GBP/USD Consolidates Ahead of Data and Fed

By Fast Brokers – The Cable has stabilized along our 1st tier uptrend line and is consolidating as investors await UK CB Realized Sales followed by U.S. New Home Sales and the Fed’s monetary policy decision.  Furthermore, Obama will deliver his State of the Union tonight with possible budget proposals in the mix.  Hence, investors will have plenty to digest and this could lead to additional volatility in the FX markets.  Britain’s disappointing GDP data sent the Pound reeling yesterday, so it will be interesting to see how today’s realized sales number pans out.  Although the Cable has managed to stabilize, a weaker than expected CB release could send the Cable a step lower.  Meanwhile, our 1st tier downtrend line is approaching an inflection point with our 1st tier uptrend line, meaning activity in the Cable could pick up soon.  That being said, investors should pay close attention to gold and the S&P futures, particularly gold’s ability to hold above previous January lows.  A pullback in gold and/or equities could signal another leg up in the Dollar due to correlative forces.

Technically speaking, despite yesterday’s setback in the Cable the currency pair still has multiple uptrend lines serving as technical cushions along with 1/22 lows and the psychological 1.60 level should it be tested.  As for the topside, the Cable faces multiple downtrend lines along with 1/04, 1/21 and 1/15 highs.  Therefore, although the Cable’s uptrend line has been dealt a blow today, the currency pair still has some wiggle room on both sides.

Present Price: 1.6136

Resistances: 1.6143, 1.6170, 1.6195, 1.6223, 1.6247, 1.6264

Supports: 1.6119, 1.6092, 1.6073, 1.6048, 1.6023, 1.6001

Psychological: 1.60, 1.65, January highs and lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

EUR/USD Gravitates Towards January Lows

By Fast Brokers – The EUR/USD has dropped back towards January lows and our 2nd tier uptrend line as the Dollar consolidates across the board.  Investors are waiting for new U.S. New Home Sales and the Fed’s monetary policy decision.  Extra weight has been placed on the Fed’s monetary policy statement despite the expectation that the central bank will keep its policy unchanged.  More government officials have been vocalizing their displeasure with Bernanke lately, so it will be interesting to see how the Fed reacts.  Meanwhile, the EU will release German CPI and Unemployment Change data over the next 24 hours and this could move the Euro a bit.  However, yesterday’s stronger than expected EU data set hasn’t had much of an influence over the Euro and the EUR/GBP has reversed from earlier gains.  Therefore, it’s difficult to assume these upcoming data points from Germany will have much of an impact on the market unless the numbers swing dramatically in one direction or the other.  Hence, focus should remain on the U.S. over the next 24-48 hours unless we get more news about China’s monetary tightening.  Speaking of China, the SCI was under selling pressure today as investors brace for the impact of a more hawkish monetary policy from the central bank.  If Chinese equities continue to turn this could drag on U.S. equities as well.

Technically speaking, the EUR/USD faces topside technical barriers in the form of multiple downtrend lines along with 1/25 highs.  As for the downside, the EUR/USD has our 1st and 2nd tier uptrend lines serving as technical cushions along with previous January lows and the psychological 1.40 level should it be tested.  Our 1st tier uptrend line could carry some weight since it runs through some April 2009 lows.  That being said, a failure of our 1st tier could send a fairly negative signal considering April 2009 lows are around the 1.30.

Present Price: 1.4057

Resistances: 1.4078, 1.4096, 1.4118, 1.4152, 1.4174, 1.4193

Supports:  1.4045, 1.4015, 1.3981, 1.3950, 1.3929, 1.3900

Psychological: 1.40, January lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

The Fed’s Interest Rate decision

No Change But it Could Have an Impact on the Forex Pairs

The Fed’s interest rate decision will grab the center of attention this week as hopes for an interest rate cut now seem to be fading into the distance. Even though the Fed mentioned at its last meeting that the economy seems to be showing signs of improvement, recent numbers might not be enough to shift the Fed into a more tightening stance.

According to the Fed’s prior statement:

  • Household spending expanded at a moderate rate, though it remains constrained by a weak labor market, modest income growth , lower housing wealth and tight credit
  • Businesses are still reluctant to add payrolls
  • Financial conditions have improved but there is still weakness in certain parts of the sector. Recent bank reports have also disappointed with weaker results

Despite the improvement, recent inflation figures dampened any signs of a rate hike as prices increase at a lower than expected rate. CPI climbed by a mere 0.1%, following a 0.4% gain in November, while the core figure, which excludes food and energy costs also increased by 0.1%.

To date companies are able to raise prices with unemployment still at high levels. According to the Fed inflation is expected to stay “subdued”.

Even though the Fed is expected to maintain the target range for the federal funds rate at 0-0.25% and continue to provide support to mortgage lending and help the credit market through mortgage backed securities and agency debt, the release could have impact on the intraday session and present investors with a nice intraday trend.

