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USDJPY: "Golden" Breakout Could Target 7.5-Year High
The technical perspective is relatively clear. USDJPY broke out of its near-term triangle pattern on Friday and is maintaining that move thus far this week, but more broadly, rates are in a sideways range with support in the 118.30-50 zone up to resistance at the 7.5-year high around 122.00. With the RSI also breaking out of its own triangle pattern, more technical strength is favored this week, though the pair may struggle to break strong resistance near 122.00 without a major fundamental catalyst.
In that vein, there are a few major fundamental storylines to watch this week. Logistically, it's worth noting that Japanese Banks are closed today and tomorrow for the end of the Golden Week celebration, so liquidity (and volatility) could be limited in the early part of this week. Later in the week, traders will gain insight into the US economy's performance in April, highlighted by the release of the ISM Non-Manufacturing PMI report (Tuesday), the ADP Non-Farm Employment report (Wednesday), a panel discussion from Fed Chair Yellen (Wednesday), and the marquee US Non-Farm Payroll report (Friday). Traders will be looking to see if the world's largest economy is accelerating after yet another disappointing first quarter of the year and a strong NFP report would go a long way toward alleviating fears of continued economic malaise.
Forex technical analysis: EURUSD peeks below a support level (based on forexlive article)
So it is a slow grind and may just rebound off the next support, but the EURUSD has touched (and is taking a peek below) the 100 hour MA (blue line in the chart below) at the 1.1135 level currently.
There are reports that the IMF will cut off support for Greece. IMF Lagarde and Greece's Tsipras are holding a telephone conference.
European commission president Juncker says Greece exit for Euro area is no option and that Europe must show solidarity with Greece.
if actual > forecast (or previous data) = good for currency (for AUD in our case)
[AUD - Cash Rate] = Interest rate charged on overnight loans between financial intermediaries. Short term interest rates are the paramount factor in currency valuation - traders look at most other indicators merely to predict how rates will change in the future.
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Australia Trims Key Rate By 25 Bps To Record Low
The Reserve Bank of Australia lowered its benchmark interest rate by a quarter point as inflation outlook provided the space for monetary policy easing.
As expected by economists, the policy board governed by Glenn Stevens on Tuesday decided to cut the cash rate by 25 basis points to a record low of 2.00 percent, effective May 6.
This was the second reduction this year. The bank last reduced the rate by 25 basis points in February.
"The Board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand," the bank said in a statement.
Today's rate cut is unlikely to be the last in this cycle, Paul Dales chief Australia & NZ economist at Capital Economics said.
EUR/USD Technical Analysis: Short Position Now in Play (based on dailyfx article)
The Euro put in a bearish Evening Star candlestick pattern, hinting a move lower against the US Dollar may be in the cards. A daily close below the 14.6% Fibonacci expansion at 1.0982 exposes the 23.6% level at 1.0793. Alternatively, a push above the 38.2% Fib retracement at 1.1271 opens the door for a challenge of the 50% threshold at 1.1519.
"Although lately I’ve been treating a longstanding bear-market target in the low $800s as practically a done deal, my trading partner, John Boutiette reminded me last week that, from a purely technical standpoint, such an outcome would not even become probable, let alone certain, until sellers trash the 1120.50 midpoint support shown. So far, the low of the 43-month-old bear market is 1134.10, leaving about $13 of room before we have reason for deep concern. And just to be sure, I’ll stipulate that the June contract close beneath 1120.50 for two consecutive months before we assume the 808.50 target is in play. Meanwhile, that midpoint support should be regarded not only as a minimum downside objective for now, but as a potential spot to try bottom-fishing with a tight stop-loss."
if actual > forecast (or previous data) = good for currency (for USD in our case)
[USD - Trade Balance] = Difference in value between imported and exported goods and services during the reported month. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.
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"The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $51.4 billion in March, up $15.5 billion from $35.9 billion in February, revised. March exports were $187.8 billion, $1.6 billion more than February exports. March imports were $239.2 billion, $17.1 billion more than February imports.
The March increase in the goods and services deficit reflected an increase in the goods deficit of $14.9 billion to $70.6 billion and a decrease in the services surplus of $0.6 billion to $19.2 billion.
Year-to-date, the goods and services deficit increased $6.4 billion, or 5.2 percent, from the same period in 2014. Exports decreased $11.7 billion or 2.0 percent. Imports decreased $5.3 billion or 0.8 percent."
Euro off lows after EC forecasts (based on investing.com article)
The euro backed away from session lows on Tuesday after the European Commission raised its growth forecast for the euro zone this year, as investors looked ahead to U.S. data on service sector activity and trade later in the day.
EUR/USD was at 1.1119, still down 0.24% for the day, after falling to lows of 1.1066 earlier.
In its quarterly forecasts the EC said it now expects the euro zone economy to grow to 1.5% in 2015 up from 1.3% three months ago.
The Commission also revised up its forecast for inflation this year to 0.1% from its earlier forecast for a decline of 0.1% and said it expects inflation of 1.5% in 2015 up from 1.3%.
But it slashed its forecast for Greek economic growth to just 0.5% this year down from 2.5% previously and warned that the recovery has stalled since snap elections at the end of last year.
The euro remained under pressure following media reports that the International Monetary Fund pushed the euro zone to cut Greece’s debt burden last month, amid fears that its debt is becoming unsustainable.
Athens is scrambling to reach an agreement with its creditors on a package of economic reforms for more bailout funds before it runs out of cash.
Aussie dollar breaks higher as USDJPY falls below 120.00 (based on forexlive article)
The aussie has kept its bid after the RBA and the USD falling has given it the extra push.
For USDJPY, 119.45/50 is the next major support point ahead of 119.30/35 and the 100 dma at 119.20. We're already finding resistance around 119.85/95 and will probably see more around 120.00 and 120.10.
AUDIO - Is the Super Cycle Ending? with Scott McCormick (based on fxstreet article)
Market guru, Bill Gross, forecasts the next 35 years as lacking big market gains, and the end of a super cycle in the market. Master trader, Scott McCormick joins Merlin to see if it is truly a super cycle, and what impact that might have on traders going forward. The duo also talk about current market levels and trends.
USD/JPY Technical Analysis: Treading Water Near 120.00 (based on dailyfx article)
The US Dollar corrected narrowly lower after seemingly completing an upside breakout against the Japanese Yen late last week. A daily close above the 38.2% Fibonacci expansion at 120.68 exposes the 50% level at 121.41. Alternatively, a reversal below trend line resistance-turned-support at 119.56 opens the door for a challenge of the April 3 lowat 118.71.