FOREX PRO WEEKLY, November 16-20, 2015

Sive Morten

Special Consultant to the FPA
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Fundamentals

The dollar rose on Friday as statements from Federal Reserve officials and U.S. economic data continued to support expectations that the U.S. central bank may raise interest rates in December.

U.S. consumer sentiment beat forecasts, gaining for the second straight month and showed an improvement in buying plans for large discretionary purchases, especially vehicles.

The euro gained some ground in volatile, thin trading just as futures markets closed after news that least 40 people were killed in shootouts in central Paris.

Marc Chandler, currency strategist at Brown Brothers Harriman, said the move was more than likely smaller speculators getting out of existing positions, and not a fundamental reaction driving flows to the euro.

As a result of the modest uptick in the euro , the euro zone single currency ended the day down 0.4 percent to $1.0777.

Other U.S. data on Friday, including a weaker-than-expected retail sales report and a second straight monthly decline in producer prices, failed to knock the dollar. The soft inflation and signs of slowing consumer spending appeared unlikely to deter the Fed from a rate hike next month, economists said.

"Retail sales were disappointing again, but we've seen consistently these numbers disappoint over the past little while," said Shaun Osborne, chief currency strategist at Scotia Capital in Toronto.

"It does look as if consumer demand has gotten off to a fairly sluggish start in the quarter, but the general backdrop I would imagine for the consumer is still quite constructive in the U.S."

Comments from Fed Vice Chair Stanley Fischer late Thursday and from Cleveland Fed President Loretta Mester on Friday underpinned the widely held belief that the Fed intends to raise rates at its next meeting in December.

Fischer told a conference at the Fed Board he expects U.S. inflation to rebound next year and noted the Fed could raise rates soon. Mester, who is not a voter on the Fed's rate-setting committee this year but will be in 2016, said America's labor market appears near full strength and that the time to hike is "quickly approaching."

The dollar firmed nearly 1 percent against both the euro and Swiss franc on the day.

Versus the Swiss franc , the dollar gained 0.7 percent, moving to 1.0067 francs. It was headed for a modest 0.1 percent weekly gain.

The dollar also moved higher on the day against the yen , sterling and the Swedish and Norwegian crowns . It was also up against the Canadian , Australian and New Zealand dollars.

The dollar index, which measures the dollar against a basket of other major currencies, rose 0.3 percent to 98.948. The index is down about 0.2 percent this week as profit-taking sent it lower earlier in the week.

Sterling slipped against the dollar on Friday, pegged back by comments from a senior Bank of England policymaker who said an interest rate hike by the Federal Reserve would not automatically lead to a response in Britain.

A day after BoE chief economist Andy Haldane said Britain does not need a rate hike in the near future because wage growth has fizzled and the outlook for the global economy is uncertain, he told BBC radio that while monetary policy in other countries mattered, it would not prompt an automatic response by the BoE.

"Haldane suggested that a rate hike is a long way off due to inflation undershooting. So we are a bit bearish on sterling especially against the dollar," said a trader.

Sterling was down 0.1 percent at $1.5218 , having risen to a day's high of $1.5270 after U.S. retail sales and producer prices came below expectations. But the soft data did little to alter chances of a rate hike by the Fed next month. Markets are pricing in a 70 percent chance of a liftoff.

Sterling, though, rose against the euro, trading 0.7 percent higher at 70.50 pence , not far from a three-month high of 70.41 pence hit on Thursday.

The pound has lost ground against the dollar in recent days after the BoE cooled expectations of a rate hike in the near term, while a blockbuster U.S. jobs report kept the chances of a hike by the Federal Reserve very much alive.

Along with uncertainty over when the BoE would raise rates, sentiment towards the pound has been weighed down over a referendum on Britain's membership of the European Union.

The cost of hedging against sharp price swings in sterling's exchange rate surged on Thursday.

A fresh opinion poll showed more than 50 percent of Britons want to leave the European Union while 47 percent would like to remain in the bloc. The opinion poll was conducted by pollster Survation on behalf of the 'out' campaign.

Traders think UK inflation and retail sales data due next week are unlikely to change the outlook for monetary policy.

"Given uncertainty regarding global growth prospects, and as the BoE remains cautious regarding a stronger currency's dampening impact on price developments, we expect investors' central bank monetary policy expectations to remain strongly capped," Valentin Marinov, head of G10 FX strategy at Credit Agricole, wrote in a note.

