Technical Analysis for EURUSD: daily bear market rally with 1.0954 resistance - good possibility for price reversal to the primary bullish

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newdigital, 2015.04.18 06:54

EUR/USD: Momentum Shifts - BTMU (based on efxnews article)

EUR/USD is still trading within the 1.05-1.10 range that has been mainly intact for most of March and April, and in that sense the best bias to have for the week ahead is probably neutral, notes Bank of Tokyo Mitsubish (BTMU).

"The momentum though appears to be shifting back toward a higher move with EUR/USD moving that way in the aftermath of the monetary policy press conference by President Draghi. While the ECB is a little more upbeat we do not think that will help the euro," BTMU adds.

"The IMF/G20 gathering in Washington may well result in some comments on the dollar – a G20 statement may refer to FX in a slightly different way and this is a risk to the upside for EUR/USD. Any sense that officials are getting more worried about the speed of dollar strength may prompt selling. However, this is unlikely to be sustained for long – the reality is that monetary policy divergence is set for some considerable time," BTMU argues.

"Greece will remain an issue and given the risk that this could go right to the wire, this is a clear downside risk for EUR/USD if there’s a sense next week of no progress being made toward a resolution and the release of additional funds for Greece," BTMU adds.

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newdigital, 2015.04.19 08:11

EUR/USD Weekly Fundamental Analysis, April 19 – 24, 2015 – Forecast (based on fxempire article)

The EUR/USD soared to a near term high at 1.0808 after the release of inflation data and strong comments from Mario Draghi on Thursday.  USD outlook has become more balanced which is likely to drive near‐term USD weakness but over the medium term the USD should still be supported. The DXY USD index is flirting with a break below its 50‐day MA, a level it hasn’t traded through since July, accordingly technically the USD index is shifting and a close below here today would be important. The fundamental side has likely caught up to the data surprises, which have continued to be disappointing for the US.

The euro is stronger, having rallied back above 1.08 and moving towards its 50‐day MA. Fundamental data was essentially as expected with inflation in line with the flash estimate. Greece continues to be a core focus, with April 24th’s Euro‐Area meetings particularly important. German and French yields continue to fall, driving an increased focus on the risks around bond scarcity for the ECB QE program.

Data released this week showed the Eurozone is fighting its way out of deflation, as prices rose for the second month straight, easing fears it could enter into a prolonged period of price falls. The single currency area’s annual inflation rate rose to -0.1 per cent in March, up from -0.3 per cent a month earlier, according to its official statistics agency. This was in line with analysts’ expectations.

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newdigital, 2015.04.19 18:29

EUR/USD weekly outlook: April 20 - 24 (based on investing.com article)

The dollar was lower against the euro for a fourth consecutive session on Friday as expectations for higher U.S. interest rates waned, despite data showing an uptick in inflation in March.

EUR/USD was up 0.43% to 1.0807 in late trade and ended the week with gains of 1.89%.

The dollar shrugged off data on Friday showing that U.S. consumer prices were higher for a second successive month in March.

The Labor Department reported that the consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.

Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October.

The report came after data earlier in the week showed that U.S. retail sales for March came in below expectations. Another report, showing a larger-than-forecast drop in industrial output pointed to a slowdown the first quarter.

The string of weak data added to the view that the Federal Reserve could push back hiking interest rates until late 2015 from midyear.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down to 97.62 late Friday. The index ended the week down 1.9%.

The single currency gained in spite of concerns that Athens is no closer to reaching an agreement on economic reforms for bailout funds with its creditors, fuelling fears that Greece could be forced out of the euro zone.

Earlier in the week European Central Bank President Mario Draghi said the bank expects to fully implement its trillion-euro quantitative easing program. He also played down concerns that the asset purchase program will struggle to find enough euro zone bonds to buy.

In the week ahead, investors will be looking ahead to reports on the U.S. housing sector and data on durable goods orders for further indications on the strength of the recovery.

In the euro zone, Tuesday’s ZEW report on German economic sentiment and Thursday’s reports on private sector activity will be in focus.

Tuesday, April 21

• In the euro zone, the ZEW Institute is to report on German economic sentiment.

Wednesday, April 22

• The U.S. is to release data on existing home sales.

Thursday, April 23

• The euro zone is to release survey data on private sector economic activity, while Spain is to release its employment report.
• Later Thursday, the U.S. is to report in initial jobless claims and new home sales.

