Saturday, February 28, 2015
China Non-manufacturing PMI: 53.9 (February) vs 53.7
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China Non-manufacturing PMI: 53.9 (February) vs 53.7
China NBS Manufacturing PMI above forecasts (49.7) in February: Actual (49.9)
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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
©2015 “FXStreet. The Forex Market” All Rights Reserved.
China NBS Manufacturing PMI above forecasts (49.7) in February: Actual (49.9)
Dollar Ends Week on Strong Note, Defying Adverse Fundamentals
The US dollar ended this week with gains even though it looked like fundamentals were against the US currency. The greenback was particularly strong against the euro, and this was surprising considering the progress in the situation with Greece. At the same time, the dollar was unable to beat the Great Britain pound.
The dollar struggled after the testimony of Janet Yellen, Federal Reserve Chairperson, made speculators reconsider the potential timing for an interest rate hike, hurting the dollar. Furthermore, many economic indicators from the United States were lackluster. Yet the greenback jumped on Thursday despite adverse fundamental data, resulting in a weekly gain.
Meanwhile, the euro was extremely weak, reaching the lowest level since December 2007 against the sterling. It was a surprise considering that a bailout deal has been made, which was approved by other eurozone members, including Germany.
EUR/USD dropped from 1.1394 to 1.1190, demonstrating the weakest weekly close since October 2003. GBP/USD went up 1.5396 to 1.5438, reaching the weekly high of 1.5551. USD/JPY ticked up from 119.09 to 119.63 over the week.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.
Dollar Ends Week on Strong Note, Defying Adverse Fundamentals
FX CFTC report - TDS
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FX CFTC report – TDS
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FXStreet (Guatemala) – Analysts at TD Securities offered the FX CFTC Commitments of Traders Report – for week ending Tuesday, February 24th.
“CFTC data for the week through February 24th showed a further reduction in overall USD-bullish positioning. The aggregate net long USD position against the major currencies fell for a third week in succession to total USD42.8bn in the latest week, the lowest bull bet on the USD since December.”
“Once again, a sizable reduction in net EUR short positions accounted for most of the decline in the long USD bet. Net EUR shorts eased to –177.7k contracts this week, down from –185.5k contracts in the prior week—equating to a USD1.2bn overall reduction in the net short EUR position. Net short GBP positions saw a reduction of 7k contracts this week, to –21.8k contracts to account for another USD0.5bn reduction in the USD bull bet.”
“Elsewhere, in similar vein to last week, positioning changes were not that significant. Net short JPY positions dropped modestly to –47.5k contracts this week (-49.1k last week. Net short CHF positions were little changed at –5k this week (-6k last).”
“Despite focus on RBA policy prospects last week, speculative accounts boosted net short AUD positions quite aggressively, however, extending the steady increase in positioning here evident since mid-December. Net AUD shorts stood at –63.1k contracts as of Tuesday, the biggest bet against the AUD since early 2014.”
“Net short NZD positions were reduced but remain very modest (-4.3k) while investors took advantage of the recent stabilization in the CAD bear trend to boost, very slightly, net shorts to –36.4k (from –32.8k last week.). Net MXN shorts were raised slightly to –48.3k, within recent ranges.”
FX CFTC report - TDS
US stocks closes negative on the day but over 5% up in the month
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US stocks closes negative on the day but over 5% up in the month
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FXStreet (San Francisco) – Historically, January is a bad month for stocks and then, February starts the recovery… but this time it seems too much, or may be too good! Wall Street closed Friday with small losses but posted strong gains in the month, including a 7% gain in the Nasdaq.
February was a great month for the major averages that are around 2% up on the year with the Dow hitting new record closes for the first time in the year.
Most sectors finished Friday down for the day. Major losers were Technology (-0.58%), Health Care (-0.43%), and Industrial shares (-0.42%). To the upside, Consumer Staples (+0.26%), Telecomm (+0.17%) and Energy sectors (+0.16%) were the gainers.
The Telecommunication sector performed the best out of all sectors over the week with a gain total of 0.32%. Followed by Staples (+0.27%) and Discretionaries (+0.09%). Laggards on the week were Utilities (-1.77%), Energy (-0.96%), and Industrials (-0.91%).
On February, Materials (+6.79%), Technology (+5.42%) and Discretionaries (4.90%) were the leaders; while Utilities (-7.40%) was the only sector that posted losses in the month.
The Dow Jones fell 0.45% on Friday to 18,132.70; the DJIA declined 0.04% in the week; but rallied 5.64% in the month to be 1.74% positive YTD.