"As such we do not expect next week's CPI and retail sales releases to have any sustainable currency impact. We remain in favour of selling the currency versus both the Swiss franc and the dollar."


So in recent comments we see confirmation of our former analysis. Another major topic right now is a terrorist attack on Paris. I feel great sorrow for Parisians since my country just recently met similar tragedy.
I could say only one thing - when EU politicians will start to think on its own country and work in favor of its own people, instead to blindly follow third party external geopolitical ambitions?

Still, our forum is economical and here we will speak only on possible impact on markets, without discussing all background of this event. It seems that on Monday we could get strong bearish gap on EUR and skyrocket action on gold...
Today we will speak on EUR. GBP and NZD are also interesting, but, NZD holds well and continues action to our B&B "Sell" target. With recent events in France, it also probably will get gap and may be even will hit target on Monday. On GBP - market has reached our resistance area, but downward action has not started yet and we're waiting for reversal patterns there.
I'm not sure that it makes big sense to put here CFTC data, hardly it will have any reason on coming week... it will be nervous week, guys...
Anyway, we see that EUR mostly shows bearish sentiment - net short speculative position has increased at simultaneous increasing in open interest:
cot-EUR_USD.png


Within recent month we tell about exceptional role of geopolitics events (mostly in gold research though). World is entering in tough times, guys. And it seems that role of geopolitics will grow.

Technicals
Monthly

First, is let's take a look again at cross-section analysis. On dollar Index chart we see clear confirmation of further dollar appreciation. Market has formed DRPO "Failure" pattern which suggests upside continuation. At the same time we have bullish grabber on dollar index that suggests the same. Next target here is 1.618 extension of long-term AB-CD extension:
dxy_m_16_11_15.png


On EUR -
Overall picture stands bearish. Major events here are - bearish grabber, breakout through major 1.12 Fib support that is based on all times low in Dec 1999, and - bearish dynamic pressure. We see that trend holds bullish but price creeps lower with MACDP line.

Even beyond mentioned patterns picture shows other bearish signs - as market has reached 1.27 target of butterfly - EUR has turned to logical 3/8 retracement. Since acceleration to first target was fast, it increases chances on further drop to 1.618 level and this will be parity.

Also, we have bearish flag here that also suggest downside breakout as normal progress.

Our next target is parity. But, guys, we should be ready for deeper continuation. EU meets hard times - internal disagreement among members (Brexit, Greece, refugees problems), difficult economical situation and external pressure could force EUR drop significantly lower than parity stands. Even from technical point of view - parity is just psychological level, it does not coincide with any meaningful technical support. In fact, market already has broken all major supports till 0.8225 lows... After parity next step is 0.8950 - 1.618 extension of big butterfly right on 1.58 top, where bullish trend was over.

That's being said, analysis of monthly chart mostly leads us to conclusion that market mostly is bearish.
eur_m_16_11_15.png


Weekly
Weekly analysis is rather simple right now. Trend is bearish, market stands in clear bearish breakout of flag pattern. Market is not at oversold and it means that it easily continue action down on next week. After Paris events we will not be surprised if EUR will appear around 1.04 right no next week.
EUR stands below major Fib support and MPS1 - this indicates existing of bear trend. Here we have only one pattern that could point nearest target - 1.618 AB-CD extension, that stands around the same 1.04 area
eur_w_16_11_15.png


Daily
I do not know how useful will be daily analysis, guys, because Monday morning EUR could drop like a stone. I hope that you already have short positions according our comments on last week.
Still, let's see what we have. Market is not at oversold and could easily drop to 1.05 area. This will be also 1.27 extension of butterfly pattern.
Also we've got bearish grabber that we've discussed on Friday that gives more confidence with downward continuation.
For those of you who have missed entry as on 1.10 retracement as on 1.08 most recent retracement - hardly you will get chance to take position until 1.04. Theoretically it looks simple - "try to get short on any minor rally to Fib resistance", but the major question though is when we will get this retracement rally...
eur_d_16_11_15.png


Hourly
Probably intraday analysis even less useful than daily one. Anyway... The first thing that we call - do not hurry to take position ASAP on Monday. Wait a bit when market will calm down. If you do not have short position - your rush will not help you to get it. That's why your major task it to take position at reasonable technical level. Your position has to be not just profitable, it also has to be safe. And this is primary task.

