EUR/USD Wrap Up form Forex-Nation.com
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Forexwatchman
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No update needed for today. Tomorrow's Core Retail Sales should prove to be an important development going into next week as it will more than likely come in better than forecasted. My reasoning here is that the NFP showed unemployment has held up at 9.7% with only 36,000 jobs lost in February, a moderately good sign that people are finding work and holding onto their jobs. Also, February's consumer sentiment came in better than expected which indicates consumers are more willing to spend their hard earned money. Other factors come into play here, but I'll spare you the details. Also keep in mind that I am referring to the Core report which excludes some of the more volatile industries and thus reflects a more consistent indication of the market's health from month to month. If numbers come out much better than expected I would look for a rally on the EUR/USD as investors have already shown signs of becoming weary of risk aversion and are bound to pick back up on higher yielding currencies. If numbers come in worse than expected though, I would look for more risk aversion and thus new lows on the EUR/USD before the end of the day. Good luck to you guys!
Thanks for following along Para47!
Thanks for following along Para47!
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Wrap Up for March 15
Well in my last analysis I predicted that Core Retail Sales would beat expectations on Friday and was spot on with that one. I also said that even though this meant strength in the U.S. economy had returned, it also would not necessarily translate to a sell off on the EUR/USD and provided an explanation for why. That too was the case as we saw the EUR/USD break key resistance levels and rally into the 1.3790’s before the end of the day.
My how fast things change! Now it appears that risk aversion is very much back in play as news regarding China and their more aggressive language regarding future dealings with the U.S. has caused risk appitite to sour. Reuters reported that 130 members of Congress have asked Treasury and Commerce to label China a currency manipulator when the Treasury issues its semi-annual currency report on April 15. They want countervailing duties (definition = An additional import duty imposed to offset Government subsidies in the exporting country, when the subsidized imports cause material injury to domestic industry in the importing country) applied to Chinese imports. Their recommendations were that Treasury should enter into negotiations with China on its currency regime with the IMF and others after labeling it a manipulator. If talks fail, Obama should take China to the WTO, the lawmakers say. This does not increase confidence in riskier currencies like the euro and thus argues strongly for more risk aversion like we’ve seen earlier in the year.
In other news, Greece is waiting for a package that seems to be an enigma from hell as we continue to get contradictory reports about just what the EU is planning to do for Greece’s sinking ship. This afternoon the Eurogroup met and failed once again to come up with a solution by their mid-March deadline. At some point, the market is going to test their resolve and give the euro a real good kick in the butt. For now I am still short on my original short position at 1.3704. Even though it has reached the weekly S1 and bounced back (to the pip!), I continue to leave this trade open because I still believe that fundamentally we have more reasons today to invest in the U.S. economy and stay out of the Euro-zone plus we haven’t been able to break the 38.2 fib level as I write this, a key level of resistance. Either way, I have locked in a small profit in case I am wrong so nothing is at stake but more profits for me either way. Good luck to you all!
Well in my last analysis I predicted that Core Retail Sales would beat expectations on Friday and was spot on with that one. I also said that even though this meant strength in the U.S. economy had returned, it also would not necessarily translate to a sell off on the EUR/USD and provided an explanation for why. That too was the case as we saw the EUR/USD break key resistance levels and rally into the 1.3790’s before the end of the day.
My how fast things change! Now it appears that risk aversion is very much back in play as news regarding China and their more aggressive language regarding future dealings with the U.S. has caused risk appitite to sour. Reuters reported that 130 members of Congress have asked Treasury and Commerce to label China a currency manipulator when the Treasury issues its semi-annual currency report on April 15. They want countervailing duties (definition = An additional import duty imposed to offset Government subsidies in the exporting country, when the subsidized imports cause material injury to domestic industry in the importing country) applied to Chinese imports. Their recommendations were that Treasury should enter into negotiations with China on its currency regime with the IMF and others after labeling it a manipulator. If talks fail, Obama should take China to the WTO, the lawmakers say. This does not increase confidence in riskier currencies like the euro and thus argues strongly for more risk aversion like we’ve seen earlier in the year.
