Eur/usd - page 325
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EUR/USD failed to break the support line and rebounded again to the upside.
EUR/USD: Euro Hovers Near $1.13, Awaiting US data
The contagion from relatively muted trading in Asia on Friday is likely to spread into Europe, with traders looking to the US session for incentives. The euro, however, remains elevated and trades near $1.13 handle.
"Relative calm in Asia since China came back from its holiday celebrations bolstered by a Japanese corporate tax cut and the hope of further stimulus from Beijing have helped global market hold off the lows reached in August," Angus Nicholson from IG wrote on Friday.
The euro remains firmly higher, up 0.21% to $1.1301 heading into the European session.
The dollar has been mixed in recent sessions leading up to the Federal Reserve (Fed) rate decision next week. A weekly fall in jobless claims to 275,000, not far off multi-decade lows, is another sign of strength in the labor market.
"However, its inflation that’s the main dilemma for the Fed, not the labor market. PPI figures reported on Friday will be the penultimate piece of inflation data for the Fed to consider with CPI reported next week a day before the FOMC meeting," Jasper Lawler from CMC Markets wrote on Friday.
Apart from German inflation, which matched expectations of no change in August, no major data are scheduled in the Europe session.
Markets will look to the US data feed today for some motivation, with the US University of Michigan consumer confidence survey expected to decrease slightly to 91.4 in September after the unexpected drop to 91.9 in August, while the US Producer Price Index is seen at a negative 0.1 month-on-month in August.
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Yesterday the EURUSD initially fell but found yet again enough buying pressure to break above a daily resistance at 1.1237 and closed in the green near the high of the day, setting a bullish tone for the mid-tem. The key levels to watch today are a previous swing high at 1.1332 (Resistance), a daily resistance at 1.1460 and the previous resistance now support at 1.1237.
The single currency recorded a significant growth against the dollar on Thursday, which technically was the fifth consecutive profitable day for the currency pair. The euro rose by nearly 70 pips to a closing price of 1.1278. The session was held within the extreme values at 1.1294 and 1.1278. The price went above moving averages, while the index of relative strength develops in positive territory. Break of 1.1290 will confirm the current optimism and the next target is 1.1320.
RSI is mixed to bullish and the price is facing resistance at 1.1360 then 1.1400. the market is bullish before the FED meeting next week which will have a huge effect on the market.
EUR/USD Outlook: Judgment Day Ahead, Dollar Shakes
Volatility is expected to be lower until Thursday, but the crucial Federal Open Market Committee meeting concludes on that day and after that, markets are likely to experience turbulent movements.
"The euro has now retraced all the losses suffered in response to the comments from ECB President Draghi last Thursday. Any further gains is likely to be met with increased rhetoric about and 'unwarranted tightening of the monetary stance'. EUR/USD upside remains limited from here in our view," analysts at Bank of Tokyo-Mitsubishi believe.
The ECB trash-talked the euro at its last meeting, which implies that levels around $1.15 are too much for the central bank. Should the Fed delay hiking rates, the euro might be at these levels very quickly, which might spur further negative comments from the ECB.
The dollar has been under some selling pressure in recent days and the greenback was unable to strengthen significantly as traders have been cutting their long USD positions heading into the meeting.
According to TD Securities, the Fed won't raise rates this Thursday, but will rather take no action. However, the press conference will be of greater importance, along with economic estimates and the so-called dot plot.
"The Fed will continue to express its desire to hike, which will result in a hawkish tone by keeping every meeting live. The updated dots will reflect a slower pace of stimulus withdrawal and a lower terminal rate once the first hike has occurred," analysts at TD Securities wrote on Friday.
The dot plot from June's meeting indicated only one rate hike in 2015 and it looks like that's exactly what's about to happen. Moreover, the odds for raising rates fell to only around 30% according to the fed funds futures and the Fed usually does what markets want, meaning more than 50% (ideally odds around 75%) should be required for the central bank to hike.
This meeting will probably start a longer-term trend, to either side, as speculative positions on the pair are neutral, suggesting there is room for positions to build on both sides.
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EUR/USD posts seventh straight win, ahead of critical Fed Sept. meeting
EUR/USD surged to its highest level for the month of September on Friday, as currency traders gear up for the possibility of divergent monetary policies on each side of the Atlantic as early as next week if the Federal Reserve raises interest rates at Thursday's FOMC meeting.
The currency pair traded in a broad range between 1.1255 and 1.1350, before settling at 1.1338, up 0.0058 or 0.51%. The euro has now closed higher against its American counterpart for seven consecutive sessions, to enjoy one of its longest winning streaks of the year. EUR/USD ended Friday's session at its highest closing level since August 25.
