Forex Crunch EUR/USD Outlook – September 6-10

Forex Crunch EUR/USD Outlook – September 6-10

EUR/USD Outlook – September 6-10

Posted: 05 Sep 2010 01:47 AM PDT


The upcoming week consists of industrial production publications among other figures. Here’s an outlook for European indicators and an updated technical analysis for EUR/USD.

EUR/USD daily graph with support and resistance lines on it. Click to enlarge:

eur usd forecast

EUR/USD managed to cling to the uptrend channel, even through Friday’s release of US Non-Farm Payrolls, which came out better than expected. This week is rather mild regarding US releases. Let’s see the European ones:

  1. Sentix Investor Confidence: Published on Monday at 8:30 GMT. This survey of 2800 analysts and investors finally turned positive last month, for the first in a few years. The positive score of 8.2 points means optimism about the economy. Another rise to 9.3 points is predicted now.
  2. German Factory Orders: Published on Tuesday at 10:00 GMT. The Euro-zone’s largest economy enjoyed a fantastic leap in orders last month – 3.2%, double the expectations. Another rise is expected now, but it will probably be slower – 0.6%.
  3. German Industrial Production: Published on Wednesday at 10:00 GMT. Complementing on the figure from the previous day, also here growth is expected (1.1%). But contrary to factory orders, the change in the value of the industry disappointed with a 0.6% drop last month. If both figures go in the same direction this time, it will shape the direction of the Euro.
  4. German Final CPI: Published on Thursday at 6:00 GMT. Inflation isn’t a threat in the Euro-zone. According to the initial release, prices remained unchanged in August. This will probably be confirmed now.
  5. ECB Monthly Bulletin: Published on Thursday at 8:30 GMT. This collection of statistical data is what the ECB sees when it comes to make a decision. The last rate decision by the ECB didn’t include a rate hike, but it did consists of interesting thoughts about the economy. We’ll now get to see what central bankers were looking at. This always rocks the Euro.
  6. French Industrial Production: Published on Friday at 6:45 GMT. Europe’s second largest economy suffered from a big plunge in industrial output – 1.7% last month. A correction of 0.8% is expected now in this volatile indicator.

EUR/USD Technical Analysis

The Euro began the week with a gradual fall below 1.2722 (mentioned in last week’s outlook) and bottomed out at 1.2625. It then made a leap upwards, and after a struggle with the 1.2840 line, it managed to close just under 1.29, a weekly gain of about 150 pips.

After this move upwards, Euro/Dollar is now in a range between 1.2840, which is a minor support line and 1.2930 which was a stubborn resistance line at the beginning of August.

Above, the round number of 1.30 is the next resistance line, working as such in July. Higher, the 1.3110 line worked earlier this year as a support line and recently as resistance and now serves as a strong line of resistance.

Higher, 1.3267 held the pair before its collapse in May and also provided some resistance in the recent surge. The last resistance line for now is 1.3435, which also changed its role from support to resistance.

Looking down, the 1.2722 line is still relevant, despite being crossed several times in the past week. It’s now a minor support line. Below, 1.2610 the swing high in July and also served as support recently is a strong support line.

Lower, 1.2460 capped the pair when it was trading lower, in May and in June. Below, the "Lehman levels" – lows of 2008, continue to provide minor support.

A strong support line appears at 1.2150, which worked as a very strong line of support, and briefly as resistance. Even lower, the round number of 1.20 is the next line of support, before the year-to-date low of 1.1876.

I remain bearish on EUR/USD.

Despite the hope that came from the Non-Farm Payrolls, austerity measures in Europe still make the Euro-zone vulnerable. Range trading will probably be seen at the beginning of the week, and more price action will happen towards the end of it.

This pair receives excellent reviews on the web. Here are my picks:

  • Casey Stubbs sees the buy zone for the Euro approaching.
  • James Chen posted a currency strength / weakness meter. The Euro is somewhere in the middle.
  • Kathy Lien provides the best reason to buy Euros.
  • Andriy posts technical levels for the Euro and other pairs on a weekly basis
  • TheGeekKnows provides a review of the past week and a look forward.