In other news, Greece is waiting for a package that seems to be an enigma from hell as we continue to get contradictory reports about just what the EU is planning to do for Greece’s sinking ship. This afternoon the Eurogroup met and failed once again to come up with a solution by their mid-March deadline. At some point, the market is going to test their resolve and give the euro a real good kick in the butt. For now I am still short on my original short position at 1.3704. Even though it has reached the weekly S1 and bounced back (to the pip!), I continue to leave this trade open because I still believe that fundamentally we have more reasons today to invest in the U.S. economy and stay out of the Euro-zone plus we haven’t been able to break the 38.2 fib level as I write this, a key level of resistance. Either way, I have locked in a small profit in case I am wrong so nothing is at stake but more profits for me either way. Good luck to you all!
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Risk appetite picked back up this morning during the Asian and European sessions as signs of strength for the euro zone and stability back here in the states all point towards an increase in risk appetite for investors. The chart I posted yesterday at Forex-Nation continue to frame price action quite well as the trendline was upheld during a brief sell-off on the EUR/USD followed by a rally that gained real momentum after the release of the ZEW March German economic sentiment index, a better than expected 44.5 vs 43.5 forecast. Also in the mix of economic data was the Core CPI and CPI which were both at expectations. In the U.S., the U.S. government has stated that unemployment has pulled itself out of the uncontrolled freefall and should be stabilized now, although it won't fall back down this year, it also shouldn't rise much higher going forward.
Since our crossover occurred on the alligator, the EUR/USD has rallied as high as 1.3741 and shows no signs of slowing down. The next key level to watch is 1.3776, which if broken could lead to a true bullish rally up into the mid to upper 1.3800's. My opinion is that we won't see such a rally without some sort of news event fueling it, such as a Greek bailout of some sort. But don't hold your breath. I expect us to achieve new highs and then continue to be range bound between the 1.3800's and the 1.3500's. This is where support/resistance overpowers fundamental events as traders stick to the technicals while they wait for fundamentals to sort out a clearer picture. Stay on top of your charts but keep your ear tuned into the news just in case. Good luck to you all!
Since our crossover occurred on the alligator, the EUR/USD has rallied as high as 1.3741 and shows no signs of slowing down. The next key level to watch is 1.3776, which if broken could lead to a true bullish rally up into the mid to upper 1.3800's. My opinion is that we won't see such a rally without some sort of news event fueling it, such as a Greek bailout of some sort. But don't hold your breath. I expect us to achieve new highs and then continue to be range bound between the 1.3800's and the 1.3500's. This is where support/resistance overpowers fundamental events as traders stick to the technicals while they wait for fundamentals to sort out a clearer picture. Stay on top of your charts but keep your ear tuned into the news just in case. Good luck to you all!
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Sometimes it hurts to be right. I took a small loss of just 9 pips on yesterday's bounce off of resistance trade and in my trade analysis I had mentioned that I believed the bulls would rally further before we'd see a true sell-off and profit taking. I mentioned that this was why I hadn't yet moved my S/L to break even though at the time the trade initially went into profit by about 15 pips. Turns out that was exactly what happened, as 1.3761 was as low as this pair could go before buying interest picked back up again.
It now looks like selling pressure has returned with a vengeance, spurred on by the unemployment numbers out of the UK which surprised everyone and led to massive selling of EUR/GBP. Merkel’s comments probably played a little part there as well. German Chancellor Angela Merkel said that "The euro is facing the strongest challenge it has ever had to cope with," Merkel told the Bundestag lower house of parliament. "The (solution) ... can only be one we find with regard to the long-term stability of the euro.
In the U.S. we saw PPI fall to 0.6%, ex-food and energy up +0.1% Most of the drop was in energy costs , which will more than likely rebound in next month’s data. Nothing else too exciting to mention today.
EUR/USD continues to slip on profit-taking, down now to the 1.3740 area. Be careful before jumping on board though as I am told there are bids in the 1.3720/30 area near-term. Although a crossover has occurred on the 15 minute chart, I will wait and see what happens on the hourly with our alligator. We are dangerously close to the upward trendline that has so far held up to the selling pressure from earlier in the week, and that might be where the 1.3720 bids come into play as price action inches its way down.
Look for big news out of the U.S. tomorrow with Core PPI, Unemployment claims, and Philly Fed Manufacturing index all out. Good luck to you all!
It now looks like selling pressure has returned with a vengeance, spurred on by the unemployment numbers out of the UK which surprised everyone and led to massive selling of EUR/GBP. Merkel’s comments probably played a little part there as well. German Chancellor Angela Merkel said that "The euro is facing the strongest challenge it has ever had to cope with," Merkel told the Bundestag lower house of parliament. "The (solution) ... can only be one we find with regard to the long-term stability of the euro.
