FOREXYARD: Forex News Blog | |
- Is the EUR/SEK Poised for an Upward Move?
- Both NOK and DKK Continue to Fall Against Main Currency Rivals
- The BOE’s Dilemma; Tackling High Inflation or Lack of Growth
- USD/JPY Technical Analysis
| Is the EUR/SEK Poised for an Upward Move? Posted: 12 Oct 2010 06:27 AM PDT
Over the last week, the Swedish krona has seen some fairly substantial gains vs. its main currency rivals. One currency in particular, the euro, has plummeted over 1200 pips since late last week. As we will see through a number of technical indicators, the EUR/SEK pair, while not currently in oversold territory, is showing signs of approaching the point where an upward correction is likely to take place. Traders will want to pay close attention to the pair in order to take advantage of this impending price shift. We will be looking at the 8-hour chart for EUR/SEK provided by Forexyard. The technical indicators being used are the Stochastic Slow, Williams Percent Range and Relative Strength Index (RSI). 1. As we can see, the Stochastic Slow has already formed a bullish cross before moving back into neutral territory. The lines are once again pointing downward, and are very close to the support line. Should they drop below the line again, and intersect, the pair is likely to see an upward correction. 2. In the clearest sign that the pair is likely to see bullish movement, the Williams Percent Range is right at the -80 level. Typically, when the indicator reaches -80 and below, it is taken as a sign that the pair is in oversold territory. 3. Finally, the RSI, while not quite in the oversold region yet, is pointing downward and is approaching the lower support line. Should the indicator move below the 30 level, traders can take this as a sign that the pair will see a bullish correction.
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| Both NOK and DKK Continue to Fall Against Main Currency Rivals Posted: 12 Oct 2010 06:16 AM PDT
Sweden continues to be one of the major success stories in European economics. Recently, comments from the Swedish Central Bank signaled a possible rise in interest rates in the near future. This led to fairly significant gains for the krona, particularly against the euro and US dollar. Over the last several days, the EUR/SEK pair has dropped over 1200 pips, and is currently trading around the 9.2450 level. The USD/SEK had dropped over 1000 pips late last week, but the pair managed to stage an upward rally when markets opened on Sunday night. The trend for USD/SEK is still very much bearish, and analysts do not foresee a significant upward correction in the near future. Turning to the other Scandinavian currencies, both the NOK and DKK have not been able to match the success of its Swedish counterpart. Since markets opened for the week, the Norwegian krone has lost almost 400 pips to the euro and close to 1000 pips against the dollar. While the Danish krone has been consistently gaining against the greenback in recent months, it has started off the week loosing over 600 pips against the USD. While the EUR/DKK pair has moved relatively little this week, the pair seems locked in an upward trend which is unlikely to break in the near future. This week, traders will want to pay attention to several economic indicators out of the US that are likely to influence the Scandinavian currencies. US Fed Chairman Bernanke is scheduled to give a speech on Wednesday and Friday. His speeches typically give a clear indication of the direction the US economy is heading and consistently lead to market volatility. Any news that the US is moving to implement quantitative easing measures in order to stave off another recession, is likely to bring the dollar down against the Scandinavian currencies. |
| The BOE’s Dilemma; Tackling High Inflation or Lack of Growth Posted: 12 Oct 2010 04:31 AM PDT
U.K. inflation exceeded the government's 3% limit for a seventh month in September according to a CPI report released today. The rate is well above the 2% goal set by the Bank of England, adding to the debate over the future of the monetary policy as the country is attempting to recover from the recession. The Central Bank has been debating expanding its 200 billion-pound ($318 billion) stimulus plan to stimulate growth as the government is expected to begin the drastic spending cuts in order to tackle the country's enormous debt. The concern is that such drastic cuts will suppress consumer spending and therefore cause a double dip. Adding to this concern was the release of a highly disappointing Halifax HPI last Thursday, which showed that housing prices fell to a record low. However, with inflation already above comfortable levels, sanctioning more quantitative easing, namely pumping more money in to the economy, may prove difficult. Expanding the monetary easing programs will ultimately result in even higher inflation. There is currently a split in the BOE regarding the future course of action. Bank of England officials are split over whether to raise interest rates to curb inflation or add stimulus to avert the threat of another slump. It seems unlikely, however, that any hikes in the interest rates will occur short term. With economic fundamentals in the U.K proving to be relatively weak, raising interest rates, and thus limiting liquidity in the markets will stifle consumer spending and ultimately the economic recovery. Consumer spending accounts for the bulk of the country's economic activity. This debate is particularly interesting ahead of Friday's Inflation Report Hearing where the BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee. With the necessity of spending cuts on the one hand, and uncomfortable levels of inflation on the other, it will be interesting to see how the BOE will decide to act. In any case, an exciting trading week is expected for the Pound. |
| Posted: 12 Oct 2010 03:18 AM PDT
At the beginning of the week, USD/JPY still struggled with 83.16, but after the pair fell below the previous 15 year low of 82.82. Dollar/Yen continued the fall and went as low as 81.72 before closing at 81.90. The chart below is the USD/JPY daily chart: The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI) and Bollinger Bands. Point 1: The Bollinger Bands have already begun to widen, indicating that a price shift is likely to take place. As we can see, the price ticks are currently right along the lower band, telling us that the price shift is likely to be upward. |
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