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
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
Oil - US Crude
Bearish
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
Wall Street
Bearish
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
Bearish
GBP/USD
Mixed
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
USD/JPY
Bearish
More View more
Real Time News
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/5VzSt5Ak7R
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/Jkv0onMyZw
  • Why is JPY called a safe haven? What are some factors in its favor this quarter? Get your free forecast here: https://t.co/mzeJ5x73N3 #DailyFXGuides https://t.co/S4bwgGZxmw
  • 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/T3W8CIg5iy
  • 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/FPgZ5gkgrM
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here: https://t.co/8A1QhwMVKo https://t.co/E0KhcKHrOf
  • For some reason an old story has popped up - many apologies.... https://t.co/jHjQxyFRXM
  • The US dollar is unloved, oversold and at lows last seen over 30-months ago. At the moment there seems to be very little reason to buy the greenback. Get your $USD market update from @nickcawley1 here:https://t.co/VY3SLs35cp https://t.co/w5ljByv9cf
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/CpqePQYF4E
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/Rg2YGZCUCr
Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

2013-02-04 12:45:00
Christopher Vecchio, CFA, Senior Strategist

ASIA/EUROPE FOREX NEWS WRAP

The past several days may very well be looked back upon as a major inflection point in the 1Q’13: the most significant US economic data released beat expectations handily, while even the outlying disappoints come with substantial circumstantial annotations, if only to suggest that any near-term US economic weakness is “transitory,” something the Fed itself said in its policy statement last week. And while the US picture is growing brighter – as noted by the ever-so important rally by US Treasury yields – all of the sudden the situation in Europe looks unstable once more.

This week was already expected to provide volatility across Euro-based pairs, with a highly anticipated European Central Bank meeting on the calendar on Thursday. While no policy change is expected at this meeting, the recent drawdown in the ECB’s balance sheet (via LTRO repayments) as well as the recent rapid appreciation by the Euro, has stoked not only liquidity concerns, but also concerns that Euro-zone exporters’ competitiveness may be eroding at a very fragile time. Accordingly, a more neutral tone is expected this week, if only to offset the prior hawkish tone set forth by the ECB at the January meeting.

When considering the ECB meeting this week in context of the weekend’s events, it is possible that the Euro may have set a top against the US Dollar in the near-term (each currency’s narratives are diverging). The Italian elections due in a few weeks are seeing a closely-contested race, with former prime minister and widely-viewed ‘Euro-negative’ candidate Silvio Berlusconi narrowing the polls. In Spain, a corruption case has rattled the government, with opposition leaders calling for PM Mariano Rajoy’s resignation, an event that would essentially be the market equivalent to the Greek elections last May. At 09:45 EST/14:45 GMT, PM Rajoy and German Chancellor Angela Merkel meet to discuss the events unfolding.

Taking a look at European credit, peripheral yields have shot up, exposing the Euro to weakness on Monday. The Italian 2-year note yield has increased to 1.636% (+5.1-bps) while the Spanish 2-year note yield has increased to 2.742% (+19.9-bps). Similarly, the Italian 10-year note yield has increased to 4.389% (+7.1-bps) while the Spanish 10-year note yield has increased to 5.330% (+15.4-bps); higher yields imply lower prices.

RELATIVE PERFORMANCE (versus USD): 11:50 GMT

GBP: +0.20%

NZD: +0.19%

AUD: +0.19%

CAD:+0.04%

JPY:-0.15%

CHF:-0.34%

EUR:-0.54%

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.14% (+0.32% past 5-days)

ECONOMIC CALENDAR

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_Picture_1.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

TECHNICAL ANALYSIS OUTLOOK

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_x0000_i1028.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

EURUSD: Consolidation occurring after overshoot towards 1.3700; with the daily RSI uptrend breaking, a pullback towards 1.3500 should not be ruled out. I maintain: “with the daily RSI well into overbought territory, a pullback would be deemed healthy. Dips into 1.3500 are deemed constructive. Support is 1.3615/20 (weekly R2), 1.3540 (weekly R1), and 1.3500. Resistance is 1.3635/60 and 1.3755/85 (weekly R3, monthly R1).”

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_x0000_i1029.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

USDJPY: No change: “Further bullish price action as US Treasury yields strengthen and speculation over BoJ policy arises again. Resistance comes in at 92.00/05 (breaking now) (weekly R1), 93.15/20 (weekly R2), and 93.45/50 (monthly R3). Support comes in at 91.00 and 90.00/10 (weekly pivot, monthly R2).”

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_x0000_i1030.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

GBPUSD: The pair is holding the 61.8% Fibonacci retracement from the June low to January high, but I maintain: looking to sell rallies in the pair as significant RSI divergence exists. Failure at the former November swings lows at 1.5825 (and subsequently, the 200-DMA at 1.5890) underscores how weak the pair is right now. A break below 1.5675 eyes a move towards 1.5500, and ultimately, 1.5265/70, the June low. Resistance comes in at 1.5825 and 1.5885/90. Support is 1.5675 and 1.5580 (monthly S1).

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_x0000_i1031.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

AUDUSD:No change: “The pair continues to range although it has showed signs of cracking, with both the ascending trendline off of the June low and the October low having been breached, as well as the ascending TL off of the June low and the December low. Accordingly, a weekly close below 1.0460 could signal a deeper retracement towards 1.0350/400, before a greater breakdown towards parity. Support comes in at 1.03800/400 (last week’s low), 1.0340/50 (December low), and 1.0140/50 (October low). Resistance is 1.0460/70 (ascending TL off of the June and December lows, 50-EMA) and 1.0500/15.”

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_x0000_i1032.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

S&P 500: Tuesday I said: “as indicated on the charts the past weeks, noting “nearing the top 1505/1512” – the top was 1504.6. If this breaks, 1520 is in sight.” Indeed, the irrational exuberance has continued, bringing topline Bearish Rising Wedge resistance in focus at 1512/15; the December 2007 highs of 1520/24 could be reached on an overshoot. Bottom line: I’m expecting a crash in the S&P 500 unless volumes accelerate rapidly, given the disconnect from reality.

Forex_Political_Concerns_Hamper_the_Euro_-is_EURUSD_Top_in_Place_body_x0000_i1033.png, Forex: Political Concerns Hamper the Euro - Is EUR/USD Top in Place?

GOLD: The past few weeks I’ve maintained: "When considering the move off of the September highs, a measured A-B=C-D (as expressed on the Daily) suggests that a bottom could be in place at [1630/40].” The rebound has ensued, with the alternative safe haven rallying up to 1690 today. A daily close above 1700 points towards 1722/25 and 1755. Support is 1663 (200-EMA) and 1640/45.

--- 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, please fill out this form

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

DISCLOSURES