Further reading:

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GBP/USD Outlook – September 6-10

Posted: 05 Sep 2010 01:45 AM PDT


The Pound showed weakness in the past week, and is now facing important tests. The upcoming week consists of a rate decision among other important releases. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.

GBP/USD daily graph with support and resistance lines on it. Click to enlarge:

gbp usd forecast

When the dollar strengthened on Friday’s Non-Farm Payrolls, the Pound suffered. When the dollar later retreated on the disappointing services PMI, the Pound only partially recovered. This is a sign of its weakness. Will it continue downwards this week? Let’s see:

  1. Halifax HPI: Publication time unknown. Delayed from last week. This house price index, is one of the most accurate available, as it's based on internal data from HBOS, one of the biggest banks in Britain. According to the bank, a three month slump in house prices stopped last month with a neat 0.6% rise. But this time, a 0.3% drop is predicted.
  2. BRC Retail Sales Monitor: Published on Monday at 23:00 GMT. This indicator serves as hint for the official retail sales figure. It measures the change in volume of sales, but only for the members of the BRC. The index rose nicely in the past three months, but could dip this time, especially after last month’s growth was weak.
  3. Manufacturing Production: Published on Wednesday at 8:30 GMT. Manufacturing output disappointed is the past three months by falling short of expectations, or even dropping. This gauge of the economy always rocks the Pound. Last month’s 0.3% rise will probably be followed by a similar rise this time. Note that manufacturing is part of the wider industrial production figure (expected to rise by 0.4% after dropping by 0.5% last time), but manufacturing is in the limelight.
  4. NIESR GDP Estimate: Published on Wednesday at 14:00 GMT. The National Institute of Economic and Social Research publishes its highly regarded estimate of GDP every month, filling in the gap for the official government releases. The estimate for the three months that ended in July stood on 0.9%,  lower than the official 1.2% growth seen in Q2. We’ll now get news about the three months that ended in August – more information about the third quarter.
  5. Trade Balance: Published on Thursday at 8:30 GMT. Britain’s deficit fell from 8 to 7.4 billion last month, boosting the Pound. This time, it’s expected to slip back up to 7.5 billion. A big disappointment can definitely hurt the Pound, as it happened when trade balance deficit jumped in May.
  6. Rate decision: Published on Thursday at 11:45 GMT.  There’s still only a single member of the MPC that voted for a rate hike – Andrew Sentance. This came in response to the rising inflation, which has weakened recently, as Mervyn King had expected. So, the chances of a rate hike are lower now. The British Official Bank ate will probably stay at 0.50% once again. The wording of the MPC Rate Statement will be interesting to watch, as it may signal the roadmap for an exit strategy.
  7. PPI: Published on Friday at 8:30 GMT. PPI Input, the secondary indicator of inflation was negative in the past three months, showing a significant drop in prices. The surprising drop of 1% last month will probably be followed by a 0.2% rise this time. Only a big leap will send a signal that also consumer inflation is on the rise, but this is unlikely – it will probably remain contained – showing that there’s no pressure for a rate hike. PPI Output is also expected to post a small gain – 0.1%.
  8. CB Leading Index: Published on Friday at 9:00 GMT. This composite index of 7 economic indicators is based on data that has already been released. Nevertheless, it still has an impact on cable. Last month it rose by 0.5%, and the rise will probably be more moderate now.

GBP/USD Technical Analysis

The Pound began the week with a failed attempt to stabilize above 1.5520 (mentioned in last week’s outlook). After this failed, GBP/USD lost 1.5470 and continued downwards, supported by the 1.5350 line. A recovery on Friday found it struggling with the 1.5470 line from the other side, and it closed at 1.5450.

The Pound fell to a lower range – between 1.5470 which also capped the pair in July, and 1.5520, which was a peak in April and now serves as minor resistance.