In the U.S. we saw PPI fall to 0.6%, ex-food and energy up +0.1% Most of the drop was in energy costs , which will more than likely rebound in next month’s data. Nothing else too exciting to mention today.
EUR/USD continues to slip on profit-taking, down now to the 1.3740 area. Be careful before jumping on board though as I am told there are bids in the 1.3720/30 area near-term. Although a crossover has occurred on the 15 minute chart, I will wait and see what happens on the hourly with our alligator. We are dangerously close to the upward trendline that has so far held up to the selling pressure from earlier in the week, and that might be where the 1.3720 bids come into play as price action inches its way down.
Look for big news out of the U.S. tomorrow with Core PPI, Unemployment claims, and Philly Fed Manufacturing index all out. Good luck to you all!
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During this morning's European session a relatively unimportant economic report, the euro zone's Current Account index came in much worse than expected and essentially scared all the bulls out of the market. Because foreigners must buy the EUR currency to pay for the exports, these figures can have sizable affect on the EUR when they are far off from expectations. Combining this data with renewed talk of Greece having to seek IMF help from our buddy Chief finance spokesman Merkel’s killed off anymore chances of a rally for this pair. The trendline that I've been paying close attention was broken and signaled a further decline back down to the support line I have drawn at 1.3648 near the weekly S1.
Jitters over the Greek debt situation are widening spreads in the bond markets as well. Greek 10-year bonds trade at 310 bp over German bunds today, up from 300 bp yesterday. The wider the spread, the greater the pressure on the euro.
Although central banks have been buyers of EUR/USD around the 1.3650's this morning, should those bids fail to hold the support line in place you should certainly expect an even bigger downfall as rumors of heavy stops below the 1.3640 level are looming. I have been saying that the EUR/USD is in a bullish trend right now, but each time Germany's spokesmen open their mouth risk appetite closes it's own.
On the otherhand, If we don’t break 1.3640, odds of us going back into the 1.3800's in a few days are very good. Continued talk from Germany about Greece going to the IMF will certainly be a factor in all of this.
Out of the U.S. this morning:
US CPI unchanged, core up 0.1%; jobless claims 457,000 very close to expectations
The employment sub index firmed to 8.4 in March from 7.4 in February. New orders dropped to 9.3 from 22.7
Philly Fed slightly firmer than expected at 18.9
Check out Forex-Nation.com for more information. Good luck to you all!
Jitters over the Greek debt situation are widening spreads in the bond markets as well. Greek 10-year bonds trade at 310 bp over German bunds today, up from 300 bp yesterday. The wider the spread, the greater the pressure on the euro.
Although central banks have been buyers of EUR/USD around the 1.3650's this morning, should those bids fail to hold the support line in place you should certainly expect an even bigger downfall as rumors of heavy stops below the 1.3640 level are looming. I have been saying that the EUR/USD is in a bullish trend right now, but each time Germany's spokesmen open their mouth risk appetite closes it's own.
On the otherhand, If we don’t break 1.3640, odds of us going back into the 1.3800's in a few days are very good. Continued talk from Germany about Greece going to the IMF will certainly be a factor in all of this.
Out of the U.S. this morning:
US CPI unchanged, core up 0.1%; jobless claims 457,000 very close to expectations
The employment sub index firmed to 8.4 in March from 7.4 in February. New orders dropped to 9.3 from 22.7
Philly Fed slightly firmer than expected at 18.9
Check out Forex-Nation.com for more information. Good luck to you all!
Forexwatchman
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As is usual for a Monday, no real economic news causes no major moves as the EUR/USD consolidates it's losses after last Friday's massive sell-off. And when the markets got nothing else to talk about you fall back on your favorite whipping post Greece. It would appear even clearer than ever now that Germany would like to have nothing to do with that countries debt crisis and possibly the euro currency itself. In a Financial Times/Harris poll, almost a third of Germans polled believe Greece should be asked to leave the euro zone while it sorts out it’s finances, while some 40% feel their own country would be better off outside the single currency. Then you have Austrian and Italian Finance Ministers restating their belief that compromises are needed and a plan should be decided upon at the next EU summit. So essentially the lines in the sand have been drawn and all this will amount to an ugly sell-off period for the EUR/USD sometime down the road. In another informative article out of the UK Telegraph: German and Dutch leaders have concluded in the nick of time that they cannot defy the will of their sovereign parliaments by propping up a country that lied about its deficits, or risk court defeats by breaching the no-bail-out clause in Article 125 of the EU Treaties. Sounds like they have a great point!
