Euro to fall at 1.4279

Economic Alarms

Mixed Performance of Euro zone and Satisfied data from US economy last week has let Euro to take satway Trend, where higher fuel price is a bitter experience for the Global Economic Growth.This week data from Euro would release saying Business conditions are shivering but still expecting for a better future, US got improvement in housing sector which is making greenish in consumer sentiment with good forecast as last Quarter GDP increased and forecast is higher.


Heads n Shoulders.

In weekly chart the clear "Head n Shoulder" would be interesting Trend. Before Euro rise back to 1.5 ish, it would fall to 1.4513 followed by 1.4279.

Taking look in the chart below:

Trend (Satway) with bullish Shadow.

13 days self adjust RSI at Over Sold Area.

Trading Below Pivot 1.4750


R3 = 1.5395 (STRONG)
R2 = 1.4906 (MEDIUM)
R1 = 1.4827 (MEDIUM)

S1 = 1.4673 (STRONG)
S2 = 1.4504 (MEDIUM)
S3 = 1.4279 (MEDIUM)

Opec's jealous for high Oil Prices would Find a support for Euro to not fall. where Supportive US data will keep euro in "Sell" mode for Short Time.

Best Buy "Bet" Observed at 1.4444. the risk observation is 165 pips.

Fundamentals are also considered to confirm the Trend.....

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Technicals are likely to trump the news this week

Because the markets are largely sitting on key support and resistance levels right now it makes technicals much more important and critical than some of the fundamentals we may normally be interested in. Market sentiment at these levels can be extremely volatile so I am watching those announcements that are likely to have the biggest impact on forex traders in the short term.

From that perspective it is tempting to get a little over focused on the USD, and with GDP and FOMC releases due this week that temptation is somewhat justified. Traders in general have been increasing their outlook for growth in the US recently as evidenced by the trend in equities. If the GDP prelim. numbers or consumer confidence or even the FOMC minutes appear soft we could get a rejection at resistance on the USD and therefore a continued reversal across the majors. Check out the video for our take on the rest of the week's news and what we think will matter most.

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Forex News | Dollar VS Oil

Dollar rallies to one-month high on Oil drop and Confidence rise

News and Events:

The Dollar soared to a one-month high against a basket of currencies on Tuesday, benefiting from a steep drop in oil prices and an unexpected rise in US consumer confidence.

Analysts said Merrill Lynch's announcement late on Monday of yet another write-down and capital-raising exercise also helped support the Dollar, as they raised hopes the turning point in the yearlong credit crisis was close.

Oil fell as low as 120.42 yesterday before ending only $2.5 down at 122.19. A decline in oil prices tends to benefit the Dollar, as it eases some of the growth concerns.

Second-quarter US GDP on Thursday and Friday's US non-farm payrolls figures for July will be the market's main focus later this week.

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The Forex Market Overview

The Forex Market Overview 9 July 2008

The Usd was weaker in Asian session as news that Iran had tested 9 surface to surface missiles spooked the market. Eurusd trade up from 1.5660 to 1.5728 while UsdJpy slipped from 107.50 to 107.02. Risk sentiment had already been on shaky ground after the Lehman report on Fannie and Freddie and with rising tensions in the region the missile test (actually facts were a little vague) had traders quick to respond. Crude prices rallied back above the $137.00bll mark. Reassurance from Fed Chairman Ben Bernanke that the central bank will keep assisting financial markets in these turbulent times also helped both the Dollar and equities . In Mr. Bernankes prepared remarks yesterday stating that ``The Federal Reserve is strongly committed'' to financial stability and is ``considering several options, including extending the duration of our facilities for primary dealers beyond year-end,'' did help relieve some pressure.

US Stocks were sharply higher Tuesday, led by banks and transports as oil and natural gas prices retreated. The major indexes finished around their best levels for the session. Asian markets are trading higher this morning on the strength of Wall Street's finish overnight. The Shanghai stocks rose as investors plunge on bargain buying amid the steep recent losses and also on speculation that the Chinese government might need to provide support to the market. USD slipped in Asia after it was reported that Iran had test fired nine long and medium range missiles which could possibly strike as far as Israel. Gold closed lower, pressured by a strong dollar and falling crude prices ; the most active Aug '08 contract down $5.50 to $923.30. Sep '08 silver +3.5 ¢ at $17.955/oz.

In Japan machinery orders for May came in much better than expected at 10.4% vs. 5.5% exp while Core orders also strengthened, rising 5.1% vs. 3.4% exp. However while the BoJ expectations (and ours) has continued economic deterioration well entrenched, with markets trading on risk we could see short periods of Jpy strength (but we see those as opportunity to build short Jpy positions).

In Australia consumer sentiment fell -6.7% which was much weaker the Junes -2.0% reading. The number is at its lowest level since 1992 and doesn’t bode well for speculators expecting the RBA to continue higher (and maintain its neutral stance). AudUsd trade down from 0.9549 to 0.9480 on the disappointing data. We will be watching for a sell off in the commodities caused by the global slowdowns and mounting evidence that the RBA will need to shift towards a growth bias before we begin to look for opportunities to sell Aud.