On hourly chart we see retracement up and by current picture next resistance stands around 1.0785. There theoretically we should get chance for short entry (if we would have Paris events)...
eur_1h_16_11_15.png


Conclusion
European problems grow with geometrical progression. The fact that all of them are mostly long-term is significantly increase bearish sentiment in EUR view. That's why in long-term perspective we look on parity but keep in mind that EUR could and probably will drop lower.
In short-term perspective we do not know how market will open on Monday, but we suggest that this will be large gap down and we will not be surprise if market will appear around 1.04 in a blink of an eye. That's why, if you do not have short position - do not hurry to take one. Wait a bit, when market will calm down. Usually after nervous action solid retracement could follow. Wait for it. It is long-time bearish journey ahead on EUR and you will get a lot of chances to take position.



The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
 
Good morning,

Reuters reports today - dollar rose to seven-month highs in Asian trading on Tuesday, as investors turned their focus from the Paris attacks to growing expectations that the U.S. Federal Reserve is poised to hike interest rates next month.

U.S. consumer price data scheduled for later this session is expected to provide more to whether the U.S. central bank will raise interest rates as early as next month, which would be the first official hike in borrowing costs in nearly a decade.

The euro slipped 0.2 percent to $1.0663, after earlier brushing a nearly 7-month low of $1.0659.

In sharp contrast with the Fed, the European Central Bank is considered very likely to take further quantitative easing (QE) steps next month.

"It looks like the direct impact, at least on sentiment, from the Paris attacks has faded," said Sue Trinh, a strategist with RBC Capital Markets in Sydney.

"In terms of FX price action, we've reverted to the trend that was in place before the weekend's terrible events, which is euro underperforming into the December ECB on expectations of increased QE."

A Reuters poll of traders on Monday showed that most expected the ECB to diversify the 60 billion euros a month of mostly government bonds it has been buying since March to include municipal bonds.

"Disappointment by the ECB at this stage would be tantamount to solidifying expectations at current levels for growth and inflation, a trap we fully expect them to avoid," Richard Cochinos, head of European G10 FX strategy at Citigroup, said in a note.

The latest data from the Commodity Futures Trading Commission, released on Monday due to last week's U.S. Veteran's Day holiday, showed that investors boosted their dollar bets in the week ended Nov. 10 to the highest levels since mid-August.

The dollar added about 0.2 percent to 123.37 yen , moving back within sight of its post-payrolls high of 123.60 and away from the previous session's one-week low of 122.23, as investor risk aversion faded. The yen is traditionally a safe-haven currency, and it had gained after the Paris attacks.

The New Zealand dollar shed about 0.5 percent to$0.6462, having broken key support around 65 cents, ahead of a global dairy auction on Wednesday.

New Zealand's near-term inflation expectations rose in the fourth quarter, a survey showed on Tuesday, and the Reserve Bank of New Zealand is regarded as likely to cut interest rates at its next policy review in December

Its Australian counterpart edged down 0.1 percent to $0.7087, but remained underpinned by the Reserve Bank of Australia minutes.

According to the minutes of its Nov. 3 policy review released on Tuesday, Australia's central bank said a subdued inflation outlook meant there was scope to ease monetary policy further if needed, but policymakers appeared to set a high bar for such a move.


Today, guys, it probably makes sense to take a look at GBP. EUR we've discussed in our weekly research and nothing new has happened yet.

Last time, on GBP we were looking for entry point to go short and said that retracement probably should stop somewhere around 1.51-1.52 area. We have long term bearish view on GBP by many reasons that we've discussed in detail in our weekly researches. The major idea is existing of contradiction between public opinion and real fundamental data on perspective of UK economy growth, inflation and rate hike. Thus, due high level of housholds' debt, low inflation and cloudy perspectves of economy growth (including Brexit risk) rate hike hardly is possible in nearest future. That's why we expect mostly bearish continuation on GBP and searching chance for short entry.