EUR/USD gained support at 1.1088, the low from Sept. 4 and was met with resistance at 1.1562 the high from Aug. 26.
On Friday morning, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) said its headline Producer Price Index for August remained unchanged in August, following a 0.2% gain a month earlier. The reading came in substantially higher than low end of consensus estimates of a 0.6% decline.
Meanwhile, the Core PPI-FD, which strips out food and energy prices, ticked up by 0.3%, marking the third consecutive month of considerable gains. On a yearly basis, the core reading has increased by 0.9%, providing support to hawkish views for an imminent rate hike.
While the Federal Open Market Committee (FOMC) would like to see long-term inflation reach its targeted goal of 2% before it lifts its benchmark interest rate for the first time in nearly a decade, vice chair Stanley Fischer has indicated that the U.S. central bank could normalize policy before it reaches the threshold. Long-term inflation has remained under 2% in every month for the last three years.
Next week, the Labor Department will release the Consumer Price Index for August on Wednesday, which coincides with the start of the FOMC's two-day September meeting. The Fed's benchmark Federal Funds Rate has remained at its current level of zero to 0.25% since December, 2008. When the economy is growing at a high rate, the U.S. typically increases the Fed Funds Rate to encourage people to save more and spend less. As a result, the action is meant to slow the economy and reduce inflationary pressures.
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EUR/USD forecast for the week of September 14, 2015
The EUR/USD pair broke higher during the course of the week, as we continue to see volatility. However, the overall attitude of the market does look like it is trying to break out to the upside, and a move above the 1.15 level has us buying the Euro over the US dollar. What is important is that the Federal Reserve has the interest rate announcement and of course statement coming this week, and I could be the catalyst to finally break out above what looks to be an ascending triangle. Ultimately, we think that a move above the 1.15 level and more importantly a weekly close above that level would be a trend change. This is why we think this is one of the most important weeks in this pair as far as this entire year will be concerned.
Trend changes our messy affairs, and as a result we feel that this type of volatility is to be expected. We don’t really have any interest in selling this pair until we get the interest-rate announcement and of course the statement which could tell us that perhaps the Federal Reserve is looking to raise interest rates several times, but right now that’s difficult to believe. Ultimately, it is probably only a matter of time before we see the breakout and continue to go higher. Every time we pullback it should be a buying opportunity and we think that the market will probably try to reach the 1.25 level next. Yes, the 1.20 level will be resistive and psychologically significant, but as far as actual clusters on the chart are concerned, we don’t have any reason to think that the 1.20 level will be of significance.
If we do break out, quite frankly we feel that a lot of careers will be made going long of this market. With that, we believe that the commodity markets may also wake up at that point as well. All things being equal, we are bullish, but very cautious about putting money to work below the red line on this chart.
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An interesting week ahead!
EUR/USD: Euro Bulls Still Dominate Ahead of Fed
The shared European currency trimmed most of its overnight gains on Monday but still remained slightly elevated. A very quiet trading day is anticipated, while the rest of the week will be busy with the Federal Reserve's (Fed) meeting in primary focus.
The Fed's decision will be a key signpost with respect to the next move in not only equity markets, but the US dollar as well.
The EUR/USD added 0.10% to $1.1342, trading within a narrow range of a mere 20 pips.
The probability of the Fed hiking the rates now stands at around 30%, but strengthening of most majors against the US dollar in trading today appears to indicate that markets think rates will be left on hold.
"The AUD, JPY, EUR, among a raft of others, are likely to see a short-term strengthening rally against the USD, but this is likely to dissipate as their longer-term trend in the second half of the year is further weakness against the USD. Thus any strengthening bounce after the Fed meeting could be a good entry point to sell those currencies," Angus Nicholson wrote on Monday.
Chinese data out over the weekend provided a familiar view of its divergent two-speed economy but didn't provide much to alleviate Chinese growth concerns, as consumption continues to do well while industrial production and investment slow.
Total goods produced by Chinese industries rose less than expected in August, while fixed asset investment also missed expectations. Industrial output rose 6.1% in August compared to August the previous year. The actual reading fell below the 6.5% market estimate, but was up from the reading of 6.0% in July. Retail sales rose 10.8% in August, beating the market expectations of 10.6% rise.
The weekend data appears to have spurred speculation that fiscal stimulus measures need to pick up in the second half of the year. One of the most notable features of the slowdown in China’s economy this year has been the failure of fiscal spending to pick up.
The most concerning figure was probably the fall in fixed asset investment to 10.9%, below last month’s 11.2%.
"It is this (figure) along with a weak manufacturing sector that suggests that the wish of the Chinese government hitting its 7% growth target is likely to be the product of wishful thinking, unless data improves substantially between now and year end," Michael Hewson from CMC Markets wrote on Monday.
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