InvestMacro FX

EUR/USD

Remains in a near-term uptrend from 1.2643, with today’s attempt to retest 1.2920 upper range limit, running out of steam at 1.2908, ahead of shallow correction.

Clearance of 1.2920/31 resistance zone is needed to resume recovery and focus 1.2960/1.3049, Fibonacci levels, otherwise, the recent structure remains negative for test of lower range limits at 1.2643/24.

Res: 1.2908, 1.2920, 1.2931, 1.2960

Sup: 1.2823, 1.2792, 1.2765, 1.2745

GBP/USD

Continues to trade within an hourly falling channel, with scope set for retest of channel support, currently near 1.5250. Multi-week structure also suggests the end of a complex corrective phase off 1.3500. Regain of 1.5486, however, would ease bear pressure.

Res: 1.5464, 1.5492, 1.5532, 1.5596

Sup: 1.5343, 1.5295, 1.5250, 1.5235

USD/JPY

Yesterday’s upside rejection at 84.37 has triggered fresh weakness. Channel loss triggered a drop to breach 83.25, trendline drawn off 83.58, 24 Aug low. This now opens 82.98/30, with extension to 81.88, May 1995 low seen short-term. Upside, 83.73/83 now caps while 84.37 becomes key near-term resistance.

Res: 83.83, 84.17, 84.47, 84.62

Sup: 82.98, 82.30, 81.88, 81.50

USD/CHF

Rejection at 1.0276, near 38.2% of 1.0630/1.0060 decline, confirmed the underlying bear structure. Loss of critical support at 1.0065/60, multi year bear continuation pivot, would project a significant weakness longer-term, with 0.9916 seen first. Upside, 1.0071 caps for now.

Res: 1.0071, 1.0097, 1.0132, 1.0170

Sup: 0.9980, 0.9960, 0.9949, 0.9916

Welcome to another day of FX trading! In today’s fx feature is the weekly chart of the USDCHF. As you can see, the pair has been losing a lot ground for several weeks now. After hitting a high of 1.1731 last May 31, it has slid since then. In fact, it had already touched the parity level early today. Still, previous supports around the 1.0000 psychological level have kept the price from falling any further. If if the 1.0000 marker gets breached, the pair could revisit its 1-year low at 0.9916. A break of this low could send it towards the pair’s all time low at 0.9635. But with investors protecting the price at 1.0000 and an oversold condition, the pair could, however, stage a rally.

Renewed confidence in the global markets have weakened the dollar’s valuation against its peers as of late. Both the DJIA and the broader S&P 500 have again logged in some beautiful gains yesterday, rising by 0.78% and 1.11%, respectively. Yesterday’s jump in confidence which was reflected in the rise in the equities markets was because of the Basel III agreement that was concluded yesterday. The Basel III is an international regulatory code that requires banks to raise their common equity to 4.5% from 2.0%. This equity will be used by the banks as buffer in case they encounter liquidity problems from say investor withdrawals and the like. In the East, China’s handsome industrial production (13.9%) and retail sales (18.2%) growth further supported the market’s optimism.

The highlight of this week for Switzerland is the Swiss National Bank’s monetary policy decision on Thursday (September 16). The SNB is expected to keep its interest rate unchanged at 0.25%. The bank, though, is very notorious in intervening in the fx market to prevent the Swissy appreciation. They do so because a higher Swissy negatively impacts their export industry. With the Swissy trading at an all-time high against the euro and flirting with historical highs versus the Us dollar, the SNB could indeed meddle in the market. If it does, then a sudden spike against the Swiss franc could occur. Nonetheless, even if the SNB intervenes, its effect would just be temporary. Market sentiment is still stronger and as long as optimism remains, the Swissy could strengthen still.

More on LaidTrades.com …

By Russell Glaser – The EUR/USD is caught in a range trading environment and has headed lower from the resistance level that forms a consolidation pattern beginning in mid-August. Traders should be looking to short the EUR/USD now that the upward movement has ceased following negative German economic data.

As the pair’s trend has ceased and volatility has fallen sharply, an ascending triangle pattern has formed on the daily chart. The left leg of the triangle is a horizontal line above the highs of the consolidation pattern and the right leg is formed from rising lows.

The EUR/USD made a false breakout to the downside previously on September 9th, trapping many traders who tried to short the pair prematurely. However, an opportunity exists to short the pair while still in the consolidation pattern.

Triggering today’s move lower was the release of negative economic data from Europe. The German ZEW Economic Sentiment report came in far below the market’s expectations. The release for the month of August was -4.3. Economists expected the survey to register a reading of 14.9. This is a sharp drop off from July’s numbers where the report was released to a positive 15.8.

