News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • It seems the markets are riding high, but risk is always lurking around the corner. Consider your escape plan before you find yourself in collapsing market. What are the top havens for different conditions in 2020? Find out from @JohnKicklighter here: https://t.co/1oeXWEsJkb https://t.co/x8uyOHLtgE
  • The Swiss Franc may continue higher against the US Dollar as technical pressure favors USD/CHF bears..Get your $USDCHF market update from @FxWestwater here:https://t.co/yqJbbhAWiu https://t.co/CaMR0Vqd1m
  • The US Dollar lost ground to most ASEAN currencies as Emerging Market assets climbed despite US economic woes. USD/INR is eyeing third-quarter Indian GDP at the end of the week. Get your market update from @ddubrovskyFX here:https://t.co/urDN2b5Nwd https://t.co/toSDbVZCSi
  • The global stock market can be categorized into specific groups or ‘stock market sectors’. Organizing the vast number of stocks in this way helps traders to view assets in a more manageable way. Get your stock market sectors basics here: https://t.co/5gbiHmY8yl https://t.co/mQ6ty8Yalv
  • The Euro looks poised to continue gaining ground against haven-associated currencies and may reverse higher against the British Pound in the near term. Get your #Euro market update from @DanielGMoss here:https://t.co/oRIHju7ZzK https://t.co/dIEErVzWEY
  • Gold and silver prices have come under significant pressure recently. However, this correction lower could prove short-lived as price analysis hints at a reversal higher. Get your $XAUUSD market update from @DanielGMoss here:https://t.co/K1qL0fsGwy https://t.co/tRfjlN6X22
  • The S&P 500, Dow Jones and crude oil prices have recently made critical advances to the upside. Is retail positioning supporting the case for further upside momentum?https://t.co/rfA2TsBctB https://t.co/SNoOEVLXvA
  • An improving economic backdrop is bolstering crude oil prices and in turn, the Canadian Dollar. Still, the risk-sensitive Australian Dollar continues to move higher. Get your market update from @FxWestwater here:https://t.co/NJ683bZKpe https://t.co/zt3bYddjZ6
  • Gold Price Forecast: Dovish FOMC Could Underpin Bullion Ahead of NFP - https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/11/27/Gold-Price-Forecast-Dovish-FOMC-Could-Underpin-Bullion-Ahead-of-NFP.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Moss&utm_campaign=twr #Gold #XAUUSD $GOLD $GLD https://t.co/N9ChZOqSdy
  • Forex Update: As of 21:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.42% 🇦🇺AUD: 0.35% 🇳🇿NZD: 0.30% 🇨🇦CAD: 0.20% 🇯🇵JPY: 0.16% 🇬🇧GBP: -0.33% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/4uyJxc09OH
Euro Expected to Remain Bid On Dips Over Coming Sessions

Euro Expected to Remain Bid On Dips Over Coming Sessions

2012-01-13 11:19:00
Joel Kruger, Technical Strategist
Share:
  • Short covering rally begins in Eur/Usd
  • Upbeat Draghi and solid auction results also prop
  • Commodity bloc becomes less desirable
  • Yen crosses at risk for upside over coming sessions
  • Eur/Usd close above 1.2750 keep recovery prospects intact

A combination of early 2012 short-covering, some better than expected Eurozone auction results and a relatively upbeat ECB President Draghi, have all been attributed to the latest gains in the Euro, which stands out as a relative outperformer over the past few sessions. The break in Eur/Usd back above 1.2820 has also triggered a technical double bottom on the daily chart which should now open a measured move upside objective towards the 1.3000-1.3200 area. While we would not be getting overly bullish the Euro against the US Dollar, we do however feel that there could be some excellent opportunities to play the Euro against some of the other key currencies. An initial wave of selling has emerged to take the Euro below 1.2800 into the North American open, with traders citing a mediocre Italian auction and news that the EBA stress tests may be delayed, but we do not see these setbacks as a major deterrent to the current upside correction which should continue.

