Eur/usd - page 129

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France CB Leading Index Drops In May

French leading index decreased in May, dragged by production expectations and new orders, results of a survey by the Conference Board showed Friday.

The Conference Board leading index, an indicator of future economic expectations, fell 0.2 percent month-on-month in May. This follows a revised 0.1 percent rise in April.

Among the sub-indices, the decline in production expectations and industrial new orders more than offset the large positive contributions from yield spreads, building permits, new unemployment claims and the stock price index.

The Conference Board coincident index, a measure of current economic activity, decreased 0.1 percent in May, after remaining unchanged in April.

Wages and salaries increased in May, while industrial production and employment declined. Personal consumption of manufactured goods remained unchanged in May.

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EURUSD 1.35 still on the radar - key levels cited

See my Daily Forex Trading Outlook

Forex Trading Outlook for July 18, 2014 - YouTube

 

EUR/USD < 1.35: 6 reasons and the next levels

It finally happened: EUR/USD cracked below the 1.35 level that Mario Draghi sent it to. The pair was hovering above this line and it made a move below. The new low so far is 1.3490 – the lowest since February.

The euro was pushed down due to several reasons:

  1. Weak European indicators: German ZEW came out below expectations, and so did the current account. And while inflation did not disappoint, at 0.5% it remains at rock bottom levels.
  2. Portugal: With a major shareholder in Portugal suffering issues, there are worries that the whole banking system in Europe remains fragile.
  3. Change in euro-zone flows. With the ECB’s OMT backstop, peripheral bonds seemed very attractive, with their high yields. But after all the inflows, these bonds are already less attractive and flows may have changed. This is a slow process, but it is probably beginning to take effect.
  4. A slight hawkish tilt by the Fed: While Janet Yellen made her best effort not to say anything, the warning about some “stretched valuations” in some stock market sectors could be seen as a warning that not only is QE ending, but rate hikes may be coming sooner than later.
  5. Geo-political worries: The world is unstable. The downing of the Malysian plane in Ukraine can have dangerous implications, especially as it was a plane leaving Amsterdam, in the heart of the EU. Russian gas supplies to the old continent may be in danger. Adding the ground offensive Israel launched into Gaza, the “risk off” sentiment does not help.
  6. Italy GDP forecast downgraded: Ryan Littlestone at Forex Live reports that the Bank of Italy has downgraded its 2014 GDP forecast from a not so impressive 0.7% to an even worse 0.2%.

Further support awaits at 1.3475, followed by 1.3450.

Resistance awaits back at 1.35, and this line could be fought over. Further resistance awaits at 1.3550.

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EUR/USD eases off 7-month lows after U.S. data

The euro eased off seven-month lows against the U.S. dollar on Friday, after the release of disappointing U.S. consumer sentiment data, although concerns over geopolitical tensions in Ukraine and the Middle East continued to dampen risk sentiment.

EUR/USD pulled away from 1.3491, the pair's lowest since January, to hit 1.3513 during U.S. morning trade, still down 0.09%.

The pair was likely to find support at 1.3478 and resistance at 1.3540, Thursday's high.

In a report, the University of Michigan said its consumer sentiment index fell to a four-month low of 81.3 this month, from a reading of 82.5 in June, confounding expectations for rise to 83.0.

Sentiment was hit earlier, after a Malaysian Airlines passenger jet crashed in eastern Ukraine overnight Thursday. All 298 people on board were killed, sharply raising the stakes in a conflict between Kiev and pro-Moscow rebels in which Russia and the West back opposing sides.

The crash came a day after the U.S. and the European Union announced a fresh round of sanctions against Russia, following the annexation of Crimea in April and ongoing tensions in the rest of Ukraine. The U.S. package was the largest round of penalties so far.

Markets were also jittery after Israel announced late Thursday the start of a ground campaign in Gaza after 10 days of aerial and naval bombardments failed to stop Palestinian rocket attacks.

The euro was fractionally higher against the pound, with EUR/GBP edging up 0.11% to 0.7918.

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i think the uptrend is coming from monday

 

EUR/USD forecast for the week of July 21, 2014

The EUR/USD pair fell during the course of the week after initially trying to rally. However, we remain above the 1.35 handle, and therefore we feel that the market is still simply going to consolidate in this relatively tight range. Because of that, we don’t necessarily like the idea of being involved in this market from a longer-term perspective, and with this, we are positive, but only for the very short-term. If we break down below the 1.35 level however, this market could go down to the 1.33 level.

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Weidmann Says ECB Won't Delay Rate Hikes For Public Finances

European Central Bank Governing Council member Jens Weidmann said on Friday that easy monetary policy has done what it can to maintain price stability in the euro area and the central bank will not delay any interest rate hike, when needed, in consideration of the state of public finances.

"It is particularly important to make it quite clear now that the Eurosystem will not put off a necessary increase in central bank interest rates out of consideration for public finances," Weidmann, who heads the Bundesbank, said in a speech in Madrid.

"Looking at the euro area, I would therefore say that monetary policy has done its bit towards maintaining price stability."

Monetary policy alone cannot resolve the crisis, the policymaker said, adding that some unconventional measures that the ECB took has pushed it to the maximum of its mandate.

However, the June measures, which includes cutting the refi rate to a record low and the deposit rate to negative as well as unveiling a raft of liquidity measures, cannot be compared to with the crisis measures taken two or three years ago, Weidmann said.

An excessive long period of low inflation could paralyze the Eurozone economy and the central bank is focused on preventing that, he added.

Saying that it would be wrong to play down the risks and side-effects of the June measures, Weidmann drew attention to the danger of exaggerations on the asset and real estate markets, especially the hunt for yield.

