Tuesday, February 15, 2011

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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Weekly Outlook Feb. 14-18

Posted: 14 Feb 2011 07:58 AM PST

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While this week got off to a slow start, the next four days promise to be significantly more exciting as a number of economic indicators are likely to inject volatility in the marketplace. Here is a roundup of the major news events traders will want to pay attention to this week.

On Tuesday, major news is expected from the UK, euro-zone and US. At 09:30 GMT, the British Consumer Price Index is scheduled to be released. A slight increase over last month is predicted, which if true, will likely help the pound recover some of the losses it took at the beginning of the week. At 10:00 GMT, the German ZEW Economic Sentiment is expected to show growth in the euro-zone’s richest country. This should help the euro in the short term against its main currency rivals. Finally, at 13:30 GMT, the US Retail Sales figure is predicted to come in slightly below last month’s figure. If true, the USD may cap off its recent bullish session.

Turning to Wednesday, the big news is likely to be the Bank of England’s (BOE) Inflation Report. The report is expected to explain the recent rise in inflation in the UK, and will likely put pressure on the BOE to raise interest rates. Any talk of an increase in interest rates is likely to cause investors to open long positions with sterling.

Thursday’s main news is from the US, when the weekly Unemployment Claims figure will be released, followed by a testimony from the Fed Chairman. Following last week’s unexpected drop in the number of new people filing for unemployment insurance, analysts are now predicting the figure to go back up. If so, traders can expect the dollar to turn bearish to close out the week. Last week’s testimony from the Fed Chairman caused the greenback to tumble. Should Thursday’s speech turn out to be as pessimistic as last week’s, it may lead to downward pressure for the USD.

Finally, the loonie is likely to be most affected by Friday’s news cycle, as the Canadian CPI and Core CPI figures are set to be released. Analysts are forecasting a significant rise in both figures, which if true, is likely to help the CAD extend its recent bullish trend against the USD.

Technical Tip – EUR/CHF Rally Fails at 200-Day Moving Average

Posted: 14 Feb 2011 06:12 AM PST

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Judging from the previous price action there may be more room for the EUR/CHF to fall.

The pair has shown a propensity to be sold off when it approaches its 200-day moving average. On two prior occasions (both in November of 2010) the pair fell following unsuccessful attempts to trade above this long term moving average.

The most recent attempt comes following the late December through February move that appears to once again have failed to breach above the 200-day moving average. This rise in price was the equivalent of a 61.8% retracement from the mid-November high to the December low.

Today's selling shows the EUR/CHF failed to breach above the 200-day moving average which comes in today at 1.3200. The pair is currently encroaching on the rising trend line from the mid-January low. This coincides with the support level at 1.3070. A close below the trend line may signal further reversals. Support is found at 1.2930, followed by 1.2770, and 1.2720.

Resistance will come in at the 200-day moving average as well as the mid-November low at 1.3230.

EURCHF

Technical Tip – EUR/USD – Breach of Trend Line Points to Further Declines

Posted: 14 Feb 2011 01:09 AM PST

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Following a breach of the rising trend line from the January low, the EUR/USD looks set to retrace its gains from this year.

The 100-day moving average has so far provided support but the failure of the pair to make new highs shows a lack of bids in the market for the euro. Falling long term stochasitics on the weekly chart also support a move lower.

Currently the pair is approaching the 38.2% Fib retracement (1.3480) from the January to February move which coincides with the recent support range the pair has found between the levels of 1.3480 and 1.3500.

A breach below this level should target the 61.8% Fib retracement of at 1.3250. This level lines up nicely with the mid-January pivot of 1.3240.

Resistance may be found at the falling trend line off of this year's high which comes in today at 1.3660. The high from February 9th at 1.3740 also stands out as a possible resistance level.

EURUSD_Daily

GBP/JPY Testing Significant Resistance Level at 134.25

Posted: 13 Feb 2011 11:30 PM PST

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The British pound is once more pushing towards its significant resistance level against the Japanese yen at 134.25. The pair has tested this price barrier twice before over the previous five months, failing to breach both times.

While the pound has been gaining ground against a number of its currency rivals, it has so far failed to breach this resistance line versus the yen.

Looking over the chart below, it appears the pound will once more fail to break through this resistance level as per the technical indicators seen on the chart (provided by ForexYard).

As we can see, the Stochastic (slow) is revealing a fresh bearish cross, signaling an impending downward correction. The recent bearish cross on the MACD supports this notion as well.

If this technical analysis bears weight on this week's trading, then the GBP/JPY may indeed experience a significant down-turn as it fails once more to break through this price barrier at 134.25.

GBP/JPY – Daily Chart
GBPJPY - Daily Chart

Euro Zone Industrial Production on Tap Today

Posted: 13 Feb 2011 11:00 PM PST

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The US dollar experienced one of its most bullish trading days last Friday against the EUR. The EUR/USD fell as low as 1.3496, its lowest level since Jan 21st, after Egyptian President Hosni Mubarak stepped down and handed over power to the army.

The price of crude oil also fell $4 to below $85.50, extending hefty losses from the previous session as political concerns sent investors into safe havens. This week, crude oil is set to be in the spotlight again with important publications data from U.S.

Today's leading indicator:

10:00 GMT: Industrial Production

The Industrial Production report provides an excellent gauge of current economic conditions and overall economic situations. As a leading indicator of economic health, this report has a direct correlation with the strength of the euro zone economy. If the end result will beat expectations for -0.1%, the euro might be strengthened as a result.
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