Worries that this could be the beginning of an economic slowdown in both Germany and the European Union prompted selling of the EUR/USD. Germany is the EU’s largest economy and this adds to fears of continued weak economic activity in the US which contribute to selling of the euro and buying of the dollar.

Following today’s bearish economic data from Europe, an opportunity may be exist to short the EUR/USD now that the price has bounced off of the upper boundary line of the triangle at the resistance level at 1.2920.

Traders can enter short with a first target at the lower boundary line of the ascending triangle pattern. A limit order can be placed above the support of 1.2680. Also a protective stop should be placed above the resistance line of 1.2920 to defend against a breakout to the long side should the pair reverse and turn upwards.

More conservative traders may not want to trade inside the triangle pattern and will prefer to wait for a breakout of the triangle pattern to initiate a trade. If so it may be worthwhile to be patient and to wait for a breach below 50% Fibonacci retracement level at 1.2600 and the bottom of the triangle pattern at 1.2585.

Further support is found in a range between the mid-June high of 1.2465 and the 61.8% retracement level of the bullish correction for the pair at 1.2430.

Forex Market Analysis provided by ForexYard.

© 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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar weakened against all of the G10 currencies as risk-seeking continued with equities up 1% and oil back above $77. Treasury yields also came down as investors digested the less stringent than expected Basel II negotiations and the decent Chinese economic data. The only data release of the day was the monthly budget statement, which showed a deficit for the 23rd consecutive month, the longest stretch on record. Retail sales data will help show how the consumer has weathered the recent soft patch in data. We are expecting a moderate rise in August, though some tepid auto sales could weigh on the headline figure.

EUR

The euro benefited from the renewed risk-seeking but the German ZEW survey data will be another important step to see if softer times are ahead for the Eurozone. Consensus estimates are for a dip in the economic sentiment reading but an increase to 50.0 for the current situation.
ECB President Trichet said what was decided on Basel III would not hamper the global recovery and said he saw no deflation risk in advanced economies for now. Trichet did not offer any comments on monetary policy.
JPY

USDJPY remained heavy ahead of the DPJ leadership election as investors put some more money to work across asset classes. Press reports suggest the race is still too close to call and given recent price action, there appears more scope for an upside USDJPY surprise should Ozawa win given that it would inject uncertainty into the future policies of the DPJ and also given his outspoken support of FX intervention. Results are expected around 0600GMT.
GBP

Investors have been concerned about elevated inflation readings but BoE MPC members believe the data should start to come back down. We should see slight easing in the y/y figures for both CPI and RPI, which could temper investor expectations for the BoE at this stage in the recovery.

TECHNICAL OUTLOOK

EURUSD BEARISH Violation of 1.2588 and 1.2434 thereafter is required for the confirmation of bearish trend. Resistance holds at 1.2919.
USDJPY BEARISH Trend is bearish; there is little support till 79.75 key level. Short-term resistance is defined at 85.23.
GBPUSD BEARISH Stalled above 1.5297; a break here would expose 1.5125/15 ahead of 1.4906. Near-term resistance lies at 1.5565 ahead of 1.5731.
USDCHF BEARISH Focus is on the downside with initial support lying at 1.0061 ahead of 0.9918. Near-term resistance comes in at 1.0278 ahead of 1.0466.
AUDUSD BULLISH Bullish pressure targets 0.9389; break of the level would favour another run towards 0.9406. Near-term support is at 0.9171 ahead of 0.9055.
USDCAD NEUTRAL 1.0673 and 1.0108 define the next bull and bear triggers respectively.
EURCHF BEARISH Sell-off from 1.3924 found support at 1.2766; break of the level would expose 1.2626 ahead of 1.2403. Resistance at 1.3163.
EURGBP NEUTRAL Model is neutral; 0.8390 and 0.8142 mark key near-term directional triggers. 0.8068 defines a key support level.
EURJPY BEARISH Focus is maintained on 105.44, next support at 100 psychological level. Resistance is at 111.19.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

EUR/USD

Extends recovery off 1.2643 higher low, to attempt at 1.2920, the upper boundary of the recent 1.2624/1.2920 range. Break higher is required to resume the near-term recovery and focus 1.2960/1.3049, Fibonacci levels, otherwise, the recent structure remains negative for test of 1.2643/24.

Res: 1.2920, 1.2931, 1.2960, 1.3000

Sup: 1.2843, 1.2823, 1.2792, 1.2775

GBP/USD

Continues to trade within an hourly falling channel, with scope set for retest of channel support, currently near 1.5250. Multi-week structure also suggests the end of a complex corrective phase off 1.3500. Regain of 1.5486, however, would ease bear pressure.

