Forex Technical Update Prev: GBP/USD in a Pullback after Bearish Breakout (7/18) GBP/USD Failed Bearish Breakout – The bearish breakout yesterday was followed by a pullback towards 1.6075. We reached across to find resistance at 1.6080, but the market stayed above the recent local pivot near 1.6058, and built strength instead. Bullish Breakout…more clues needed – Now there is an upside break. Note the RSI kissing 70 after just kissing 30, reflecting a ranging mode. The break to the upside is like the break to the downside so far – no confirmation yet. – A throwback can help to confirm the bullish intent if it fails to break below 1.6080. That will confirm weak bears. To confirm strong bulls, we want to see the RSI break above 70 convincingly. – The RSI in the 4H chart should at least break back above 60 to start signaling the bullish attempt.
GBP/USD in a Pullback after a Bearish Breakout
Forex Technical Update Prev: GBP/USD Completes a ABC Correction; Bullish Momentum is Tested (7/15) GBP/USD – The sterling failed to make a meaningful bullish attempt from the 1.6075 level after an ABC correction last Friday. – Instead of making new highs, the market hammered at the support until breaking it today, and falling to the 200SMA in the 1H chart. – Note the RSI reading finally broke below 40 to kill the bullish momentum, and even shows some short-term bearish momentum as the reading kissed 30. – At the second half of today’s US session, we are seeing some pullback after the strong bearish candle from a little earlier. – If the market fails to break above 1.6075 in the Asian session, and can avoid breaking back above the 1.6110 level in the upcoming European session (in about 12hours), then the bearish outlook is still valid, at least in the very short-term towards 1.5930-1.5940 area. – The bearish outlook can extend lower towards 1.5780-1.58 area.
EUR/USD’s Technical Setup Ahead of the Eurozone
Forex Technical Update Prev: EUR/USD 1.42 Defended to Start Week (7/17) EUR/USD – The EUR/USD started this week bearish, but was supported in the US session. The market reached as low as 1.4015, cracking important pivot near 1.4030, but failing to sustain the break. This failure at least weakens the bullish scenario starting this week in a consolidation mode, with the market back to where it opened. – However, the inability of the RSI reading in the 1H chart to break below 30 suggests weak bears as well. Note that this is above 61.8% retracement of previous rally. – The bulls are weak too if they respect the opening gap guarded near 1.4130. – Therefore, as we gear up for the European session, the EUR/USD is in consolidation.
USD/CAD dipped into lower ground in the past week. The rate decision, BOC Press Conference, inflation data and retail sales are the highlights of a busy week. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD. Last week Canadian housing starts rose unexpectedly amid strong sales activity in Ontario reaching 197,400 new building starts following 194,000 inthe previous month. The prosperous housing market continues to thrive despite the restrictions on mortgage lending issued at the beginning of 2011. USD/CAD daily chart with support and resistance lines on it. Let’s Start: Foreign Securities Purchases: Monday, 12:30. Foreign investors continued to buy Canadian securities totaling $8.2 billion in April and following 6.44 billion in the previous month. A decrease to $7.41 billion is forecasted. Rate decision: Tuesday, 13:00. The Bank of Canada maintained its target overnight rate at 1% due to a gradual recovery in the global economy and in the Canadian market expansion.
Daily Forex and Market Report
FOREX A sharp fall in the Euro (1.4074) in early Asian trading today. The Euro is trading well below the 21 week MA at 1.4287. Losses are seen in the Cable (1.6088) and Aussie (1.0610) as well. This is compared to Friday’s close near 1.6125 and 1.0645 respectively. The Yen (79.05) and USDCHF (0.8133) are relatively stable. The Swissy had strengthened to 0.8075 in early Asian trade and has weakened slightly from there. The Euro has weakened on continued concerns regarding the Euro Zone debt problem. The ECB is opposed to any restructuring of Greek debt, which would lead to such debt being classified as “default grade” and not acceptable as a collateral security. Thursday, sees €6.6 billion worth of Greek debt maturing. MARKETS The US markets closed higher on Friday. Dow (12479.73) was up 0.34% and the Nasdaq (2789.80) was up 0.98%. The Asian markets are trading mixed today. Shanghai (2821.93, up 0.06%), Indonesia (4034.04, up 0.27%) are trading higher while Australia (4541, down 0.04%)
EUR/USD: 1.42 Defended to Start Week
Forex Technical Update Prev: EUR/USD Supported at 1.41, Targets 1.43, 1.4450 If US CPI is Subdued and Stress Tests Do Not Stir (7/15) EUR/USD – The EU stress test results were not great, but not as bad as anticipated neither. – However the 1.42 level was defended on Friday, and well defended to start the week as well, as the EUR/USD opened with a gap to the downside. – Getting deeper into the Asian session, the market is in a declining support. – The RSI in the 1H chart is breaking below 40, and killing the short-term bullish momentum we established last week. A reading below 30 returns the market to bearish momentum in the short-term. – The 4H chart shows that the momentum in the medium term is bearish, and remains so as the RSI reading failed to break above 60 last week. – Notice also the failure to break 61.8% retracement. – The market looks poised to continue the bearish trend this week
New Intervention Hints
After weeks, or even months, central banks are once again floating hints of intervention. It should be no surprise that these innuendos come form Japan and Switzerland, countries which witnessed their respective currencies appreciate of late. In case of the Swiss Franc, this has been especially true – it has been making new highs against the Euro, the Dollar and the Pound for a long time now. Last week has been no exception and all these currencies sank to new lows versus the CHF. Officials from both the BoJ and the SNB have quoted as “closely monitoring the markets”, complaining that too strong currencies hurt their countries’ competitiveness and exchange rates are “far out of line with real fundamentals”. As always, the BoJ is more vocal, but for the SNB’s comments are notable, because the central banks has been quiet for a long time. In the past they intervened when the EUR-CHF was around 1.5000, now it is closer to 1.15000
The Aussie couldn’t avoid the implications of the European debt crisis, but managed to stay relatively strong. The upcoming week consists of the important meeting minutes and other key events. Here is an outlook for these events, and an updated technical analysis for AUD/USD. Australia’s housing sector is still live and kicking. Home loans continued their strong recovery and defied the talks about an Australian housing bubble. Australia also enjoyed continued strong growth in China. AUD/USD chart with support and resistance lines on it. Click to enlarge: New Motor Vehicle Sales: Monday, 1:30. With Australia’s vast lands, sales of vehicles serve as a good gauge of the economy. The past two months have been somewhat worrying with a cumulative drop of almost 12%. A correction is expected this time. Monetary Policy Meeting Minutes: Tuesday, 1:30. The recent rate statement was quite dovish. The central bank expressed concerns and markets don’t see a rate hike this year anymore.