"Low interest rates also ease the pressure on governments to vigorously tackle their countries' problems," he said.

"There is a danger that the low interest rates will be used not to consolidate budgets, but to finance additional spending."

He stressed the need for sound public finances as a prerequisite for a stability-oriented monetary policy.

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EUR/USD Forecast July 21-25

EUR/USD lost ground in a week that saw the odds turn against it. The Bundesbank Monthly Report, Manufacturing and Services PMIs and the German Ifo Business Climate are the major events on our calendar. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.

Germany’s ZEW Economic Sentiment registered another slide, reaching a disappointing 27.1 - a 19 month low. Increased geo-political risks in form of the Ukraine crisis as well as more worries from Portugal also weighed on the common currency. In the US, Yellen’s testimony helped the dollar just a bit, as US data was mixed. After dipping below 1.35, the pair eventually recovered above the line, but remains on low ground. What is the next direction for the pair?

  1. German PPI: Monday, 6:00. German producer prices declined more than expected in May, down 0.2%, due to a sharp fall in energy prices. The reading was contrary to predictions for a 0.2% rise and followed a 0.1% decline in the previous month. On a yearly base, PPI declined 0.8% from 0.7% in May 2013. PPI is expected to gain 0.1%.
  2. German Bundesbank Monthly Report: Monday, 10:00. German Bundesbank report in June warned that economic growth may slow in the second quarter but should expand again in the third quarter due to stronger demand for construction and a positive mood among consumers. However the growth rate in the third quarter is not expected to match the strong growth registered in the first quarter. However the central bank akso reported that the continuation of economic expansion also depends on the Ukraine crisis not escalating further.
  3. Consumer Confidence: Wednesday, 12:00. Eurozone consumer confidence dropped 0.3% in June, reaching -7.4. The reading was worse than the -6.5 predicted by analysts. Nevertheless, confidence has improved steadily since the 42-month low of -26.7 in November and continues to improve hand in hand with economic growth. Consumer confidence is expected to reach -6 this time.
  4. Spanish Unemployment Rate: Thursday, 6:00. Spain’s unemployment rate increased in the first quarter, rising to 25.9% from 25.7 in the last quarter of 2013 because of the cold winter season badly affecting tourism-dependent sectors. Furthermore, Spain’s work force has contracted by 187,000 to 22.884 million. The number of employed fell by 184,600 to 16.961 million, the lowest first quarter drop in six years. Despite the pickup in economic activity, unemployment remains at high levels since 2012. Prime Minister Mariano Rajoy has reiterated that job creation is his top priority after pushing through a labor market reforms, reducing a budget gap and rescuing the country’s banks. Overall, the improvement in the job market is expected to show in the next quarters.Spanish Unemploymentrate is expected to remain 25.9%.
  5. Flash manufacturing and services PMIs: Thursday Business activity in the euro zone declined for a second straight month in June, indicating recovery continued to be modest while France struggling to achieve economic growth. Both manufacturing and services sectors fell in May. Flash Manufacturing PMI dropped to 51.9 from 52.2 in April, while the Services sector dropped to 52.8 following 53.2 in the previous month. Activity in Germany’s services sector slowed 56.0 to 54.8 while the manufacturing sector inched up from 52.3 to 52.4. The main concern was the ongoing weakness France. The private sector activity declined to 47.8 from 49.6 remaining in contraction, while the services PMI fell to 48.2 from 49.1 in May. Both figures were lower than expected. The European Central Bank provided additional stimulus at their June 5 meeting, saying more will come if economic conditions don’t improve. However the surveys also noted that economic growth would pick-up in the coming quarters. French manufacturing is expected to rise to 48.5, while services is expected to reach 48.9, German manufacturing is predicted to improve to 52.2 and services to 52.7, the Eurozone manufacturing is projected to reach 52 and services to 52.7.

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EURUSD Weekly Outlook: What’s Driving The Current Trading Range, What Will Break It

Summary

Technical Outlook: The pair remains within its 1.35-7 trading range, with any breaches of the 1.35 area likely just temporary as long as the fundamentals that have supported the EURUSD hold. Our directional bias remains bearish.

Fundamental Outlook: Neutral near term, bearish longer term, and what could change this outlook

Trader Positioning: Pros steady, small retail traders shift strongly to the long site

Conclusions: What’s preserving the current likely trading range and what to monitor to anticipate the eventual breakout

TECHNICAL OUTLOOK

Summary

Short Term Technical Outlook: Neutral, as downward momentum clashes with strong support at 1.3500. That level is likely to break, see below for whether it’s likely to happen this week.

Medium & Long Term Technical Outlook: Bearish – all momentum indicators on weekly charts suggest more downside in the coming months.

First we look at overall risk appetite as portrayed by our sample of global indexes, because the EURUSD usually tracks these fairly well, particularly the leading US and European indexes. The main exception to this rule comes when either the Fed or ECB is expected to make a policy change in the near future, because changing interest rate expectations are more influential than overall risk appetite trends.

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EURUSD: Prints Negative Candle, Risk Builds On The Upside

EURUSD: Though closing lower the past week, the pair ability to reject downside price and print a rejection candle is suggestive of a recovery higher.

Support lies at the 1.3490 level where a break will expose the 1.3450 level. Below here will pave the way for a move lower towards the 1.3400 level.

If this continues, expect further downside to occur towards the 1.3350 level. Its weekly RSI is bearish and pointing lower supporting this view. On the upside, resistance lies at the 1.3650 level, its psycho level followed by the 1.3700 level.

Further out, resistance comes in at the 1.3750 level followed by the 1.3800 level. All in all, EUR remains biased to the downside in the medium term.

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