FOREXYARD: Forex News Blog | |
- Euro Continues to Tumble
- USD/SEK Target at 6.80 by End of the Year
- Long Term Support for Swedish Krona
- Bearish Chart Pattern Hints at Reversal for Spot Gold
- Dollar Momentum Rising as Bernanke Speech Nears
| Posted: 30 Nov 2010 03:56 AM PST
The EUR/USD fell below a significant Fibonacci level as the euro continues to be sold amid European debt fears. In European trading hours the euro was weaker on the back of the European debt crisis. Contagion fears are rampant as economists and analysts attempt to identify the next European nation that may require financial assistance. The release of an 85 billion euro bailout package for Ireland has not helped to ease situation. A potential split in the government coalition threatens to break up the ruling government and delay the passing of the next year's budget which includes considerable belt tightening as required by the joint EU/IMF bailout package. Irish bonds have also sold off as new European legislation threatens subordinate bank bond holders to take a haircut of 80% while senior bank bond holders remain guaranteed by the Irish government. The EUR/USD fell to a low of 1.2979 before recovering to the 1.3040 level. The daily low coincides with a downward sloping channel line off the mid-November lows which should serve as a support. The drop also took the pair below the 50% Fibonacci retracement level for the June to November move at 1.3080. A close below this level will move the next target lower to the 61.8% retracement level at 1.2800. The EUR/CHF is also down sharply at 1.2973 following an opening day price of 1.3095. Dollar strength is less apparent today as traders appear to be focused on euro selling. The GBP/USD is slightly lower at 1.5520 from 1.5533. The USD/CHF is down at 0.9975 from 1.0002. Euro weakness should continue into the New York trading session with US consumer confidence set to be released at 15:00 GMT. European Central Bank President Jean-Claude Trichet is due to testify at 15:30 GMT. His comments may offer a bit of respite for the euro. Federal Reserve Chairman Ben Bernanke is set to speak at The Ohio State University Fisher College of Business in Columbus, Ohio at 20:00 GMT. |
| USD/SEK Target at 6.80 by End of the Year Posted: 30 Nov 2010 03:30 AM PST
Following a month long plunge against the dollar, investors, along with Sweden's central bank official, anticipate an imminent rebound for the Swedish krona versus the USD. The currency dropped from 6.48 versus the dollar to currently trade at 7.05. Looking at the pair's daily chart, it is evident that the RSI (1) for the pair has been floating near or above the overbought territory indicating downward pressure, with the Williams Percent Range supporting this trend. The expectation for the Krona is to appreciate versus the USD to around 6.80 by the end of the year.
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| Long Term Support for Swedish Krona Posted: 30 Nov 2010 03:23 AM PST
Following a month long plunge against the dollar, investors, along with Sweden's central bank official, anticipate an imminent rebound for the Swedish krona versus the USD. The Swedish currency plunged in late October as the Riksbank dampened investors’ expectations for further hikes in the interest rates. The currency dropped from 6.48 versus the dollar to currently trade at 7.05. Recent economic data, however, brought back expectations of a sooner than expected rise in interest rates, signaling that Sweden's economy will expand and interest rates will rise faster than in the U.S. or Europe. Recent data showed that consumer and business confidence is soaring with recent GDP data supporting the optimism. Swedish government's statistics agency said third-quarter gross domestic product expanded by a seasonally-adjusted 2.1% on a quarterly basis and grew 6.9% on an annual basis. The fundamentals provide strong support for the Swedish krona with the expectation of an interest rate hike in February; however, the recent GDP data and comments by Swedish officials in support of a stronger domestic currency have raised expectations of an interest rate increase as soon as December. The main obstacle facing the krona is the persistent euro-zone debt crisis as the region accounts for over 60% of its exports and therefore makes is vulnerable to any issues arising from the region. The currency is also very sensitive to overall market mood which is again extremely dampened over the euro-zone crisis, dragging down the krona's sentiment. |
| Bearish Chart Pattern Hints at Reversal for Spot Gold Posted: 30 Nov 2010 12:33 AM PST
The appearance of a head and shoulders reversal pattern provides technical evidence to sell. Other long tern technical indicators support this hypothesis. The daily chart for spot gold trading displays the formation of a bearish head and shoulders pattern. This reversal pattern may signal a top in the intermediate uptrend that spans from a low in July to a high in November. Going to the chart, the head and shoulders are clearly defined with the left shoulder taking shape on 10/14, the head is located at 11/9, and the right shoulder at 11/23. A break below the rising neck line would signal a completion of the chart pattern. By measuring the height of the neckline we can estimate a potential move of $100 from the breach below the neck line.
Further evidence of a bearish move in the price of spot gold can be found when looking to the long term time frame. The November candlestick on the monthly chart appears set to end on a doji candlestick. This is a bearish signal for spot gold and supports the hypothesis of a price reversal. The monthly chart also shows technical divergence in the Momentum oscillator. In December 2009 the Momentum indicator registered a high of 151 on a new high in the price. However, the next peak in June 2010 fell to 140 despite a new record high in the price. We may expect the November number to also fall which would provide further evidence of divergence thus supporting a drop on the price. Given the bearish chart pattern and the accompanying negative signals from the monthly chart the uptrend appears to be weakening on a technical basis. A sell would be recommended upon a break below the neckline from the head and shoulders pattern with a take profit level near the rising trend line on the daily chart. The trend line rises off the lows of February, March, and July.
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| Dollar Momentum Rising as Bernanke Speech Nears Posted: 29 Nov 2010 10:49 PM PST
The U.S. dollar is increasingly being chosen over the yen as the choice currency during times of heightened risk aversion. The contracting global economy helped to strengthen the dollar yesterday as the yen begins to lose favor as a safe haven currency. As for today, there are several important events coming out of the U.S. and Europe including the U.S. Consumer Confidence and Fed Chairman Bernanke Speech. These events always provide for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following these vital announcements. Here is a roundup of today's events 15:00 GMT: U.S Consumer Confidence 20:00 GMT: Fed Chairman Bernanke Speech Federal Reserve Chairman Ben Bernanke is due to deliver a speech titled Conversation on the Economy at The Ohio State University Fisher College of Business in Columbus, Ohio. There is the possibility that Bernanke will comment on a number of developments in the region and hint at future Fed policies. Speculators will attempt to use those statements as a gauge of direction for the USD in the coming weeks and adjust their positions accordingly. Therefore, this speech will likely create volatility as it gets underway. |
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