Month: July 2010

Hello there forex friends! today’s I present to you an update on US dollar index which I last posted back in June 24 (kindly see my previous entry here). As you can see, the index has retraced back to the 50% Fibonacci retracement level that I drew after reaching a high of 88.708 last June 7. Given its oversold conditions, the pair would probably head north soon. If the 50% Fib breaks, its long term uptrend line would be its immediate support. Now, if this uptrend gets broken, the index could slide down to around 82.00 or even further at 81.00. But as long as the uptrend remains intact, the index and the USD’s valuation against the other currencies would likely rise.

Remember that 57.6% of the index’s weight is composed of the euro. So if the Euro Stoxx 50 index breaks down as what I presented in my earlier post today (kindly see here), resulting to a slide in the demand for the euro as well, the USDX as a result would rise. Moreover, further declines in the US’s major indices (Nasdaq, DJIA, and S&P 500), would cause some risk aversion, leading the investors back to the safety of US bonds and therefore the USD.

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By Greg Holden – Sweden’s central bank, the Riksbank, recently stated that its growth prospects remain solid, and that its economy currently stands on firm ground. We’ve seen long-term appreciation of the SEK against its 16-nation EUR counterpart over the past few months, with a few exceptions, but the latest downturn may be due to the negative sentiment offered in the statement.

The Riksbank announced a quarter-point rate hike, from 0.25% to 0.50%, but added a note of caution that its GDP growth forecasts have been decreased substantially due to external factors. With an estimation of a major European contraction in GDP, the Swedish economy will no doubt be affected in a similar fashion.

Riksbank Governor Stefan Ingves noted that “The Swedish economy is developing strongly following the severe downturn,” But the bank’s official report also mentioned that “economic growth abroad is expected to be lower, which means that the repo rate in the longer term will not need to be raised as much as was previously assumed.”

This negative assessment of the euro zone has put some expected pressure on the currency combination for the region. From a technical perspective (seen below), we also see the SEK at a position of corrective movement. Many indicators are providing traders with strong bearish signals.

Technical Analysis

– The chart below is the EUR/SEK daily chart provided by ForexYard. The indicators used are the Stochastic Slow, the Williams Percent Range, and Fibonacci retracement lines were drawn.

– Point 1: We can see here that the price is currently testing a significant resistance line at the 23.6% Fibonacci level. Should the price be able to break through this level we could see a strong depreciation in the SEK.

– Point 2: The Stochastic Slow seems to be providing what looks like an impending bearish cross. Once this indication is provided, we should expect strong downward pressure on the pair.

– Point 3: The Williams Percent Range has peaked and recently turned downward. This indicator appears to highlight the growing level of bearish pressure being applied.

EUR/SEK – Daily Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Anton Eljwizat – The Oil prices are once again dropping, and it is currently traded around $71.75 per barrel. However, there is much technical data that supports a bullish move for today as described below. Forex traders involved with commodities like this can take advantage of this knowledge by going long on Crude Oil now, and at a great entry price!

• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI) and Williams Percent Range.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

• Point 4: The William’s Percent Range also supports the upward direction.

Crude Oil Daily Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Analysis by Finexo.com

Growing global fears over potentially stagnating in China’s and the U.S’s economic recovery as well as mounting concerns over the overall health of the Euro Zone’s banking system have pushed investors to seek refuge in safe haven currencies- mainly the Yen. The Japanese currency approached a seven month high against the greenback as forex traders flocked to the currency amid concerns that the dwindling global economic recovery will discourage central banks from withdrawing their stimulus measures. The Dollar stabilized yesterday after falling last week on a disappointing job report; however, it still has not regained its appeal as the most favored safe haven currency. Distress over the state of the U.S. economy resurfaced after Friday’s job report showed weak hiring in the private sector, fueling concerns that the world’s largest economy could be headed for a double dip recession.

EUR/USD
The Euro dropped to $1.2482 in this morning’s session, but managed pull back up above $1.2557 and is continuing towards last week’s six week high of $1.2613. With no major Euro impact news today, the main focus remains on yesterday’s comments made by European officials regarding the stress tests to be conducted on Euro zone banks. Investors are looking for proof that these tests will be conducted objectively, and that credible back-stops are put forth by policy makers in case of a fall-out. Although the EUR/USD seems to have found solid support above the 1.25 level, failure to address these rising concerns could have a negative impact on the Euro.

AUD/USD
The Aussie successfully erased all initial declines following the Australian Reserve Bank’s announcement to hold interest rates unchanged. This morning, as predicted, RBA Governor Glenn Stevens opted to hold the overnight cash rate at 4.5% for a second month in a row. With its decision to hold the interest rate unchanged, the RBA has joined central banks in the U.S., Europe and parts of Asia in keeping key interest rates unchanged to better gauge the affects of the European sovereign debt crisis on the global economic recovery. The AUD/USD touched on 0.8391, up from 0.8370 at the time of the RBA decision.