Looking up, 1.5720, which supported the pair back in 2009 is the next line of resistance. Above, 1.5833, which provided support at the beginning of the year and later worked as resistance, is the next line. Higher, the psychological round number of 1.60 proved to be a tough barrier and is the highest level in 6 months.

Higher, 1.6080 is the next minor resistance line, after working as support in January. It's followed by 1.6270, but that's quite far at the moment.

Looking down,  1.5230 was a stubborn resistance line in July and is now a major support line. Lower, 1.5120 will provide further support after having this role in July.

The 1.5050 line capped the pair on a recovery attempt in May, and is now a minor support line. Lower, 1.4950 provided support in July and is the final line for now.

I remain bearish on GBP/USD.

Inflation has softened and doesn’t support a rate hike. Together the pause in employment improvement, the Pound is vulnerable to further losses.

Further reading:

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AUD/USD Outlook – September 6-10

Posted: 04 Sep 2010 07:45 PM PDT


After a great week, another busy one expects Aussie traders. The RBA’s rate decision and employment figures are the highlights. Here’s an outlook for Australian events and an updated technical analysis for AUD/USD.

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

aud usd forecast

The Aussie enjoyed lots of good figures, with the Q2 GDP growth of 1.2% being a great positive surprise. The better-than-expected retail sales figure and especially building approvals, showed that also in Q3, the Australian economy is warming up once again. Will this lead to a renewal of rate hikes?

  1. MI Inflation Gauge: Published on Monday at 12:30 GMT. The Melbourne Institute’s inflation gauge fills in for the government, that publishes an official inflation figure only once per quarter. According to MI, inflation slowed down from 0.5% three months ago, down to 0.1% last month. A similar 0.1% rise is expected this time.
  2. ANZ Job Advertisements: Published on Monday at 1:30 GMT. The amount of jobs published in the media serves as a good indicator for the official employment figures released 3 days later. Last month saw a smaller growth in ads, only 1.3%, and indeed, the gain in jobs was slower than previous months. This time, the rise in ads is expected to slightly stronger.
  3. AIG Construction Index: Published on Monday at 23:30 GMT. The Australia Industry Group showed that the construction sector is slowing down, even contracting in the past two months. The index was under the critical 50 point mark, and this shows an economic squeeze. This goes hand in hand with the slowdown in other housing sector figures – a result of the rate hikes. It’s expected to recover, but remain under 50 points this time.
  4. Rate decision: Published on Tuesday at 4:30 GMT. 4 months have passed since the last rate hike, the sixth since the financial crisis. The hikes took their toll on the economy, and especially on real estate, so Glenn Stevens and his colleagues at the RBA decided to pause on recent months. Also now, the Cash Rate is expected to remain unchanged at 4.50%. The focus will be on the accompanying statement which will hint about future moves.
  5. Home Loans: Published on Wednesday at 1:30 GMT. This important housing sector figure always rocks the Aussie. After a sharp fall of 3.9% last month and many bad months beforehand as well, the number of loans is expected to grow by 1.1% this time, boosting the Aussie.
  6. Employment data: Published on Thursday at 1:30 GMT. After months of excellent figures, last month’s employment numbers were somewhat mixed. Employment Change rose by 23.5K, slightly better than expected, but the unemployment rate jumped to 5.3%, which was a quite a disappointment. A similar gain in jobs, 25.3K is expected now. The unemployment is expected to fall back down to 5.2%. Any result will rock the Aussie.
  7. Guy Debelle talks: Starts speaking on Thursday at 3:00 GMT. RBA deputy governor Dr. Guy Debelle might say more about the fresh rate decision, and add prospects about the future. It’s important to note that in a speech last week, Debelle didn’t mention anything related to monetary policy.
  8. Chinese Trade Balance: Published during Friday. Australia’s main trade partner has a strong impact on the Aussie. This time, the trade balance of the world’s second largest economy will be closely watched. This figure is also sensitive for the value of the Chinese yuan, which is closely monitored by the US. China’s surplus is expected to squeeze from 28.7 to 26.9 billion.