Relative performance versus the USD Friday (as of 11:10GMT)

  1. CAD +0.10%
  2. AUD +0.09%
  3. NZD +0.08%
  4. JPY +0.05%
  5. GBP -0.03%
  6. EUR -0.17%
  7. CHF -0.18%

Eur/Jpy has also triggered a double bottom on the daily chart, but in this case, there could be a lot more room to run given how stretched this market has been in recent weeks and the fact that it is below major psychological barriers at 100.00 and by multi-year lows. Eur/Aud and Eur/Nzd are also showing signs of reversal from record lows, but again, we would probably advise waiting for a little more confirmation before getting aggressive with counter-trend positions. Still, we do like the idea of playing the upside in the Euro, particularly against these commodity currencies, given the fact that any stabilization within the Eurozone, will likely start to put a lot more pressure on Aussie and Kiwi going forward.

Should the Euro region begin to stabilize, then all those who had been aggressively positioning away from the Euro will look to build back into the single currency. Conversely, should the markets return to a risk off environment that is less Euro specific and more global macro, we could just as easily see underperformance in the commodity currencies given their traditional positive correlation to risk. In our opinion, the latter scenario is probably the more realistic of the two, where risk off trades works its way back into the markets but draws more unwelcome attention to economies that have not yet been entirely exposed to the global slowdown.

We believe that the global recession will soon enter a third and final phase which will originate in China and spread to the commodity economies and emerging markets. Already over the past couple of days we have been hearing fresh rumors of further accommodation out of China, and more recently, Australia’s Financial Sector Union has warned local baking executives to prepare for the worst following the news from ANZ that it will aggressively reduce its workforce over the next 6 months. US equity futures and gold prices are relatively unchanged, while oil has managed to mount a decent recovery.

ECONOMIC CALENDAR

Euro_Expected_to_Remain_Bid_On_Dips_Over_Coming_Sessions_body_Picture_5.png, Euro Expected to Remain Bid On Dips Over Coming Sessions

TECHNICAL OUTLOOK

Euro_Expected_to_Remain_Bid_On_Dips_Over_Coming_Sessions_body_eur.png, Euro Expected to Remain Bid On Dips Over Coming Sessions

EUR/USD: The recent break back above 1.2820 has triggered a double bottom on the daily chart, which opens additional corrective activity from here back into the 1.3000-1.3200 area over the coming sessions. Ultimately however, we retain a bearish bias and would be looking for opportunities to fade rallies in favor of underlying bear trend resumption and the next major downside extension below 1.2500.

Euro_Expected_to_Remain_Bid_On_Dips_Over_Coming_Sessions_body_jpy2.png, Euro Expected to Remain Bid On Dips Over Coming Sessions

USD/JPY:Despite the latest pullbacks, we continue to hold onto our constructive outlook while the market holds above 76.55 on a daily close basis. We believe that any setbacks from here should be limited in favor of a fresh upside extension back towards 79.55 over the coming weeks. Look for a break above 78.30 to confirm and accelerate, while only a daily close below 76.55 negates and gives reason for pause.

Euro_Expected_to_Remain_Bid_On_Dips_Over_Coming_Sessions_body_gbp2.png, Euro Expected to Remain Bid On Dips Over Coming Sessions

GBP/USD: The market has mostly been locked in some sideways chop over the past few weeks with any rallies very well capped ahead of 1.5800 and setbacks supported ahead of 1.5270. Until either side is broken, we would expect to see additional range trade. Therefore the preferred strategy is to look to buy range dips and sell by range highs. Only a weekly close above 1.5800 or below 1.5250 would give reason for outlook shift.

Euro_Expected_to_Remain_Bid_On_Dips_Over_Coming_Sessions_body_swiss1.png, Euro Expected to Remain Bid On Dips Over Coming Sessions

USD/CHF: This market remains very well supported on any form of a dip and looks poised for a fresh upside extension towards 1.0000 over the coming weeks. Look for a daily close back above 0.9600 to confirm and accelerate. Ultimately, any dips should be used as formidable buy opportunities, while only back below 0.9000 would ultimately threaten the recovery outlook.

--- Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Click here for an introduction to currency overlay and hedging strategies.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES