EUR/USD: We Are Back To EUR-Long Strategy, Eyes On U.S. CPI

GROWTHACES.COM Forex Trading Strategies

Pending Orders

EUR/USD: buy at 1.0740, if filled – target 1.1000, stop-loss 1.0615

GBP/USD: buy at 1.4900, if filled – target 1.5270, stop-loss 1.4820

USD/JPY: sell at 119.35, if filled – target 117.20, stop-loss 120.20

USD/CHF: sell at 0.9590, if filled – target 0.9360, stop-loss 0.9685

USD/CAD: sell at 1.2280, if filled – target 1.2000, stop-loss 1.2380

AUD/USD: buy at 0.7730, if filled – target 0.7950, stop-loss 0.7620

NZD/USD: buy at 0.7630, if filled – target 0.7850, stop-loss 0.7520

EUR/GBP: buy at 0.7170, if filled – target 0.7350, stop-loss 0.7110

EUR/JPY: buy at 127.40, if filled – target 130.00, stop-loss 126.30

GBP/JPY: buy at 177.20, if filled – target 179.50, stop-loss 176.20

CHF/JPY: buy at 123.75, if filled – target 126.20, stop-loss 122.60

AUD/JPY: buy at 91.80, if filled – target 94.00, stop-loss 90.80

 

EUR/USD: We Are Back To EUR-Long Strategy, Eyes On U.S. CPI

(buy at 1.0700)

• Atlanta Federal Reserve Bank president Dennis Lockhart, a voting member of the Fed’s rate-setting committee this year, said that a below-par March U.S. employment report and other factors were making the economy difficult to read. He added that he expects the signs of weakness will prove transitory, but he wants more evidence to be sure. He added he was leaning against a June interest rate hike.
• Boston Fed President Eric Rosengren (non-voting) questioned the rush to raise rates, saying that he sees inflation likely staying below 2% for several more years. In his opinion the Fed should wait longer before it starts to raise interest rates and then be ready to increase them more quickly than if it started to tighten policy soon.
• Federal Reserve Vice Chairman Stanley Fischer said the appreciation of the U.S. dollar would likely come to an end in the not too distant future. He pegged the timing of a rate rise to the question of how fast the economy will bust free from the first-quarter slowdown.
• On the other hand some policymakers, like Cleveland Fed President Loretta Mester (hawk, voting), lean strongly toward an earlier rate hike. In her opinion weak first-quarter economic data were the result of harsh weather and a dockworkers strike on the U.S. West Coast. She added that the economy is now better positioned to withstand negative shocks, so there was less risk that the Fed would need to return rates to near zero some time after it tightens policy.
• The European Central Bank reiterated it had no plans to curb its money-printing programme although it expects euro zone economic recovery to broaden and strengthen. Peter Praet, member of the Executive Board of the ECB said: “When the time comes we will not look at only inflation but at battery of indicators before deciding on tapering.”
• Thursday brought a continuation of the series of weak U.S. macroeconomic data. U.S. housing starts rose far less than expected in March and permits recorded their biggest drop since last May. Groundbreaking increased 2.0% mom to a seasonally adjusted annual pace of 926k vs. the median forecast of 1.04 million. Permits for future home construction declined 5.7% to a 1.04 million unit pace. A reading of 1.08 million was expected. The number of Americans seeking unemployment aid rose 12k last week to a seasonally adjusted 294k.
• Today’s data showed the Eurozone HICP inflation was unchanged in March vs. the preliminary estimate. Inflation amounted to -0.1% yoy vs. -0.3% yoy in February. Core inflation (excluding energy, food, alcohol and tobacco) amounted to 0.6% yoy vs. 0.7% yoy a month earlier.
• We are in trend transition now. The market reaction to the series of U.S. weaker-than-expected data suggest USD bulls were becoming frustrated with the poor performance of U.S. economy and trimming their long-USD bets. Spread between U.S. and German bonds yields is likely to narrow in the coming weeks due to possible delay of U.S. Fed hikes, so the scale of carry trade using the EUR as a funding currency may be lower.
• Our short EUR/USD position reached its stop-loss at 1.0770. Technical situation suggests taking long position – RSIs are biased up with room to run. We are looking to buy on dips and placed a buy order at 1.0700. Long-term traders are waiting for advance estimate of U.S. Q1 GDP data on April 29. A weak GDP reading may confirm that the long-term bearish trend on the EUR/USD is over.
• The market is focused on U.S. CPI reading today (12:30 GMT). Our forecasts are in line with market expectations.

Significant technical analysis’ levels:

Resistance: 1.0889 (high Apr 8), 1.0955 (high Apr 7), 1.1036 (high Apr 6)

Support: 1.0738 (hourly low Apr 17), 1.0727 (10-dma), 1.0623 (low Apr 16)

 

GBP/USD Above 1.5000 For First Time In A Month

(buy at 1.4900)

• The number of people in work in Britain jumped by its biggest amount in almost a year in the three months to February. The Office for National Statistics said the number of people in employment rose by 248k. The employment rate of 73.4% showed an unusually big jump to hit a new all-time high and unemployment rate fell to 5.6%, its lowest since July 2008.
• Total average weekly earnings in the three months to February, including bonuses, rose 1.7% yoy, slowing from 1.9% yoy in January. Excluding bonuses, pay rose by 1.8% yoy. The ONS said pay, including bonuses, rose 1.3% yoy in February alone, compared with 1.4% yoy in January. Excluding bonuses, pay rose 2.2% yoy in February, the biggest increase since May 2011. The Bank of England predicts wage growth will speed up sharply to reach 3.5% yoy by the end of this year.

• The GBP hit a four-week high against a weaker USD, helped by a strong British jobs report. The GBP has suffered in the past few weeks mainly due to uncertainty before a May 7 national election.Most polls show the Conservatives and the Labour Party neck and neck and it is hard to predict who will win and whether a stable government can be formed.
• The nearest short-term targets for the GBP/USD bulls are the 55-dma at 1.5067 and 1.5155, daily high on March 18. Technical situation is good for GBP/USD bulls – trend indicators supports further GBP/USD gains. Our strategy is to get long at 1.4900.

Significant technical analysis’ levels:

Resistance: 1.5067 (55-dma), 1.5155 (high March 18), 1.5255 (high March 6)

Support: 1.4917 (hourly low Apr 17), 1.4813 (low Apr 16), 1.4703 (low Mar 15)

 

USD/CAD: Watch Canadian CPI And Especially Retail Sales Data

(sell at 1.2280)

• The CAD rallied against the USD for a third straight session on Thursday, breaking key technical levels. On Wednesday, the loonie powered to its strongest against the USD since the Bank of Canada’s surprise interest rate cut in January. We expected a corrective move on the USD/CAD after Wednesday’s strong fall as the USD-bullish sentiment is still dominant, but our previous long reached the stop-loss level.
• U.S. and Canadian inflation figures for March and Canadian retail sales for February will be released today at 12:30 GMT. Our forecasts for CPI data are in line with market consensus. However, in our opinion Canadian retail sales data may be even more important than inflation figures. Stronger sales reading may give the CAD another boost.
• We maintain our forecast that the Bank of Canada will not cut interest rates this year. However, some market participants still expect such a move. That is why on-hold BOC policy should support the loonie. In our opinion the USD/CAD is likely to decline in the medium term and we are looking to get short on upticks for 1.2000.

Significant technical analysis’ levels:

Resistance: 1.2205 (session high Apr 17), 1.2300 (psychological level), 1.2328 (high Apr 16)

Support: 1.2100 (psychological level), 1.2064 (low January 21), 1.2000 (psychological level)