The S&P 500 declined 0.30% on the day to 2,104.50; the S&P finished the week with a 0.27% drop, the month with a 5.49% climb and it’s 2.21% positive YTD.
The Nasdaq, which is flirting with the 5,000 level, fell 0.49% on the session to 4,963.53; the Composite wrapped up the week 0.15% positive, the month with an impressive 7.08% gain in February that drove it 4.8% up YTD.
Small caps on the figure of the Russell 2000 closed the day 0.46% negative at 1,233.37; However it was 0.13% positive in the week, 5.83% up in the month and 2.38% YTD.
US stocks closes negative on the day but over 5% up in the month
USD/JPY: Looking constructive for above 120.00 - TDS
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USD/JPY: Looking constructive for above 120.00 – TDS
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FXStreet (Guatemala) – USD/JPY looks technically constructive, according to analysts at TD securities.
Key Quotes:
“The early February break above trend/bull wedge consolidation resistance failed to achieve lift-off but nor did the USD drop back (the former resistance became support essentially).”
“Now, the USD is poised to close the week stealthily bullish. At or near current levels will be the strongest weekly close for the USD since the first week of January—a positive sign.”
“Along with the alignment of trend strength oscillators across the short, medium and long-term studies, there is evidence here too that the USD bull trend is trying to get back on track.”
“The technical “damage” was done here earlier in the month when the consolidation first broke down but we suspect the USD will pick up a little more traction above 120 and a lot more above 121.85.”
USD/JPY: Looking constructive for above 120.00 - TDS
Session Recap: USD takes a breather
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Session Recap: USD takes a breather
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FXStreet (Córdoba) – The dollar took a breather on Friday following yesterday’s rally, although it managed to extend gains versus the yen and the franc following US GDP revision. The second estimate for US 4Q GDP came in at 2.2%, below the first estimate of 2.6% last month, but above expectations for a revision to a 2% increase.
EUR/USD closed the day little changed just below the 1.12 mark after hitting a fresh 1-month low of 1.1175 at the beginning of the session. The pair posted its second weekly loss in a row and remained dangerously close to multi-year lows scored last month.
GBP/USD ended up 0.23% on Friday and managed to hold onto minor weekly gains despite yesterday’s drop.
USD/JPY rose to a 3-day high of 119.79 but stalled a few pips shy of Wednesday’s high. USD/CHF rose to the 0.9545 zone, but the resistance area held after a second test this week.
In the commodity space, oil closed the week just above $50 a barrel, while gold ended up but remained capped by $1220 an ounce.
Elsewhere, stocks closed lower in Wall Street but accomplished monthly gains. The DJIA fell 0.45%, the S&P500 drop 0.30% while the Nasdaq lost 0.49%.
Next week, ECB meeting and US nonfarm payrolls report will be the key events to watch.
Session Recap: USD takes a breather
CFTC Commitment of Traders Report - TDS
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CFTC Commitment of Traders Report – TDS
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FXStreet (Guatemala) – Analysts at TD Securities offered the CFTC Commitment of Traders Report for week ending February 24th.
Key Quotes:
“Gold specs exited further from long positions as weaker US data lends credence to the latest dovish sounding Fed meeting Minutes.”
“Silver specs were a little more timid about cutting longs as they seem to have more conviction in higher prices.”
“Platinum specs drove positioning to record short side exposure, betting that a breakdown in technical support would accelerate downside.”
“Palladium specs added net length anticipating that greater US/China auto sales will drive large deficits and keep prices trending higher.”
“Copper specs reversed a bit of bearishness, anticipating that production losses would tighten the market.”
“Crude oil investors were mixed. WTI specs further increased short positions more than longs as net positions continue to flatten on bearish local inventories. Brent spec decreased short positions more than longs on endemic supply disruptions.”
“Persistently cold weather has natural gas specs cover short positions, similar to heating oil investors.”
“Gasoline specs increased short positions and decreased long positions in line with feedstock crude pricing.”
CFTC Commitment of Traders Report - TDS
Friday, February 27, 2015
Weekly Trading Forecast: Expect Heavy Seas Between NFPs, ECB and RBA
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US Dollar Forecast– Dollar Faces Speculation, Risk Trends, Central Bank Moves
The Dollar received a jolt of volatility this past week in a rally that followed the CPI inflation report, but the currency was unable to escape the bounds of a month-long range.
Japanese Yen Forecast – US Dollar Likely to Reverse versus Japanese Yen in Week Ahead
The Japanese Yen traded lower versus the US Dollar for the third week in four and left the USDJPY exchange rate near the key ¥120 level. Why might the week ahead finally bring a major breakout?
