[pasfx]

2013.01.02: A new beginning

EUR/USD

Yesterday the market stood still and the EUR/USD pair was no exception. It is a rare occasion, but not even a one pip move could be seen in any currency pair.



Technical Outlook

The stalemate seen yesterday will come to an end today when the market will pick up again and the volume will slowly get back to normal. A few days ago we mentioned the horizontal channel that confines the pair and which is still holding. The lower boundary of the channel is the support formed at 1.3170 and it rejected price numerous times proving to be a strong barrier for any down movement. The upper boundary is located at the 1.3290 level of resistance. At the moment our bias is neutral on the pair but we consider that a break of either boundary of the channel is indicative of an extended move in that direction.

Fundamental Outlook

Although some banks are still closed, today there are some releases of economic indicators: for the Euro zone the most important are the Spanish Manufacturing PMI coming out at 08:15 am GMT and the Italian Manufacturing PMI released a half an hour later. Better than expected numbers usually strengthen the currency but the market conditions still cannot be considered normal and surprises can occur. Later, at 3:00 pm GMT the US release the ISM Manufacturing PMI, a high impact diffusion index based on the opinion of about 400 purchasing managers. The forecast is for 50.2 from a previous of 49.5. Higher values then 50.2 can strengthen the US Dollar.



GBP/USD

Just as expected, the pair had no movement yesterday, but the last trading day of 2012 brought a lot of bullish momentum.



Technical Outlook

There is a distinct possibility for the pair to continue its strong move up touching once again the resistance formed at 1.6300. Monday many resistance levels were broken: diagonal resistance created by the down trend line, dynamic resistance created by the 200 Simple Moving Average and horizontal resistance represented by the 1.6175 level. This makes future higher prices very probable. But like we mentioned, the market is still not entirely back to normal so we recommend a lot of caution.

Fundamental Outlook

The only data released by the UK today is the Manufacturing PMI, scheduled for 09:30 am GMT, with a small increase expected: 49.2 from a previous of 49.1. The index is based on about 600 surveyed purchasing managers and it usually has a hefty impact on the market. The US event mentioned earlier will also affect the GBP/USD pair.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

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[pasfx]

2013.01.03: Another day inside the channel?


EUR/USD

Almost immediately after the opening of the market, the EUR/USD shot up for about 100 pips and price touched the upper boundary of the channel that we talked about before rebounding hard and traveling the whole distance back towards the lower boundary of the channel.



Technical Outlook

Lately the horizontal channel seems to be the main technical aspect of the market and price has almost text book reactions when it touches either one of its boundaries. We mentioned this before but the upper boundary of the channel is represented by the resistance formed at 1.3290 and the lower boundary is formed by the support level at 1.3170. If the channel will still contain the pair and the current break of the lower boundary is a false one, then it is most likely that we will see today a rally into higher territory. Of course a real break is not out of the question and if that occurs, we expect an extended move down.

Fundamental Outlook

Today�s fundamental side of the market will be influenced to some extent by the German and Spanish Unemployment Change numbers coming out early in the morning but they are not considered to be high impact economic indicators. Lower numbers are good for the Euro because an economy with less unemployed people is considered a thriving one.

The main fundamental events today come from the United States in the form of the ADP Non-Farm Employment Change (anticipated 134K from a previous of 118K), released at 1:15 pm GMT and the Unemployment Claims which will be released 15 minutes later (anticipated 356K form previous 350K). In the case of the first indicator, higher numbers than expected are good for the currency and for the second indicator, lower numbers are likely to strengthen the currency. The final event that we must keep an eye on comes late at 7:00 pm GMT and it�s the FOMC Meeting Minutes, containing a detailed explanation of the reasons that influenced the FOMC members� vote on the US interest rate.

GBP/USD

What appeared to be a true break of the resistance formed at 1.6300 turned out to be just a false one, followed by a substantial move down, below the mentioned resistance.



Technical Outlook

Lately the momentum has been strongly bullish for the pair but the recent drop makes our technical view almost neutral. It appears that no clear direction can be established and we recommend caution when trading the GBP/USD, at least until further developments. If price continues down, the level of 1.6175 could provide some support, but sudden moves to the upside (towards 1.6300 again) are not out of the question.

Fundamental Outlook

The most important economic indicator released today for the British Pound is the Construction PMI (09:30 am GMT), with a slight increase being anticipated: 49.6 from a previous of 49.3. It is an index based on the opinions of about 170 Purchasing Managers and better than expected numbers can strengthen the GBP, driving the pair higher. All the US data mentioned earlier will impact our analyzed pair.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.04: The big fall begins


EUR/USD

Yesterday we experienced a text book break of the lower boundary of the horizontal channel that contained the pair for the last period. After the break, price re-tested the support turned resistance and then continued lower, exhibiting clear seller control over the market.



