The Latest in Forex News & Analysis.

EURUSD takes a run above the 200 day MA

By Greg Michalowski | June 5, 2014 2:07 pm | 0 Comments

The EURUSD has moved back above the 200 day MA at the 1.36438 level.  A close above this MA level would be bullish, but the 2nd piece of the 1-2 punch this week is still to come with the US employment report due out tomorrow.

The 1st punch – designed to weaken the EURUSD – did little for Mr Draghi and the ECB with the EURUSD higher and now above key resistance.  Of course, there was additional stimulus with banks now able to borrow for 4 years at 0.25% . The hope is that they lend out to small to medium size companies and spur the economies of the EU nations. However, the verdict will not be felt for some time and even so, the ECB still expects growth to be low and inflation to be below the 2% target through 2016.

The market traders may also be anticipating a weaker US employment report tomorrow.  The expectation is for non-farm payroll to rise by 215,000. Yesterday, the ADP employment report estimated a rise of 179,000.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.The post is intended for clients and traders outside the US.

Japan’s PM Abe asks pension funds to raise stock investment

By Greg Michalowski | 1:55 pm | 0 Comments

This is being reported by Nikkei Review (CLICK HERE FOR THE FULL ARTICLE)

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.The post is intended for clients and traders outside the US.

Feds Kocherlakota says employment and inflation are below Fed goals

By Greg Michalowski | 1:50 pm | 0 Comments
  • Demand for safe assets has risen
  • Fed may need to keep rates low for years
  • Low rates may result in signs of instability
  • Asset returns may be highly volatile

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.The post is intended for clients and traders outside the US.

GBPUSD pushing against resistance but bullish on the day.

By Greg Michalowski | 1:28 pm | 0 Comments

The GBPUSD – after a volatile ride during the Draghi press conference – has recovered and continued the move higher that was started soon after the opening.  The price rise has moved to resistance against the 1.6810 level which is the underside of the broken trend line on the daily chart (see above). Looking at the hourly chart, the 50% of the move down from the high on May 21 to the low May 29th comes in at 1.68062, and that too has provided some resistance at the highs over the last 4 or so hours of trading.

The support for the pair comes in at 1.67792 -83 area now. This is the 38.2% of the move down from the May 21 high to the low reached on May 29th (see chart below). The 1.3783 is near highs going back to May 15th (see hourly chart below).

The price after the ECB decision moved quickly above this level -but only briefly. After falling to new lows, the bullish bias for the pair reasserted itself and the subsequent rally took the price back above this resistance area.  This time, the price has been able to stay above the area (at 1.3779-83). This is now support for the pair.

So with support holding below, and pretty good resistance above, the market has been able to define some technical levels that traders can use for clues between now and the Unemployment report.  For me, the intraday technical bias is a touch positive with the price moving above the aforementioned levels and also higher on the day, above the 100 and 200 hour MAs, but it needs that next move above the 1.6806-10 for the next leg higher to begin. Topside targets include the 1.6833, 1.6881 and then the May highs at 1.69203.

On a failure and move back below the 1.6779 level, look for the price to retest the 200 hour MA (green line in the hourly chart) and the 100 hour MA (blue line). A break below those levels should solicit a more bearish bias once again.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.The post is intended for clients and traders outside the US.

USDJPY tests a cluster of support..and holds on the first look

By Greg Michalowski | 12:38 pm | 0 Comments

 

The USDJPY- like some of the other currency pairs – has had an up-and-down day.

During ECB President Mario Draghi’s press conference, the pair moved higher, but found sellers against the underside the broken trendline on the hourly chart, and also near high prices from yesterday and earlier today (see chart above).

The subsequent decline from today’s highs, has taken the USDJPY to new lows for the day, and toward a cluster of technical support levels.

Looking at the hourly chart above, the blue moving average line is the 100 hour moving average. That level comes in at 102.37 currently. Below that, the blue horizontal line is where the 100 day moving average is at today. That level comes in at 102.315. Finally, the 38.2% retracement of the move up from the May 29th low to the June 4 high comes in at 102.28.

The combination of these 3 technical levels (between 102.28 and 102.37) was enough to slow the decline has traders – short from above –  took some profits against the support, and buyers looking for a dip could easily define and limit their risk against this key support level.

As we head into the NY afternoon session, this area should continue to hold support.  If there is a break, however, there may be some liquidation as traders who are long on the break above the 100 day MA on Monday/Tuesday exit.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.

