Forex Knowledge 24 MARCH 2014 currency Report.
EQUITIES
The markets are shrugging off a worse than expected manufacturing data coming out of China and trading deeply in the green.
The Dow (16302.77, -0.17%) shot up to 16450 levels before ending in the negative to keep the bearish options open. The correction may continue to test the 16100-16000 levels once again before breaking above 16500 later, that would lead to a rally towards 17000.
The Shanghai (2047.5, -0.01%), contrary to the expectation bounced back sharply to 2060 from the old support of 1985 but the worse than expected Chine PMI data this morning may bring it down once more. The Dax (9342.94, +0.50%) is yet to break above the 9400 level we have been eyeing. This zone of 9400-9460 is important for the bulls to sustain their strength. The Nikkei (14484.06, +1.83) recovered most of its loss incurred in the last session but the downtrend remains in force till 14700-800. We look for a break of 14200 to confirm the bearish momentum.
Decent chances of seeing a strong bounce in the Nifty (6493.20, +0.16%) today as it has managed to hold above the trendline support in the 6480-60 region. There could be potential for 6600 also.
COMMODITIES
Precious metals are trading lower while the Oil market have bounced from support regions.
Gold (1326.04) is trading lower and testing support near 1324.5. While below 1335, we may see moves within 1324-1335 keeping 1300 on the downside but a break above 1335 may take it higher to 1360-1380.
Silver (20.17) continues to fall and may target 20-19.75 in the coming sessions as the Gold-Silver ratio (65.72) continues to target 66-66.5 from where it may come off. Till then we do not expect a rise in Silver.
Copper (2.9320) is stable for now, trading within the crucial levels of 3-2.90 and may continue so for some more time. No major movement expected in the near sessions. There are equal chances of breakouts on either direction.
Brent (106.91) has bounced from 105.4 and may target 108. It is highly fluctuating in the broad 105-108 regions but looks bullish in the longer term.
Nymex WTI (98.49) has bounced from support near 98.23 and may target resistance near 100.5-101.38. A break above 101.38 may take it higher to 102 levels. Note that 98-102 levels are crucial and an efective break on either side may signal a major movement ahead.Brent-WTI spread (7.48) is stable for now but may target 8-8.5 from where we may see a fall to 5.
CURRENCIES
After the sharp reaction to the FOMC meet last week, most of the currencies are in a consolidation mode and technically unchanged in structure.
Dollar Index (80.11) remains on course to its way to 80.50-75 with a possible correction interrupting the rally. The bullish momentum remains intact as long as it holds above 79.90-70.
The Euro (1.3796) has broken below 1.3790 to enter into a short term downtrend and staying below 1.3810-30, may reach 1.3650-1.36 soon.
Dollar-Yen (102.51) held above 101 to shoot up sharply and maintain the broader range of 101-104. The sideways action in this range may continue for some more time before a decisive move emerges.
The Euro-Yen Cross (141.42) remains in an uptrend that is in a risk of getting nullified if a rally doesn’t materialize soon. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138.50 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.
Pound (1.6482) is close to our buying zone and the medium term trend decider level of 1.6470-50 now. Now if it manages to hold above our stop loss level at 1.64, a resumption of the uptrend may be expected.
Aussie (0.9070) is consolidating in range of 0.89-0.9150 for the last 3 weeks with no particular directional clue. A break below 0.8925-0.89 may ensure a journey back to 0.87 now.
Dollar-Rupee (60.89) closed just below the support of 60.90 and may extend the fall to 60.80-70 now. The price reaction in the area of 60.80-70 and then the long term support zone of 60.60-50 will determine any follow through or more rangebound movement.
INTEREST RATES
The US 10-5Yr yield differential (1.02%) has dropped further. We see that the US 5Yr (1.73%) is up slightly and is trading just above the resistance zone near 1.70%. A break above the current resistance zone can see the 5Yr rise to 1.80%. The 10Yr (2.75%) has dipped a bit but is expected to be ranged between 2.75-2.80%.
The German 10Yr (1.63%) remained stable and is trading near our target of 1.65%. A break above the resistance near 1.65-1.66% can signal a rise to 1.70-1.75%. The German-US 10Yr spread (-1.12%) is up slightly but is still in a downtrend. The 2Yr spread (-0.23%) remained stable after bouncing from the trend support. A rise to -0.15% can be seen if the support holds.
