weakness in the first quarter relating it to
temporary factors. Inflation will have to climb back to 2% and the job
market needs to improve further before a rate hike is announced.
However, the Fed believes the US economy will rebound in the second
quarter. Meanwhile, jobless claims
released last Thursday, surprised markets with a 34,000 fall in the
number of claims nut not all data points impressed. The biggest winner
was the euro, that broke critical resistance and seems unstoppable. Poor
data weighs on the pound towards the elections and central banks weigh
on the kiwi and the Aussie.
US Dollar Fundamentals (based on dailyfx article)
Fundamental Forecast for Dollar: Neutral
This past week, the USDollar posted its first drop
on a monthly basis in 10 consecutive months. At the same time, the week
ended on a rally that closed out the period little changed. We are in a
phase of technical and fundamental limbo. A correction for the Greenback is not without its merits:
the Dollar’s exceptionally consistent run can be overinflated by
trend-following speculative interests that need to retrench and rate
speculation has softened alongside the quality in data. Then again, the
currency’s and economy’s ‘relative’ appeal is still exceptionally
strong. With the Dollar transitioning from a steady bull trend to a
period of consolidation and now suffering its most painful slide in a
year, the burden to generate momentum on this week’s fundamental themes
will be more evenly distributed.
For fundamental traders, the most recognizable
catalyst in the week ahead will be the April labor statistics due on
Friday. It is not unreasonable to peg the NFPs the week’s top event risk.
It is an easy-to-interpret indicator and taps directly into what has
driven the Dollar and FX market generally through the past year:
monetary policy expectations. However, there will be hurdles to overcome
for this data to lock in a definitive currency move. The most prominent
obstacle for the report will be its Friday release. There will be
plenty of anticipation, but confirmation comes late in the week.
In the data itself, the elements that cut closest to
the key determinants for monetary policy will carry the most weight.
The unemployment rate is already well beyond levels previously set as
targets, so its up- or downtick will generate lower amplitude waves. The
missing element in the timing of the Fed’s liftoff is tangible
inflation pressure. For that reason, the earnings data will likely prove the most important update.
The current consensus is for a 2.3 percent increase in wages
year-over-year, which would match the strongest pace since 2009. Should
the data meet or ‘beat’ this forecast, it would tip the uneasy
equilibrium in rate speculation that we were left with following this
past week’s poor 1Q GDP reading and the FOMC’s suspiciously status quo
statement. Alternatively, a ‘miss’ is likely to carry less weight as it
fighting a current whereby the Fed remains well ahead of the policy
USDJPY Fundamentals (based on dailyfx article)
Fundamental Forecast for Yen: Neutral
GBPUSD Fundamentals (based on dailyfx article)
Fundamental Forecast for British Pound: Neutral
AUDUSD Fundamentals (based on dailyfx article)
Fundamental Forecast for the Australian Dollar: Neutral
GOLD Fundamentals (based on dailyfx article)
Fundamental Forecast for Gold: Neutral