Trade FOREX with FXCM

  • Award-Winning Platform
  • 24/7 Customer Support
  • Trade Directly on Charts
  • Free $50K Practice Account

Resources

Euro Poised To Break 1.3000, Bullish Sterling Momentum To Accelerate

By , Currency Analyst
17 April 2012 13:55 GMT

Talking Points

  • Euro: Spain Debt Auction Exceeds Target, IMF Calls For ECB Rate Cut
  • British Pound: Upward Trending Channel Remains Intact, Inflation Ticks Higher
  • U.S. Dollar: Struggling On Risk Appetite, 9,900 Key For Index

Euro: Spain Debt Auction Exceeds Target, IMF Calls For ECB Rate Cut

The Euro climbed to an overnight high of 1.3171 as Spain sold EUR 3.18B in short-term bills, which exceeded the EUR 3.0B target, but heightening finance costs across the periphery countries continue to reinforce a bearish outlook for the single currency as European policy makers call for additional monetary support. However, the ECB may have little choice but to preserve its current policy amid the stickiness in price growth, and we may see a growing rift within the Governing Council as the fundamental outlook for the region remains clouded with high uncertainty.

Indeed, ECB board member Miguel Angel Fernandez Ordonez made an attempt to talk down the risk surrounding Spain and said that the region will not need a bailout, but saw little scope to push through another Long Term Refinancing Operation as the non-standard measure appears to be having a limited impact in addressing the risk for contagion. As the debt crisis raises the risk for a prolonged recession, the International Monetary Fund argued that the Governing Council should ‘lower its policy rate while continuing to use unconventional policies to address banks’ funding and liquidity problems,’ and we may see ECB officials show an increased willingness to target the benchmark interest rate as its ballooning balance sheet comes under scrutiny. As the EURUSD struggles to push back above the 50-Day SMA at 1.3208, we should see the bearish formation continue to pan out, and the pair looks poised for a break below 1.3000 as price action approaches the apex of the descending triangle.

British Pound: Upward Trending Channel Remains Intact, Inflation Ticks Higher

The British Pound extended the advance from earlier this week amid heightening price pressures in the U.K., and the stickiness in inflation may prompt the Bank of England to scale back its dovish tone for monetary policy as central bank officials anticipate to see a stronger recovery later this year. As the GBPUSD trades back within the upward trending channel from earlier this year, we will maintain our bullish outlook for the pair, and we may see the pound-dollar mark a 2012 high later this week should the BoE Minutes dampen speculation for more quantitative easing. As the GBPUSD carves out a higher low around 1.5800, the bullish momentum underlining the sterling should continue to gather pace over the near-term, and we may see the pound-dollar ultimately make a run at the 23.6% Fibonacci retracement from the 2009 low to high around 1.6250 as the central bank looks to conclude its easing cycle.

U.S. Dollar: Struggling On Risk Appetite, 9,900 Key For Index

The greenback is struggle to hold its ground on Tuesday, with the with the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDOLLAR)paring the overnight advance to 9,964, and the reserve currency may continue to trade heavy during the North American trade as the rebound in market sentiment gathers pace. As the U.S. equity market tracks higher, the rise in risk-taking behavior looks poised to gather pace over the next 24-hours of trading, but we will stick by our bullish call for the USDOLLAR as the index maintains the upward trend from earlier this year. However, as the economic docket for the U.S. remains fairly light for the remainder of the week, broader risk trends may continue to drive the dollar, and we will be closely watching the 9,900 figure for the index as it holds up as support.

--- 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, send an e-mail with subject line "Distribution List" to dsong@dailyfx.com.

Will the EUR/USD Resume the Downward Trend From 2011? Join us in the Forum

Related Articles: Weekly Currency Trading Forecast

FX Upcoming

Currency

GMT

EDT

Release

Expected

Prior

No Scheduled Releases

Currency

GMT

Release

Expected

Actual

Comments

AUD

1:30

New Motor Vehicle Sales (MoM) (MAR)

--

4.0%

Biggest advance since August.

AUD

1:30

New Motor Vehicle Sales (YoY) (MAR)

--

4.0%

CNY

2:00

Actual Foreign Direct Investment (YoY) (MAR)

-13.6%

-6.1%

Largest decline since December.

NZD

3:00

Non Resident Bond Holdings (MAR)

--

60.9%

Highest since October.

JPY

4:00

Tokyo Condominium Sales (YoY) (MAR)

--

-6.1%

First decline since October.

JPY

4:30

Industrial Production (MoM) (FEB F)

--

-1.6%

Weakens for the first time since November.

JPY

4:30

Industrial Production (YoY) (FEB F)

--

1.5%

JPY

4:30

Capacity Utilization (MoM) (FEB F)

--

-1.7%

JPY

5:00

Consumer Confidence (MAR)

40.0

40.3

Highest since February 2011.

EUR

6:00

EU 25 New Car Registrations (MAR)

--

-7.0%

Falls for sixth month.

GBP

8:30

DCLG UK House Prices (YoY) (FEB)

--

0.2%

First rise since March 2011.

GBP

8:30

Consumer Price Index (MoM) (MAR)

0.3%

0.3%

Rises for the first time in six-months, dampening calls for more quantitative easing.

GBP

8:30

Consumer Price Index (YoY) (MAR)

3.5%

3.5%

GBP

8:30

Core CPI (YoY) (MAR)

2.3%

2.5%

GBP

8:30

Retail Price Index (MAR)

240.9

240.8

GBP

8:30

Retail Price Index (MoM) (MAR)

0.4%

0.4%

GBP

8:30

Retail Price Index (YoY) (MAR)

3.6%

3.6%

GBP

8:30

Retail Price Index Ex Mort Int.Payments (YoY) (MAR)

3.7%

3.7%

EUR

9:00

Euro-Zone CPI (MoM) (MAR)

1.2%

1.3%

Holds steady for fourth month.

EUR

9:00

Euro-Zone CPI (YoY) (MAR)

2.6%

2.7%

EUR

9:00

Euro-Zone CPI - Core (YoY) (MAR)

1.5%

1.6%

EUR

9:00

Euro-Zone ZEW Survey (Economic Sentiment) (APR)

--

13.1

Highest since May 2011.

EUR

9:00

German ZEW Survey (Economic Sentiment) (APR)

19.0

23.4

Best print since June 2010.

EUR

9:00

German ZEW Survey (Current Situation) (APR)

35.0

40.7

EUR

9:00

Italian Current Account (euros) (FEB)

--

-5138M

Narrows for the first time since December.

CAD

12:30

Manufacturing Shipments (MoM) (FEB)

-0.3%

-0.3%

Contracts for the second month.

USD

12:30

Housing Starts (MAR)

705K

654K

Largest decline since April 2011.

USD

12:30

Housing Starts (MoM) (MAR)

1.0%

-5.8%

USD

12:30

Building Permits (MAR)

710K

747K

Advances for the third straight month.

USD

12:30

Building Permits (MoM) (MAR)

-0.7%

4.5%

CAD

13:00

Bank of Canada Interest Rate Decision

1.00%

1.00%

Scales back dovish tone.

USD

13:15

Manufacturing Production (MAR)

--

-0.2%

Contracts for the first time since November.

USD

13:15

Industrial Production (MAR)

0.3%

0.0%

Fails to grow for the second month.

USD

13:15

Capacity Utilization (MAR)

78.5%

78.6%

http://www.dailyfx.com/forex_market_news/forecasts/

provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from

17 April 2012 13:55 GMT