InvestMacro FX

By eToro – Equity markets were hammered as a combination of weaker than expected earnings and a disappointing consumer sentiment index, hurt investor sentiment. Bank of America’s 8% drop led financials lower, erasing the S&P 500 index’s weekly gains amid concerns the economy is expanding too slowly to spur corporate growth. Adding to the jitters was a morning report that showed consumer sentiment dropped to its worst level since March 2009. The S&P 500 lost 13 points or 1.3%.

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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.

USDCAD bounced strongly to as high as 1.0523 last week. Further rise towards 1.0676 previous high is still possible later today, and pullback would more likely be seen before breaking above this level. Key support is now at 1.0500, a breakdown below this level will indicate that a cycle top has been formed on 4-hour chart, then another fall towards 1.0000 could be seen. If 1.0676 key resistance gives way, next target will be at 1.0852 (May 25 high).

Daily Forex Forecast

GBPUSD broke above the falling price channel on daily chart and is facing 1.5522 key resistance. Minor consolidation would more likely be seen next week before breaking above this level and the trading range would be within 1.4940-1.5470. However, another rise towards 1.5522 key resistance is still possible after consolidation, and a break above this level will indicate that the long term downtrend from from 1.7042 has completed at 1.4230 already, then the following uptrend could bring price to 1.8000 area.

For long term analysis, GBPUSD might be forming a cycle bottom at 1.4230 level on weekly chart. Key resistance is at 1.5522, a break above this level is needed to confirm the cycle bottom.

Weekly Forex Analysis

ood day men and ladies of forex! From my last post about the Cable or the GBPUSD pair back on July 2 (kindly see it here), the have continued to trek along an ascending channel. After it met some resistance at around 1.5200, it fell back only to bounce back again from the channel’s support. It eventually broke above 1.5200 and continued to race past 1.5400. Recently, it marked a new 2-month high at 1.5472. Though with the stochastics already turning south and a likely wall just at the nearby resistance of the channel, the pair could soften for awhile before moving up again. If it weakens, then its likely support would be somewhere around 1.5200. But when it bounces north, it could rise until it encounters some selling pressure at 1.5500.

The pound continued to pound the greenback as the latter continued to show some broad-based weakness against the majority of the other majors. Despite Google’s weak second quarter showing, the demand for the non-dollar currencies remained high. But today, its rise was a bit cut off in spite of the stellar numbers by General Electric, Citigroup and Bank of America.

for today, the pound could extend its rally against the USD if the University of Michigan Consumer sentiment index for July prints a better-than-expected score. The index is seen to have fallen to 74.2 from 76.0. Though given the recent string of rallies in the global markets, the investors sentiment could have picked up during the period. Watch out for the its release today at 1:55 om GMT.

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In my last post about the EURCAD pair several days ago (July 9), I mentioned that the Loonie could be preparing for a revolt against the Canadian dollar. Back then, the pair already broke its downtrend line and appeared to be in the phase of forming the right shoulder of an inverted head and shoulders pattern. However, the pair did not fall back down to the bottom of the left shoulder. Instead, it found some support at 1.3000 before springing back up again. And just recently, the pair finally broke out from the mentioned formation. Having said that, this move could now be a reversal that could send the euro back towards 1.4500 against the Loonie. A break below the neckline again could push it back down to 1.3000.

Fundamentally, today’s worse-than-expected drop in the University of Michigan Consumer Sentiment Survey for July (66.5 versus 74.2) caused the investors to dispose the more favored currency, the Loonie, vis-a-vis the euro. Though the projected 0.25%  increase (to 0.75% from 0.50%) in Canada’s interest rate this coming Tuesday (July 20) could propel the CAD higher over the euro again. Still, given the unexpected slide in June retail sales of -1.2%, hence a drop in business activity could be enough for the BOC to pause its rate hike. If this happens, then the Loonie would surely weaken as the market already expects that it would raise it. Stay tune!

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By CountingPips.com

Canada’s Leading Indicators rose for the 13th straight month in June, according to a report from Statistics Canada today. The Leading Indicator Index, which is a measure of future economic activity, increased by 1.0 percent in June following a revised increase of 1.1 percent in May. The index has now increased every month going back to June 2009.

Eight out of ten of the measured sectors that make up the leading indicator index showed increases for the month. Durable goods orders was the leading sector with a gain of 2.3 percent while the money supply and average workweek both increased by 0.8 percent. The US Conference Board indicator rose by 0.5 percent and business & personal services employment advanced by 0.4 percent for the month.

The housing index indicator was the largest negative contributor for the month with a decrease by 1.9 percent while other durable goods sales fell by 0.5 percent.

By Dan Eduard – Over the last month and a half, USD/SEK has been stuck in a prolonged downward trend. The U.S. dollar has been bearish across the board, but against the SEK, it has seen particularly heavy losses. Since June 7th, the pair has tumbled an astounding 8000 pips. As we will see, technical data will indicate that an upward correction is finally set to take place.

We will be looking at the daily chart for USD/SEK, provided by ForexYard. The technical indicators we will analyze are the Bollinger Bands, Stochastic Slow and Relative Strength Index (RSI).

1. The pair is currently trading along the lower band, indicating that an upward correction is due to take place. Furthermore, the Bollinger Bands are beginning to widen, spreading further apart. This typically means that a price shift is likely to take place.

2. A cross in the Stochastic Slow is currently forming below the lower support line. This is typically seen as a clear indicator that a bullish correction is imminent.

