EUR/USD: 2015 Forex Forecast

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newdigital, 2015.01.03 08:33

Forex Weekly Outlook January 5-9

US ISM non-manufacturing PMI, trade balance, FOMC meeting minutes, Major employment data including the all-important Non-Farm Payrolls report, Rate decision in the UK. These are the main economic releases for this week. Let’s see, in detail, the market movers to impact Forex trading.

Last week, US jobless claims release disappointed with a 17,000 rise in the number of new claims, reaching 298,000. However, the four week moving average inched slightly to 290,750. Furthermore, Consumer confidence, released earlier, rebounded to 92.6 following 91 points in November, indicating consumers are more confident at year-end than they were at the beginning of the year. The present situation index reached its highest level since February 2008. Economists expected sentiment to reach a higher reading of 94.6. Will the US economy continue its positive trend in 2015?

1. US ISM Non-Manufacturing PMI: Tuesday. 15:00. Non-manufacturing Purchasing Managers Index rebounded in November after two straight months of declines. The Index increased to 59.3 beating forecasts of 57.5. 14 industries out of the 18 surveyed reported expansion. Non-manufacturing PMI is expected to reach 58.2 in December.
2. US ADP Non-Farm Employment Change: Wednesday, 13:15. U.S. private sector added 208,000 workers in November following 230,000 jobs gain in the previous month, indicating the slowdown in global economy does not impact US domestic activity. The ongoing improvement in the labor market leads to faster wage growth. A Labor Department report showed compensation per hour increased 1.3% in the third quarter rather than the 2.3% reported in the previous month, and declined 0.9% instead of the expected 2.3% rise. ADP job gain is expected to reach 227,000 in December.
3. US Trade Balance: Wednesday, 13:30. The U.S. trade deficit contracted less than expected in October reaching $43.03 billion. Lower crude oil prices had limited impact. Imports jumped 0.9%, reaching $241 billion, while exports increased 1.2% to $197.5 billion, indicating the economy was is resistant to the slowdown in global demand. Economists forecasted a deficit of $41.3 billion. Exports to the European Union increased 8.5 percent, while China saw a 36 percent jump in the value of goods it imported from the United States. Exports to Japan rose 4.0 percent, while those to Canada and Mexico – the main U.S. trading partners – reached record highs. Sustained dollar strength, however, is expected to undercut export growth in the months ahead. Imports from China hit an all-time high, leaving the politically sensitive trade gap at $32.6 billion. U.S. trade deficit is predicted to narrow to 42.3.
4. US FOMC Meeting Minutes: Wednesday, 19:00. The Federal Reserve minutes from November showed some members were concerned about the moderate pace of inflation, despite the strengthening trend in the job market. Policy makers projected a weaker economic outlook and increased downside risks in Europe, China, and Japan.
5. UK rate decision: Thursday, 12:00. The Bank of England kept its key interest rate at a record low of 0.50% amid weak inflation threatening economic growth. Policy makers also voted to maintain cash stimulus at £375 billion. Britain’s 12-month Consumer Price Index (CPI) rate increased to 1.3% in October from a five-year low of 1.2 percent in September, but remained far below the BoE’s government goal of 2.0%. No change in rates is expected this time.
6. US Unemployment Claims: Thursday, 13:30. The number of Americans filings initial claims for unemployment benefits in the U.S. increased last week by 17,000 to a seasonally adjusted 298,000, beating market forecast. This was the highest figure since November 22 topping analysts’ predictions for a 287,000 reading. The four-week moving average, a less volatile measure, climbed to 290,750. The number of claims is expected to reach 291,000 this week.
7. Canadian employment data: Friday, 13:30. Canada’s job market had a temporary setback in November, contracting 10,700 jobs which nudged the unemployment rate slightly to 6.6%. However, despite the disappointing release, the general trend is positive showing a 146,000 job increase in the last 12 months. The majority of job addition in the last few months are in full time employment. Canadian economy is expected to expand in 2015 particularly if the US economy continues to strengthen. Canada’s job market is expected to add 10,300 positions while the unemployment rate is expected to remain at 6.6%.
8. US Non-Farm Employment Change and Unemployment Rate: Friday, 13:30. The US labor expected more than expected in November, surging by 321,000 jobs after adding 243,000 on October. This was the biggest jump in employment since January 2012, reaching a12 month average of 224,000. Economists expected a gain of 231,000 positions, however wage growth was still rather weak. The unemployment rate for November was 5.8%, unchanged from October’s reading in line with market forecast. The report also said that the labor force participation rate was unchanged at 62.8%. Us labor market is forecasted to expand by 241,000 while the unemployment rate is expected to decline to 5.7%.