The EUR/USD has been in a very narrow range all morning and should continue to abide by its current parameters until something new pops up on the news wires. I have the range parameters at 1.3545 and 1.3502. A break of either of these lines might be a signal of a new rally or sell-off but be aware that in thin market conditions like we have today, breakouts can sometimes simply be the markets way of testing the limits and not an actual signal that momentum is building in any particular direction. I would certainly place more weight on a break of support at 1.3502 than the resistance level of 1.3545. Tomorrow we should see a slightly more active market, with Existing Home Sales out at 10:00 am, but Wednesday will be where the fun is at with German Ifo Business Climate, U.S. Core Durable goods, and New Home Sales all coming out that day. So good luck to you all!
The EUR/USD has been in a very narrow range all morning and should continue to abide by its current parameters until something new pops up on the news wires. I have the range parameters at 1.3545 and 1.3502. A break of either of these lines might be a signal of a new rally or sell-off but be aware that in thin market conditions like we have today, breakouts can sometimes simply be the markets way of testing the limits and not an actual signal that momentum is building in any particular direction. I would certainly place more weight on a break of support at 1.3502 than the resistance level of 1.3545. Tomorrow we should see a slightly more active market, with Existing Home Sales out at 10:00 am, but Wednesday will be where the fun is at with German Ifo Business Climate, U.S. Core Durable goods, and New Home Sales all coming out that day. So good luck to you all!
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Overnight we finally saw the 1.3463 support level that has provided so much support for the EUR/USD give way to selling pressure and as I predicted a significant sell-off ensued. It was a quite break though, and made me wonder if the breakout was legitimate or not for quite some time. Several fundamental factors influenced this including Fitch downgraded Portugal to AA-, Industrial Orders came in much weaker than expected, -2.0% m/m, +7.0% y/y, way below median forecasts of +1.9%, +14.2% respectively, and of course there's Greece and I'll spare you those details. Even with better than expected German Ifo data, business climate index, and PMI data, the EUR/USD can no longer ignore the 800 lbs. gorilla in the room.
If you haven't placed a sell order on the EUR/USD you might be better off waiting for a retrace before entering the market because the sell-off has reached as low as 1.3333 and I would expect to see support coming back into play around the 1.3300 level with the weekly S2 just below there. I'm short on time so I will have to be brief today, but expect a better summary and analysis later on in the week as things die down for me. Good luck to you all!
If you haven't placed a sell order on the EUR/USD you might be better off waiting for a retrace before entering the market because the sell-off has reached as low as 1.3333 and I would expect to see support coming back into play around the 1.3300 level with the weekly S2 just below there. I'm short on time so I will have to be brief today, but expect a better summary and analysis later on in the week as things die down for me. Good luck to you all!
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The EUR/USD sunk lower during Asian and early European session hours thanks to deputy governor of the People's Bank of China Zhu Min, who said the Greek debt crisis was just the beginning, prompting another short-term sell-off and triggering stop-loss orders at 1.3300 that sent the euro to a 10 month low of 1.3285. As I write this the EUR/USD has dropped to 1.3277 and we could very well see this thing drop to 1.3100 which I predicted seeing happen back in February.
The Euro will more than likely remain volatile as currency markets focus on the European Union summit that begins today in Brussels with its primary goal of a solution to the lingering debt crisis in Greece. There are strong rumors circulating about an actual deal being ironed out tonight, with a mix of bilateral and EU aid. The idea that some German members are very rigid all of a sudden about adhering to the EU treaty is comical, as they seem to have been able to pick and choose what to obey and what to ignore on a daily basis in the past. The ECB bent its own rules today, extending the period in which it will accept low-rated collateral like Greek government debt as collateral. This continues to weaken confidence in the euro as such rule bending is not good for ECB's credibility, but is actually good for the Greeks as it takes some of the immediate pressure off of them. Once the deal gets made public, watch for the more “European” the deal, the better for the euro and the larger the IMF role, the worse it will be.
Also out of the euro zone:
German Gfk April consumer sentiment indicator holds steady at 3.2%, better than median forecast of 3.1
French Febraury consumer spending -1.2% m/m, much weaker than median forecast of +0.3%
Italy March business morale rises to 84.1 from downwardly revised 83.8 in February, weaker than median forecast of 84.5 but still highest read since June 2008.
