Eur/usd Update

EUR/USD has edged lower on Tuesday, as the pair trades in the mid-1.36 range in the European session. In economic news, German Import Prices looked weak, coming in at a flat 0.0% in December. As well, EU financial ministers will get together for their monthly meeting. In the US, there are two key events – Core Durable Goods Orders and CB Consumer Confidence.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical

• EUR/USD was steady in the Asian session, hovering close to the 1.3670 line. The pair has lost ground early in the European session.

Current range: 1.3580 to 1.3650.
Further levels in both directions: 

• Below: 1.3580, 1.3515, 1.3450, 1.34, 1.3320, 1.3240, 1.3175 and 1.31.
• Above: 1.3650, 1.37, 1.3800, 1.3832 and 1.3940.
• 1.3580 is the next support level. 1.3515 is stronger.
• 1.3650 is weak resistance. The round number of 1.37 follows.

EUR/USD Fundamentals

• 7:00 German Import Prices. exp. 0.3%, actual 0.0%.
• All Day – ECOFIN Meetings.
• 13:30 US Core Durable Goods Orders. exp. 0.7%.
• 13:30 US Durable Goods Orders. exp. 1.9%.
• 14:00 US S&P/CS Composite-20 HPI. exp. 13.7%.
• 15:00 US CB Consumer Confidence. exp. 78.3 points.
• 15:00 US Richmond Manufacturing Index. exp. 13 points.

*All times are GMT

EUR/USD Sentiment

• German Business Confidence Improves: The week started on the right foot for Eurozone data, as German Ifo Business Climate, a key event, continues to improve. The indicator topped the 110 level, posting a reading of 110.6 points, up from 109.5 last month. This edged above the estimate of 110.2 points. Germany is the Eurozone’s largest economy, and the region will need the German locomotive to lead the way to an economic recovery.
• US Housing Numbers Slide: The US housing sector is showing some weakness. New Home Sales dropped sharply in December to 414 thousand, down from 464 thousand a month earlier. This was nowhere near the estimate of 457 thousand. This follows a disappointing Existing Home Sales release last week. The key indicator dropped to 4.87 million, down from 4.90 million a month earlier and shy of the estimate of the 4.94 million. This was the indicator’s fourth straight drop. The markets will be hoping for better news from Pending Home Sales on Thursday. A third straight housing reading below the estimate could weigh on the dollar.
• Worries about China: Jitters in Chinese money markets, as well as comments about a “severe economic situation” in the world’s No. 2 economy are worrying markets. While the impact is currently limited to commodity currencies, lower Chinese demand for German products could change the European picture one day.
• IMF warns about deflation in Eurozone: Eurozone inflation indicators continue to point to weak inflation, and the situation as deteriorated to such an extent that the IMF has voiced its concern about the danger of deflation in Europe. This was seen in a report published by the organization as well as in a speech by IMF Managing Director Christine Lagarde in Davos. While the ECB seems concerned with low inflation and not outright deflation, any further deterioration could push the ECB to set a negative deposit rate as soon as March 2014.

AUD/USD still bearish

AUDUSD: Despite its attempts at recovering higher, it continues to hold on to its broader medium term downside bias. With that said, we expect its current recovery attempts to fade at the 0.8755 level or maximum at the 0.8822 level if it does continue. 

Support lies at the 0.8659 level followed by the 0.8600 level where a breach will aim at the 0.8550 level. Further down, support is located at the 0.8500 level. Its daily RSI is bearish and pointing lower suggesting further weakness. 

On the upside, resistance resides at the 0.8755 level initially with a cut through there targeting the 0.8822/47 levels where a reversal of roles is likely to occur. But if this fails, expect more recovery to occur towards the 0.8915 level, its Jan 16’2014 high and next the 0.9000 level, its big psycho level. 

All in all, the pair remains biased to the downside in the medium term.

Forex Outlook

Euro

A very crucial week is coming up for the major economies where their currency pairs would certainly face some serious volatility this week as a number of critical economic indicators are due to be released. The euro which is currently taking bearish correction and is in short term bearish channel would be impacted highly by the data including German ZEW Economic sentiment, the German and French flash manufacturing and services PMIT, the Spanish unemployment rate, and the German PPI. A good positive outcome for these indicators can surely lift the pair up where bullish streak might continue as it was in the month of November and December.

Pound

Now that the bulls have taken the pair back up immediately after the bearish correction, the investors are eying the data that is to be released this week including claimant count change, asset purchase facility, and unemployment rate which is expected to drop down to 7.3% from its previous reading of 7.4%.

Apart from that the economic indicators of the U.S. including unemployment claims and existing home sales can impact the pairs as well, but both these indicators are due on Thursday.

Aussie
Losing more than 250 points last week, the Aussie investors are still cautious and are looking ahead to the Chinese economic indicators including GDP, fixed asset investment, industrial production, and the inflationary numbers of Australian economy where CPI rate is expected to fall to 0.5% from its past reading of 1.2%. Aussie desperately needs to have some good fundamental outcomes, or else the bears would be taking this rally further down as the charm for the pair wouldn’t be that much for the investors.