British Pound Forecast – GBP/USD Stalls at Key Juncture – Outlook Hinges on BoE, NFP
The Bank of England’s (BoE) March 5 interest rate decision may have a limited impact on GBP/USD as the central bank is widely anticipated to retain its current policy, but the fundamental developments coming out of the U.K. may continue to boost the appeal of the sterling should the data prints highlight an improved outlook for growth and inflation.
Australian Dollar Forecast – Australian Dollar Looks to RBA Rate Decision to Break Deadlock
The Australian Dollar is looking to the RBA monetary policy announcement to break prices out of congestion following four weeks of deadlock.
Gold Forecast – Gold 1195 Support Remains Paramount Ahead of March Opening Range, NFP
Gold prices snapped a four week losing streak with the precious metal rallying 1.27% to trade at $1216 ahead of the New York close on Friday.
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Weekly Trading Forecast: Expect Heavy Seas Between NFPs, ECB and RBA
Australian Dollar Looks to RBA Rate Decision to Break Deadlock
Fundamental Forecast for Australian Dollar: Neutral
RBA Rate Decision to Trigger Volatility on 50/50 Expectations Split
US Payrolls Outcome to Complicate Aussie Dollar Follow-Through
Identify Critical Australian Dollar Turning Points with DailyFX SSI
The Australian Dollar spent a fourth week in consolidation having started the month with a drop to the lowest level in nearly six years against its US counterpart. That move was triggered by a surprise interest rate cut from the Reserve Bank of Australia, and prices have since stalled as investors weigh the possibility of further easing. The deadlock is likely to be broken in the week ahead as policymakers gather for another policy meeting.
A survey of 29 economists polled by Bloomberg is narrowly leaning toward stimulus expansion, with 18 of those queried calling for the benchmark lending rate to be lowered by 25 basis points to 2 percent. Traders are bit more dubious: priced-in expectations reflected in OIS rates reflect a 56 percent probability of a reduction. This means that regardless of which direction the RBA opts to take, nearly half of investors will find themselves wrong and scrambling to readjust portfolios accordingly. Needless to say, this is likely to make for a volatile response no matter what outcome ultimately hits the wires.
Whatever the initial reaction however, follow-through will be far from certain as high-profile event risk emerges on the external front and threatens to pull the Aussie into its orbit. February’s US Employment report stands out as particularly critical as investors continue to speculate about the timing of the first post-QE interest rate hike from the Federal Reserve. Expectations call for a slight slowdown in job creation, with payrolls posting a 235,000 increase compared with 257,000 added in the prior month.
US news-flow has tended to underperform relative to forecasts in recent months, hinting economists continue to overestimate the vigor of the world’s largest economy and opening the door for a disappointing jobs figure. Such a result may pour cold water on bets calling for the onset of FOMC policy normalization by mid-year. That is likely to weigh on the US Dollar, offering a lift to the Australian unit that either cuts short weakness or amplifies strength seen after the RBA announcement, depending how Glenn Stevens and company ultimately decide to proceed.
Australian Dollar Looks to RBA Rate Decision to Break Deadlock
Dollar Faces Rate Speculation, Risk Trends, Central Bank Moves
Fundamental Forecast for Dollar:Neutral
The PCE inflation gauge and NFPs will shape rate speculation that still has market pricing October hike
Expected easing efforts by the ECB, RBA and BoC can leverage the Dollar’s outlook for rate hikes
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The Dollar received a jolt of volatility this past week in a rally that followed the CPI inflation report, but the currency was unable to escape the bounds of a month-long range. It will be increasingly difficult to maintain a range going forward however. Not only are major themes like US rate forecasts and risk trends developing, but we have a range of high profile event risk. While US indicators like the February NFPs will provide a clear connection to Dollar activity; policy decisions by some of the Fed’s largest counterparts – the ECB, BoE, RBA and BoC – can generate considerable indirect force.
For Dollar traders, the outlook is steeped in two key fundamental themes: monetary policy and speculative sentiment. It is the former that has fed the Greenback’s bullish trend these past nine months (the ICE Dollar Index secured an eighth consecutive rally – a record- while the Dow Jones FXCM Dollar Index closed the month slightly lower). Yet, just as clear as the ‘relative’ hawkish outlook for the Fed has generated such a resounding performance, we can also see its limitations shaped through the month-long consolidation pattern the benchmark established through February.