 

EURUSD recovers the entire losses. Moves briefly above the 200 day MA, but backs off

By Greg Michalowski | 10:40 am | 0 Comments

The EURUSD has now recovered the full decline since the interest rate decision. That move back higher has also taken the price back above the 200 day MA at 1.36426 –  but only briefly.  The price is back down to the 1.3614 level already.

Needless to say, the action suggests that liquidity conditions remain limited.  Breaks away from key moving averages like the 200 day MA, should solicit sellers on corrections. Not today. The full retracement suggests that the market is anything but normal.

This morning before the decision and press conference, sellers needed to get the price below the floor for the week at the 1.3585 area and then 1.3560. They remain levels that need to be broken now that the first look failed.

Bring on the US employment report.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.

Canada Ivey PM plunges to 48.2 from 54.1.

By Greg Michalowski | 10:26 am | 0 Comments

The estimate was 56.0.

The USDCAD made new highs on the news release but has since rotated back lower.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.

US stocks are lower. European stocks higher.

By Greg Michalowski | 10:23 am | 0 Comments

At 10:18 AM ET, the US stock prices are showing modest losses. The European stock markets meanwhile are higher.  I am not sure there is an impact on the currency markets today from the stocks or visa versa. They each seem to me moving randomly to he honest.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.

NZD strongest currency. EUR remains the weakest but well off the lows now.

By Greg Michalowski | 10:17 am | 0 Comments

The strongest currency for the day is the NZD – rising against all the major currencies. It is strongest against the EUR having tested and holding the 100 day MA in yesterday’s trading.  Today the price fell back below trend line support at the 1.6083. Watching that level as resistance now.

The weakest currency is the EUR still although it is well off the lows now. The EURUSD is near unchanged now but remains down on the day vs. all currencies (at 10 AM).  Against the GBP, the pair is down -0.35% today but like the EURUSD is off the lows. The price fell below the low for the year (traded at the lowest level since December 2012) but has since rebound back above this break point (at 0.8080).

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.

Draghi exceeds expectations. EURUSD weakens.

By Greg Michalowski | 9:00 am | 0 Comments

The bulk of the press conference is now over and it is clear that the ECB’s intention is to increase liquidity for an extended period of time, discourage idle funds, and spur on lending (with targeted LTROs)  Even so, they lowered their estimate for inflation for 2014, 2015 and 2016.  They lowered GDP for 2014 but increased growth forecast for 2015 and kept 2016 GDP unchanged. Analysts seem to think that the ECB has exceeded expectations and the EURUSD has moved lower in  reaction to the actions.

From a technical perspective, the EURUSD has pushed below the low from Feb 12th at the 1.35606 and the 38.2% of the move up from the July 2013 low to the high reached just last month at the 1.35207.  The price has scrambled back higher in the last few minutes of trading.  Watch the 1.3556-73 area now as resistance. A move above this area would not be welcomed from a technical perspective and would muddy the waters for trading today (although I do expect selling rallies to persist).

The price today  is breaking away from the 200 day MA (green line in the daily chart above) after consolidating just below the level over the last six or so trading days.  The inability to move above the 200 day MA today (the initial spike stalled right at the level)  helps to confirm the market’s desire to keep the bears in charge.   The low for the year comes in at 1.3476 and this is still a doable target today, if the aforementioned resistance can hold and the market is able to push back below the 1.35207 level (and stay below).

For the year (5 months into 2014), the low to high trading range in pips  is 517 pips. The lowest trading range for any year since the EURUSD was introduced, was last year’s range at 1150 pips (see chart below). At 517 currently, it certainly suggests there is room to roam lower and extend the range for the year at some point.

Now, there is a new normal in the FX market which could keep ranges lower than normal (i.e., less liquidity, more regulation, and general market apathy has slowed trends). However, a range less than half of the lowest trading range is likely too narrow.  What would be an acceptable target for a  low to high trading range for the year?  I would think that 700-800 is something that is not out of the question. If so, a move toward 1.3200 is possible at some point.

Remember, such projections occur if fundamentals and technicals remain in place and they just don’t happen in an instant. It takes time.  For me, staying below the 200 day MA is important in keeping the bears in charge in 2014. A move above would certainly not suggest the bears remain in control.  From a fundamental perspective, a continuation of the US recovery is still needed.  If the US economy falls down, that would make it more difficult for the dollar to move higher.

As things stand at this moment today, the technical picture is still saying down.  Until it starts to show a more bullish picture (first step above the 1.3560 level), the bears remain in control.

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All information on this site is provided for informational and educational purposes only. Information provided is not to be misconstrued as trading advice. Past results are not indicative of future results. In addition trading in foreign exchange markets on margin carries a high level of risk, and may not be suitable for all individuals.

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