Oil Outlook

Oil prices saw an increase as benchmark U.S. crude for March delivery was up 22 cents to $97.54 a barrel at 0620 GMT in electronic trading on the U.S. Mercantile Exchange. On the other hand, Iran is going to play a major role in the global oil prices. It is participating in the financial and political carnival i.e. the World Economic Forum in Davos, Switzerland.
According to news reports attention will be global energy prices and Iran’s effort to rejoin the global trading community after years of sanctions. This is also going to affect the oil prices which are improving nevertheless as it rose 59 cents to $97.32 on Thursday. A major reason behind the increase in oil prices is that a severe cold spell is hitting parts of the U.S.
Nevertheless, a boost in the global economy is also expected to have some impact on the oil prices. Earlier, the International Monetary Fund raised its growth forecast for the global economy. The international body also said that the U.S. economy will grow better this year. The demand from China is expected to increase further this year.

Oil Stocks in the U.S. Depleting at a Healthy Rate 

However, a major concern still lingering on is that the U.S. is still producing crude at an unprecedented rate. ForexMinute has earlier reported that if the U.S. continues producing the crude at this pace and the imposed export restrictions are kept intact, the oil prices in the U.S. may fall further.

On the other hand, the slight rise in oil prices is due to the deep chill blanketing which is raising demand for oil and that is leading to reduction in the oil stocks of heating oil. In its pursuit to become self-dependent, the U.S. is piling up huge oil stocks and according to IEA; this may hit the wall soon.
Nevertheless, natural gas has seen record prices of more than $100 per 1,000 cubic feet on the spot market in some U.S. regions. Whereas Brent crude, a benchmark for international oil, was up 13 cents to $107.71 a barrel on the ICE exchange in London, wholesale gasoline inched up 0.3 cent to $2.673 a gallon.
The global oil may get somewhat low if Iran starts producing and exporting its quoter of oil which looks likely as the latest indications show.

USD/JPY looking bullish

USD/JPY posted losses last week, as the pair closed the week at 104.17. The upcoming week has just seven releases. Here is an outlook on the major market-movers and an updated technical analysis for USD/JPY.
US employment numbers started off the week strongly, as ADP Non-Farm Payrolls and Unemployment Claims looked sharp. However, Friday’s NFP of just 74 thousand was a two-year low, and the yen responded with gains.
Click to enlarge: 

1. Current Account: Monday, 23:50. Current Account is closely linked to currency demand, as a higher surplus indicates that foreigners are purchasing more yen to execute domestic transactions. Japan has posted two straight deficits, and a small deficit is expected for December, with an estimate of -0.02 trillion yen.
2. Economy Watchers Sentiment: Tuesday, 5:00. This index surveys consumer confidence in the economy, with readings above the 50 level indicating optimism. The index climbed to 53.5 points in November, up from 51.8 points the month before. The upward trend is expected to continue, with the estimate standing at 54.2 points.
3. M2 Money Stock: Tuesday, 23:50. This indicator looks at the money supply in circulation and in bank deposits. It is considered a minor event since much of the data was released in the Monetary Base event last week. The index has been increasing and rose to 4.3% in November. The upward trend is expected to continue in December, with the estimate standing at 4.5%.
4. 30-year Bond Auction: Wednesday, 3:45. The average yield on 30-year bonds rose to 1.70% in November, up slightly from 1.62% a month earlier. No substantial changes are expected in the upcoming release.
5. Preliminary Machine Tool Orders: Wednesday, 6:00. This manufacturing release continues to post impressive gains, with the previous release jumping by 15.4%. The markets will be looking for another strong gain for the December release.
6. Core Machinery Orders: Wednesday, 23:50.  This important manufacturing indicator should be treated as a market-mover. It tends to show strong movement, making accurate forecasts a tricky task. The indicator posted a modest gain of 0.6%, shy of the forecast of 0.9%. The markets are expecting an improvement in the December release, with an estimate of 1.2%.
7. Tertiary Industry Activity: Wednesday, 23:50. Tertiary Industry Activity has struggled, posting four declines in the past five releases. The November release dropped 0.7%, well below the estimate of a 0.3% gain. However, the markets are expecting a strong turnaround, with an estimate of a 0.8% gain.

* All times are GMT.

USD/JPY Technical Analysis

USD/JPY started the week at 104.91. The pair climbed to a high of 105.34 late in the week, but then reversed directions and dropped all the way to 103.83, briefly dipping below support at 104.00 (discussed last week). The pair closed the week at 104.17.