Technical Outlook

Our bias on the pair is bearish at the moment and we base this on the recent break of the support formed at 1.3170 and also the decisive break of the 1.3140 support. Both are now resistance once again, confirmed by the re-test seen after the break. The next important support level is located at 1.3020 and although we don�t expect it to be hit today, we consider that to be the next short term target for the EUR/USD pair. As always, we must be aware of surprise moves above 1.3170 which would be indicative of indecision in the market, not necessarily an uptrend.



Fundamental Outlook

The attention today is focused on the United States as we expect the always important release of the Non � Farm Employment Change numbers at 1:30 pm GMT. Actual numbers higher than the expected ones are indicative of economic stability and even growth which usually translates into a strong currency for the country. Today�s expected number is 150K from a previous of 146K. At the same time, the US Unemployment Rate is released, but no change is expected: 7.7% from previous 7.7%. If the value will drop, that will be positively reflected in the currency. The final release of the day concerning the US Dollar is the ISM Non Manufacturing PMI (3:00 pm GMT) and a small decrease is expected: 54.2 from the previous of 54.7. Higher numbers than 54.2 can strengthen the US Dollar and drive the pair lower.


GBP/USD

The pair had a downward trajectory, just like its sister pair, EUR/USD. The support at 1.6175 crumbled under the pressure of the sellers and at the moment price is sitting on the support formed at 1.6140.



Technical Outlook

The bulls seem to have no answer at the moment and we expect lower prices for the pair. The level to watch is 1.6175 because it was not re-tested and another small move up to touch it is possible. In the event that price does not move up to touch the broken support turned resistance, the 200 Simple Moving Average could provide some support for the pair.

Fundamental Outlook

Our analyzed pair will be affected today by the UK Services PMI released at 09:30 am GMT. The value is expected to increase slightly (50.4 from a previous of 50.2) but the Pound will probably strengthen only if the value will be higher than 50.4. The important US events mentioned above will have a hefty impact on our pair as well.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.07: The ingredients for a break of support are present


EUR/USD

The anticipated drop for the pair occurred and price touched the support formed at 1.3020, although it didn’t re-test the broken level of 1.3140 like we expected. A bounce into up was then experienced, resulting in a higher close of the day.



Technical Outlook

The move up seen during Friday’s trading session does not change our bearish sentiment on the pair and we consider it a much needed retracement after such a big fall. Price dropped almost 300 pips in just two days so the sellers are in control of the market at the moment but probably profit taking at the 1.3020 support pushed price higher (the process of closing a sell trade implies buying). At the moment price shows a small rejection from the 50 period Simple Moving Average and Bearish Divergence is present so this could be a good place for the retracement to end and the down trend to resume. We are not dismissing any moves higher but we find them less probable.

Fundamental Outlook

Mondays are usually slow in terms of economic indicators releases and today the only events that could affect the pair come from the Euro zone in the form of the Sentix Investor Confidence and the Producer Price Index. Usually both these indicators have a very light impact on the market and sometimes can even go unnoticed by traders, but surprising numbers could generate some movement. No data concerning the US Dollar is scheduled for release today.

GBP/USD

Since the false break of the strong resistance established at 1.6300, the pair has been in a clear and strong downtrend, apparently breaking the support at 1.6040 during Friday’s trading session before retracing above it.



Technical Outlook

Although price at the moment sits above support, we consider that today another attempt at breaking it will occur. The fact that price could not break the 1.6040 level on the first attempt is not indicative of downtrend weakness, but rather a short term seller exhaustion and some profit taking, just like we mentioned on our EUR/USD technical outlook. The Hidden Bearish Divergence is present in the GBP/USD pair as well and we expect a down trend resumption during today’s trading session.

Fundamental Outlook

The only notable economic indicator released today for the British Pound is the Halifax House Price Index, coming out at 08:00 am GMT with an expected decrease from a previous of 1.0% to 0.2%. Actual numbers higher than 0.2% could strengthen the Pound and drive the pair higher, but this indicator is not known as a strong market mover so we don’t expect major moves to be generated by its release.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.08: The support levels still have strength


EUR/USD

During yesterday�s trading session, the pair had another clash with the support created at 1.3020 and so far it looks like we are not going to see price moving below this level. The European Sentix investor Confidence was announced at -7.0, much better than the expected -13.7 and although it is not a high impact indicator, it helped the Euro in its upward path.



Technical Outlook

We maintain our bearish bias on the pair and we consider that this move up lacks the power to break any strong resistance levels. A good place for the sellers to take back control of the market is the resistance created at 1.3170, seen on the four hour chart above. On the downside, the support at 1.3020 remains crucial and a possible break will probably generate more seller pressure and consequently, lower prices.

Fundamental Outlook

Today no high impact economic indicators are released for either the Euro or the US Dollar. The only scheduled releases worth mentioning are the Euro zone Retail Sales, coming out at 10:00 am GMT, with an increase expected (0.5% from a previous of -1.2%) and the Euro zone Unemployment Rate, coming out at the same time, with a very small increase anticipated: 11.8% from 11.7%. For the retail Sales, higher numbers are likely to strengthen the currency and the opposite applies for the Unemployment Rate.