Compared to the ECB and BoJ (who are executing quantitative easing programs) or the RBA and BoC (which have recently cut their benchmark rates), the FOMC is exceptionally hawkish. Though it is still plotting the time frame for its first hike in a controlled normalization regime, a tightening move offers drastic contrast. Much of this has been priced in however. Currently, the market expects a first and second rate hike in 2015 – something the other majors cannot claim. To leverage further gains on this view though, the lead needs to be extended.
According to Fed Fund futures, the first move by the Fed is expected around the October 28 meeting. Alternatively, surveys for economists, analysts and primary dealers pegs it around June 17 or July 29. That opens the door for more progress. A few particular data points stand out over the coming week that can up the market’s expected time frame – or push it back depending on the outcome. At the start of the week, we have the PCE inflation measures. Given that this is the Fed’s preferred price gauge, a surprise here could generate a greater market response than the heft Dollar bid that followed last week’s CPI release. At the end of the week, the February labor data will be a media and speculative focus. While the payrolls and jobless figure are important, we know the general trend of the past five years. The missing puzzle piece for hikes is inflation. And that leverages the importance of the average hourly wages component which last month posted the biggest monthly jump since December 2008.
A change in tide and intensity of the US rate forecast is the most direct means to motivate the Dollar, but don’t write off the strengthening or weakening of its collective counterparts as a capable impetus. The ECB is set to activate its stimulus program while the RBA and BoC are expected to each supply a consecutive interest rate cut. There is plenty of room to broaden or close that gap.
There will be plenty on the docket – and no doubt newswires – to occupy our attention in the week ahead. Yet, it is important to maintain a firm grasp of the ‘big picture’. The view of US monetary policy compared to its conterparts is a node, but how collective monetary policy influences global investor sentiment is a central pillar. ‘Risk appetite’ has not contributed much to the Dollar’s cause – bullish or bearish – recently as it has not moved with conviction (regardless of what it seems the S&P 500 is doing). It is difficult to instill confidence of a robust extension of already mature risk accumulation trends. In contrast, the correct spark can ignite an explosive value gap to risk aversion and deleveraging. When this reallocation hits, the Dollar will gain at the extremes.
Dollar Faces Rate Speculation, Risk Trends, Central Bank Moves
Gold 1195 Support Remains Paramount Ahead of March Opening Range, NFP
Fundamental Forecast for Gold:Neutral
Gold Holds Up at $1200, SPX 500 Remains in Consolidation Mode
Gold Price 1170s Still Seen as Support
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Gold prices snapped a four week losing streak with the precious metal rallying 1.27% to trade at $1216 ahead of the New York close on Friday. The fresh batch of central bank rhetoric from the Humphrey-Hawkins testimony suggests that the Fed remains cautiously on course to normalize monetary policy, but the fundamental developments due out in the days ahead may heavily influence interest rate expectations as the central bank struggles to achieve its 2% target for price growth.
Beyond the slew of central bank rate decisions kicking off the March trade (RBA, ECB, BoE & BoC), the U.S. Non-Farm Payrolls report may have the biggest implications for gold on the back of the USD strength story. Despite the stronger-than-expected 4Q GDP print, the disinflationary environment may put increased emphasis on the wage growth figures due out on Friday, and signs of subdued household earnings may undermine the bullish sentiment surrounding the dollar especially as market participants anticipate Average Hourly Earnings to narrow to an annualized 2.1% in February. We’ll look for possible softness in the greenback to further support the recent gold rally with prices closing out the week just below key resistance.
Last week we highlighted key technical support at $1196/98, a level defined by “the confluence of the 61.8% retracement of the November advance & the 1.618% extension of the decline off the January high and is backed closely by a basic trendline support off the November low. We’ll reserve this region as our near-term bullish invalidation level and although the broader bias remains weighted to the down-side, near-term this structure may offer stronger support. Interim resistance (near-term bearish invalidation) stands at $1218/24… Bottom line: looking for a low early next week with a general topside bias in play near-term while above $1196/98.” – Indeed the market fell to a fresh low on Monday before rebounding to test the $1218/24 resistance range. Our outlook remains unchanged heading into March with the 1196-1224 range in focus to start the week. A topside breach keeps the long-bias in play targeting resistance objectives at 1234 & 1248/50 with a break sub 1195 (close basis) risking substantial declines into subsequent support targets at $1171 & $1155.
