Eur/usd - page 171
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a Huge sell off on all the american stocks after the FED decision and the fear that the weak Euro will damage the american economy. soon it has to be a start of a bullish trend the FED and ECB will push it to happen.
Euro Declines as Draghi Cites ‘Excessively Low’ Inflation
The euro declined for the first time in four days as European Central Bank President Mario Draghi called for structural reforms in the region and pledged to expand stimulus measures if needed.
The greenback gained against 12 of its 16 major peers as Goldman Sachs Group Inc. sees it strengthening more versus the euro, yen and three other peers in revised 12-month forecasts. The U.S. currency erased earlier losses after initial jobless claims unexpectedly fell last week. The yen touched a three-week high as investors pushed back bets for when the Federal Reserve will increase interest rates.
“Whenever Draghi speaks, people expect it to be euro negative,” Robert Sinche, a global strategist at Pierpont Securities LLC in Stamford, Connecticut, said by phone. “There will be this continued discussion about a currency being a lever that’s left for them. Fiscal-policy levers aren’t there, monetary-policy levers aren’t there, so the exchange rate is one of the few levers that can probably be pulled.”
The euro fell 0.3 percent to $1.2691 as of 5 p.m. New York time after earlier gaining as much as 0.5 percent. The shared currency lost 0.6 percent to 136.85 yen. The dollar fell 0.2 percent to 107.84 yen after touching 107.53, the lowest since Sept. 17.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major currencies, rose 0.3 percent to 1,065.53 after dropping 1.5 percent in the previous three days.
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The break above 1.2700 brought a short squeeze to the 1.2780-1.2820 price region, with resistance at 1.2790 eventually bringing about heavy selling and profit taking to bring the exchange rate back below 1.27. With the pair in its third day above its 10-day moving average we expect short term bullish correction to continue (despite long-term downtrend and bearish fundamental environment) and will look to set a long on a drop back down to the 10-day.
ECB Chief: Ready To Take Additional Measures To Fight Deflation
European Central Bank President Mario Draghi reaffirmed the bank's commitment to lift inflation from its "excessively" low level through additional monetary easing and cautioned that there would be no recovery without reforms.
The governing council is "unanimous in its commitment to take additional unconventional measures to address the risks of a too prolonged period of low inflation," ECB chief said at the Brookings Institution in Washington D.C. late Thursday.
"We are ready to alter the size and/or the composition of our unconventional interventions, and, therefore, of our balance sheet, as required," Draghi said.
"We are accountable to the European people for delivering price stability, which today means lifting inflation from its excessively low level," he said. "And we will do exactly that," Draghi added.
In August, inflation fell to 0.3 percent, the lowest since October 2009. The ECB targets 'below but close to 2 percent' inflation over the medium-term.
Earlier this month, the ECB kept its key refi rate at a record low 0.05 percent and the deposit rate at -0.20 percent. The rates were lowered by 10 basis points in September on the premise that euro area inflation would slow in the coming months.
International Monetary Fund Managing Director Christine Lagarde said Thursday the monetary policy, particularly in the Eurozone and Japan, should be more accommodative to support the economy.
The IMF trimmed its 2014 growth estimate for the currency bloc to 0.8 percent from 1.1 percent. For 2015, the growth is estimated to be 1.3 percent, down from prior forecast of 1.5 percent.
Draghi observed that there is an urgent need to raise potential output through reforms and creating confidence is the way out of the crisis. In order to lift structural growth, the prime driver should be productivity.
Further, Draghi said the fiscal policy should work with rather than against monetary policy in supporting aggregate demand.
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EUR/USD: Waiting For Next Bearish Set-Up
The dollar managed to stabilize after the falls but is still far from the highs. What is the next direction for the greenback?
ING sees emerging opportunities to buy the dollar against both the euro and the yen.
EUR/USD’s is back trading around the steep falling trend line around 1.2690, notes ING.
“The hourly chart shows the completion of a minor bottom formation above the horizontal resistance at 1.2685, likely suggesting further upside with a short-term price target of around 1.2870. The daily chart shows strong horizontal resistance coming in between 1.2860 and 1.2975 with the sharp declining MA-50 line at 1.3038,” ING adds.
All in all, despite recent short-term development, ING considers this in the context of a longer-term lower top within the downtrend before the next decline begins.
