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
Bearish
Oil - US Crude
Bearish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true. Simplify your trading strategy with these four indicators here: https://t.co/fYgcMxImlP https://t.co/kkekBVYvhV
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/VwIkOMpvYl
  • “The UK and EU have agreed to return to the negotiating table to try to agree a post-#Brexit trade deal. But on Friday, a joint statement said ‘significant divergences’ remained.” - BBC News #GBP
  • Multiple time frame analysis follows a top down approach when trading and allows traders to gauge the longer-term trend while spotting ideal entries on a smaller time frame chart. Learn how to incorporate multiple time frame analysis here: https://t.co/Sy3g6HGLrR https://t.co/aRfVCRZut3
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/rJznrXkcYz https://t.co/uUh18lR3yK
  • The rising wedge is a popular reversal pattern that is predictive in nature and can give traders a clue to the direction and distance of the next price move. Incorporate the rising wedge in your trading strategy and learn more here: https://t.co/zTTk2WOrj9 https://t.co/q5oBalZieU
  • Both the S&P 500 and $EURUSD will enter the coming week with momentum to their back. What can trip up the rallies? What could keep them going? My overview for the week ahead: https://www.dailyfx.com/forex/video/daily_news_report/2020/12/05/SP-500-and-EURUSD-Rallies-Face-Different-Conviction-Questions-.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/YfEXEhkbhl
  • After the recent strength of EUR/USD, a period of consolidation is likely ahead of two critical meetings: of the European Central Bank and the European Council. Get your $EURUSD market update from @MartinSEssex here:https://t.co/Slu7tHo2a4 https://t.co/9am4szeia1
  • Triangle patterns have three main variations and appear frequently in the forex market. These patterns provide traders with greater insight into future price movement and the possible resumption of the current trend. Learn about triangles here: https://t.co/ZukLITx2KG https://t.co/gvkXqKDQyH
  • Continuation patterns can present favorable entry levels to trade in the direction of the prevailing trend. Use continuation patterns in your technical analysis here: https://t.co/TUVnO3bO1P https://t.co/vBLkMKjf4x
Risk-Appetite Supported as German Court Declines Injunction on ECB

Risk-Appetite Supported as German Court Declines Injunction on ECB

2012-09-11 11:05:00
Christopher Vecchio, CFA, Senior Strategist
Share:

By no means is the Euro leading this morning although it remains bolstered by a few key facts: despite chatter from both the Italian and Spanish prime ministers that suggest neither country will be agreeing to the European Central Bank’s bond-buying scheme due to the conditionality, bond yields on the shorter-end of the curve haven’t reacted violently, and instead have only leaked higher; and the German Constitutional Court has eased some concerns over the ECB’s scheme by denying an injunction filed against the ECB’s scheme yesterday.

Nevertheless, the German Constitutional Court will decide on the legality of the European Stability Mechanism (ESM) tomorrow, in what is expected to be a highly contentious decision. The Court is expected to ratify the decision, but not with a pure “YES” stamp of approval; instead, like all other measures with German involvement, a heavy helping of conditionality is to be expected. In turn, if the Court believes that the federal government (Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble) is overreaching its bounds (by abusing the Bundestag’s and Bundesrat’s legal right to control budget outlays), then it is likely that Germany will be forced to curb its charge forward as the head of Europe’s bailout fund (ultimately, saving Europe from a fiscal standpoint lays with Germany).

Taking a look at credit, peripheral European bond yields are edging up, continuing the move from yesterday after Italian Prime Minister Mario Draghi’s commentary about the country avoiding participation in the ECB bond-buying scheme. The Italian 2-year note yield has increased to 2.330% (+8.7-bps) while the Spanish 2-year note yield has increased to 2.800% (+6.5-bps). Similarly, the Italian 10-year note yield has increased to 5.128% (-3.3-bps) while the Spanish 10-year note yield has increased to 5.666% (+2.4-bps); higher yields imply lower prices.