Gold 1195 Support Remains Paramount Ahead of March Opening Range, NFP
GBP/USD Stalls at Key Juncture - Outlook Hinges on BoE, NFP
Fundamental Forecast for British Pound: Neutral
GBP/USD Rebound Stalls at Former Support- Bearish RSI Break in Focus
GBP/USD Tests Key Retracement
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The Bank of England’s (BoE) March 5 interest rate decision may have a limited impact on GBP/USD as the central bank is widely anticipated to retain its current policy, but the fundamental developments coming out of the U.K. may continue to boost the appeal of the sterling should the data prints highlight an improved outlook for growth and inflation.
Following the BoE testimony, it seems as though the Monetary Policy Committee (MPC) will continue to move towards a rate hike especially as Governor Mark Carney only sees a ‘temporary’ decline in U.K. inflation and retains the hawkish forward-guidance for monetary policy. With that said, a further pickup in U.K. Mortgage Approvals along with a faster expansion in the Purchasing Manager Indices (PMI) may boost interest rate expectations as a growing number of central bank officials show a greater willingness to normalize monetary policy over the near to medium-term.
At the same time, the U.S. Non-Farm Payrolls (NFP) report will also largely be in focus as it remains a race between the Fed and the BoE as to who will be the first to normalize monetary policy. Indeed, another 240K expansion in U.S. employment may further the argument for a mid-2015 rate hike, but Chair Janet Yellen and Co. may ultimately share a similar fate to their U.K. counterpart especially as Average Hourly Earnings are expected to narrow to an annualized 2.1% in February. As a result, the disinflationary environment may push the Fed to further delay its normalization cycle, while a pickup in U.K. economic activity may underpin a larger rebound in the British Pound as the central bank continues to prepare households and businesses for higher borrowing-costs.
Nevertheless, the lack of momentum to push and close above the former support zones around 1.5510-55 may produce range-bound prices in GBP/USD ahead of the key event risks, but the pair may make a more meaningful effort to retrace the decline from the previous year should the fundamental developments sway the interest rate outlook for the U.S. and U.K. As we open up the March trade, the opening monthly range may dictate the short-term outlook for the pound-dollar as the Fed is scheduled to deliver its next interest rate decision on March 18.
GBP/USD Stalls at Key Juncture - Outlook Hinges on BoE, NFP
2 Reasons NZD/USD Could Be a Buy
Talking Points:
NZD/USD has risen over 5% from its multi-year low
Strong resistance has been broken
NZD/USD SSI is at -1.55, a bullish signal
Since its low on February 3rd, the NZD/USD has been on a tear to the upside. It’s rallied as high as 400 pips from the bottom, and doesn’t show much sign of stopping. Today we look at two reasons why being bullish the NZDUSD could be a potential opportunity.
NZD/USD Has Broken Resistance – Bullish
On the Daily chart below, we can see the bearish price channel formed late in 2014. The lower trend line was respected from September-December until we witnessed a breakout in the middle of January. The kiwi has recovered, tested prior support level (which is now acting as resistance) and has now finally broken above it.
This break above resistance is confirmed with today’s weekly close above this level. A confirmed break of resistance is a bullish signal and could mean price will rally higher in the future.
Learn Forex: NZD/USD Breaking Resistance
(Created using Marketscope 2.0 charts)
NZD/USD Sentiment is Negative – Bullish
I love analyzing retail sentiment. It is my favorite tool and I believe it turned my trading career around. So I always look to see what sentiment is doing before a trade is placed. For the past couple weeks, sentiment has been relatively flat with no major imbalance between long and short traders on the major currency pairs. The only exception to this has been the NZD/USD the past few days. We’ve seen NZD/USD SSI the most negative it has been in months, which historically is a bullish signal.
Learn Forex: NZD/USD Speculative Sentiment Index (SSI) – Negative
(Screen capture from DailyFX On-Demand)
The chart above shows how NZDUSD’s price has reacted to varying levels of SSI. When the SSI (in light blue) has been in negative territory, price tended to move higher. And since SSI is at the most negative value it’s been in a long time, price could rally because of it.
In Conclusion
It’s important to state that there are no guarantees in trading, and even though this setup shows promise, it does not mean it will work out. Reading charts and analyzing sentiment can lead to great trades, but it can also lead to losses. So as always, perform your own due diligence before placing any trades on your own account. Also, feel free to utilize a demo account to practice trading risk-free before trading with real money.
Good trading!
—Written by Rob Pasche
To contact Rob, email rpasche@dailyfx.com.
