Forex Weekly Outlook Sep 28 - Oct 2 (based on forexcrunch article)
A turbulent week has seen the dollar dive but recover quite nicely. US Consumer Confidence, ADP jobs release, Canadian GDP, Janet Yellen’s speech, and a buildup to the highly important US monthly jobs report are the highlights of this week. Here is an outlook on the market movers on Forex calendar.
The dollar suffered for while, on unimpressive durable goods orders. The pain was especially strong against the euro, that received only normal dovish words from Draghi. Yet the fate changed as Yellen surprised with a hawkish tone, stressing that a 2015 hike is certainly on the cards. The final GDP estimate for the second quarter in the US beat forecasts with a better than expected reading of 3.9% annual growth. Elsewhere, the Aussie struggled with another weak Chinese figure and USD/CAD reached an 11 year high, yet these commodity currencies recovered.
Forecast for the Week - levels for EUR/USD by Morgan Stanley (based on efxnews article)
Fundamentals for EUR/USD: neutral. "Draghi and other ECB members were unable to provide new
information on policy tools they could use, so the EUR weakness (as
markets priced in a deposit rate cut) was limited. This was followed by
back-to-business for the EUR and its inverse correlation with risk
appetite. As markets continue to be worried about global growth,
especially in the emerging markets, the EUR will likely continue to see
support. The stronger trade is to buy EUR/GBP as opposed to EUR/USD."
Technicals for EUR/USD: ranging within intermediate levels with breakdown expectations. This pair is
on bearish ranging condition since end of March this year to be moved within 1.1713 resistance and 1.0847 support level. If the price breaks 1.1016 support from above to below so the next bearish targets will be 1.0847 and 1.0461. By the way, if the price breaks 1.1713 resistance from below to above so the next real target will be 1.2069 in this case. The trend line of symmetric triangle pattern may be broken by the price to below at 1.1016, and if so - we may see the good breakdown for this week up to 1.0847 target. Thus, the expectation for bearish breakdown for EUR/USD is very high and the breaking 1.1016 support level is the most likely scenario for this week for example.
What To Expect Into This Week: US NFP - Barclays (based on efxnews article)
"We expect, in line with consensus, an increase of 200k in the headline number (190k for the private payroll), a steady unemployment rate of 5.1%, and a 2.4% y/y increase in wages. We see these figures as robust indicators of tighter labor market conditions and supportive of inflation in the months to come."
2015-10-02 13:30 GMT (or 15:30 MQ MT5 time) | [USD - Non-Farm Employment Change]
if actual > forecast (or previous data) = good for currency (for USD in our case)
[USD - Non-Farm Employment Change] = Change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
EURUSD M5: 100 pips ranging price movement by USD - Non-Farm Employment Change news event:
Trade Ideas For EUR/USD by UBS (based on efxnews article)
EUR/USD: "it is range-bound for now. After Janet Yellen's
remarks last week it appeared that the US dollar would strengthen
further, but sentiment changed ahead of the weekend, with the market
closing some positions. That should not affect the overall situation
though, and we prefer buying EURUSD on dips."
Bullish intra-day reversal based on negative data for Pending Home Sales news event (adapted from realtor.org article)
The price for EUR/USD M5 timeframe broke 100-SMA and 200-SMA from below to above together with symmetric triangle pattern and stopped below 1.1234 resistance level. The price was reversed from the bearish to the bullish market condition because of negative data for Pending Home Sales news event. If this level is broken so the bullish trend will be continuing on this timeframe.
"Pending home sales retreated in August but remained at a healthy
level of activity and have now risen year–over–year for 12 consecutive
months, according to the National Association of Realtors®. A modest increase in the West was offset by declines in all other regions."
"The Pending Home Sales Index,
a forward–looking indicator based on contract signings, decreased 1.4
percent to 109.4 in August from 110.9 in July but is still 6.1 percent
above August 2014 (103.1)."
NAR chief economist, says even with the modest decline in contract
signings, demand continues to outpace housing supply and elevate price
growth in numerous markets. "Pending sales have leveled off since
mid–summer, with buyers being bounded by rising prices and few available
and affordable properties within their budget," he said. "Even with
existing–housing supply barely budging all summer and no relief coming
from new construction, contract activity is still higher than earlier
this year and a year ago."
As to the GOLD (XAU/USD) so M5 price was on bear market rally within the primary bearish market condition for trying to break 100-SMA to come to the ranging area of the chart. The key 'reversal' resistance for this timeframe is 1135.28, and if the price breaks this level so we may see the ranging condition with the good possibility to the bullish reversal in the near future.
EUR/USD Fundamentals - Non-Farm Employment Change Forecast by Credit Suisse (based on efxnews article)
Credit Suisse made a fundamental forecast for the high impacted news events which will be on Friday: Non-Farm Employment Change:
"We project Friday’s payrolls to show +195k jobs in
September (consensus), up from last month’s +173k, due to strong growth
in the construction and service producing sectors. Unemployment is forecasted to remain at 5.1%
in line with consensus, while average hourly earnings should increase
0.2% (consensus 0.2%), taking the year over year figure to 2.4%, its
highest point since August 2009."
If actual data > forecast or previous data = good for currency (for USD in our case)
[USD - Non-Farm Employment Change]= Change in the number of employed people during the previous month, excluding the farming industry. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
As we see - Credit Suisse estimated for NFP to be 195K against 202K forecast and
173K previous data. It means that we should expect the bullish condition
in short term situation during and immediate after this news event on
FX Signals by RBC (based on efxnews article)
Trading ideas for EUR/USD by UBS Group (based on efxnews article)
UBS described some trading strategies which may be used for EUR/USD in short and medium term situation:
EUR/USD: "the pair has had a slow week so far with no clear
direction and we should see more of the same ahead of Friday's US
payrolls. Keep playing the intraday moves and only get involved on the
extremes. Month-end moves might provide some opportunities today, but
overall we think that the 1.1000-1.1400 range is the new 1.0800-1.1200."
As we see - UBS changed the key s/r range from 1.1000/1.1400 to 1.0800/1.1200 expecting the more bearish in medium term. The price will be ranging within the following key support/resistance levels:
On the weeky point of view - it means that symmetric triangle pattern will be broken from above to below for 1.0847 as a nearest bearish target.
EUR/USD: Monitor Key Levels - UOB (based on efxnews article)
United Overseas Bank expects sideways trading within 1.1145 and 1.1245 which means the following:
According to UOB - EUR/USD pair is on ranging market condition for waiting for direction:
"EUR continues to trade in a listless manner and at this stage, we still prefer to hold a neutral view. Only
a clear move beyond the key levels of 1.1085 or 1.1295 would suggests
the start of a directional movement in the coming weeks."
Thus, intermediate support/resistance levels are 1.1145 and 1.1245, and key reversal directional levels for today and for the coming week are 1.1085 and 1.1295.