RELATIVE PERFORMANCE (versus USD): 10:20 GMT

NZD: +0.54%

CAD:+0.40%

AUD:+0.37%

JPY:+0.35%

CHF:+0.31%

EUR:+0.27%

GBP: +0.16%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.29% (-1.15% past 5-days)

ECONOMIC CALENDAR

Risk-Appetite_Support_as_German_Court_Declines_Injunction_on_ECB_body_x0000_i1029.png, Risk-Appetite Supported as German Court Declines Injunction on ECB

Another quiet day on the North American side of the economic docket, with only two releases due that could generate volatility ahead of the US cash equity open. At 08:15 EDT / 12:15 GMT, the CAD Housing Starts (AUG) will be released and the report is expected to show jobs growth above a monthly rate of +200.0K for the ninth consecutive month. At 08:30 EDT / 12:30 GMT, the USD Trade Balance (JUL) is due, and the stronger US Dollar during the first month of the third quarter, alongside declining consumption in Asian and Europe, are expected to have widened the deficit.

TECHNICAL OUTLOOK

Risk-Appetite_Support_as_German_Court_Declines_Injunction_on_ECB_body_Picture_2.png, Risk-Appetite Supported as German Court Declines Injunction on ECB

BB represents Bollinger Bands ®

EURUSD: Little has changed over the past 24-hours: “The EURUSD made a huge technical breakthrough on Friday by shattering a yearlong descending trendline off of the August 2011 and October 2011 highs. This now marks the potential for a long-term bottom at the 1.2040/45 low. Additionally, while our bias for a move towards 1.1500 by November 1 is negated, a weekly close back within the channel – back below 1.2620/35 (former yearly low set in January) – would suggest a false breakout has occurred. Near-term resistance comes in at 1.2820/25 (late-May swing highs) and 1.2980/1.3000. Support comes in at 1.2740/50, 1.2620/35, 1.2500/10, and 1.2460/80.”

Risk-Appetite_Support_as_German_Court_Declines_Injunction_on_ECB_body_Picture_4.png, Risk-Appetite Supported as German Court Declines Injunction on ECB

USDJPY: The sell-off continues with price holding below the 78.10/20 level, with touches below 78.00 coming today. Nevertheless, 78.60 remains our line in the sand for bullish/bearish price action: a daily close above 78.60 suggests a move back towards 79.15/30 (100-DMA, 200-DMA, descending trendline off of the April 20 and June 25 highs); a daily close below 78.60 keeps 78.10/20 and 77.90 in focus, while penetration of the August low at 77.90 will likely result in a washout to new lows with the potential for 77.65/70 and 77.30.

Risk-Appetite_Support_as_German_Court_Declines_Injunction_on_ECB_body_Picture_3.png, Risk-Appetite Supported as German Court Declines Injunction on ECB

GBPUSD: The GBPUSD has started trading higher, breaking last week’s high suggesting that the British Pound’s trajectory is very much upwards for September (based on opening ranges). As such, our opinion holds: “As long as price on the daily chart is supported by 1.5930/40, there’s reason to believe that a run up to 1.6120/40 is possible during September. Above 1.6120/40, the former April swing highs at 1.6260 (by close), 1.6300 (by high) are in focus; this would also represent a break of the descending trendline off of the April 2011 and August 2011 highs. Below 1.5930/40, near-term support comes in at 1.5860/75 (ascending trendline off of August 2 and August 31 lows), 1.5770/85 (late-August swing lows), and 1.5700.”

Risk-Appetite_Support_as_German_Court_Declines_Injunction_on_ECB_body_Picture_1.png, Risk-Appetite Supported as German Court Declines Injunction on ECB

AUDUSD: The AUDUSD is back on the up and up, testing 1.0400, but falling short of the highs set on Friday. As such, interim resistance comes in at 1.0400 (September high), 1.0410/20 (mid-August swing lows), and 1.0435/45 (mid-July and early-August swings). The picture is clear: there’s a lot of significant confluence (based on former support/resistance levels) in the airspace overhead. A breakdown eyes 1.0275/1.0300, 1.0210/25, and 1.0160/75 (weekly low).

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, send an e-mail with subject line "Distribution List" to cvecchio@dailyfx.com

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

DISCLOSURES