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2 Reasons NZD/USD Could Be a Buy
USDJPY Will Begin March at Bottom of Resistance Zone
GBPUSD responds to slope resistance
AUDUSD faces channel resistance
NZDUSD rally stalls at December low
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Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-“BIG picture, monthly RSI has broken out of a triangle pattern. Sometimes, a pattern breakout in momentum (or OBV) precedes the breakout in price. The development’s implications are obviously significant.”
-A number of calls for parity have been published recently. While the long term pattern suggests an eventual print near .90, the sudden aggressively bearish calls come just after a record small speculator short position and record open interest in euro futures was recorded in November. The same COT profile was evident in May 2012, before the EURUSD bottomed in July. Aggressive forecasts are often published when it’s comfortable to do so, which means that the trend is embedded in the public consciousness to the point of extremity. The path to .90 or so won’t be smooth (in other words…more 2 way trade). Former support may provide resistance from 1.1640 to 1.2040.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-“A breakout from a 1 month inverse head and shoulders pattern is valid above today’s low (breakout day) but GBPUSD does face channel resistance at this level. The reversal pattern’s objective is 1.5494, which is in line with the December low at 1.5485.”
-GBPUSD met the target and traded into the mid-1.5500s this week. There is good resistance here from former lows and slopes on multiple time frames.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-“AUDUSD may be trying to put in a floor of sorts as the rate has held up since putting in a large range and volume reversal on Tuesday. The larger trend remains lower however with resistance estimated at .8030/50. The next potentially important support probably isn’t until the 61.8% retracement of the 2001-2011 rally at .7183.”
-“The last 2 weekly candles (key reversal and inside doji), at slope support mind you, are consistent with a near term change in behavior.” The market has held up but nearby channel resistance could derail the trip to .8030/50.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-“NZDUSD traded to the 61.8% retracement of its 3 year range today (.7929) and the next level of interest probably isn’t until the 2013 Labor Day gap at .7722. One can’t help but notice that an epic double top is possible with a target of .5898. That would trigger on a drop below .7370.”
-The large double top triggered…but the breakout has proven false to this point. The December low (.7608) served as resistance this week. In time, the 2013 low (.7682) could come into play as resistance.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-“Continue to favor a broad range as 119.80-120.70 as resistance and 116.40-117.10 as support. A move through either one of these zones would define target zones of 124-128 and 110-114.”
-Early month trade is always important but even more so as USDJPY is going to begin March near the lower bound of its resistance zone.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
Automate trades with Mirror Trader
-“USDCAD has pushed through the 2007 high at 1.1875, 61.8% extension of the 2007-2009 rally from the 2011 low at 1.1882, and several upward sloping parallels. The next cluster of technical levels is between 1.25 and 1.2730.”
-Near term, the contracting range indicates potential for a triangle. Typically, a triangle will lead to a thrust in the direction of the preceding trend. In this case, that is bullish. Don’t be dogmatic though (especially since long term resistance has been reached at 1.2730). A break of 1.2350 would open up a parallel as support near 1.2200.
Weekly
Chart Prepared by Jamie Saettele, CMT using Marketscope 2.0
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-“Since banging off of a lower parallel (after SNB), USDCHF has rallied and is just pips from the median line of that structure. The line in question is just pips from the October 2014 low at .9352. Watch for resistance. A reaction targets .8820/30 as support. A move over the mentioned median line opens up .9530/50 (November and December 2014 lows).”
-USDCHF has pushed through the mentioned through the mentioned line and is pressing against the December low. Watch the median line for support now…probably near .9300/40.
USDJPY Will Begin March at Bottom of Resistance Zone
EUR/USD Rebound Vulnerable to ECB?s 2017 Forecasts- 1.1300 in Focus
Talking Points:
- EUR/USD Rebound Mired by ECB Easing Cycle- Bearish Momentum Remains in Play.
- AUD/USD Range Vulnerable to Dovish RBA, Dismal 4Q GDP Report.
- USDOLLAR Topside Targets Favored Ahead of NFPs as Bearish Momentum Falters.
For more updates, sign up for David’s e-mail distribution list.
EUR/USD
Chart – Created Using FXCM Marketscope 2.0
Looks as though EUR/USD will continue to close above 1.1185 (23.6% expansion) to 1.1210 (61.8% retracement), but will retain the approach to ‘sell-bounces’ in EUR/USD as the Relative Strength Index (RSI) retains the bearish momentum.
Updated forecasts along with the forward-guidance for monetary policy will be largely in focus as the European Central Bank (ECB) prepares to launch its quantitative-easing (QE) program.
DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped back to net-short EUR/USD going into the end of the month, with the ratio currently holding at -1.02.