On daily chart market is turning down for second session. Unfortunately we do not have grabbers here. Upside action was logical as reaction on Fib support + 1.27 butterfly level + oversold. As support was respected, market is turning back to bearish action and this could be a chance for taking short position.
Fast drop to 1.27 butterfly level hints on further continuation - first to 1.618 but later to 1.45 lows.

gbp_d_17_11_15.png


On hourly chart we see some action that reminds rounding top. Price does not show acceleration down yet, so keep watching for action to Fib levels. If it will be smooth and slow then it could be used for short entry. But don't be short if GBP will show fast acceleration up. Also we would like to see stronger bearish acceleartion later, as soon as round top will be completed.
gbp_1h_17_11_15.png
 
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Good morning,

Reuters reports today the dollar sat near a 7-month high against a basket of currencies on Wednesday as the euro slid on expectations for more monetary easing by the European Central Bank in December.

The greenback treaded water after its advance was halted by an overnight drop in U.S. Treasury yields amid investor demand for safe-haven assets.

The greenback's gains came in large part from the euro's weakness. The common currency was down 0.1 percent at $1.0635 after touching a 7-month trough of $1.0630 overnight, hurt by the potential harm the Paris attacks could do the euro zone economy, and which could require yet more easing by the ECB.

The euro could also face pressure in the longer run with France on a stronger war footing following the assault on its capital.

France is bound to overshoot its European Union budget deficit target as it boosts security spending in the wake of the Nov. 13 attacks, Prime Minister Manuel Valls said on Tuesday.

"Although French government bonds are unlikely to be sold immediately on this - the ECB is a steady buyer of debt - it is still a fiscal issue with negative consequences for the euro in the long run," said Ayako Sera, a senior market economist with Sumitomo Mitsui Trust in Tokyo.

"That said, the ECB's monetary policy firmly remains an immediate concern for the euro," Sera added.

Expectations of further central bank stimulus grew on Tuesday after ECB's chief economist and executive board member Peter Praet told Bloomberg that he was aware of present downside risks and that they may have increased in light of the events in Paris.

The worst policy mix for a currency is loose monetary and tight fiscal policy. The eurozone is flirting with this combination, even if the region's fiscal straitjacket is not being enforced rigorously. This is part the case for a weaker euro in the quarters ahead," wrote Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

Moreover, latest data further highlighted the monetary policy divergence theme, with a rise in U.S. inflation reinforcing prospects of the Federal Reserve hiking interest rates next month.

The dollar was flat at 123.43 yen after nudging up to a 1-week high of 123.49, its advance stalled by the overnight drop in U.S. debt yields.

Treasury yields declined on Tuesday as worries that more terror acts would follow Friday's attacks in Paris spurred demand for safe-havens. Two-year to 10-year debt yields rebounded on Wednesday, although their rise was too modest and gave little lift to the dollar.

Elsewhere, a fall in dairy prices knocked the New Zealand dollar lower. The kiwi struggled near a 6-week low of $0.6452 .

Data out late on Tuesday showed global dairy prices fell for the third consecutive auction, adding to pressures on New Zealand farmers and to the chance that the central bank could cut interest rates at its meeting next month.

The market will sift through the October Fed policy meeting minutes due later in the session for hints on the timing of a possible rate hike. The dollar had surged after the Fed left the door open for a December rate hike at the meeting held late in October.

Housing-related data to be released later in the day will also provide a glimpse into the health of the U.S. economy.


Today we will take a look at EUR. Yesterday GBP has shown upside retracement. It should be nice, but it has formed bullish grabber. Although market works as we've expected - now it is moving down, but grabber is the risk. So, if you missed entry yesterday - you could wait for grabber's failure first.

On EUR situation is blur a bit, but mostly on intraday charts. While on higher time frames we have clear targets - parity on montlhy and 1.0450 on daily but on intraday we have no such clarity.

Thus, on daily EUR is not at oversold and broken all meaningful support. We have AB-CD pattern in progress. Taking in consideration the speed of falling - EUR should reach 1.618 target @ 1.0450 and this is our next destination point:
eur_d_18_11_15.png


When EUR stands on marche it usually shows minor 3/8 retracement. You can see it even on current rally. It means that hardly we will get significant bounce before 1.0450 target will be hit.
4-hour chart does not give us a lot information - just downward channel. Be careful with divergence. In current situation it would be better to ignore it.
eur_4h_18_11_15.png


That's why the only tool that we have is on hourly chart. And this tool is black nasty candle range on 5th of November. As you can see it held price action for 2 weeks. Usually when market breaks such ranges - it tends to move the same distance in direction of breakout, i.e. to 1.05 area. And this is very close to daily target...
It means that right now we could count only on minor retracement and most logical level is 1.07 - re-testing of broken consolidation. From bearish perspective, we do not want to see EUR return back inside of it - just touching and moving down again.
Currently we do not see any other tools that could help us to get better and clearer view on intraday charts
eur_1h_18_11_15.png
 
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Good morning,

Reuters reports today the dollar pulled back in Asian trading on Thursday as investors took profits following its rise to seven-month highs, as Federal Reserve officials' comments as well as minutes from the central bank's latest meeting hinted that an interest rate hike could be right around the corner.

