Comments and forex-analytics from FBS Brokerage Company - page 135
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The banks recommend selling euro
Danske Bank: sell EUR/USD at $1.3097, target $1.3004 and stop at $1.3169.
Commerzbank: sell EUR/USD at $1.3350, target $1.3025 and lower stops from $1.3415 to $1.3355.
The pair has been trading in a very volatile way today. Data from France and Germany wasn’t bad, but Sentix Investor Confidence was disappointing with -14.7 in April from -8.2 in March.
RBS: trading GBP/USD
Technical analysts at RBS recommend buying British pound versus the greenback at on the dips to $1.5810/35 stopping at $1.5750 and targeting $1.6072.
The specialists note that GBP/USD will face strong resistance in the $1.6072/91 (“tweezer top” formed in November 2011). There’s also resistance at the recent highs of $1.5930 and $1.5987. If the forecast doesn’t realize, then the important downside levels lie at $1.5666 and $1.5585.
UBS: trading USD/JPY on the BOJ
Analysts at UBS believe that the Bank of Japan will deliver the expected easing at its second meeting this month on April 27. The specialists underline that this way Japanese central bank will have time to adjust their policy to what the Federal Reserve comes up with on April 24-25 justifying the policy with an updated Outlook Report.
In their view, the BOJ may:
- Extend Asset Purchase program from the end of 2012 to June 2013 or longer;
- Extend APP by at least another 5 trillion yen, concentrated in government bonds component;
- Remove the limit of buying the JGBs via the APP of only those issues with 2 years left to maturity or less;
- Raise inflation target from 1% to 2%.
How to trade using such assumption: UBS expects USD/JPY to drift down to 80.00/50 and then start rebound after the BoJ meeting on April 27 aiming to 85.00 yen in 3 months (if the Fed’s approach remains unchanged).
RBS: outlooj on the EUR/GBP
According to RBS analysts, the Britain’s economy is moving in a positive direction. The outlook is still not clear-cut, but recent better-than-expected data show that in Q1 the economy of the region is growing.
Specialists direct our attention to the bunch of positive PMI data (particularly, service and construction PMIs). Mixed household, public and financial sectors data don’t permit to make a completely favorable long-term forecast, but the GDP seems to have improved in Q1. Stronger growth will help the government to meet the deficit reduction plans.
Specialists forecast the EUR/GBP to weaken to 0.8080 level. However, the 'doji' pattern on Friday and the upward movement at the beginning of the week promise a correction to 8280/8315 levels. Strategists recommend going short with a stop loss at 0.8352. The downside targets remain at 0.8223 and 0.8192 levels.
Mizuho: dollar may rise to 105 yen
According to analysts at Mizuho Corporate Bank, the greenback may strengthen to 105 yen over the next couple of years (a highest level since October 2008).
On a weekly Ichimoku chart, the USD/JPY rose above the Kumo (3), clamped between the Kijun (2) and Tenkan (1) lines. Mizuho specialists say this pattern means the dollar will strengthen further to 85 yen and then to 105 yen. On a monthly chart, analysts expect the pair to overcome the top of the cloud in two years.
Euro area: auctions, yields and euro
The market’s opened in the risk-off mode today: Asian shares dropped today after S&P 500 lost 1.7% yesterday and European stocks fell to 10-week minimum on Tuesday.
Italian 10-year yields rose yesterday to 5.69%, the maximum since February, while Spanish ones reached the highest level since December of 5.99%.
Note, however, that the picture for today isn’t entirely grim as Italian/German and Spanish/German 10-year yield though slightly, but narrowed.
Investors are waiting for Italian debt auctions: the nation aims to sell 11 billion euro ($14.4 billion) of bills today (3 billion euro of 91-day bills and 8 billion euro of 361-day bills) and longer-term debt tomorrow (due in 2015, 2020 and 2023). Results are due around 10:10 GMT.
In addition, Germany plans to sell up to 5 billion euro of 10-year bonds. Results are due after 09:30 GMT.
Analysts at Mizuho see no reason to buy euro. Nomura adds that if EUR/USD closes below $1.3050, it will slide to $1.2600.
JPMorgan: EUR/JPY’s facing resistance
Technical analysts at JPMorgan Chase believe that EUR/JPY may decline to the minimal level since February of 104 yen.
The specialists note that the pair has reached resistance in the 105.65/106.00 area (38.2% Fibo retracement of an advance from January minimum to March maximum, 200-day MA and March minimum).
Japanese currency weakened versus the majority of its peers as the Bank of Japan has left yesterday its policy unchanged and the market’s now pricing in easing at the BOJ’s second meeting this month that will take place on April 27.
USD/JPY: upward correction may be coming
US dollar keeps trading within downtrend versus Japanese yen sliding from March maximums above 84 yen.
USD/JPY has reached the lower line of the price channel and is now likely rebound targeting the upper line of the channel during the next several days.
The greenback may get support from strong bids in the 80.50/55 area and October 2011 maximum in the 79.50/55 region.
State Street Bank: “It’s a bit too early now for the market to trade on the Bank of Japan's meeting on April 27. But expectations of further easing mean the yen is unlikely to keep rising, beyond the 80 yen mark. But the market will probably start trading on it perhaps next week.”
Longer-term outlook
Warning from RBS: “There’s an unrealistic expectation of how early central banks will tighten in the world outside Japan. If the market moves to reflect that and we see 2-year yields in the US and the rest of the world come down back toward Japanese levels, the upward pressure on the yen will reemerge.” The 2-year yield spread between US and Japanese bonds widened to 0.20 from 0.08 percentage point in January. RBS thinks USD/JPY may decline to 73 yen by the end of 2012.
SocGen: trading EUR/USD
Strategists at Societe Generale advise to go short on the EUR/USD, entering the trade at 1.3100 with a stop at 1.3250 and a target of 1.2600.
According to analysts, unsuccessful bond auctions in Europe and recent negative U.S. NFP data point to likelihood of another possible round of QE. Before the lackluster reports were out, investors believed QE3 may be beneficial for risky assets. However, now it became clear that the further monetary easing will point at grave problems in the global economy. The risk-off market mode and troubles in Spain and Italy will weigh on the common currency.
Commerzbank: technical levels for EUR/USD
Technical analysts at Commerzbank claim that support for EUR/USD lies at $1.3032. If the pair drops below this level, it will decline to $1.2974/54 (February minimum and 61.8% Fibonacci retracement of the single currency’s advance from January minimums to February maximums) and then to $1.2624.
The specialists claim that resistance for euro is found at $1.3207 (55-day MA) and $1.3487 (February maximum).