AUD/USD
AUD/USD looks poised to retain the range-bounce action ahead of the Reserve Bank of Australia (RBA) interest rate decision on March 3 amid the string of closes above 0.7780 (23.6% retracement).
Seeing mixed speculation for a further reduction in borrowing-costs as 18 of the 29 economists polled forecast a 25bp rate cut.
With the near-term bullish RSI momentum in play, key topside level of interest comes in around former support at 0.8020 (38.2% expansion) to 0.8040 (61.8% retracement).
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Read More:
USD/JPY Scalp Targets 119.64 Resistance Ahead of GDP
The Weekly Volume Report: USD Pushes Higher But Still Waiting on Volume
USDOLLAR(Ticker: USDollar):
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar outlook remains bullish going into March as it retains the upward trending channel carried over from July 2014; topside targets favored following break of bearish RSI momentum.
The stronger-than-expected 4Q GDP print may fuel expectations for a very robust Non-Farm Payrolls (NFP) report, but we will keep a close eye on the wage growth figures especially as the Fed remains in no rush to normalize monetary policy.
Still favor the approach to ‘buy dips’ in USDOLLAR, with the next topside target coming in around 11,901 (78.6% expansion).
Join DailyFX on Demand for Real-Time SSI Updates!
Click Here for the DailyFX Calendar
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David’s e-mail distribution list, please follow this link.
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EUR/USD Rebound Vulnerable to ECB?s 2017 Forecasts- 1.1300 in Focus
EUR/USD Rebound Vulnerable to ECB?s 2017 Forecasts- 1.1300 in Focus
Talking Points:
- EUR/USD Rebound Mired by ECB Easing Cycle- Bearish Momentum Remains in Play.
- AUD/USD Range Vulnerable to Dovish RBA, Dismal 4Q GDP Report.
- USDOLLAR Topside Targets Favored Ahead of NFPs as Bearish Momentum Falters.
For more updates, sign up for David’s e-mail distribution list.
EUR/USD
Chart – Created Using FXCM Marketscope 2.0
Looks as though EUR/USD will continue to close above 1.1185 (23.6% expansion) to 1.1210 (61.8% retracement), but will retain the approach to ‘sell-bounces’ in EUR/USD as the Relative Strength Index (RSI) retains the bearish momentum.
Updated forecasts along with the forward-guidance for monetary policy will be largely in focus as the European Central Bank (ECB) prepares to launch its quantitative-easing (QE) program.
DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped back to net-short EUR/USD going into the end of the month, with the ratio currently holding at -1.02.
AUD/USD
AUD/USD looks poised to retain the range-bounce action ahead of the Reserve Bank of Australia (RBA) interest rate decision on March 3 amid the string of closes above 0.7780 (23.6% retracement).
Seeing mixed speculation for a further reduction in borrowing-costs as 18 of the 29 economists polled forecast a 25bp rate cut.
With the near-term bullish RSI momentum in play, key topside level of interest comes in around former support at 0.8020 (38.2% expansion) to 0.8040 (61.8% retracement).
Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!
Read More:
USD/JPY Scalp Targets 119.64 Resistance Ahead of GDP
The Weekly Volume Report: USD Pushes Higher But Still Waiting on Volume
USDOLLAR(Ticker: USDollar):
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar outlook remains bullish going into March as it retains the upward trending channel carried over from July 2014; topside targets favored following break of bearish RSI momentum.
The stronger-than-expected 4Q GDP print may fuel expectations for a very robust Non-Farm Payrolls (NFP) report, but we will keep a close eye on the wage growth figures especially as the Fed remains in no rush to normalize monetary policy.
Still favor the approach to ‘buy dips’ in USDOLLAR, with the next topside target coming in around 11,901 (78.6% expansion).
Join DailyFX on Demand for Real-Time SSI Updates!
Click Here for the DailyFX Calendar
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
To be added to David’s e-mail distribution list, please follow this link.
Trade Alongsidethe DailyFX Team on DailyFX on Demand
Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.
