EURUSD: Bearish, Extends Weakness Despite the Bounce

Further down, support stands at the 1.3500 level where a violation will target the 1.3450 level. Its daily RSI is bearish and pointing lower suggesting further weakness. Conversely, if recovery is triggered, gains could build up towards the 1.3730 level, its May 14’2014 high. Continue reading

US data looking good, so why did the dollar drop? 5 reasons

A big bulk of US figures came out above expectations, at least in the figures that matter most. However, the US dollar stalled its rally, against quite a few currencies. 

Why did this happen? Here are 5 reasons

US annual inflation rose to 2%, as expected. More importantly, core inflation exceded expectations and advanced to 1.8%, more than 1.7% foreseen by economists. Core inflation is certainly where the Fed wants it to be. This is great news and allows the tapering to continue untouched. If this continues, a rate hike could come earlier in 2015. Continue reading

Mixed GDP Reports Shift Stimulus Expectations

Whether it was increased concern that the adoption of a large scale bond purchase program from the European Central Bank might not materialize in June, or stronger wholesale prices in the US sending worries that CPI might come in warmer than expected this morning, investors chose to offload higher yielding positions and rotate into safe haven asset classes yesterday.  Comments from the Russia’s foreign minister that Ukraine was on the brink of a civil war didn’t help bolster market sentiment, with the S&P finishing the day lower by 0.47% and the yield on the 10 year US treasury sinking to 2.55%.  The VIX futures curve displayed some interesting price action, with the front month contract actually easing lower by 1.8%, while the spot contract edged up by 0.74% to protect against the slide in equities.  The inversion on the near months of the VIX curve hints that yesterday’s action was more about hedging the move lower in equities, versus larger scale geopolitical worries. Continue reading

EUR/USD May 15 – Euro Slips As Eurozone GDP Slips

The euro has resumed its losing ways, as EUR/USD has fallen below the 1.37 level in Thursday’s European session. The euro has coughed up over 350 points since climbing within a whisker of 1.40 late last week. In Thursday action, German Preliminary GDP looked sharp, posting its highest gain in a year. However, Eurozone Flash GDP dipped in Q1. On the inflation front, Eurozone Core CPI improved in April and matched the forecast. In the US, there are a host of events on the schedule, highlighted by three key releases - Core CPI, Unemployment Claims and the Philly Fed Manufacturing Index. Also, Federal Reserve chair Janet Yellen will speak at an event in Washington. Continue reading

Forex Analysis: AUD/USD Attempts Further Rise from Lows

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May 14, 2014 – AUD/USD (daily chart) has continued its attempts to reach higher in a push to extend the rebound from extreme lows that has been in place for more than three months. After hitting a three-and-a-half year low of 0.8659 in late January, the currency pair began a steady climb that formed both a bullish head-and-shoulders reversal pattern as well as an ascending trend line connecting price lows. Continue reading

Carney and BoE Send Pound Lower with Dovish QIR

While it wasn’t the “buy everything this isn’t nailed down” rally from Monday, the S&P managed to edge out another record close yesterday, posting a modest 0.04% increase but holding below the psychological 1,900 level.  Soft retail sales in the US kept a lid on any exuberant investor optimism, with a decline in import and export prices during the month of April shifting investors expectations that Thursday’s CPI reading will likely remain sluggish.  Despite the less than enthusiastic retail sales numbers, the rebound in the DXY continued as the EUR slumped further, with the USD-linked index rallying to levels not seen since early April. Continue reading

EUR/USD May 14 – Euro Shrugs off Weak Inflation, Manufacturing Numbers

EUR/USD is showing little movement, as the pair trades in the low-1.37 range in Wednesday’s European session. On the release front, Eurozone numbers were disappointing. Inflation numbers out of France and Germany weakened in April, and Eurozone Industrial Production posted another decline. Later in the day, the president of the German central bank, Jens Weidmann, will speak in Berlin. In the US, today’s major release is the Producer Price Index. Continue reading

EUR/USD May 13 – Under Pressure As German Economic Sentiment Tumbles

After all the excitement last week from EUR/USD, the pair has steadied, trading in the mid-1.37 range in Tuesday’s European session. The euro has not reacted to a dismal reading from German ZEW Economic Sentiment, as the key indicator dropped to a 16-month low. Eurozone Economic Sentiment followed suit with a soft reading in April. In the US, today’s highlights are Core Retail Sales and Retail Sales. Continue reading

Forex Analysis: EUR/USD Tumbles to Key Support

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May 13, 2014 – EUR/USD (daily chart) has dropped sharply from the 1.4000 price area down to key support around the 1.3700 level. Last week saw the currency pair hit a new 2 ½ year high of 1.3993, just short of its 1.4000 upside target, before dropping sharply and following through on its short-term downside momentum. That sharp drop broke down below the 50-day moving average, suggesting a pullback and temporary loss of upside momentum, but has not yet breached the crucial 200-day moving average to the downside. The 1.3700 price region, around where price action is currently trading, represents a major support/resistance area where the currency pair last pulled back in March and April. Continue reading