Technical News

Euro dollar is showing strength and looking to break, despite growing uncertainty about Greece and numerous observations the the exchange rate is too high. Today we have important data towards the rate decision. Here's a quick update on technicals, fundamentals and what's going on in the markets. EUR/USD Technicals Asian session: The session was rather active with the pair gradually climbing up from support and continuing further up. It already reached 1.4666 before falling back. Current range 1.4580 - 1.4650. Further levels in both directions: Below 1.4580, 1.4520, 1.4450, 1.4375, 1.4282 1.4160, 1.4030, 1.3950. Above:  1.4650, 1.47, 1.4775, 1.4882, 1.4940. 1.4580 serves only as weak support. Much more serious support is at 1.4450. 1.4882 is the big hurdle on top. Euro/Dollar sliding in range  - click on the graph to enlarge. EUR/USD Fundamentals 9:00 European Retail Sales. Exp. +0.4%. 10:00 German Factory Orders. Exp. +2.1%. 14:00 IBD/TIPP Economic Optimism. Exp. 42.1 points. 19:00 US Consumer Credit. Exp. 5.2 billion. 19:45 Ben Bernanke talks. For more events later in the week, see the Euro to dollar forecast EUR/USD Sentiment Calls for...

Forex The Euro (1.41) fell on Friday despite a better than expected EU GDP release (Q1 up 0.8% q/q, against expected +0.6%). A low of 1.4050 was seen so far today. USDJPY (80.97) fell to 80.34 on Friday, but rose through again. USDCHF (0.8926) rose from Friday's low of 0.8798. The Cable (1.6174) continues to lose and hit a low of 1.6146 on Friday. The Aussie (1.0552) has also lost ground, seeing a low of 1.0521 on Friday and 1.0525 so far today. Overall, the Dollar Index (75.87) has done well all through last week and could strengthen a little more this week. Markets It was disappointing on Friday that the Dow (12595.75, -0.79%) was unable to build on its gains from Thursday. There is some hope for Bulls because there is support at 12545 is holding. Things might turn pretty bearish if that breaks. A-Pac indices are trade flat to negative today, ranging between +0.14% (New Zealand) and -1.05% (Australia). Nikkei (9,587.85) is down 0.63%....

Equities The Nikkei led Asian markets higher, rallying 1.9% to 9768, as investors returned to buying following the previous day’s earthquake. China’s Shanghai Composite gained .7% and the Hang Seng rose .5%. The Australian government rejected an $8 billion offer from the Singapore Exchange to buy the ASX group, citing sovereignty issues. The country’s main index, the ASX 200, rose .7%. In Europe, miners led shares higher, as base metal prices jumped. The FTSE and CAC40 both climbed .8%, as gold hit a new record high , while copper and silver posted strong gains. US stock eased, with the Dow closing down 29 points, and the Nasdaq down .6%. US lawmakers finally reached a budget deal late Friday night, preventing a government shutdown. The deal will cut $40 billion from this year’s budget and sets the stage for a broader showdown later in the year. Airlines tumbled, as soaring oil prices hurt the industry. United Continental fell 5.8%, JetBlue dropped 4.25% and Delta sank...

The US Dollar continued to get hammered on Friday in a relatively quiet trading. No explosive moves that I could see, but the Aussie made another all time high while the Euro gained as well. To put the USD weakness in perspective, it even dropped in relation to Japanese Yen. That is probably only temporary, the sell off in the JPY will likely resume, but it should illustrate just how precarious the USD has become. We can blame it on the discord regarding the budget, however, now that an “agreement” was reached, it is still unclear if that will help the Dollar next week. Probably very little long term impact, since the spending “cuts” were cosmetic at best, accounting for, what, 3-4% of one year deficit? Until we start reducing these imbalances by 30-40%, all this is a lip service and not a serious attempt to create a balanced budget. This minor resurgence in the Yen put a little kink in...