Res: 1.5464, 1.5492, 1.5532, 1.5596

Sup: 1.5343, 1.5295, 1.5250, 1.5235

USD/JPY

Corrective phase off 83.33 stalled at 84.37 yesterday, with reversal followed. Channel loss triggered a drop to breach 83.25, trendline drawn off 83.58, 24 Aug low. This now opens 81.88, May 1995 low short-term, with initial targets at 82.98/30. Upside, 83.73/83 now caps while 84.37 becomes key near-term resistance.

Res: 83.83, 84.17, 84.47, 84.62

Sup: 82.98, 82.30, 81.88, 81.50

USD/CHF

Rejection at 1.0276, near 38.2% of 1.0630/1.0060 decline, confirmed the underlying bear structure. Loss of critical support at 1.0065/60, multi year bear continuation pivot, would project a significant weakness longer-term, with 0.9916 seen first. Upside, 1.0071 caps for now.

Res: 1.0071, 1.0097, 1.0132, 1.0170

Sup: 0.9980, 0.9960, 0.9949, 0.9916

Source: ForexYard

The U.S. dollar fell to a fresh 15-year low against the Japanese yen ahead of a big leadership election in Japan. The greenback also sank against the euro during Tuesday’s trading.

Economic News

USD – Dollar Falls Ahead of Japan Leadership Vote

The U.S. currency was near a 1-month low against a basket of currencies after suffering its steepest fall against the euro in two months as rising investor risk appetite helped the European currency.

The dollar fell to a 9-month low against the Swiss franc on Tuesday as market players scaled back investments in risk currencies and poured funds into low-yielding currencies such as the yen and the franc. The dollar fell 0.2% to 1.0050 franc, its lowest since December of last year.

The greenback traded broadly flat against the euro on Tuesday, at $1.2870, after losing more than 1% against the common currency on Monday. The dollar touched 83.23 yen, the lowest level in 15 years, but later recovered slightly to 83.43, but still down from 83.66 in late trading on Monday. The move came ahead of an election to decide the leader of the Democratic Party of Japan, with the winner widely expected to serve as the nation’s prime minister. Analysts said that dollar-yen pair may firm and could strengthen toward 85 should Japan’s political situation stabilize.

EUR – Euro Gains on Risk-Asset Demand

The euro rose the most in 10 weeks against the U.S. dollar after regulators gave European banks more time than analysts expected to meet new capital requirements. The euro also strengthened after the European Commission said the region’s economy may grow almost twice as fast this year as previously forecasted. Against the Japanese yen however, the euro lost ground, hitting 107.42, down from 107.63 Monday.

The euro strengthened 1.6% against the dollar to $1.2878. It climbed earlier as much as 1.7% to $1.2893 in the biggest intraday gain since July 1. The euro rebounded 12% from a four-year low on June 7 through Aug. 6 as investors focused on worse-than-forecasted U.S. economic data as European statistics surpassed predictions. Still, the euro may be unable to sustain its gains against the dollar as renewed concern over the solvency of nations from Portugal to Ireland points to another slump for the common European currency.

JPY – Yen Extends Gains Versus Dollar Before Election

The yen rose to a 15-year high on Tuesday ahead of a decisive vote in Japan, weighing on Japanese equities and leaving traders wondering whether a rally that has lifted global stock markets to their highest levels in a month can be sustained.

The yen rallied versus the dollar on speculation Prime Minister Naoto Kan will beat his rival Ichiro Ozawa in a party vote today; reducing the likelihood the government will intervene to weaken the currency. Japan’s currency also strengthened against all the major currencies as the Japanese stocks dropped, boosting demand for safer assets.

OIL – Oil Rises on Improved Global Economic Outlook

Crude Oil closed above $77 a barrel Monday after upbeat data from China stoked optimism about the global economy, while the closure of a pipeline in the Midwest disrupted supplies to refineries in the region. Oil traders were cheered by increasing industrial production in China, which over the weekend reported manufacturing gains of nearly 14% in August from a year ago, with the data signaling the world’s second-biggest economy is growing.

Crude prices earlier reached an intraday high of $78.07 a barrel, the first time a front-month contract breached the $78 mark since Aug. 11. On Friday, Oil gained $2.20 to end at $76.45 a barrel, closing the week higher by 2.5%. A softer U.S. dollar also supported the dollar-denominated commodity by making it less costly for holders of other currencies.