Technical Analysis – A Possible Trade Opportunity

USD/JPY- Daily Chart

Bullish Scenario – A Break above the upper trend line resistance could present the start of a new bullish trend.

Target A – 91.0

Target B – 92.0

Bearish Scenario – A drop below support could lead to a drop to prior support around

Target A – 89.0

Target B – 88

Analysts Expectations

DataPredicted ResultLast Result
Interest Rate Decision0.25%0.25%

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Successful Trading!

The eToro Team

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Potential Reversal for EUR/JPY

By Anton Eljwizat – The EUR has dropped significantly versus the Yen in the past 2 weeks, and it is currently traded around 125.40. And now as evident in the data below, the 8-hour chart is giving bullish signals, indicating that EUR/JPY pair might go up. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal.

• Below is the 8-hour chart of the EUR/JPY currency pair.

• The technical indicators that are used are the William Percent Range, Relative Strength Index (RSI), and Slow Stochastic.

• Point 1: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

• Point 2: The Slow Stochastic indicates an impending bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The Williams Percent Range has peaked near at the -100 marker, which means that there may actually be a strong level of upward pressure.

EUR/JPY 8-Hour Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Federal Funds Rate Leading Event in Today’s Market

Source: ForexYard

The most important event of the trading day is likely going to be the Federal Open Market Committee’s (FOMC) Federal Funds Rate statement at 19:15 GMT. With Fed Chairman Ben Bernanke’s recent re-confirmation there is an opportunity for him to return some market optimism with a renewed mission statement with this rate statement. Hawkish statements may give a boost to the USD in the minutes after the release, and traders should pay especially close attention to any indication for a time-table regarding future rate hikes.

Economic News

USD – Bernanke Confirmation May Produce Hawkish Statements

Following yesterday’s surge in USD strength, the EUR/USD cross now appears to be consolidating in expectation of a volatile movement. After rising over 100 pips, the USD now floats near 1.4070 against the 16-nation European currency. The greenback experienced similar results against the British Pound and currently trades at the 1.6120 price level.

The American economy is expected to publish a number of significant reports today. With impacting housing data due at 15:00 GMT, there is a possibility of a build-up towards USD strength if the New Home Sales report can provide positive news for the US economy.

On the other hand, the most important event of the trading day is likely going to be the Federal Open Market Committee’s (FOMC) Federal Funds Rate statement at 19:15 GMT. With Fed Chairman Ben Bernanke’s recent re-confirmation there is an opportunity for Chairman Bernanke to return some market optimism with a renewed mission statement with this rate statement. Hawkish statements may give a boost to the USD in the minutes after the release.

EUR – EUR Down Despite Rising German Business Climate

The Euro-Zone economy may take a back seat in today’s trading with the flurry of economic news releases coming from Britain, the United States, and New Zealand. The EUR has traded down against most of its counterparts following the USD’s surge in yesterday’s trading. The EUR/USD pair currently sits near the 1.4070 price level and a consolidation has begun to shape which could return strength to the 16-nation currency if today’s releases return a level of risk appetite.

Yesterday’s release of the German Ifo Business Climate report, which showed better than expected results, surprisingly lowered the value of the EUR as true market sentiment may still be lagging. Britain’s declining GDP figures may have countered a measure of market optimism, but today’s CBI Realized Sales report could bring risk appetite back if results meet or exceed expectations.

Most investors will be paying close attention to the reports coming out of the United States surrounding the US housing market and short-term interest rates. The Federal Open Market Committee’s (FOMC) rate statement at 19:15 GMT will likely bring with it the most volatility to today’s market. If Fed Chairman Ben Bernanke can put forth more realistic expectations about future rate hikes, we may see the USD surge in short-term trading, pushing the EUR into a strongly bearish direction.

JPY – BOJ Monthly Rate Report on Tap Today

Despite the US Dollar’s recent gains, the Japanese Yen has in fact outpaced the greenback in gaining momentum against its currency counterparts. Against the USD, the JPY has climbed towards the 89.00 price level from near 92 over the past day, marking a significant rise despite the Dollar’s extended bullishness.

Today’s major event from the United States is not directly related to the Yen, but the Bank of Japan (BOJ) is due to release its monthly report regarding the statistical data surrounding its interest rate decisions. This report has the ability to impact the Yen by giving more accurate information about the decisions made at the highest levels in the BOJ. However, it should be noted that today’s market movement is indeed going to revolve around US Fed Chairman Ben Bernanke’s rate policy statement at 19:15 GMT and traders would be unwise not to pay attention to his statements.

Crude Oil – Spot Crude Oil Breakout Anticipated by Investors

A steadily declining price of oil has many investors worried that a breakout is almost overdue. The price declined from roughly $84 a barrel down 11% to just under $75 a barrel over the past few weeks, but has recently leveled off into a consolidation trend on the technical charts, indicating a volatile price movement in the near future.