New to FX? Watch this Video
Join us to discuss the outlook for the major currencies on the DailyFXForums
EUR/USD Rebound Vulnerable to ECB?s 2017 Forecasts- 1.1300 in Focus
The Weekly Volume Report: USD Pushes Higher But Still Waiting on Volume
Talking Points
Get real time FXCM volume on your charts for free. Click HERE
Daily Volume Chart: EUR/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
EUR/USD recorded a new low close for the year this week
Declining volume during recent consolidation favors a downside resumption, but turnover needs to pick up on weakness to confirm this thinking
A rather stagnant daily OBV line also favors an eventual downside resolution
A close above 1.1450 on above average volume will turn attention higher
Daily Volume Chart: USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
USD/JPY has traded in a very tight consolidation over the past couple of weeks
The lack of volume during the push higher at the start of the month raises concerns that the consolidation is not yet finished
The lack of momentum in daily OBV is also a concern
A close under 118.00 on above average volume would turn us negative on the exchange rate
Daily Volume Chart: AUD/USD
Charts Created using Marketscope – Prepared by Kristian Kerr
AUD/USD traded at its highest level in almost a month this week
Volume has been in general decline since the start of year, but the lack of turnover on the recent rise suggests move is likely only corrective
A modest move off the recent lows in daily OBV also favors a correction scenario
A daily close above .8000 on above average volume would turn us positive on the Aussie
To receive Kristian’s analysis directly via email, pleaseSIGN UP HERE.
— Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX
The Weekly Volume Report: USD Pushes Higher But Still Waiting on Volume
GBPJPY Sentiment Remains Elevated
Talking Points:
-GBPJPY SSI remains elevated at +2.0
-Volatility contraction is not ideal for the Breakout2 strategy
-Range conditions prevail for the main pairs
We have been following the DailyFX Plus Breakout2 strategy for the past several weeks as it is widely followed by many traders. This piece aims to identify those markets where breakout conditions are prevalent, and thus a follow through of the breakout is more likely.
Well, volatility has fallen significantly and generally speaking, meaningful breakouts are absent. To add more salt to the breakout wound, sentiment readings are fairly tame as well. As a result, be VERY selective if you choose to employ breakout strategies in this market environment. Also, remember, that not implementing a breakout strategy IS a strategy.
When viewing the potential for a breakout, the GBPJPY is the one which is still hanging by a thread as its Speculative Sentiment Index (SSI) reading continues to remain elevated. The strength of trend and volatility expansion has been absent which could mean a consolidation before the breakout.
GBPJPY 4 Hour Chart
(Created using FXCM’s Marketscope charts)
Upon inspection of the chart above, it is possible to count this upward correction complete. If indeed this is the case, then prices could fall several hundred pips which aligns with the SSI filter on the Breakout2 strategy.
Therefore, the GBPJPY is the sole currency pair with a ‘2’ rating below. Still not outstanding, but it does stand out as the only pair not at a ‘1’ rating.
DailyFX Plus Breakout2 Conviction Chart for February 27, 2015
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Last Week’s Conviction Report: GBPJPY SSI Bearish Signal Grows More Extreme
Bold and italicized ratings above represents a change in the rating from last week. You’ll notice that several of the ratings were downgraded as the conditions are no longer ripe for follow through of a breakout.
As you can see in the chart above, the ADX and Rate of Change (ROC) are grouped together. Since the ADX doesn’t indicate direction, only strength of move, we want to couple it with a rate of change indicator.
When trading a breakout strategy, ideally we would like to see prices in a trend and moving. This would increase the chance of a breakout that would follow through. If prices are in a range and if the ROC is neutral, that indicates there isn’t prices are comfortable near the current levels until a catalyst creates discomfort for the price.
Ideally, we would like to see a directional move take place with expanding volatility. Expanding volatility can be measured through analysis of ATR range or perhaps volume expansion.
The fourth item is sentiment as read through FXCM’s SSI. The result of the “Bearish” means the SSI reading is > 1.22 and “Bullish” means SSI is <-1.22. For a current reading of SSI, log into DailyFX Plus (sign up for a free trial if you don’t have a live FXCM account) and view the Speculative Sentiment Index section (SSI).
When taking this together and a conviction reading is assigned. It is important to understand the conviction reading is the opinion of the author and not a recommendation to trade, use, or not use the DailyFX Plus Breakout2 strategy.
A conviction rating of ‘3’ means the ingredients exist for a breakout market condition that the Breakout2 strategy enjoys. A reading of ‘1’ represents a mixed bag and that the Breakout2 strategy is more at risk of a market condition that doesn’t cater as well to breakouts.
—Written by Jeremy Wagner, Head Trading Instructor, DailyFX Education
The DailyFX Plus Breakout2 strategy can be automated. If you wish for the trades to trigger automatically into your account, register for a Mirror account which provides you access to dozens of other strategies as well.
Follow me on Twitter at @JWagnerFXTrader.
See Jeremy’s recent articles at his DailyFX Forex Educators Bio Page.
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Feedback? Email Jeremy at jwagner@dailyfx.com
GBPJPY Sentiment Remains Elevated
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