In the U.S., Jobless claims fell to 442,000, which was better than forecast. The market had expected a smaller drop of 2,000 in weekly claims and in actuality US weekly jobless claims were down 14,000 in the week ending on March 20 for a total of 442,000 compared to a total of 456,000 in the week before. This doesn't appear to have had much effect on the EUR/USD as bigger matters loom over the horizon.
As it stands, the U.S. session has been very volatile and hard to predict, causing me some real frustration and retiring early on to avoid losing all my gains from the European session. I continue to see no reason to avoid selling any decent rallies especially above 1.3350. The GDP and Consumer Sentiment reports do come out tomorrow, but I would expect them to be sidelined by any real news about a deal finally arriving out of the EU Summitt (see above). Good luck to everyone!
The Euro will more than likely remain volatile as currency markets focus on the European Union summit that begins today in Brussels with its primary goal of a solution to the lingering debt crisis in Greece. There are strong rumors circulating about an actual deal being ironed out tonight, with a mix of bilateral and EU aid. The idea that some German members are very rigid all of a sudden about adhering to the EU treaty is comical, as they seem to have been able to pick and choose what to obey and what to ignore on a daily basis in the past. The ECB bent its own rules today, extending the period in which it will accept low-rated collateral like Greek government debt as collateral. This continues to weaken confidence in the euro as such rule bending is not good for ECB's credibility, but is actually good for the Greeks as it takes some of the immediate pressure off of them. Once the deal gets made public, watch for the more “European” the deal, the better for the euro and the larger the IMF role, the worse it will be.
Also out of the euro zone:
German Gfk April consumer sentiment indicator holds steady at 3.2%, better than median forecast of 3.1
French Febraury consumer spending -1.2% m/m, much weaker than median forecast of +0.3%
Italy March business morale rises to 84.1 from downwardly revised 83.8 in February, weaker than median forecast of 84.5 but still highest read since June 2008.
In the U.S., Jobless claims fell to 442,000, which was better than forecast. The market had expected a smaller drop of 2,000 in weekly claims and in actuality US weekly jobless claims were down 14,000 in the week ending on March 20 for a total of 442,000 compared to a total of 456,000 in the week before. This doesn't appear to have had much effect on the EUR/USD as bigger matters loom over the horizon.
As it stands, the U.S. session has been very volatile and hard to predict, causing me some real frustration and retiring early on to avoid losing all my gains from the European session. I continue to see no reason to avoid selling any decent rallies especially above 1.3350. The GDP and Consumer Sentiment reports do come out tomorrow, but I would expect them to be sidelined by any real news about a deal finally arriving out of the EU Summitt (see above). Good luck to everyone!
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As I stated yesterday, a deal was in the works that would finally be unvailed overnight regarding a Greek bailout. I also mentioned "Once the deal gets made public, watch for the more “European” the deal, the better for the euro and the larger the IMF role, the worse it will be." Well the details that have emerged thus far put the ratio of funding sources at 2/3rd by EU and 1/3rd by IMF. Thus a small rally has ensued today to end the trading week. The mechanism will only be triggered if Greece cannot get market funding by itself which will eventually happen one way or another. An interesting point to mention was the offical statment from the IMF where the early headlines make it sound as though they remain on the outside looking in. "The fund stands ready to consider any request for financial assistance from any member country," it says in a statement via Reuters. Did the Europeans just allot 1/3rd the cost of a bailout of Greece to the IMF with no input from the Fund itself? Some could argue that it appears that way from such a "non committal" statement as that one.
The final unveiling of a bailout plan was good news for the EUR/USD as it rallied towards the formidable area of resistance between 1.3435 and 1.3450 but came up short, stalling at 1.3422. Although the last 24 hours were worth a decent rally, I doubt very highly that such enthusiasm over such a last minute patch work of a plan will carry over into next week.
I will be posting a video of all my trade setups for this week and it will be a good one for you to see how traders setup their next trades and use different timeframes and indicators to make their decisions. Check it out over at Forex-Nation.com!
The final unveiling of a bailout plan was good news for the EUR/USD as it rallied towards the formidable area of resistance between 1.3435 and 1.3450 but came up short, stalling at 1.3422. Although the last 24 hours were worth a decent rally, I doubt very highly that such enthusiasm over such a last minute patch work of a plan will carry over into next week.
I will be posting a video of all my trade setups for this week and it will be a good one for you to see how traders setup their next trades and use different timeframes and indicators to make their decisions. Check it out over at Forex-Nation.com!
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