The dollar modestly extended its losses against its Japanese counterpart after the Bank of Japan kept monetary policy steady as widely expected, despite the country's recent slip into a technical recession.

"I don't think there's any fundamental shift here, just a bit of profit-taking after the minutes, and I don't see any change to the dollar's trajectory," said Mitul Kotecha, head of Asian FX and rates strategy at Barclays in Singapore.

The minutes showed that Fed policymakers made an unusually direct reference to a possible December rate increase at the central bank's Oct. 27-28 meeting.

A chorus of Fed officials also backed investors' expectations of a rate hike, with Fed President Dennis Lockhart, New York Fed President William Dudley and Cleveland Fed President Loretta Mester all expressing confidence that the policy tightening, when it comes, will be implemented smoothly for markets

"It seems the argument has moved on from when the Fed will raise rates to how many hikes we will see in 2016," Chris Weston, chief market strategist at IG Ltd in Melbourne, said in a note to clients on Thursday.

The Fed funds futures curve is pricing in just over two hikes throughout 2016, which Weston said was the best guide for trading the dollar.

"With a further widening of the U.S. Treasury/German bund yield spread, the odds of traders buying the USD ahead of the 16 December FOMC meet and then selling once we get confirmation of the hike seems elevated," Weston said.

At his post-meeting briefing later in the session, BOJ Governor Haruhiko Kuroda is expected to reiterate that tightening labour markets will push up wages and help Japan recover from a temporary soft patch.

Some economists, though, fear the soft patch is deeper than officials admit. Ministry of Finance data released early on Thursday showed that Japan's exports fell 2.1 percent in October, posting the first year-on-year decline in more than a year, underscoring weak external demand hit by China's slowing growth.

"Japan's economy has continued to recover moderately, although exports and production have been affected by the slowdown in emerging economies," the BOJ said in its statement on Thursday.

The BOJ kept its economic assessment unchanged.

The euro added about 0.4 percent to $1.0703 , pulling away from Wednesday's seven-month low of $1.0617, with its upside capped by expectations that the European Central Bank will take fresh monetary easing steps next month continuing to pressure the common currency.

The ECB will release the minutes of its latest policy meeting later in the session, which investors will scan for clues to what the central bank might do in December.

"There's a big expectation of easing. The question is how much detail they're going to give, and what's the thinking behind it," said Barclay's Kotecha.


So, EUR has turned to upside retracement. Normally it should be mild, since market is bearish, EUR is not at oversold or at any support. Besides market stands between 1.0 and 1.618 AB-CD targets. Usually market gravitates to hit next target before turning to some other drastic action or reversal.
eur_d_19_11_15.png


Yesterday we've said that it would be perfect if market will stop at the bottom resistance of black nasty candle. If price will return back inside of its range - this would be negative sign for bears, at least in short term and suggests further upward retracement.
This level also is Fib resistances - 50% of most recent swing and 3/8 of the same black candle.
eur_1h_19_11_15.png


Although it seems that reaction is starting down - it is still risk exists of deeper upward retracement. That's why if you would like to take short positions there are two ways to act. First is - wait when hourly bearish trend will be confirmed and then use most recent swing down to enter at some Fib resistance. This will let you to minimize loss, if market suddenly will turn up again.
Conservative tactics - wait when EUR will drop below lows and then enter at minor upside retracement. Also you could combine both way by splitting your total position.
 
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Good morning,

Reuters news tells - The dollar steadied against the yen and euro on Friday after retreating from a recent rally that took the greenback to 7-month highs against a basket of peers.

The dollar was firm at 122.895 yen after sliding 0.6 percent on Thursday, snapping a four-day winning run. The Bank of Japan's decision not to ease monetary policy further weighed mildly on the U.S. currency, though it was still enroute to scape out a 0.2 percent gain this week.

"Foreign players appeared to have cleared out positions before the long Japanese weekend, pushing the dollar lower. Japanese investors, on the other hand, are buying on price dips and preventing a further decline," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.