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newdigital, 2015.01.03 10:56

EUR/USD Monthly Technical Analysis for January 2015 (based on fxempire article)

The new year begins with the interest rate differential strongly favoring the U.S. Dollar over the Euro. Simply stated, the U.S. Federal Reserve is getting ready to raise interest rates in 2015 while the European Central Bank is gearing up for a fresh round of quantitative easing (QE). Rates should rise in the U.S. and should fall in Europe, increasing demand for the Greenback.

The key factor that will determine the ECB’s decision on quantitative easing will be inflation. The central bank is trying desperately to prevent deflation from creeping into the economy. Inflationary spikes can be tolerated because the central banks have aggressive tools to fight this. However, deflation is a difficult challenge because central bank weapons are limited.

The ECB will start to get important inflationary data early in the month which should cause a volatile reaction from traders in either direction. The first key date to watch is January 7. On this date, traders will get the opportunity to react to the latest CPI Flash Estimate and Core CPI Flash Estimate. These reports should determine what the ECB will do about QE at its monetary policy meeting on January 22.

Oversold conditions could produce periodic short-covering rallies throughout the month, but these rallies are likely to set up fresh shorting opportunities. The monthly chart indicates that the fundamentals are bearish and even if they did begin to change, it would take several months to clear out the shorts and form a bottom.

The key number to watch early in the month is the July 2012 bottom at 1.2042. This is the first major downside target so traders may try to take care of this price early in the month. If the selling pressure persists then look for the downside momentum to continue down to the June 2010 bottom at 1.1876.

The 1.2042 price level may be treated like a pivot throughout the month. A sustained move above it may even trigger a rally back to 1.2341, but this is unlikely to occur unless the ECB backs away from implementing QE this month.

The initial reaction to QE should be bearish for the Euro. The size of the break will be determined by the size and length of the program. Some optimistic investors feel the EUR/USD will decline during the first quarter of 2015, but will strengthen throughout the year because the QE will start to help stimulate the Euro Zone economy. Others feel that the U.S. faces too much exposure to China and this could derail its economy.

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Something Interesting in Financial Video January 2015

newdigital, 2015.01.03 07:47

Jim Rogers 2015 Forecast Buy Gold , Bull Market will come

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newdigital, 2015.01.03 20:24

EUR/USD Forecast: new 4-year lows (based on fxstreet article)

The EUR/USD pair extended its latest decline in this first working day of 2015 to levels not seen since June 2010. Europe started the day with the wrong foot, as data shows Markit Manufacturing readings missed expectations in the EZ and most of it members, exception made by Germany, where PMI meet expectations of 51.2.

From a technical perspective, the bearish bias remains intact, as the 4 hours chart shows price declined further below its 20 SMA whilst RSI turned lower despite in oversold territory. The immediate bearish target comes at the 1.2000 figure, and it won’t be easy to break on a first attempt; but if it’s tested and the bounce from it remains limited, chances are of a break lower, with the selloff most likely extending down to 1.19.

The 1.2070 level comes as the immediate intraday resistance, with a recovery above it probably triggering an upward corrective movement towards the 1.2120 price zone.