AUD/USD Technical Analysis

The Australian dollar dropped gradually at the beginning of the week, and found support at the 0.8870 line (mentioned in last week’s outlook). It then made a sharp recovery, crossing 0.90 easily, struggling with 0.9080 and finally jumping above 0.9135 to close at 0.9143.

The Aussie is now bound between the 0.9135 line which worked as support back in April, and 0.9220, which was a support line in March and also capped the Aussie at the beginning of August.

Looking down, 0.9080 is the next support line. It was a double top in July and the Aussie leaped above it during a weekend. Lower, the round number of 0.90 provides support. This psychological number was also a swing low in March.

The 0.8870 line was tested in the past week and also capped the pair twice in recent months. It now serves as strong support. 0.8735 was a low point in December 2009 and also in July – minor support now.

Lower, 0.8567 was a support line back in 2009, and also worked as resistance in May. Below, 0.8316 was a double bottom in July and provides strong support. The final line is the year-to-date low 0f 0.8066.

Looking up above 0.9220, the next line is a very strong one – 0.9327. It capped the Aussie many times in the past year. A break above this line will send the pair towards immediate resistance at 0.9366, which was a stubborn line in April.

The 2009 high of 0.9405 is the next resistance line, and it’s followed by 0.95, which was last reached only in 2008.

I remain bullish on the Aussie.

The past week’s strong GDP figures, and a good outcome from the job figures on this busy Australian week, should provide the basis for further gains.

Further reading:

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NZD/USD Outlook – September 6-10

Posted: 04 Sep 2010 03:45 PM PDT


The kiwi expects a rather lightweight week in terms of economic indicators, so the technicals will play a bigger role. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD.

NZD/USD daily graph with support and resistance lines on it. Click to enlarge:

nzd usd kiwi forecast

The managed to break higher after frustrating. Will this trend continue?

  1. Manufacturing Sales: Published on Tuesday at 22:45 GMT. While being a rather late figure, the quarterly frequency makes this number important. New Zealand is expected to enjoy a third straight quarter of growth in the volume of sales at manufacturers gates, after 0.7% and 0.9% rises beforehand.
  2. Overseas Trade Index: Published on Thursday at 22:45 GMT. This indicator has proven very relevant for New Zealand. It measures the change in purchase power. The past two quarters were positive, with rises of 5.7% and 5.9%. Another quarter of growth is predicted now, but it will probably be more modest – 2.3%.

NZD/USD Technical Analysis

The kiwi had a bad start with a drop under 0.70. It bottomed out at 0.6947 before recovering. After a struggle with the 0.7160 line (mentioned in last week’s outlook), Friday’s move sent it temporarily above 0.72, reaching 0.7218 before closing just under 0.72.

NZD/USD is now in a narrow range between 0.7160, which was a stubborn peak in June and also in the past week, to 0.72, which also worked as support.

Below, 0.70 is a critical round number that is closely eyed by traders. Lower, 0.69 is the next line of support. It previously worked as a line of resistance in May, after the pair fell down sharply.

Below, 0.68, that was a swing low in mid-July and also held NZD/USD in February is the next support line. Lower, 0.6685 worked as support back in September and was a pivotal line in July. The final line for now is the year-to-date low of 0.6560.

Looking up, 0.7325 capped the pair during August and serves as the next resistance line if 0.72 is cleared. This is followed by  the 0.7440 region, which capped the pair when it traded higher.

Higher, 0.7523 was a swing high back in November 2009, and serves as a minor line of resistance. Even higher, the 0.7634 peak reached almost a year ago, is the final frontier for now.

I am neutral on NZD/USD this week.

Without really important data, the kiwi is likely to swing with the mood in the global markets. The earthquake that hit the country’s southern island isn’t expected to cause an earthquake in currencies.