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.

The Reserve Bank of Australia (RBA) left its cash rate steady at 4.50% as expected, saying the global economy had continued to expand, albeit unevenly, with growth in Asia very strong and signs of China moderating to a more sustainable rate.

The EUR and Australian dollar (AUD) rebounded from early losses against the dollar and yen on Tuesday after a statement by the RBA helped dispel some gloom about the economic outlook, which led to short-covering. The Aussie stood 0.4% higher on the day at $0.8437 after earlier dropping to test a support line at $0.8315, a low point set last week.

Against the yen it climbed 0.6% on the day at 74.08 after sliding as far as 72.73. Global risk appetite has taken a beating in the past few weeks on growing worries about the health of the euro zone’s banking system, a slowdown in China and risks of a double-dip recession in the United States.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Good Tuesday everyone! On today’s canvas is the daily chart of the Euro Stoxx 50. for those who does not know, the Euro Stoxx 50 is a stock index of the 50 biggest blue-chip companies in the euro zone. Like the Dow of the US, the Stoxx 50 can also be used as a leading barometer of the euro zone’s economic health. Unlike the DAX (kindly see my colleague’s earlier post here), the Stoxx 50 is a couple of steps away from breaking down already. Its price action is actually very similar to FTSE, which my partner also posted earlier today (kindly check it here), since it is also showing a head and shoulders formation. But as mentioned, the Stoxx has not breached its neckline yet unlike the FTSE. If and when it breaks below the 2,200 level and the neckline, it could plunged all the way down 1,850. In fact, a couple of indicators suggest that it could indeed do so. First, the RSI has fallen below 50, suggesting that the index’s downward momentum is increasing. Second, the 50-day moving average has also crossed over below the 200-day MA, indicating a likely move downwards. Moreover, the MACD has also recently turned negative. On the upside, if buying interest returns and the neckline holds, the index could once again aim at least for the peak of its right shoulder. With the index now trading below the 50 and 200 MAs, however, it would need a lot of buying support to push itself upwards again.

With all the debt concerns that has been happening around the euro zone, particularly in Greece, it is understandable why a lot of investors have been losing faith in investing in euro stocks and even bonds. Just recently, Spain was also placed under the watch list by the international ratings agency, Moody’s. Several countries including Greece, Portugal, and Spain have their sovereign debt already downgraded. If this contagion spreads among the other member countries, investors will  all the more pull out their money from the Europe. And it is not as if the euro zone has been growing on a big scale as well. the euro zone only grew by a meager 0.2% during the first quarter of this year. With a drop in the retail sales in the months following and a continued lose of investor confidence, its growth for the second quarter will likewise be weak as well.

So how will a drop in equity demand affect the euro? Remember that most of the investments in the euro zone, the equities and bonds, are priced in euros. One has to exchange their money into euros first before being able to invest in these instruments. A slide in equities due to a lack of demand, therefore, will also cause a dip in the demand for the currency. In short, if and when the euro stoxx index sinks, the valuation of the euro currency would likely decline as well.

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Source: ForexYard

The EUR dropped some of its gains against the dollar and the yen in thin trading as U.S. markets were closed yesterday. A lack of high impact data on the economic calendar kept currencies in a tight range. However, this should change today with influential economic data expected to be released from the U.S. and European interest rates due out.

Economic News

USD – Strong Economic Data Needed to Prevent Double Dip Recession

With U.S. markets closed for the 4th of July holiday, many of the major players in the currency markets were away from their trading desks. Low liquidity prevailed throughout the day as the dollar failed to make any significant move.

The EUR/USD dropped to a low of 1.2521 after trading as high as 1.2565. The USD/JPY was unchanged at 87.88. The GBP/USD fell to 1.5163 before closing at 1.5180.

The dollar was able to hold modest gains despite Friday’s weaker than expected unemployment data. The U.S. reported Non-Farm Employment losses of 125k. Market expectations were for a loss of 110k jobs.

It appears the market is beginning to shift its focus from the fiscal issues in the euro zone to the struggling U.S. economic recovery. Economists worry of a potential double dip recession for the U.S. economy and a ballooning U.S. deficit. Today’s data release of the ISM Non-Manufacturing PMI at 14:00 GMT may help to support or dispel the double dip theory.

The next support and resistance lines for the EUR/USD rest at 1.2470 and 1.2650 respectively. This resistance level also coincides with a 23.6% retracement level from the long term bearish trend that began in December of 2009.

EUR – Traders Eye EU Interest Rate Decision

Yesterday’s European trading session was just as quiet as the New York trading session. With the U.S. out on holiday, the major currencies were caught in tight trading ranges as major players in the FX market were away from their desks. Today’s trading will prove to be more volatile with the institutional desks returning to full staff.