Friday, April 24

• In the euro zone, the Ifo Institute is to report on German business climate.
• The U.S. is to round up the week with a report on durable goods orders.

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newdigital, 2015.04.20 06:41

EURUSD Fundamentals (based on dailyfx article)

Fundamental Forecast for Euro: Neutral

• The ECB press conference initially invited limited volatility, but EURUSD eventually settled higher.
• The bearish technical formation in the USDOLLAR Index portends to a stronger EURUSD.

The Euro treaded water last week, losing ground against half of its major counterparts and gaining a bit more against the other three. The worst performance came against the Swiss Franc (EURCHF -0.91%), while the best performance came against the US Dollar (EURUSD +1.87%). In a week ripe with strife – be it on the political front, with more debt bantering with Greece, or on the monetary front, in the form of the European Central Bank’s third policy meeting of the year – the Euro fared reasonably well, all things considered.

With respect to the ECB meeting, President Mario Draghi has made it quite clear that market-borne talk of the QE program being tapered ahead of its projected September 2016 finale are premature at best, and misguided at worst. Before asset purchases cease, the ECB needs to see a stabilization in both actualized and expected inflation, which haven’t happened yet: core inflation resides at a mere +0.6% y/y; and the 5y5y inflation swaps closed the week at 1.693%, right at the four-week/20-day average of 1.678%. ‘Taper talk’ probably becomes more realistic once core inflation crosses the +1.2% y/y threshold, or if the 5y5y inflation swaps move above 1.800%.

For now, the Euro remains a weak buy against a basket of its major counterparts due to its deflating yield appeal and further crystallization as a funding currency. The Euro has lost and continues to lose its appeal as a growth currency as the differential between the short-end and the long-end of the yield curve (in Germany the 2s10s spread fell to 0.347% on Friday from 0.638% on January 1) decreases; and its appeal as a funding currency increases as rates towards the long-end drop into negative territory (German yields out to 9-years are negative).

The drop in sovereign yields decreases the demand for Euros. With nominal yields falling and inflation expectations holding stable (and even slightly rising), real returns on fixed income investments are decreasing; in turn, this fuels demand for higher yielding/riskier EUR-denominated assets like equities; or forces Euro-Zone-based investors to look outside the region for opportunity – which means capital needs to be converted from Euros into foreign currencies. This is the “portfolio balancing channel” effect that ECB President Mario Draghi has been discussing since the beginning of the year.

The Euro’s appeal, therefore, is rooted in the oversized short position currently in the market, which at least in context of EURUSD, could help propel covering in the very near-term (as was seen again this past week). As of March 14, there were 212.3K net-short contracts held by speculators in the futures market, off from 215.3K a week earlier (and down from the 226.6K seen during the week ended March 31, 2015). Otherwise, market participants are viewing the drop in Euro-Zone yields as a sign that the ECB will keep rates for an extended period of time, well-beyond the projected September 2016 finsih for its QE program: the Morgan Stanley ‘months to first rate hike’ index currently resides at 56.5, suggesting a December 2019 or January 2020 rate hike at the earliest.

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newdigital, 2015.04.21 07:08

Forex technical analysis (VIDEO): EURUSD starts the week more bearish. Can it continue? (based on forexlive article)

The EURUSD started the day at the highs and wandered lower in trading as the week got started. Will the bearishness continue this week? What levels will keep the bears in control.

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newdigital, 2015.04.21 16:00

EUR/JPY, EUR/USD Triangles Continue to Develop Downside Potential (based on dailyfx article)

• EURJPY, EURUSD triangles begin to favor more downside.
• EURGBP double top remains valid towards 0.7063.

Short-term technical indicators are close to turning outright negative for various EUR-crosses. For EURJPY and EURUSD, this potentially means continuation outside of their recent triangls after breaking the uptrends from last week's lows (although in EURUSD, a longer-term triangle may be in the works). For EURGBP, we've seen the key topside resistance level respected throughout the consolidation, keeping the double top intact.

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newdigital, 2015.04.21 17:10

ECB Mulls Tightening Noose Around Greek Banks (based on rttnews article)

The European Central Bank is exploring measures to reduce the Emergency Liquidity Assistance to Greek banks, reports said Tuesday, citing people with knowledge of the discussions. ECB Staff have suggested an increase in the haircuts banks take on the collateral they offer for emergency funding from the Bank of Greece, both Bloomberg and CNBC said.