“Therefore, we stick to our ‘Down’ rating, waiting for the next bearish set-up,”ING advises.
EUR/USD slides on European growth concerns
The euro slid against the dollar on Friday as investors sought safety in the greenback on concerns the European economy will continue to soften while the U.S. economy gains steam going forward.
In U.S. trading, EUR/USD was down 0.45% at 1.2633, up from a session low of 1.2610 and off a high of 1.2716.
The pair was likely to find support at 1.2499, last Friday's low, and resistance at 1.2792, Thursday's high.
The single currency continued to come under pressure on concerns the European economy is floundering and may require fresh ECB stimulus measures.
In Europe on Thursday, data revealed that Germany exports fell 5.8% in August, which took its toll on Friday.
In France earlier, data revealed industrial production remained unchanged in August, better than expected 0.2% contraction, while Italy's figure expanded 0.3%, missing market calls for a 0.5% expansion
The euro slid on concerns monetary policy remains poised to loosen to steer the continent away from deflationary decline, as ECB President Mario Draghi has said monetary authorities will do what's necessary to kick start the European recovery.
Meanwhile in the U.S., import prices fell 0.5% in September from August, better than market calls for a 0.7% contraction, though still a decline nonetheless, a sign a stronger dollar and a softer global economy could water down inflationary pressures in the U.S.
Earlier this week, the Federal Reserve suggested rate hikes might not come as quickly than markets are expecting, though the dollar firmed anyway due to ongoing expectations for U.S. and European monetary policies to diverge.
Elsewhere, the euro was down against the pound, with EUR/GBP down 0.11% at 0.7870, and down against the yen, with EUR/JPY down 0.46% at 136.29.
In the U.K., the Office for National Statistics reported on Friday that the trade deficit narrowed to £9.10 billion in August from £10.41 billion in July, whose figure was revised from a previously estimated deficit of £10.19 billion.
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The dollar has been on high against all its major peers, following the rise from yesterday on US markets.
it's interesting how the USD is increasing while all the major stocks having a huge sell off
EUR/USD forecast for the week of October 13, 2014
The EUR/USD pair initially rallied during the course of the week, but found enough resistance of the 1.28 level to turn things back around. This level was previously determined to be the 61.8% Fibonacci retracement of the longer term up move, which of course means that the area was supportive in the past, and could very well be resistive now. It does appear that is the case, and as a result we are starting to gain bearish momentum in our opinion.
The resulting candle is a shooting star of sorts, signifying that perhaps the downtrend will accelerate, and we do believe that the 1.25 level below could ultimately be the “trapdoor” for lower prices. We look at the longer-term charts, a complete “round-trip” from the move that initially started the uptrend would be a move all the way back down to the 1.20 handle.
Because of this, that is our longer-term target. After all, you have to keep in mind that the Federal Reserve is most certainly the strongest central bank out there right now, and although the last meeting’s minutes suggested that perhaps the Federal Reserve was a little bit leery about tightening, the truth of the matter is that they are nowhere near loosening. With that, you have to compare the two central banks, with the European Central Bank looking very likely to add liquidity to the marketplace, the US dollar should continue to strengthen.
On top of that, although there are a bit of head wins when it comes to the US economy, most of the concerns, in the form of other economies putting a drag on global demand. Most specifically, the European Union. With that, it is obvious that the markets will favor the US dollar over the longer term, and as a result it’s very difficult to imagine that this pair will go higher. We also see a significant amount of resistance just above the 1928 level, extending all the way to the 1.30 level. With that, is much easier to sell this market than buy it.
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EUR/USD Forecast Oct. 13-17
EUR/USD managed to stage a nice recovery but didn’t go too far before losing some of the gains. Has it finally bottomed out? An important German survey and final CPI are accompanied by several speeches from Mario Draghi and other events. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.
Significant drops in factory orders and industrial output in Germany caused a lot of concern. Also Draghi weighed in, with repeating his commitment to do whatever is necessary to tackle low inflation. The president of the ECB also hinted that rates are not set to move before 2017. On the other side of the pond, the dollar got a significant blow from the FOMC minutes, where the central bank expressed concern about euro-zone growth and also about the strength of the dollar. However, it later recovered, in part thanks to encouraging labor data. What’s next?
* All times are GMT