Further reading:

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USD/CAD Outlook – September 6-10

Posted: 04 Sep 2010 10:00 AM PDT


A very busy week expects loonie traders, including a rate decision and employment data. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:

canadian dollar forecast september 6 10

Canadian GDP for the second quarter, completed with the past week’s release for June, was somewhat disappointing, after two great quarters. The overall situation is still good. This week’s 7 important Canadian releases will shed a lot of light on the current situation. Let’s start:

  1. Building Permits: Published on Wednesday at 12:30 GMT. This is a volatile, yet important gauge for the Canadian economy. Last month’s 6.5% rise in permits boosted the Canadian dollar and corrected the 8.2% fall that was seen in the previous month. The see-saw is predicted to continue with a drop of 5.8%.
  2. Rate decision: Published on Wednesday at 13:00 GMT. There is no clear consensus about this rate decision. After two rate hikes, Mark Carney’s BOC is in a dilemma. On one hand, the economy is doing quite well, and there’s a fear of rising inflation. On the other hand, Canada’s main trader partner, the US, is suffering from a slowdown, that can undermine growth in Canada. So, both an unchanged Overnight Rate of 0.75% and a hike to 1% are equally possible. This means higher than normal volatility around the release. Aslo note the accompanying statement which will indicate future moves. A hike with a statement that there will be a pause from now on can weaken the loonie.
  3. Ivey PMI: Published on Wednesday at 14:00 GMT. The Richard Ivey School of Business disappointed in its last release. The score fell to 54 points, showing that purchasing managers see less expansion. A similar number is expected this time. Only a rise above 50 points, as seen three months ago, will boost the loonie.  A rise to 55.8 is expected.
  4. Housing Starts: Published on Thursday at 12:15 GMT. Complementing on the figure from the previous day, this housing figure wasn’t too good – it fell for the 4th straight month to 189K, the lowest level since February. Another curb is due now, to 185K.
  5. Trade Balance: Published on Thursday at 12:30 GMT. Canada enjoyed a surplus in its trade balance up to April, but the number then turned negative, and even deteriorated to a deficit of 1.1 billion in last month’s release. This deficit will probably squeeze to 0.8 billion. Note that the American trade balance is released at the same time, making the timing very volatile for USD/CAD.
  6. NHPI: Published on Thursday at 12:30 GMT. The last housing figure is an official release of the change in prices of new homes. After 3 months of a 0.3% rise, this stable indicator rose by only 0.1% last month. A stronger rise will probably be seen now. Due to the timing of the publication, together with the trade balance, the impact will probably be quite modest.
  7. Employment data: Published on Friday at 11:00 GMT. The best is kept for last. After three superb months of big gains in jobs, including a surge of 93K jobs one time, last month saw a correction with a loss of 9300 jobs and a rise of the unemployment rate back to the round number of 8%. A gain of 17.6K in jobs is expected now, but the unemployment rate is likely to remain unchanged at 8%.

USD/CAD Technical Analysis

The Canadian dollar had a bad start to the week – USD/CAD failed to break below 1.05 and jumped towards the stubborn 1.0680 line (mentioned also in last week’s outlook). It then made another failed attempt to go under 1.05, but on Friday, this line finally broke and USD/CAD even extended its fall below the 1.04 line.

USD/CAD now trades between support line of 1.0280 and 1.04, which was a long-term bottom border of wide range. It’s now a minor resistance line.

Looking up, the next resistance line is at 1.05, which worked as a strong support line during most of the past week. Higher, the 1.0680 line was successfully tested for a second week in a row, making it a very strong resistance line.

Above, the 1.0750 line was the top border of a long term range, and also a swing high in May. Another swing high in May, the 1.0850 line, works as the next line of resistance, after working as such back in 2009 as well.

Lower, the 2009 low of 1.02 serves as the next line of support. Below, 1.01 capped the pair after it reached parity in April, and also was a low point a few weeks ago.

The ultimate line of support is parity – which got closer in the past week. Beyond parity, 0.98 and 0.97 provide support. They’re far now.

I remain bearish on USD/CAD.

The improvement in US jobs is good for Canada as well, as the US is Canada’s main trade partner. This week is very important for the loonie. A rate hike and positive job figures can send USD/CAD for another attempt on parity.

Further reading:

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