Some speculators would say that today’s rate statement from the US Federal Reserve regarding interest rates is creating a high level of pressure in the Forex and commodities markets and the price of spot crude oil could potentially jump in price if the US Dollar takes a hit from today’s news. If the EUR/USD is able to rebound, the anticipated breakout of Crude Oil may very well take place today with a price target back towards $80 a barrel being reached in the next few days.

Technical News

EUR/USD

The EUR/USD cross has been experiencing much bearish behavior in the past 2 weeks. However, there is much technical data that supports a bullish move for today. The RSI of the daily and 4-hour charts indicates that the pair floats in the oversold territory, leading to the conclusion that an upward correction is imminent. Going long with tight stops may turn out to pay off today.

GBP/USD

The cross has been dropping for the past week now, as it now stands at the 1.6125 level. The Slow Stochastic of the daily chart shows a bullish cross, indicating that an upward correction is imminent. This view is also supported by the RSI of the 4-hourly chart. Going long might be a wise choice.

USD/JPY

There is a fresh bullish cross forming on the daily chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. The upward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.0470 level. The daily chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. Going short with tight stops might be a wise choice.

The Wild Card

Silver

Silver prices are once again dropping, and it is currently traded around $16.90 an ounce. And now, the daily chart’s Slow Stochastic is giving bullish signals, indicating that silver prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Forex Daily Market Review Jan 27, 10

 

The major stock indices presented a volatile session yesterday, as economic data and China’s new policy to restrain economic growth, weighed on investor’s sentiment. Even though stocks pushed higher at the start of the session, Financials pulled the market lower, sending the major indices into negative territory.

Investors have been cautious to enter bullish positions, avoiding catching a falling knife, due to China’s recent news statement. The second largest economy after the United States intends to raise reserve requirements to prevent an additional bubble. According to recent data, growth in China exceeded analysts’ expectations and came out at a whopping 10.7% in the 4th quarter. Even though this is a good sign for the current recovery, the additional cash that was pumped into the system through various types of stimulus, could have a negative effect on the economy in the long run. Bank officials now fear that the vast amount of stimulus could lead to inflationary problems and ruin the country’s economic rebound.

Over in the U.S, economic data had a minor positive affect at the start of the intraday session as CB consumer confidence increased to 55.90 from 53.6, while the house price index jumped by 0.7% compared to an expected 0.5%. The S&P/CS Home price indices Composite -20 (YoY) dropped more than expected at -5.3% but showed improvement compared to its prior figure of -7.3%. When observing the chart below, provided by Standard & Poors one can see that even though there has a been an improvement over the last year, the index has not yet returned to stable levels.

From a technical point of view the major indices treaded around prior levels, after presenting a volatile session. The S&P500 index finished the day on support of 1090. The drop at the end of the session does not augur well going forward today.

Forex

On the Forex market the Dollar index traded around its prior level of 78.5 as investors prepared for a hectic Fed day today. Even though the index ended higher due to trader’s preference of the U.S Dollar, the Japanese Yen still managed to climb and increased throughout the session.

Although Japan’s outlook for sovereign was downgraded from stable to negative, the currency pushed higher as China triggered panic across the board. Meanwhile, the Bank of Japan left its rates at a low of 0.1% and commented on the recent economic improvement, by mentioning that confidence has recently improved.

Deficit troubles in the U.S also weighed on investor’s sentiment during yesterday as the Congressional Budget Office announced that the 2010 budget deficit could hit an astonishing $1.35 trillion. Even though the news was shocking for some and is expected to put pressure on the U.S Dollar in the long term, investors were reluctant to make any moves, as President Obama is scheduled to address the public and call for a 3 year freeze on discretionary spending. If this is the case, better than expected economic data and a lower deficit could have a positive effect on the U.S Dollar

Over in England the GBP/USD lost its ground throughout the session as England’s GDP result showed that the economy grew by a mere 0.1%, compared to an expected 0.4%. The positive result was widely attributed to the government’s car scrappage scheme.

From a technical point of view the GBP/USD is still trading in range and is now on minor trend line support. Ranging strategies should be used on this chart.

Market Data to Watch Out For

Even though today’s major event will be the Fed’s rate decision, a no-change decision along with a statement similar to the last one, might not cause major movement on the FX market. Many will be observing to see whether there will be any update on the exit program.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

EURUSD drops from 1.4194 level

Being contained by the falling trend line on 4-hour chart, EURUSD drops from 1.4194 level. However, sideways movement could still be seen later today and one more bounce towards1.4250 resistance is still possible. Initial support is at 1.4029, a breakdown below this level could indicate that the downtrend from 1.4579 has resumed, then deeper decline could be seen to 1.3800 area.