The major event traders are eying for this week is Thursday’s European Central Bank (ECB) interest rate announcement. Most economists expect the ECB to hold rates steady at 1.00% but are looking for upbeat comments from ECB President Jean-Claude Trichet concerning the management of the European debt crisis along with future direction of EU monetary policy.

The ECB continues to purchase EU government bonds, particularly those of Greece that are the most illiquid securities. The purchases of the government debentures are slowly increasing the money supply in the euro zone. This is raising further concerns over the euro’s long term valuation versus the dollar and the pound.

JPY – Aussie Interest Rate Forecasted to Hold Steady

Today’s Asian trading session will be highlighted by the release of the Australian Cash Rate followed by the accompanying statement from the Reserve Bank of Australia (RBA). Economists forecast the RBA to hold interest rates steady at 4.50%. Previously the RBA took a pause from the last 6 consecutive interest rate increases. The interest rate decision will be released at 04:30 GMT followed by comments from RBA Chief Glenn Stevens.

Further economic data from Australia will be released on Thursday in the form of employment data that is forecasted to deteriorate from the previous data release.

The Aussie dollar has slumped recently with the falling prices of commodities. This is despite recent dollar weakness in most of the major pairs. Continued downward movement may be seen in the AUD/USD with the next support lines resting at 0.8260 and 0.8070. Should the RBA surprise the market with an interest rate hike, the pair could rise to its next resistance level at 0.8570.

Crude Oil – Double Dip Fears Weigh on Spot Crude Oil Trading

Fears of a double dip recession are causing spot crude oil prices to decline as the price of the commodity has fallen in the early morning hours of the Japanese trading session.

Spot crud oil prices are currently trading at $71.50, the lowest price the commodity has seen since the first week of June.

Traders are concerned that another downturn in the U.S. economy could slow future demand for crude oil. As such, spot crude oil prices have fallen almost 10% over the past 7 trading days. This is despite a slumping dollar which is down 3% versus the euro. Typically the price of spot crude oil rises when the dollar weakens as this allows holders of foreign currencies to buy crude oil cheaper.

Positive economic data may help to lift the price of spot crude oil. Today’s release of the U.S. ISM Non-Manufacturing PMI at 14:00 GMT could support a lift in prices to the resistance level of 72.50.

Technical News

EUR/USD

The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bearish reversal is imminent. . Going short with tight stops might be a wise choice.

GBP/USD

There is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. The downward direction on the hourly chart’s Momentum oscillator also supports this notion. Going short with tight stops might be the right strategy today.

USD/JPY

The USD/JPY cross has experienced a bearish trend for the past month. However, it seems that this trend may be coming to an end. The RSI of the daily chart shows the pair floating in the oversold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.

USD/CHF

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the hourly chart’s Slow Stochastic. Going long with tight stops may turn out to pay off today.

The Wild Card

Crude oil

Crude oil prices are once again dropping, and it is currently traded around $71.85 a barrel. And now, the daily chart’s Slow Stochastic is giving bullish signals, indicating that oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By eToro – The Euro edge higher on light volume due to the US independence holiday.  The EUR/USD should continue to grind higher toward resistance at 1.2670. Click here to read the full daily Review

Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

USDCHF might be forming a cycle bottom at 1.0578 level on 4-hour chart. Key resistance is at the upper border of the falling price channel, now at 1.0685, a clear break above the channel resistance could confirm the cycle bottom, then further rise could be seen to 1.0750-1.0800 area. As long as 1.0800 level holds, the bounce from 1.0578 is treated as consolidation of downtrend from 1.1730, one more fall to 1.0450 is still possible.

Daily Forex Forecast

By Anton Eljwizat – The EUR rallied to a five-week high above 1.25 last week, while the dollar fell broadly after disappointing data heightened worries the U.S. economic recovery is stalling.

Concerns about euro zone debt and liquidity problems eased further on Thursday after Spain successfully sold 3.5 billion EUR of a five-year bond, adding to positive sentiment a day after European banks borrowed less money than expected from a European Central Bank (ECB) tender.

Gains in the single European currency accelerated after the EUR broke key technical resistance levels around 1.25.

As for the week ahead, the most significant news publication seems to be the Minimum Bid Rate, which is the euro zone’s interest rate announcement for July. Analysts expect the ECB to leave rates at 1.00%; however, any rate manipulations are likely to have a sharp impact on the market. Traders should also follow every publication regarding the European debt crisis as this issue continues to be the main reason for the weak Euro.

Technical Analysis

The EUR has dropped significantly versus the CHF in the past few months, and it is currently traded around 133.20. And now, as evident in the data below, the weekly chart is giving bullish signals, indicating that EUR/CHF pair might go up.

– Below is the weekly chart of the EUR/CHF currency pair
– The technical indicators that are used are the Relative Strength Index (RSI), and Slow Stochastic.
– Point 1: The Slow Stochastic indicates an impending bullish cross, signaling that the next move may be in an upward direction.
– Point 2: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

EUR/CHF – Weekly Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.