The US-Japan 10Yr spread (2.15%) has remained stable after a bounce from the support near 2.04-2.05% and can target 2.20-2.25% now. The Japan 10Yr (0.60%) has come down from 0.65% (13-Mar-14) and is range bound between 0.55-0.65%. A break beyond this range will give further direction.
The Indian 10Yr GOI (8.80%) is down slightly. It has become range bound between the support near 8.75% and the resistance near 8.85%. A break beyond this range will give us further direction.
DATA TODAY
1:45 GMT or 7:15 IST CN Manufacturing PMI
...Expected 48.70 ...Previous 48.50 ...Actual 48.1
FRIDAY'S DATA
Euro Area Monthly Balance of Payments
...Expected 18.40 EUR Bln ...Previous 20.00 EUR Bln ...Actual 25.30 EUR Bln
CA Inflation Y/Y
...Expected 0.90 % ...Previous 1.50 % ...Actual 1.10 %
EURUSD: 1.3845-1.3860 on the upside, 1.3710-1.3725 on the downside.
AUDUSD: 0.9140-0.9155 on the upside, 0.8960-0.8975 on the downside.
USDJPY: 103.20-103.35 on the upside, 100.65-100.80 on the downside.
GBPUSD: 1.6565-1.6580 on the upside, 1.6405-1.6420 on the downside.
USDCAD: 1.1280-1.1295 on the upside, 1.1105-1.1120 on the downside.
NZDUSD: 0.8575-0.8590 on the upside, 0.8385-0.8400 on the downside.
EURJPY: 141.85-142.00 on the upside, 140.20-140.35 on the downside.
EURGBP: 0.8410-0.8425 on the upside, 0.8305-0.8320 on the downside.
XAUUSD: 1345.00-1355.00 on the upside, 1310.00-1320.00 on the downside.
BRENT: 108.00-109.00 on the upside, 103.50-104.50 on the downside.
SP500: 1895.00-1905.00 on the upside, 1820.00-1830.00 on the downside.
The pair dropped yesterday and is currently trading below 38.2% correction of
the latest bullish wave that started from bottom 1.3478 reaching the top 1.3965.
Momentum indicators still tends to be negative and Linear Regression Indicator
34 is negative, all these catalysts combines with failing to stabilize above the
key support of the ascending channel.
Therefore, the bearish possibility remains valid and trading below 1.3895 strengthen it. Volatility is expectated in light of trading close to 38.2% correction at 1.3780, but breaking this level could take the pair easily towards 50% and 61.8% corrections at 1.3720 and 1.3665 respectively.
Support: 1.3720, 1.3700, 1.3680, 1.3665, 1.3620
Resistance: 1.3800, 1.3815, 1.3845, 1.3895, 1.3945
Recommendation Based on the above, sell the pair around 1.3790 targeting 1.3720, 1.3645 then 1.3620 and stop-loss above 1.3895
Negative pressures continues over the pair as it approaches the key support
of the short-term upside move starting from the bottom 1.5852 reaching the top
1.6822. The bullish key support level is close to 38.2% correction at 1.6450;
but at the same time, grear negativity is showing on AROON Indicator, MACD and
Linear Regression Indicators.
There is a possibility of breaking 1.6450, but failing to break it might trigger great volatility and perhaps some bullish corrections before extending bearishness. Generally, trading below 1.6670 is negative while stabilizing below 1.6600 is more negative.
Support: 1.6450, 1.6435, 1.6390, 1.6340, 1.6300
Resistance: 1.6515, 1.6545, 1.6600, 1.6625, 1.6670
Recommendation Based on the above, sell the pair below 1.6500 targeting 1.6450, 1.6390, 1.6300 and stop-loss above 1.6600
USDCHF is hovering near the main descending resistance for the overall
bearish wave, following the major rebound of the 127.1 extension level at
0.8702, where the ongoing pause may be temporarily as we expect price to resume
the bullish rebound. A break above the descending resistance e should confirm
more upside in the near term , targeting 0.8900 and 0.8930 levels.
Support: 0.8830, 0.8800, 0.8770, 0.8750, 0.8700
Resistance: 0.8860, 0.8900, 0.8925, 0.8950, 0.8980
Recommendation Long the pair above 0.8815 targeting 0.8860, and 0.8900 and stop-loss below 0.8765
USDJPY is retreating of 102.70 resistance level an the 50-days SMA, is price
maintains the overall sideways bias among 100.70-103.70 levels, a breakout of
the regions is necessary to signal a sustained directional move. For now, the
bias continues to be sideways, where over intraday basis, the bullish scenario
remains favored and the price may face initial support at around 101.90
level.