The Japanese financial markets will be closed on Monday for a public holiday.

The euro was little changed at $1.0718 after gaining 0.7 percent overnight.

Traders saw the overnight decline in U.S. treasury yields more as a catalyst rather than a sole reason for the dollar's drop, noting the currency appeared ripe for profit taking after surging this week to a 7-month peak against a basket of currencies.

The euro was still on track to lose 0.5 percent on the week after being buffeted by heightened prospects of the Federal Reserve hiking interest rates and the European Central Bank easing monetary policy next month.


ANTIPODEANS BULLISH

The New Zealand dollar, one of the strongest G10 currency performers this week, gained 0.5 percent to $0.6597 , adding to a gain of 1.4 percent on Thursday when upbeat domestic producer prices data triggered a rally.

"NZD has been the best performing currency in recent months, confounding widespread expectation that lower milk prices and USD appreciation would drag it down," wrote Todd Elmer, Citi's Asian head of G10 FX strategy.

In August the kiwi slumped to a 6-year low of $0.6200 against the dollar in wake of global risk aversion following a tumble in Chinese stock markets, but it has since gained about 6.5 percent.

"Declines in the prices for New Zealand's main exports are clearly negative for the currency, but investors are probably under-accounting for the degree of support for NZD afforded by buoyant risk appetite and yield seeking," Elmer said.

The Reserve Bank of New Zealand has cut interest rates this year, but the country's government bonds still offer comparatively higher yields than debt from other industrialised economies.

The Australian dollar also stood tall after surging overnight on short-covering amid improved global appetite for riskier assets. The Aussie fetched $0.7207 after rising from Thursday's low of $0.7103.


So, on EUR it looks like market is turning down, but we have one problem for short entry, and this is problem is daily trend. It has turned bullish. Since we do not have any DiNapoli directional bearish patterns, those of you who trade on daily chart should wait when market will change trend to bearish again and only after that start thinking about going short.
It seems that this trend shift is mostly technical and does not suggest real shift in sentiment, but still we have the rule of trading (at least according to DiNapoli framework).
eur_d_20_11_15.png


At the same time EUR has completed our conditions on hourly chart. Yes, upside retracement was slightly higher and EUR even has touched WPP, but at the same time it has formed bearish reversal pattern - that butterfly is. Also trend has turned bearish on hourly chart. EUR has completed harmonic swing retracement as well.
eur_1h_20_11_15.png


That's why you have almost the same choice - either try to dance around butterfly or wait for daily bearish context and only after that try to enter short. Trading with butterfly suggests possible taking of short position on some minor upside retracement to Fib level from current swing down out from WPP.
 
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Fundamentals

The dollar rose on Friday as statements from Federal Reserve officials and U.S. economic data continued to support expectations that the U.S. central bank may raise interest rates in December.

U.S. consumer sentiment beat forecasts, gaining for the second straight month and showed an improvement in buying plans for large discretionary purchases, especially vehicles.

The euro gained some ground in volatile, thin trading just as futures markets closed after news that least 40 people were killed in shootouts in central Paris.

Marc Chandler, currency strategist at Brown Brothers Harriman, said the move was more than likely smaller speculators getting out of existing positions, and not a fundamental reaction driving flows to the euro.

As a result of the modest uptick in the euro , the euro zone single currency ended the day down 0.4 percent to $1.0777.

Other U.S. data on Friday, including a weaker-than-expected retail sales report and a second straight monthly decline in producer prices, failed to knock the dollar. The soft inflation and signs of slowing consumer spending appeared unlikely to deter the Fed from a rate hike next month, economists said.

"Retail sales were disappointing again, but we've seen consistently these numbers disappoint over the past little while," said Shaun Osborne, chief currency strategist at Scotia Capital in Toronto.

"It does look as if consumer demand has gotten off to a fairly sluggish start in the quarter, but the general backdrop I would imagine for the consumer is still quite constructive in the U.S."

Comments from Fed Vice Chair Stanley Fischer late Thursday and from Cleveland Fed President Loretta Mester on Friday underpinned the widely held belief that the Fed intends to raise rates at its next meeting in December.

Fischer told a conference at the Fed Board he expects U.S. inflation to rebound next year and noted the Fed could raise rates soon. Mester, who is not a voter on the Fed's rate-setting committee this year but will be in 2016, said America's labor market appears near full strength and that the time to hike is "quickly approaching."

