Yesterday the EURUSD rallied breaking above the 200-day moving average and closed well in the green near the high of the day. This movement suggests that the bullish momentum is strong in the mid-term and the currency is at 1.1236 a pivotal point (daily resistance). A break above this pivotal point will take the pair up to another daily resistance at 1.1460.
Euro recovers its mojo but fails into 1.1300 again
It's been a busy little period while I've been putting the wrap together and we've seen EURUSD rally back to test 1.1300 only to fail againEURGBP has also run into offers again around 0.7200 while EURJPY has headed lower as USDJPY breaks the strong 122.80 support lines/bids
USDCHF has also given up on strong support at 0.9550 to run quickly down to 0.9528. More stops noted through 0.9520
And commodity currencies have even enjoyed some love as the USD-neg sentiment prevails with NZDUSD triggering stops through 0.6650 as per the order board to post 0.6670. AUDUSD has rallied well from 0.7300 but run into fresh supply around 0.7350 again
Plenty of pips to be had this morning and second-chances too. What's not to like about that on a Friday?!
The euro recorded another winning session against the dollar on Thursday. The single currency met the positive expectations and as a result broke the resistance at 1.1214. Short-term indicators remain in favor of the euro. So the couple likely will test the second key level at 1.1271. Trade on Thursday launched at 1.1118 and bullish sentiment prevailed throughout. The top of the day was reached at 1.1244 shortly before the end of the session. Finish line was marked with only 4 pips below.
Eurozone August prelim consumer confidence -6.8 vs -6.9 expected
Eurozone consumer confidence from the European Commission:
Eurozone consumer confidence beat by a tick, we're all saved.
EUR/USD in a bullish trend for the third day breaking above july's highest price and broke the psychological Resistance 1.1300 in the same day. This was not expected.
EUR/USD surges more than 1% to its highest level in nearly two months
EUR/USD soared more than 1% for the second consecutive session to move to its highest level in nearly two months, amid a massive sell-off in equity markets worldwide as concerns of a recession in China mounted.
The currency pair traded between a range of 1.1229 and 1.1389 before settling at 1.1384, up 0.0144 or 1.28% on Friday’s session. The euro closed higher against the dollar for the third straight session, moving to its highest versus its American counterpart since late-June. While the pair has remained in a holding pattern between 1.08 and 1.14 for the majority of 2015, it is by roughly 4% since the start of the summer.
EUR/USD likely gained support at 1.0808, the low from July 20 and was met with resistance at 1.1411, the high from June 22.
Stocks around the world have suffered a massive sell-off since Wednesday afternoon when the Federal Open Market Committee rattled markets with the release of relatively dovish minutes from its July meeting, which provided indications that persisting weakness in the economy could prompt it to delay an interest rate hike beyond September. The downturn has exacerbated fears of a global economic slowdown, as markets ranging from Wall Street and the U.K. to China entered correction on Friday following declines of more than 10% from recent highs. The Dow Jones Industrial Average plunged more than 500 points in Friday’s session, after suffering its worst one-day loss in four years.
The equities crash has sent investors to scurrying to government bonds, as yields continued to plunge. As a result, U.S. Treasuries are in line for one of their strongest months of the year amid soaring bond prices. On Friday, the yield on the U.S. 10-Year fell four basis points to an intraday low of 2.03%, its lowest level since late-April. Yields on 10-year government bonds in Germany and the U.K. also moved lower during Friday’s session.
In overnight trading, reports in China indicated that manufacturing production nationwide has shrunk at its quickest pace in more than six years, illustrating the unrelenting listlessness in the nation’s factory sector. A preliminary reading of the Flash China Caixin PMI for August fell to 47.1, its lowest level since the end of the Financial Crisis. A reading below 50 provides a signal of contraction in the industry. The reading fell considerably below analysts’ forecasts of 47.7 and extended losses from July’s reading of 47.8, when it plummeted to a two-year low.
The People’s Bank of China (PBOC) has approved a wide range of stimulus initiatives throughout the year in an effort to drive an economy that is experiencing its slowest level of growth in more than a decade. Over the last several months, the Chinese government has lowered its benchmark interest rate twice, cut the Reserve Ratio Requirement (RRR) or amount banks must hold in cash reserves and relaxed rules on margin financing or stock trading with borrowed funds in attempts to spur activity. The PBOC also devalued the yuan by nearly 2% earlier this month in a move aimed at boosting slumping export levels.
Also on Friday, U.S. crude futures fell below $40 for the first time in six years dropping under a key technical level. The decline in oil prices has weighed on energy companies worldwide, as Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) have seen their shares fall by more than 20% over the last year.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, plummeted by nearly 1% to 94.84, its lowest level since late-June.
Next week EUR/USD will probably reach the previous high at 1.1436 but the question is whether it will rise any higher than that.
EUR/USD Forecast August 24-28
EUR/USD rallied hard on a mix of not-so-good mews from around the world. Has it found a new driver? The highlights of the last full week of August are inflation figures and an important German survey. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
German manufacturing PMI beat expectations, but it was rather the bad news that lifted the pair. There is a growing fear about a global downturn. It began in China and spread to other places. With the euro now functioning as a funding currency, bad news means good news for the euro. This also bears truth when the crisis is brewed at home: Greece. The Greek government resigned and the resulting uncertainty has certainly not derailed the single currency. It also helped that the Fed remained hesitant about a hike in September. With worsening global conditions since that last Fed meeting, odds continue falling, and the dollar follows.
EUR/USD weekly outlook: August 24 - 28
The euro jumped more than 1% against the dollar on Friday as growing concerns over slowing global economic growth bolstered expectations that the Federal Reserve may keep interest rates on hold for longer.
The dollar tumbled against the euro and the yen after data showing manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August added to concerns over the outlook for the world’s second-largest economy.
The weak data underlined fears over global growth and added to doubts over whether the U.S. central bank will hike interest rates next month.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
EUR/USD jumped 1.28% to 1.1383 in late trade, and the pair ended the week with gains of 2.55%, the strongest weekly performance since late April.
The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.
The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.
In recent months the dollar had been boosted by expectations that the improving U.S. economy would prompt the Fed to raise borrowing costs as soon as September.
But Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.
Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook and weakness in the global economy could still pose risks to the U.S. economic outlook.
In the week ahead, investors will be looking ahead to Wednesday’s data on U.S. durable goods orders for a fresh reading on the strength of the economy. A speech on Monday by Atlanta Fed President Dennis Lockhart will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
FED did it again : instead of rate hike, there will be QE4. Next time I believe the FED will be remembered