Support: 102.00, 101.65, 101.35, 101.00, 100.70
Resistance: 102.30, 102.70, 103.00, 103.40, 10375
Recommendation Long above 101.90, targets at 102.40,102.70,1and 03.40. Stop loss below 101.30
EQUITIES
The markets are shrugging off a worse than expected manufacturing data coming out of China and trading deeply in the green.
The Dow (16302.77, -0.17%) shot up to 16450 levels before ending in the negative to keep the bearish options open. The correction may continue to test the 16100-16000 levels once again before breaking above 16500 later, that would lead to a rally towards 17000.
The Shanghai (2047.5, -0.01%), contrary to the expectation bounced back sharply to 2060 from the old support of 1985 but the worse than expected Chine PMI data this morning may bring it down once more. The Dax (9342.94, +0.50%) is yet to break above the 9400 level we have been eyeing. This zone of 9400-9460 is important for the bulls to sustain their strength. The Nikkei (14484.06, +1.83) recovered most of its loss incurred in the last session but the downtrend remains in force till 14700-800. We look for a break of 14200 to confirm the bearish momentum.
Decent chances of seeing a strong bounce in the Nifty (6493.20, +0.16%) today as it has managed to hold above the trendline support in the 6480-60 region. There could be potential for 6600 also.
COMMODITIES
Precious metals are trading lower while the Oil market have bounced from support regions.
Gold (1326.04) is trading lower and testing support near 1324.5. While below 1335, we may see moves within 1324-1335 keeping 1300 on the downside but a break above 1335 may take it higher to 1360-1380.
Silver (20.17) continues to fall and may target 20-19.75 in the coming sessions as the Gold-Silver ratio (65.72) continues to target 66-66.5 from where it may come off. Till then we do not expect a rise in Silver.
Copper (2.9320) is stable for now, trading within the crucial levels of 3-2.90 and may continue so for some more time. No major movement expected in the near sessions. There are equal chances of breakouts on either direction.
Brent (106.91) has bounced from 105.4 and may target 108. It is highly fluctuating in the broad 105-108 regions but looks bullish in the longer term.
Nymex WTI (98.49) has bounced from support near 98.23 and may target resistance near 100.5-101.38. A break above 101.38 may take it higher to 102 levels. Note that 98-102 levels are crucial and an efective break on either side may signal a major movement ahead.Brent-WTI spread (7.48) is stable for now but may target 8-8.5 from where we may see a fall to 5.
CURRENCIES
After the sharp reaction to the FOMC meet last week, most of the currencies are in a consolidation mode and technically unchanged in structure.
Dollar Index (80.11) remains on course to its way to 80.50-75 with a possible correction interrupting the rally. The bullish momentum remains intact as long as it holds above 79.90-70.
The Euro (1.3796) has broken below 1.3790 to enter into a short term downtrend and staying below 1.3810-30, may reach 1.3650-1.36 soon.
Dollar-Yen (102.51) held above 101 to shoot up sharply and maintain the broader range of 101-104. The sideways action in this range may continue for some more time before a decisive move emerges.
The Euro-Yen Cross (141.42) remains in an uptrend that is in a risk of getting nullified if a rally doesn’t materialize soon. The bullish view for 144-145 survives as long as it holds above the major support area of 139-138.50 but a break below this support may turn the view bearish and may pull it down to 136-135.50 and even 131. Initial sign of weakness will be a break below 140.50.
Pound (1.6482) is close to our buying zone and the medium term trend decider level of 1.6470-50 now. Now if it manages to hold above our stop loss level at 1.64, a resumption of the uptrend may be expected.
Aussie (0.9070) is consolidating in range of 0.89-0.9150 for the last 3 weeks with no particular directional clue. A break below 0.8925-0.89 may ensure a journey back to 0.87 now.
Dollar-Rupee (60.89) closed just below the support of 60.90 and may extend the fall to 60.80-70 now. The price reaction in the area of 60.80-70 and then the long term support zone of 60.60-50 will determine any follow through or more rangebound movement.