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newdigital, 2015.01.03 20:27

EUR/USD: January 2015 Forecast (based on dailyforex article)

The EUR/USD pair has been in a massive decline for some time now, but when I look at this chart I recognize that we may be reaching the end of the downtrend, at least for a while. After all, the 1.20 level below is a massive support barrier that we have seen come into play a couple of different times over the last five years. With that being the case, and the fact that we have sold off so viciously, I believe that we are reaching the end of the downtrend, at least for the short-term.

With a short-term, I mean possibly several months. Yes, I recognize that the Euro has a lot of issues and could continue to have those issues for some time. Ultimately though, there comes a point in time where there is almost nobody left to continue selling. With that, it’s very likely that the bounce that has been needed for some time is coming.

Is the trend changing?

When I look at the downtrend, I recognize that there is a significant amount of bearish pressure, but at the same time the rate of descent has slowed drastically. I believe that we are at a very important juncture, simply because the pair has been sold off so viciously and so overdone in that time. Ultimately, if there’s any hint whatsoever at the possibility of the Federal Reserve loosening monetary policy again, this pair will skyrocket to the upside.

Because of this, I feel that the market will more than likely look for reasons assert going higher, because quite frankly even in this environment, the 1.20 level is a bit on the cheap side as far as the Euro is concerned. If the European Central Bank suddenly looks less likely to loosen its monetary policy, that’s reason enough for this pair to go higher as well. In other words, I think now the upside risk is a lot higher than the downside risk. We have simply gone too far to the downside to justify selling at this point in time. I think that we will see a little bit of weakness in the beginning of the month, but eventually sometime during the month of January, we will see the buyers return.

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newdigital, 2015.01.04 21:36

EUR/USD weekly outlook: January 5 - 9

The euro fell to four-and-a-half year lows against the dollar on Friday after European Central Bank President Mario Draghi signaled that it would implement quantitative easing measures early this year.

EUR/USD was down 0.85% to 1.2002 in late trade, the weakest level since early June 2010.

In an interview with German financial newspaper Handelsblatt Draghi said the risk of the ECB not fulfilling its mandate of price stability is higher now than six months ago. The remarks indicated that the central will expand its asset-purchase program to include government debt in order to spur growth and inflation.

The annual rate of euro zone inflation was just 0.3% in November, well below the ECB’s target of close to but just below 2%.

The single currency was also pressured lower after data showed that manufacturing activity in the euro area grew at a slower rate than initially estimated in December, adding to concerns over the outlook for fourth quarter growth.

The dollar rose to parity against the Swiss franc for the first time since December 2010, as weakness in the euro added to pressure on the Swiss National Bank to defend its 1.20 per euro exchange rate floor. USD/CHF was up 0.83% to 1.0014 in late trade.

Switzerland’s central bank imposed the exchange rate floor in September 2011 to head off the threat of deflation and protect the country's exporters from a rapidly rising currency.

The SNB eased monetary policy in December, when it imposed negative interest rates on commercial bank deposits, in a bid to prevent the continued appreciation of the Swiss franc against the euro.

EUR/CHF was almost unchanged at 1.2019 in late trade.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, advanced 0.91% to nine-year peaks of 91.47. The index rallied 12% in 2014, boosted by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market. Wednesday’s Federal Reserve meeting minutes will be also closely watched, while the euro zone is to publish preliminary data on consumer inflation.

Monday, January 5

• In the euro zone, Germany is to publish preliminary data on consumer price inflation, while Spain is to report on the change in the number of people employed.

Tuesday, January 6

• In the U.S., the Institute of Supply Management is to release data on non-manufacturing activity.

Wednesday, January 7

• Germany is to publish data on retail sales, as well as a report on the change in the number of people employed. The euro zone is to release preliminary data on consumer inflation and a report on the unemployment rate.
• The U.S. is to release a report on ADP nonfarm payrolls, in addition to data on the trade balance. Later Wednesday, the Federal Reserve is to publish the minutes of its most recent meeting.

Thursday, January 8

• The euro zone is to publish a report on retail sales.
• The U.S. is to produce its weekly report on initial jobless claims.

Friday, January 9

• The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.