Live chart of USD/JPY:

Technical lines from top to bottom

We start with resistance at the round number of 110.00. This key level has remained intact since August 2008. This is followed by a resistance line at 109.18.
Next is 108.38. This line has remained intact since September 2008. At that time, USD/JPY was in a downward spiral which saw it drop below the 0.90 line.
106.66 has held firm since November 2008.  This is followed by resistance at 105.70. This line held firm as the pair climbed higher late in the week before retracting.
We find the first support level for the pair at the round number of 104. This was a key line back in May 2008. This line was breached during the week but remains in place. It starts off the weak as weak support for the pair.
102.50 continues to provide strong support. It marked the bottom of a dollar rally which started in early December, which has seen the yen climb above the 105 line.
101.44 was the post-crisis high seen in April 2009, and continues to provide strong support.
100.85 saw activity in July as the dollar showed strength against the yen. It is protecting the key level of 100.
The round number of 100 is a key psychological level. It is providing USD/JPY with steady support.
The final support level for now is at 98.80. It has remained firm since early November, when the dollar began a rally which saw it climb above the 105 line.

I am bullish on USD/JPY
The US has begun to taper QE, and with further moves expected early in 2014, the yen could remain under strong pressure. As well, the Bank of Japan has indicated it will continue its current aggressive monetary program, which could lead to further weakening of the Japanese currency. The yen crashed in 2013, losing about 17% of its value and enters 2014 vulnerable to further declines.

AUD/USD: Bearish, Eyes The 0.8822 Level

AUD/USD: We continue to hold our downside outlook on AUD/USD as it remains weak and declining. This development leaves the pair targeting the 0.8822 level, its Dec 19 2013 low where a break will aim at further downside towards the 0.8750 level. 

Further down, support stands at the 0.8700 level, its big psycho level. Its daily RSI is bullish and pointing lower supporting this view. 

On the upside, resistance resides at the 0.8970 level with a breach targeting the 0.8950 level followed by the 0.9004 level, its Jan 03 2014 low. A cut through here will aim at the 0.9200 level. 

Further out, resistance comes in at the 0.9166 level. All in all, the pair remains bearish in the medium term on further downside pressure.

USD/CAD: Resumes Medium Term Uptrend, Strengthens

USD/CAD: With USD/CAD rallying on Tuesday to break the 1.0736 level and resuming its broader upside on Monday, further bullishness is likely. Price extension is now underway with USD/CAD targeting the 1.0850 level.
A cut through here will aim at the 1.0900 level with a turn above here paving the way for a run at the 1.0950 level and possibly higher towards the 1.1000 level. Its daily RSI is bullish and pointing higher suggesting further upside.
On the other hand, support comes at the 1.0736 level, representing its Dec 20 2013 high. 

Further down, downside object resides at the 1.0651 level, its Jan 06’2014 low where a violation will aim at the 1.0600 level and then the 1.0550 level. A reversal of roles is likely to occur here and turn USD/CAD higher.
All in all, USD/CAD continues to face further upside threats on bullishness.

EUR/USD Jan. 9 – Markets Eye ECB Rate Announcement

EUR/USD is steady in Thursday trading, with the pair trading just above the 1.36 line in what has been an uneventful week until now. In the Eurozone, today’s highlight is the ECB rate announcement. The French trade deficit widened, and we’ll get a look at German Industrial Production later in the day. In the US, ADP Non-Farm Payrolls climbed to a two-year high. The markets are expecting another strong Unemployment Claims release on Thursday.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical

• EUR/USD edged higher late in the Asian session, consolidating at 1.3601. The pair has edged higher in the European session.

Current range: 1.3525 to 1.3615.
Further levels in both directions: 

• Below: 1.3525, 1.3440, 1.34, 1.3320, 1.3240 and 1.3175.
• Above: 1.3615, 1.3675, 1.3710, 1.3800, 1.3832, 1.3940 and 1.4036.
• 1.3615 is a weak resistance line. 1.3675 follows.
• 1.3525 is providing strong support.

CRUDE OIL: Continued Bearishness Exposes The 92.10 Level

CRUDE OIL: The commodity continues to sell off declining further today on the back of the past week losses. This development has exposed its immediate support located at the 93.00 level where a violation will turn focus to the 92.10 level, its Dec 27’2013 low.

Further down, support comes in at the 91.00 level where a break will target the 90.00 level, its big psycho level. The bulls may come in here and push the commodity back up.

However, if that fails to occur expect Crude Oil to weaken further. In such a case, the 89.00 level will be aimed at. Its daily and weekly RSI are bearish and pointing lower supporting its bearish tone.
Conversely, resistance resides at the 94.00 level with a breach of here exposing the 95.00 level and subsequently the 96.00 level.  All in all, Crude Oil remains biased to the downside in the medium term.

USD/JPY Continues Advance near Long-Term Highs

January 8, 2014 – USD/JPY (daily chart) is currently advancing very close to its new 5-year high of 105.43, which was just established a few days ago, in the very beginning of the year. That high occurred in the midst of a strong and steady bullish trend that has been in place since the currency pair broke out above its previous triangle consolidation in November, extending the sharp uptrend that has been in place since September 2012.

The past few months of this yen-weakening run have seen USD/JPY advance to break out above several key price levels, including the 100.00 psychological level and the 103.70 previous long-term high (May 2013). 105.00 had been the former upside price target, and was just reached in late December. After having just made a shallow pullback, the pair appears poised to advance even further. On a breakout above the noted 105.43 high, a major upside resistance target resides around the important 108.00 level. Downside support tentatively continues to reside around the 103.70 price region.