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Forex: Euro May Rebound in Quiet Trade, Offering a Short Trade Setup

By , Currency Strategist
12 May 2014 04:04 GMT

Talking Points:

  • Euro May Lead Amid Correction, Offering a Short Trade Setup
  • Japanese Yen Soft in Asia as Nikkei 225 Futures Gap Upward
  • New Zealand Dollar Rebounds After Last Week’s Blood-Letting

The economic calendar is quiet in European and US trading hours, offering little by way of market-moving event risk. That opens the door for corrective price action as investors digest last week’s late surge of activity that took the CVIX index of currency market volatility to an eight-day high.

The swift pickup in activity followed an unexpectedly dramatic ECB rate decision where central bank President Mario Draghi threatened possible intervention into the Euro exchange rate. Not surprisingly, the single currency came under broad-based pressure, and so may now lead the way upward amid a correction. We are looking for a selling opportunity.

The Japanese Yen narrowly underperformed in muted overnight trade as Nikkei 225 futures gapped higher to start the trading week, undermining demand for the safe-haven currency. The New Zealand Dollar corrected upward having completed the largest five-day drop in three weeks on Friday.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Current Account Total (¥) (MAR)

116.4B

347.7B

612.7B

23:50

JPY

Adjusted Current Account Total (¥) (MAR)

782.9B

-545.8B

-36.1B

23:50

JPY

Trade Balance - BOP Basis (¥) (MAR)

1133.6B

-1125.4B

-533.4B

23:50

JPY

Bank Lending incl Trusts (YoY) (APR)

2.1%

-

2.1%

23:50

JPY

Bank Lending Banks ex-Trust (APR)

2.2%

-

2.3%

1:30

AUD

Credit Card Purchases (MAR)

A$23.0B

-

A$21.4B

1:30

AUD

Credit Card Balances (MAR)

A$49.8B

-

A$50.2B

1:30

AUD

NAB Business Confidence (APR)

6

-

4

1:30

AUD

NAB Business Conditions (APR)

0

-

1

3:00

NZD

REINZ House Price Index (MoM) (APR)

0.1%

-

3.4%

3:00

NZD

REINZ House Sales (YoY) (APR)

-20.2%

-

-10.0%

4:30

JPY

Bankruptcies (YoY) (APR)

-

-12.37%

5:00

JPY

Eco Watchers Survey: Current (APR)

45.0

57.9

5:00

JPY

Eco Watchers Survey: Outlook (APR)

40.0

34.7

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:15

CHF

Retail Sales (Real) (YoY) (MAR)

1.9%

1.0%

Low

8:30

GBP

Lloyds Employment Confidence (APR)

-

-2

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3583

1.3683

1.3721

1.3783

1.3821

1.3883

1.3983

GBP/USD

1.6662

1.6768

1.6809

1.6874

1.6915

1.6980

1.7086

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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12 May 2014 04:04 GMT