Technical News

EUR/USD

The pair has been rising constantly since the beginning of the week and is currently trading around the 1.2870 level. As the MACD on the 4-hour chart continues to point up, the pair could rise further, with potential to reach the 1.2950 level.

GBP/USD

The pair failed to breach the 1.5500 level yesterday, and as a result saw a sharp fall which took it as low as the 1.5365 level. The bearish move might continue today, with a key-target level of 1.5300.

USD/JPY

The bearish trend continues with full steam as the USD/JPY has reached a 15-year low on yesterday’s trading. The RSI on the weekly chart remains within the over-sold section, suggesting that the pair might drop even further. Going short might be preferable today.

USD/CHF

Ever since peaking at the 1.275 level, the pair is dropping with no apparent stops. The MACD and the RSI on the 4-hour chart continue to point down, indicating that the bearish move has more room to go. Going short might be a good strategy today.

The Wild Card

Oil

A swift rise in the price of spot crude oil by $5 may have left the commodity oversold. A bearish cross has formed on the daily chart’s Slow Stochastic oscillator, indicating that the price may fall in the near term. Another sign supporting an end to the price rally is the doji candlestick from yesterday’s trading. The price climbed to a high of $77, a previous resistance level from early February. CFD traders may want to liquidate any long positions they may have in spot crude oil. Support is found at $75.60.

Forex Market Analysis provided by ForexYard.

© 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 Rita Ruvinski – The day ahead is busy with data releases, and many of them of high importance to markets. Foremost will be U.S. retail sales and the ZEW sentiment, but also of interest will be the British CPI and U.S. Business Inventories.

8:30 GMT: GBP- CPI

Contrary to the U.S. and Europe, Britain saw the annual rate of inflation rise above the 3% target. CPI dropped gradually to 3.1% and is now expected dip to an annual rate of 2.9%. This is expected to weaken the Pound.

9:00 GMT: EUR – German ZEW Economic Sentiment

The important German ZEW Economic Sentiment is the highlight among market events that will shape the EUR/USD trading this week. This survey of 350 analysts and investors always rocks the euro. In the past 4 months, it has shown significant drops, short of expectations, reaching 14 points last month, still in positive territory, meaning small economic optimism. Another drop is expected now which means the pair has the potential of falling below $1.2660.

12:30 GMT: USD – Core Retail Sales/ Retail Sales

The retail trade report for August could be slightly stronger than expected. This major consumer gauge recovered last month after terrible falls beforehand. Retail sales are predicted to rise by 0.4%, exactly like last month, and core retail sales will probably rise by 0.3%, slightly better than last month’s 0.2% rise. Any result will rock the markets.

14:00 GMT: USD – Business Inventories

Data on business inventories for July will add the retail component to those already known for wholesale and factory inventories. A better than expected data will rock the greenback.

Forex Market Analysis provided by ForexYard.

© 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 Russell Glaser – News released from Europe today showing increased economic forecasts for European growth will have a positive impact on the Scandinavian economies and in turn help to strengthen the Swedish krona.

Today the European Commission increased its estimate for gross domestic product in the European Union. The commission believes that Europe’s economy will grow by 1.8% as opposed to the commission’s previous estimate of 0.9%. The upgrade comes despite a warning of potential slowing growth in the EU economy during the second half of 2010. The slowdown and any additional weakening in European GDP may be caused by deteriorating fiscal conditions and the ending of government stimulus programs.

The European economy will be powered by export growth in Germany. The German economy may benefit as well from the weakened euro as a weak euro can make German imports more competitive abroad. Countries that use the euro are expected to expand economic activity by 1.7%.

The implications for the Swedish Krona should be a positive. The European Union contains 7 of the 9 largest trade partners for Sweden. Any increase in European growth should directly affect growth in the Swedish economy.

Looking at the technicals for the USD/SEK, the pair continues to trend lower. An intermediate trend line begins at the highs in early June. The trend line has two points of contact in late August. The downward trend is confirmed by the 20-day simple moving average that is sloping sharply lower.

The previous target remains the same at 7.0400 (S1). Resistance comes in at the pullback beginning at 7.1950 (R1), followed by the completion of the bullish correction at 7.3350 (R2).

Forex Market Analysis provided by ForexYard.

© 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.

AUDUSD’s upward movement from 0.8771 extended to as high as 0.9361. Support is at 0.9260, as long as this level holds, uptrend is expected to continue, and next target would be at 0.9400 area. On the downside, the pair is now facing 0.9381 (Apr 12 high), minor consolidation would more likely be seen before breaking above this level, a break below 0.9260 support will indicate that minor consolidation of uptrend is underway, then pullback to 0.9200 could be seen.

Daily Forex Forecast