Coming Up Today (All Times GMT) JPY - BoJ Monetary Policy Statement (Tentative) GBP - MPC Rate Statement (11:00) EUR - ECB Rate Announcement (11:45) & Press Conference (12:30) CAD - Building Permits (12:30) USD - Weekly Jobless Claims (12:30) GAS - Weekly Storage Report (14:30)   USDJPY Expectations of widening interest rate differentials between improving economies and Japan are reviving yen-funded carry trades. In the aftermath of the tsunami, investors are taking advantage of the BoJ zero interest policy to sell yen against higher-yielding currencies (AUD, NZD, CAD, EUR, CHF). In this context, all JPY crosses are moving in a bullish channel, a trend that is likely to continue if the Bank of Japan increases its lending facilities to avoid downward pressure on the economy. USDJPY Support/Resistance: 84.70/85.90 EURJPY Support/Resistance: 121.50/123.00 GBPJPY Support/Resistance: 138.25/140.00 EURUSD Yesterday, the EURUSD pair was almost unmoved by Portugal’s request to access the emergency lending program of the European bail-out fund. Currently, all eyes are waiting for today’s ECB rate announcement (11:00 GMT) with one question on everyone’s...

The Reserve Bank of Australia held its policy meeting on Tuesday. Pretty much as expected, the banchmark interest rate was left unchanged at 4.75%. For all the talk about inflation and the supposed pressure the central bank is under to take action, the RBA has not done anything since November last year. So, after a couple of hikes in 2010, it has been almost half a year of inaction. Perhaps the economy Down Under is not as red-hot as some sources would lead us to believe. Interestingly, the Australian Dollar has not responded almost at all to the announcement. But it had been falling slowly for several hour before, since making the all time high against the US Dollar at 1.0416, evetually dropping to as low as 1.0287. In the end, the Japanese Yen had a more interesting day, I think, getting progressively weaker, with a sudden acceleration very late in the day. Chances are that the JPY has turned for good...

EUR/USD The EUR/USD is still stuck in a consolidation area, and seems to be waiting for a trigger to run. You can see that we are consolidating between three levels. On the 4 hour chart, it is clearer as to where we are battling. The 1.3750 area has served as resistance, even though we popped above it for a short time recently. It should be noted that the price didn’t hold for long, and it was more like a “false breakout”. The 1.3450 area has been significant support, and there is even a third area to pay attention to now – the 1.36 handle. As such, it appears that we are going to go back and forth between these three levels. The 4 hour chart is probably the way to track this pair as we fight between these three areas. USD/CAD The daily bar has closed in a hammer formation, a very bullish sign. Add to that the fact that 0.98 has been very...

EUR/USD On the weekly chart, we have been pointing out the several shooting stars that are forming in the pair. This shows that any serious attempt at appreciation in the EUR/USD has failed. It appears that we are still stuck in the range. We have dipped below the 1.35 level, only to find the 1.34 line major defense as well. This gives up a support range of 100 pips between the 1.34 and 1.35 levels. Anything that is going to present long-term shorting opportunities will have to be under the 1.34 level. USD/JPY We have had a break of the 0.83 handle a couple of days ago, and formed a shooting star. Since then, we have broken above it, which is a very bullish sign. Looking at the charts now, it appears that the next bullish target will be the recent highs in the 84.50 area. Anything closing below 0.83 would cause major concern, as it appears very supportive. EUR/JPY Looking at this chart on the...

EUR/USD Looking at the EUR/USD today, we see the price has fallen fairly hard over the last 24 hours. On Monday, we formed a hammer at the 1.35 level, suggesting strong support. On Tuesday, we saw a shooting star form, which was bearish. On Wednesday we broke out, and on Thursday, we struggled as resistance has been very heavy between 1.38 and 1.40. On the weekly chart, it appears we may form another shooting star as well. This makes three in a row, and is very bearish. However, until we break below the 1.35 level and hold – it appears this pair is going to be stuck in a squeeze of sorts. AUD/USD We suggested that the Aussie was losing strength yesterday as it has drifted back down from the 1.01-1.02 resistance level. Thursday’s bar turned out to prove us correct and we have now found the parity level to be supportive. It appears that the support levels far outweigh the resistance. On the 4...

Following with the pattern of growing USD strength, it appears the Turkish lira can be added to the list. The USD/TRY has risen 0.5% over the past few days following a move by Ankara to curb liquidity by raising bank reserve requirements from 5.5% to 6.0%. Bank lending in Turkey has grown at an average of 0.8% per week since January and there is a growing concern that banks may be overextending themselves in an effort to fuel growth. The result of this latest move by Turkey’s central bank was a sharp depreciation of the lira against the dollar. The pair has moved from a price of 1.4008 just two weeks ago, upward to a current price of 1.4616. We can see on the chart below that the pair reached a significant support level near 1.4012, but failed to breach. The RSI and Stochastic (slow) both recently displayed bullish indicators and are currently both moving in a bullish direction, which suggests growing...