In the UK consumer confidence in June dropped to 61 its lowest since the survey was launched in 2004. In addition the expectations index on the labor market & economy also fell to a new low of 64. Just more evidence that the BoE will need to address the growth side of the story sooner then later.

In European session today, markets will be watching Eurozone GDP (q1 final release) and UK external trade. Euro-zone GDP in Q1will give us a better suggestion of the composition of growth by income while markets will be watching for price change on import prices rather then change in deficit.

Daily Forex Pivot Points
AUDUSD
R 3: 0.9670
R 2: 0.9642
R 1: 0.9565
CURRENT: 0.9501
S 1: 0.9477
S 2: 0.9460
S 3: 0.9409

EURJPY
R 3: 169.45
R 2: 169.15
R 1: 168.62
CURRENT: 168.62
S 1: 167.13
S 2: 166.10
S 3: 166.00

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3635
S 1: 1.3565
S 2: 1.3506
S 3: 1.3470

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Forex Market Overview

Forex Market Overview 25 June 2008

FX markets were unusually calm in the Asian session as markets await the news from the FOMC meeting. EurUsd was stuck in a 10 pip range for most of the session trading from 1.5565 to 1.5577 before breaking to the downside as Europe prepared to open. UsdJpy provided little excitement ranging from 107.67 to 107.94 despite trade data showing that exports jumped a whopping 3.7%. GBP traded between 1.9695 and 1.9712 as it followed the rest of the currencies against the USD. Carry trades eased slightly from their elevated levels with EurJpy falling to 167.64 & AudJpy 102.90.

Stocks ended up lower after a choppy session Tuesday in the wake of consumer confidence data that fell to a 16 month low in June and after UBS’s profit warning. Asian markets are mostly trading down this morning due to a fall in metal prices that weighed heavily on the mining companies. Japanese stocks were lower on the back of default concerns around developer and consumer-finance companies. Oil prices closed higher, but below the day’s peak of near $139, ahead of today’s rate announcement and US petroleum inventory data. The Aug '08 contract is up $0.26 to $137.00. Gold closed with gains, as weakness in the dollar underpinned demand for the precious metal; the most active Aug '08 contract up $4.40 to $891.60 and Sep '08 silver -15.7 ¢ at $16.739/oz.

In New Zealand The Westpac consumer confidence index fell sharply from 96.5 to 81.7 and is just above the extreme lows recorded in the early 90's recession. The RBNZ was looking for more evidence of weakness in the household sector and this clearly helps build a case. We expect the central bank to begin cutting in the fall.

If you haven’t heard already the FOMC will be announcing their rate decisions and releasing an accompanying statement later today. We are inline with market expectation and believe the Fed will hold rates at 2.00%. We expect some slight changes in the accompanying statement specifically regarding inflation and inflation expectations, however we are less hawkish then most. On the growth side, better then expected retail sales, inventories and external trade indicates that GDP will just miss contracting in Q2, while both ISM manufacturing and non-Manu have strengthened in recent months. However, we expect the downside risk to the US economy, which has been highlighted by a string of soft housing, consumer confidence data, and the decline in households’ real incomes and wealth shrinking to influence the Fed decision (we are expecting 1-2 members to vote for a hike). Overall we expect the market to be slightly disappointed by the dovish tone and lack of willingness to pre commit to any rate hike near term. Should our base scenario prove correct we should see some Usd weakness as the 60bp already priced in for 2008 looks over done.

However, it should be noted that recently The ECB has been trying to pour cold water on recent comments that there will be a more aggressive rate increasing policy by saying they have not spoken about a series of rate hikes in the Eurozone. Basically it seems that policy makers at the ECB are concerned that investors have jumped the gun and that the latest data could make it harder to raise rates that previously thought.

In addition to the FOMC, the Norge Bank (Poland Central bank is also releasing and are expect to raise 25bp to 6.00%) will also announce rates and publish its monetary policy report today. Risk is slightly skewed to a hold, but with 40% of economists that were polled looking for a hike of 25bp this will be a close one to call. We are expected a 25bp hike in the next 6 months, however this will not be the meeting. We expect the MPR to show inflation projection being revised upward which keep the NOK supported.

Daily Forex Pivot Point
AUDUSD
R 3: 0.9655
R 2: 0.9648
R 1: 0.9588
CURRENT: 0.9555
S 1: 0.9490
S 2: 0.9449
S 3: 0.9405

EURJPY
R 3: 170.00
R 2: 169.10
R 1: 168.39
CURRENT: 212.36
S 1: 166.78
S 2: 166.00
S 3: 165.53

USDSGD
R 3: 1.3850
R 2: 1.3827
R 1: 1.3730
CURRENT: 1.3681
S 1: 1.3634
S 2: 1.3580
S 3: 1.3554

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