3. Looking at the RSI, we can see that it is well below the lower support line. Traders can take this as a clear sign that upward movement is likely to take place, further supporting our original theory.

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.

Source: ForexYard

The U.S. Core CPI is the primary publication today that is set to determine the level of the dollar when the report is released at 12:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the dollar and euro is the publication of the U.S. TIC Long Term Purchases and Prelim Consumer Sentiment at 13:00 GMT and 13:55 GMT respectively. Traders may find good opportunities to enter the market following these vital announcements.

Economic News

USD – USD Falls on Negative Economic Data

The dollar fell broadly against most of its major currency pairs on Thursday, as soft inflation and manufacturing data added to concerns about the strength of the U.S. economy. By yesterday’s close, the dollar fell around 1.5% against the EUR to 1.2940, a 2-month low. The dollar experienced similar behavior against the GBP and closed at 1.5455.

U.S. producer prices declined for a third straight month. The data came just a day after minutes of the Federal Reserve’s latest meeting revealed that policy makers think they may need to do more to boost the economy if a sputtering recovery slows any further. The news helped push the EUR to its highest against the dollar since May.

Another leading indicator released yesterday was U.S. Unemployment Claims. This number handedly beat last week’s result but failed to provide strength to the dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

As for today, data releases are expected from the U.S. economy. These figures are expected to set the tone for the USD’s pairs and crosses. Special attention should be given to the Core CPI which is expected to be unchanged from its previous reading. Traders pay close attention to this figure as it has a strong correlation with the value of the U.S. dollar. Also today, the Prelim UoM Consumer Sentiment is scheduled and should also have an impact on the market because if it delivers unfavorable figures it will validate a problematic U.S. economy, and the USD is likely to weaken as a result.

EUR – EUR/USD Hits 2-Month High

The EUR strengthened against most of its major counterparts yesterday, continuing to prove for the time being that this is a solid currency that traders can rely on to provide them with steady profits. The 16 nation currency extended gains versus the USD on Thursday, nearing 1.2940 for the first time in 2 months after the Philadelphia Federal Reserve’s business conditions index fell sharply in July. The EUR experienced similar behavior against the JPY and closed up at 113.10.

Weakness in the Philadelphia’s Fed’s mid-Atlatnic district added to concern about the U.S. economy, which has been heightened in recent days by a clutch of disappointing inflation, manufacturing and retail sales data.

The single currency, which slid below $1.19 in June on euro-zone debt trouble, has since risen by more than 8% after smooth government debt auctions in Greece, Portugal and Spain eased concerns.

JPY – Yen Experiences Mixed Results against Major Currencies

The yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the CHF yesterday and closed its trading session around the 83.85 level. The JPY also saw bullishness against the USD and closed at 87.50.

The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today, especially the U.S Core CPI at 12:30 GMT. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

OIL – Oil Prices Fall Based on Weak U.S. Data

Oil fell below $77 a barrel on Thursday after disappointing U.S. economic data curbed expectations for future demand growth. Oil prices fell as low as $75.80 before it rebounded again and closed at $77.35

Oil has traded between $70 and $80 this month as investors ponder how much a pullback of government stimulus spending could undermine global economic growth and crude demand in the second half.

However, Crude oil prices were supported by the weekly inventories report from the Energy Department’s Energy Information Administration on Wednesday, which showed crude supplies shrank more than analysts had forecasted, a sign demand may be improving.

Technical News

EUR/USD

Bullishness in the pair continues as the price breached and closed above the upper channel line that the pair has been trading in since early June. The close was also above the 100-day simple moving average line. The 10-day RSI is sloping sharply higher, indicating that the momentum is to the upside. Near term resistance for the pair rests just below 1.3100.

GBP/USD

The pound was a strong mover in yesterday’s trading as the cable closed above the 23.6% Fibonacci retracement level for the long term downward trend, as well as a close above the long term downward sloping trend line that began in July of 2008. Traders should be long on the pair with a minimum target at the resistance level of 1.5520.

USD/JPY

A significant drop in the value of the pair was registered yesterday as the pair fell as low as the support level at 87, the year to date low. The downward momentum looks to continue as an absence of technical resistance on the charts could move the pair as low as 84.80, the November 2009 low.

USD/CHF

Yesterday the pair breached below the near term resistance levels of 1.0480 and 1.0430, ending the short term consolidation that the pair had experienced. The next target for the pair will be the 74.6% Fibonacci retracement level from the previous bullish trend at a price of 1.0350.

The Wild Card

Oil

The daily chart shows two candlestick patterns that hint to a slowdown of the recent bullishness of spot crude oil. Wednesday’s trading ended slightly higher but formed a doji candlestick, signaling potential short term weakness. Yesterday’s trading was more volatile with the pair falling as low as the support level of 75.80 and rising as high as 78.06, forming a long legged doji candlestick. This shows indecisiveness on the part of traders and signals wavering support for the bullish move. CFD traders may want to tighten their stops on any long positions they may have in spot crude oil.

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 soared as dollar sentiment declined and investors jumped into the Euro.  The Euro broke through resistance levels and is closing in on the 1.30 resistance mark. 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.

USDJPY broke below 88.00 key support, suggesting that a cycle top has been formed at 89.15 level on 4-hour chart. Now the fall from 89.15 is treated as resumption of downtrend from 92.88 (Jun 4 high). Deeper decline is still possible later today and next target would be at 86.00 area. Key resistance is now at 88.00, only rise above this level could indicate that lengthier consolidation of downtrend is underway, then range trading between 86.96 and 89.15 could be seen.

Daily Forex Forecast