The dollar firmed nearly 1 percent against both the euro and Swiss franc on the day.

Versus the Swiss franc , the dollar gained 0.7 percent, moving to 1.0067 francs. It was headed for a modest 0.1 percent weekly gain.

The dollar also moved higher on the day against the yen , sterling and the Swedish and Norwegian crowns . It was also up against the Canadian , Australian and New Zealand dollars.

The dollar index, which measures the dollar against a basket of other major currencies, rose 0.3 percent to 98.948. The index is down about 0.2 percent this week as profit-taking sent it lower earlier in the week.

Sterling slipped against the dollar on Friday, pegged back by comments from a senior Bank of England policymaker who said an interest rate hike by the Federal Reserve would not automatically lead to a response in Britain.

A day after BoE chief economist Andy Haldane said Britain does not need a rate hike in the near future because wage growth has fizzled and the outlook for the global economy is uncertain, he told BBC radio that while monetary policy in other countries mattered, it would not prompt an automatic response by the BoE.

"Haldane suggested that a rate hike is a long way off due to inflation undershooting. So we are a bit bearish on sterling especially against the dollar," said a trader.

Sterling was down 0.1 percent at $1.5218 , having risen to a day's high of $1.5270 after U.S. retail sales and producer prices came below expectations. But the soft data did little to alter chances of a rate hike by the Fed next month. Markets are pricing in a 70 percent chance of a liftoff.

Sterling, though, rose against the euro, trading 0.7 percent higher at 70.50 pence , not far from a three-month high of 70.41 pence hit on Thursday.

The pound has lost ground against the dollar in recent days after the BoE cooled expectations of a rate hike in the near term, while a blockbuster U.S. jobs report kept the chances of a hike by the Federal Reserve very much alive.

Along with uncertainty over when the BoE would raise rates, sentiment towards the pound has been weighed down over a referendum on Britain's membership of the European Union.

The cost of hedging against sharp price swings in sterling's exchange rate surged on Thursday.

A fresh opinion poll showed more than 50 percent of Britons want to leave the European Union while 47 percent would like to remain in the bloc. The opinion poll was conducted by pollster Survation on behalf of the 'out' campaign.

Traders think UK inflation and retail sales data due next week are unlikely to change the outlook for monetary policy.

"Given uncertainty regarding global growth prospects, and as the BoE remains cautious regarding a stronger currency's dampening impact on price developments, we expect investors' central bank monetary policy expectations to remain strongly capped," Valentin Marinov, head of G10 FX strategy at Credit Agricole, wrote in a note.

"As such we do not expect next week's CPI and retail sales releases to have any sustainable currency impact. We remain in favour of selling the currency versus both the Swiss franc and the dollar."


So in recent comments we see confirmation of our former analysis. Another major topic right now is a terrorist attack on Paris. I feel great sorrow for Parisians since my country just recently met similar tragedy.
I could say only one thing - when EU politicians will start to think on its own country and work in favor of its own people, instead to blindly follow third party external geopolitical ambitions?

Still, our forum is economical and here we will speak only on possible impact on markets, without discussing all background of this event. It seems that on Monday we could get strong bearish gap on EUR and skyrocket action on gold...
Today we will speak on EUR. GBP and NZD are also interesting, but, NZD holds well and continues action to our B&B "Sell" target. With recent events in France, it also probably will get gap and may be even will hit target on Monday. On GBP - market has reached our resistance area, but downward action has not started yet and we're waiting for reversal patterns there.
I'm not sure that it makes big sense to put here CFTC data, hardly it will have any reason on coming week... it will be nervous week, guys...
Anyway, we see that EUR mostly shows bearish sentiment - net short speculative position has increased at simultaneous increasing in open interest:
View attachment 22067

Within recent month we tell about exceptional role of geopolitics events (mostly in gold research though). World is entering in tough times, guys. And it seems that role of geopolitics will grow.

Technicals
Monthly

First, is let's take a look again at cross-section analysis. On dollar Index chart we see clear confirmation of further dollar appreciation. Market has formed DRPO "Failure" pattern which suggests upside continuation. At the same time we have bullish grabber on dollar index that suggests the same. Next target here is 1.618 extension of long-term AB-CD extension:
View attachment 22068

On EUR -
Overall picture stands bearish. Major events here are - bearish grabber, breakout through major 1.12 Fib support that is based on all times low in Dec 1999, and - bearish dynamic pressure. We see that trend holds bullish but price creeps lower with MACDP line.