INTEREST RATES
The US 10-5Yr yield differential (1.02%) has dropped further. We see that the US 5Yr (1.73%) is up slightly and is trading just above the resistance zone near 1.70%. A break above the current resistance zone can see the 5Yr rise to 1.80%. The 10Yr (2.75%) has dipped a bit but is expected to be ranged between 2.75-2.80%.
The German 10Yr (1.63%) remained stable and is trading near our target of 1.65%. A break above the resistance near 1.65-1.66% can signal a rise to 1.70-1.75%. The German-US 10Yr spread (-1.12%) is up slightly but is still in a downtrend. The 2Yr spread (-0.23%) remained stable after bouncing from the trend support. A rise to -0.15% can be seen if the support holds.
The US-Japan 10Yr spread (2.15%) has remained stable after a bounce from the support near 2.04-2.05% and can target 2.20-2.25% now. The Japan 10Yr (0.60%) has come down from 0.65% (13-Mar-14) and is range bound between 0.55-0.65%. A break beyond this range will give further direction.
The Indian 10Yr GOI (8.80%) is down slightly. It has become range bound between the support near 8.75% and the resistance near 8.85%. A break beyond this range will give us further direction.
DATA TODAY
1:45 GMT or 7:15 IST CN Manufacturing PMI
...Expected 48.70 ...Previous 48.50 ...Actual 48.1
FRIDAY'S DATA
Euro Area Monthly Balance of Payments
...Expected 18.40 EUR Bln ...Previous 20.00 EUR Bln ...Actual 25.30 EUR Bln
CA Inflation Y/Y
...Expected 0.90 % ...Previous 1.50 % ...Actual 1.10 %
EURUSD: 1.3845-1.3860 on the upside, 1.3710-1.3725 on the downside.
AUDUSD: 0.9140-0.9155 on the upside, 0.8960-0.8975 on the downside.
USDJPY: 103.20-103.35 on the upside, 100.65-100.80 on the downside.
GBPUSD: 1.6565-1.6580 on the upside, 1.6405-1.6420 on the downside.
USDCAD: 1.1280-1.1295 on the upside, 1.1105-1.1120 on the downside.
NZDUSD: 0.8575-0.8590 on the upside, 0.8385-0.8400 on the downside.
EURJPY: 141.85-142.00 on the upside, 140.20-140.35 on the downside.
EURGBP: 0.8410-0.8425 on the upside, 0.8305-0.8320 on the downside.
XAUUSD: 1345.00-1355.00 on the upside, 1310.00-1320.00 on the downside.
BRENT: 108.00-109.00 on the upside, 103.50-104.50 on the downside.
SP500: 1895.00-1905.00 on the upside, 1820.00-1830.00 on the downside.
Therefore, the bearish possibility remains valid and trading below 1.3895 strengthen it. Volatility is expectated in light of trading close to 38.2% correction at 1.3780, but breaking this level could take the pair easily towards 50% and 61.8% corrections at 1.3720 and 1.3665 respectively.
Support: 1.3720, 1.3700, 1.3680, 1.3665, 1.3620
Resistance: 1.3800, 1.3815, 1.3845, 1.3895, 1.3945
Recommendation Based on the above, sell the pair around 1.3790 targeting 1.3720, 1.3645 then 1.3620 and stop-loss above 1.3895
There is a possibility of breaking 1.6450, but failing to break it might trigger great volatility and perhaps some bullish corrections before extending bearishness. Generally, trading below 1.6670 is negative while stabilizing below 1.6600 is more negative.
Support: 1.6450, 1.6435, 1.6390, 1.6340, 1.6300
Resistance: 1.6515, 1.6545, 1.6600, 1.6625, 1.6670
Recommendation Based on the above, sell the pair below 1.6500 targeting 1.6450, 1.6390, 1.6300 and stop-loss above 1.6600
Support: 0.8830, 0.8800, 0.8770, 0.8750, 0.8700
Resistance: 0.8860, 0.8900, 0.8925, 0.8950, 0.8980
Recommendation Long the pair above 0.8815 targeting 0.8860, and 0.8900 and stop-loss below 0.8765
Support: 102.00, 101.65, 101.35, 101.00, 100.70
Resistance: 102.30, 102.70, 103.00, 103.40, 10375
Recommendation Long above 101.90, targets at 102.40,102.70,1and 03.40. Stop loss below 101.30
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