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Obsidian

FX Thoughts of the Day

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EUR/USD

EUR/USD fell after the latest report released by Commerce Department showed that retail sales in U.S. rose in February. Meanwhile the Federal Reserve's statement reduced expectations for further monetary easing. The pair tested the support at 1.3050 and bounced to 1.3120 level. Europe is one of the strongest economic regions in the world but the countries involved in the common currency are far too different to be under the same monetary policy. While EU is struggling with the structural problems, the market is turning its focus to U.S. economy. The recent data indicates that health of the U.S. economy is in a better shape than expected. The pair is now sitting on a critical support level. If bulls want to take over, they have to break resistance levels at 1.3160 and 1.3220. If the bears win the battle and break 1.3050 support level (%50 fibonacci level), the next support level will be 1.2950. The pair is more bearish than bullish.

 

GBP/USD

The British pound is of course less affected from Greek drama and less risky. The recent price action on EUR/GBP indicates this fact as well. The pair found support at 1.5620 and bounced back up again. To the upside resistance will clearly be 1.5748 and 1.5765 levels. In order to see the bullish tenancies continue, the pair has to penetrate this strong resistance zone. If the bears win the fight, the cable will re-visit 1.5645. If 1.5600 is breached, the pair will probably fall to 1.5530 and then to 1.5400.

 

USD/CHF

The Swiss franc is getting weaker against the greenback and the daily charts indicate that there is a strong possibility that the pair will retest 0.9290 if it can continue to stay above 0.9200. A weekly close above 0.9300 level would signal that the pair is heading to 0.9700. If the bulls fail and price turns bearish, look for support at 0.9160, 0.9120 and 0.9090.

 

USD/CAD

Recently USD/CAD has been hard to trade. Daily range is very tight but high oil prices will more than likely continue to support the CAD and drive this pair lower. Resistance to the upside can be found at 0.9950 and 1.00. To the downside, there will be support at 0.9844 and 0.9790.

14march.thumb.jpg.e6c154a52278bfcfd924deeec5816aa6.jpg

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Yes! I would like to see the magic level of 1.3000 fail.

 

1.30 is a strong psychological level. I will act when it fails to go back above 1.3 from below. Until then I am treating all this as noise.

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EUR/USD:

The markets continue to react to Fed's statement. EUR/USD fell to a one-month low of 1.3004. The markets are still nervous about the eurozone and the situation in Europe has been driving everything. Now the things are changing as the recent U.S. economic data suggest that the overall economy and customer sentiment are improving. If the recent economic strength continues, then the Fed will be less likely to launch another round of bond buying. According to the daily charts, the euro is under the selling pressure when the market trades below 1.3050. If the pair fails to bounce back up, that would give the bears the opportunity to break the 1.30 level. Once the pair is below this crucial level, look for 1.2950 and 1.2873. There is plenty of resistance to be concerned about to the upside with daily moving average(50) at 1.3090 and the daily resistance at 1.3160 (38.2% Fibonacci level). Bear in mind that there are 4 key news items for the greenback including PPI, Unemployment Claims, TIC Long-Term purchases and Philadelphia Fed Manufacturing Index numbers.

 

GBP/USD:

GBP/USD had another volatile day. The pair tried to break 34EMA, which has been acting like a S/R line, but failed to break this barrier as Fitch Ratings changed the outlook on UK from “stable” to “negative”. Currently the pair is stuck between 1.5740 and 1.5640. 1.5600 is an important level for the bulls to protect but if it gives way, the pair would fall to 1.55 and possibly 1.53 in fairly quick order. If prices rise from this level, look for resistance at 1.5700, 1.5740 and 1.5815. It appears that there is still a lot of possible headwinds in both directions so the pair is probably best left alone until the range is broken out of completely.

 

USD/CHF:

USD/CHF is strongly bullish and it is quite possible that the pair will continue rising as long as it stays above 0.9250/00 zone. If the pair can stay above 0.9300, buying pressure will increase and its next targets will be 0.9380, 0.9474 and 0.9600. If prices turn bearish from here, support will be seen at 0.9250, 0.9200 and 0.9163 levels. Keep in mind that the pair is a slightly manipulated one, because of the SNB and its 1.20 EUR/CHF floor.

 

USD/JPY:

USD continued to climb against JPY and this is the sixth straight bullish week in a row. I have to admit that BoJ is doing a better job this time. 84.00/10 zone may slow the bulls down for a while though. This is an important level because a bearish weekly trend line is passing as well. If the bulls can break and hold above the 84 level, the pair’s next target will be 85.50. If it fails to break above and turns bearish, look for support at 83.10, 82.60 and 82.25.

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EUR/USD:

The US dollar weakened against the euro, despite the data released last night showed the U.S. economy continues to improve. EUR/USD was in a consolidation mode during the Asian and London sessions. EUR/USD climbed after failing to break below 1.3000 support level. Now the pair is trading at 1.3085. In order to remain bullish, price needs to break 1.3160. If the bulls can penetrate this barrier, the next and important resistance, which is also daily moving average(100), is located at 1.3220. If the bears increase the pressure and take over, the pair will revisit support at 1.3000. Again markets will be most focused on figures that provide a measure of strength of the U.S. economy. Capacity Utilization Rate, Industrial Production, University of Michigan Consumer Sentiment and CPI numbers will be released today.

 

GBP/USD:

GBP/USD had been very choppy yesterday. The near-term news has undoubtedly got better, certainly than was the case in November. It is also possible that funding and credit conditions could improve. As a result, the pair rose and tested EMA(34). This is a critical level for the Cable. It will need to break above 1.5700 before challenging 1.5810 on its way to 1.6000. This is possible for sure, but it is early to tell. However if price turns bearish and the bears follow through, the pair’s next targets will be 1.5530 and 1.5470.

 

AUD/USD:

Data this month has shown just how much pain the strong AUD has inflicted on Australia’s economy. However demand from central banks seeking to diversify their reserves has been holding the AUD above the parity for a long time. AUD/USD is trading at 1.0543 by the time of typing and 4-Hour chart is indicating that we could see prices pushing higher. The pair stopped its fall yesterday at the 38.2 fibonacci level and bounced back to 1.0500 resistance after it broke the wedge formation. If the pair holds above 1.0500, look for 1.0599 and 1.0690. If the bears win the battle, there will be support at 1.0477 and 1.0400.

 

USD/CHF:

USD and EUR slipped against CHF after the Swiss National Bank kept policy steady as expected. The SNB doubled its growth forecast for 2012 and said it was determined to enforce its cap on the strong franc at 1.20 per euro because it was helping stabilize the economy. The Swiss franc strengthened after the SNB announcement and pulled back to 0.9200. If price holds above 0.9200 and turns bullish, look for resistance at 0.9287 and 0.9347. If it can’t stay above 0.9200, look for support at 0.9140 and 0.9090.

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