Daily Forex Reports

FOREX: US Dollar, Japanese Yen gain today on decreased risk.

By CountingPips.com

The U.S. dollar and Japanese yen traded higher today in forex trading against the other major currencies while the U.S. stock markets fell slightly. The risk aversion theme played out today in the markets on reports that China has instructed some banks to raise their reserve capital requirements and to restrict their lending in an effort to cool off the Chinese economy. This revelation has prompted speculation that these actions could work to dampen the global economic recovery including the economies of high-yielding currency countries like Australia and New Zealand.

The news sent the dollar and yen trading higher versus the euro, British pound sterling, Australian dollar, New Zealand dollar, Canadian dollar and Swiss franc in the forex markets today. The U.S. dollar fell against the yen in head-to-head trading as the USD/JPY currency pair dropped under the 90.00 level to trade at its lowest level since December 18th.

The American currency, meanwhile, touched a monthly high against the Canadian dollar as the USD/CAD pair reached the 1.0692 level for the first time since December 21st while the dollar also marked its highest point versus the Australian dollar since January 3rd.

The U.S. stock markets ended the day with a negative session as the Dow fell by roughly 2.57 points while the Nasdaq decreased by 7.07 points and the S&P 500 declined by 4.61 points. Oil edged lower by $0.54 to trade at $74.72 and gold declined by $2.20 to the $1,093.00 per ounce level.

Wednesday is a major news day in the markets with the Federal Reserve’s interest rate announcement taking place at 19:15 GMT and the Reserve Bank of New Zealand’s interest rate announcement taking place at 20:00 GMT. Both central banks are expected to maintain their current rate levels.

Economic Roundup: Consumer Confidence rises, House Price decline slows

By CountingPips.com

Economic news out of the U.S. showed that consumer confidence increased for the third straight month in January according to the report released today by the Conference Board. The Consumer Confidence Index, which surveys 5,000 U.S. households, rose by 2.3 points from 53.6 in December to 55.9 in January and brought the index to its highest level in 16 months. Consumers felt better about the current economy as the present situation index increased by almost 5 points from 20.2 in December to 25.0 in January. The Expectations index, meanwhile, edged up modestly in January to 76.5 from 75.9 in December.

The Director of the Conference Board Consumer Research Center Lynn Franco talked about the newest survey saying, “Consumer Confidence rose for the third consecutive month, primarily the result of an improvement in present-day conditions. Consumers’ short-term outlook, while moderately more positive, does not suggest any significant pickup in activity in the coming months. Regarding their financial situation, while consumers were less dire about their income prospects than in December, the number of pessimists continues to outnumber the optimists.”

House Prices falling at slower pace

Home prices in the U.S. continued to decline but at slower pace according to the Standard & Poors/Case-Shiller Home Price Index released today. The S & P’s/Case-Shiller Index measures sales prices of existing single-family homes nationally and tracks 10-city and 20-city composite home price measurements. The report showed that the 10-city composite index decreased by 0.2 percent in November while the 20-city composite also declined by 0.2 percent in November on a seasonally adjusted basis.

On an annual basis, the 10-city composite fell by 4.5 percent in November from the November 2008 level while the 20-city composite is 5.3 percent lower than November 2008 level. This is the third month in a row the index has fallen by less than 10 percent after 20 straight months of over 10 percent declines.

David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, commented on the report saying, “While we continue to see broad improvement in home prices as measured by the annual rate, the latest data show a far more mixed picture when you look at other details. Only five of the markets saw price increases in November versus October. What is more interesting is that four of the markets – Charlotte, Las Vegas, Seattle and Tampa – posted new low index levels as measured by the past four years.”

“On the flip side, there are still some markets that continue to improve month-over-month. Los Angeles, Phoenix, San Diego and San Francisco have seen prices increase for at least six consecutive months.”

Phoenix showed the largest monthly house price increase in November with a 1.1 percent increase while Chicago registered the largest decrease with a 1.1 percent decline.  On an annual basis, Dallas house prices have fared the best with a 1.4 percent increase from November 2008 to November 2009 while Las Vegas had the largest house price decrease with an annual decline of 24.5 percent.

Stock Trading: Is the Dow about to reverse? Candlesticks may tell the story!

By Adam Hewison – For some time now we’ve been very concerned that all the major indexes are in the “thin air” and have exceeded some key Fibonacci retracement levels. This new short video explores that and looks at a key Japanese candlestick formation that could really make a difference and be the first clue in the demise of the Dow.

I’ll also show and share with you a specific number to look for in February. Should this level be broken, then it will signal a major reversal to the downside for the Dow.

To see more MarketClub videos or learn more about our Trade Triangle technology, please just visit our site.

It’s good to be back and it’s going to be a great year. I’m looking forward to working with you all.

Enjoy the video and let us know what you think on our blog.

All the best,
Adam Hewison

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