Even beyond mentioned patterns picture shows other bearish signs - as market has reached 1.27 target of butterfly - EUR has turned to logical 3/8 retracement. Since acceleration to first target was fast, it increases chances on further drop to 1.618 level and this will be parity.

Also, we have bearish flag here that also suggest downside breakout as normal progress.

Our next target is parity. But, guys, we should be ready for deeper continuation. EU meets hard times - internal disagreement among members (Brexit, Greece, refugees problems), difficult economical situation and external pressure could force EUR drop significantly lower than parity stands. Even from technical point of view - parity is just psychological level, it does not coincide with any meaningful technical support. In fact, market already has broken all major supports till 0.8225 lows... After parity next step is 0.8950 - 1.618 extension of big butterfly right on 1.58 top, where bullish trend was over.

That's being said, analysis of monthly chart mostly leads us to conclusion that market mostly is bearish.
View attachment 22069

Weekly
Weekly analysis is rather simple right now. Trend is bearish, market stands in clear bearish breakout of flag pattern. Market is not at oversold and it means that it easily continue action down on next week. After Paris events we will not be surprised if EUR will appear around 1.04 right no next week.
EUR stands below major Fib support and MPS1 - this indicates existing of bear trend. Here we have only one pattern that could point nearest target - 1.618 AB-CD extension, that stands around the same 1.04 area
View attachment 22070

Daily
I do not know how useful will be daily analysis, guys, because Monday morning EUR could drop like a stone. I hope that you already have short positions according our comments on last week.
Still, let's see what we have. Market is not at oversold and could easily drop to 1.05 area. This will be also 1.27 extension of butterfly pattern.
Also we've got bearish grabber that we've discussed on Friday that gives more confidence with downward continuation.
For those of you who have missed entry as on 1.10 retracement as on 1.08 most recent retracement - hardly you will get chance to take position until 1.04. Theoretically it looks simple - "try to get short on any minor rally to Fib resistance", but the major question though is when we will get this retracement rally...
View attachment 22071

Hourly
Probably intraday analysis even less useful than daily one. Anyway... The first thing that we call - do not hurry to take position ASAP on Monday. Wait a bit when market will calm down. If you do not have short position - your rush will not help you to get it. That's why your major task it to take position at reasonable technical level. Your position has to be not just profitable, it also has to be safe. And this is primary task.

On hourly chart we see retracement up and by current picture next resistance stands around 1.0785. There theoretically we should get chance for short entry (if we would have Paris events)...
View attachment 22072

Conclusion
European problems grow with geometrical progression. The fact that all of them are mostly long-term is significantly increase bearish sentiment in EUR view. That's why in long-term perspective we look on parity but keep in mind that EUR could and probably will drop lower.
In short-term perspective we do not know how market will open on Monday, but we suggest that this will be large gap down and we will not be surprise if market will appear around 1.04 in a blink of an eye. That's why, if you do not have short position - do not hurry to take one. Wait a bit, when market will calm down. Usually after nervous action solid retracement could follow. Wait for it. It is long-time bearish journey ahead on EUR and you will get a lot of chances to take position.



The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.
Great info,i short on EUR/USD on NOV 4 at 1.0924 and still hold the position until now,i just think to close it in monday opening but after read your analysis,i'll hold the position for another week.Advise me if i am wrong Sir.
 
Another major topic right now is a terrorist attack on Paris. I feel great sorrow for Parisians since my country just recently met similar tragedy.
I could say only one thing - when EU politicians will start to think on its own country and work in favor of its own people, instead to blindly follow third party external geopolitical ambitions?
Dear Sive,
thanks for your words, I'm sure that everybody is and was very sad about the attack in Russia as well as this last one in Paris or wherever else has happened.
I agree with you about what you said about Europe, but unfortunately that's politic and something could change only if "money" and "ambition" would not be anymore a part of the world where we live.....

I wish you a great week and, once again, thanks for your efforts.
Stefano
 
It's a terrible thing this attack ! But what does this normally do to a currency pair, if there is anything normal. Which way is the Euro going to go ?
 
Dear Sive,

Thank you for your analysis, I also feel like you said "World is entering into tough times" nervousness in markets will increase.
 
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