GBP/USD

The two pairs have been highly correlated during the last period so the movement of the GBP/USD was quite similar yesterday to the one of the EUR/USD, making another attempt at breaking the support before retracing higher.



Technical Outlook

It seems like price is headed into resistance again and a good place to see if the move up really has some power is at the resistance zone of 1.6130 � 1.6140. If that zone is surpassed, the next hurdle will be 1.6175. On the down side, 1.6040 remains extremely important for future direction and a valid break would be indicative of down trend resumption.

Fundamental Outlook

The UK doesn�t release any economic indicators today that could affect the pair and neither do the United States. It appears that today�s movement will be driven by the technical aspect of the market.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.09: Possibly a deciding day for near-future direction


EUR/USD

Although we anticipated a reversal once the resistance at 1.3170 is touched, the bulls ran out of steam before that happened and yesterday�s trading session was dominated by the bears. However, the support at 1.3020 was in not broken or even touched.



Technical Outlook

Today we anticipate more down side movement and a possible break of the important support level created at 1.3020. However, from an hourly chart perspective, the Relative Strength Index is close to the oversold level so we might see a small move up before price reaches support. That move up will probably clear the oversold condition of the RSI.

Fundamental Outlook

The fundamental scene is quiet today, just like the first two days of the week and no major economic, financial or political data comes out. Euro zone�s only notable economic indicator is the German Industrial Production, released at 11:00 am GMT. It measures economic health from an industrial perspective and for today�s release an increase is expected, from a previous of -2.6% to 1.1%. Values higher than 1.1% could strengthen the Euro, but keep in mind that it is not a high impact indicator and sometimes its release goes unnoticed by traders. The United States announce their Oil Inventories at 3:30 pm GMT but this indicator is more likely to influence Oil price rather than our currency pairs; however, extreme values can produce volatility for our pair.


GBP/USD

The pair made a sharp turn exactly at the 1.6130 resistance and until evening, it traveled the distance back to the support located at 1.6040.



Technical Outlook

This is the third attempt over a short period at breaking the support at 1.6040. Usually this is indicative of high seller pressure and we favor a scenario where the 1.6040 level breaks and opens the door for lower prices. The Relative Strength Index is close to the oversold territory and a small move up is possible but not necessarily needed. Alternatively, the pair could remain between support and resistance for today�s trading session.

Fundamental Outlook

The only economic indicator that affects the British Pound directly is the UK Trade Balance, released at 09:30 am GMT, with a forecast of -9.0B from a previous of -9.5B. The trade balance is the difference between exports and imports and better than expected numbers are good for the analyzed currency. It tends to have a mild impact in the market but surprising numbers can create volatility. The pair will also be affected to some extent by the US events mentioned earlier.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.10: Today�s movement � entirely driven by Bank Rates?


EUR/USD

The pair moved into lower territory yesterday, validating our bearish scenario but the support at 1.3020 is still at a comfortable distance away especially since in the second part of the trading session, price had a hefty retracement to the up side, close to the down trend line drawn from this year�s high.



Technical Outlook

Once again, we are biased towards the bear side and we believe that lower prices are still ahead for the pair. If price bounces lower from the trend line that we mentioned, a break of the support at 1.3020 is most probable. If the pair moves up, it will encounter some minor resistance at 1.3090 which coincides with the 50 period Simple Moving Average on an hourly chart.

Fundamental Outlook

Today�s headline is definitely the Euro Minimum Bid Rate announced at 12:45 pm GMT, with no change anticipated (0.75%) and followed by the always important ECB Press Conference 45 minutes later. As usual, Mario Draghi, the President of the European Central Bank will give opening remarks regarding the reasons that influenced the rate change or why they kept it unchanged and afterwards, he will answer journalists� questions. The ECB Press Conference usually creates volatility and the attitude of the President decides direction: if he is hawkish in his speech and answers, the Euro is likely to strengthen and on the other hand, a dovish attitude is detrimental to the single currency. The US Unemployment Claims come out at 1:30 pm GMT, but are likely to be overshadowed by the ECB Press Conference. A decrease is expected, from 372K to 361K.


GBP/USD

After briefly retracing into higher territory during the first part of yesterday�s trading session, the pair broke the support located at 1.6040 and at the moment price is heading up once again in what appears to be a re-test of the broken support.



Technical Outlook

We expected this break of the support at 1.6040 and we consider it indicative of a continued move down, but if price doesn�t just re-test the broken level and instead returns above it, a ranging period could begin. However, we favor a scenario where the pair moves lower, but we must be aware of the underlying strength of the buyers. Today�s important fundamental events will probably give us an answer related to future direction.

Fundamental Outlook

The UK also releases today their Official Bank Rate, at 12:00 pm GMT and volatility will be created by the announcement even though no change is expected (0.50%). When the rate is changed the Monetary Policy Committee (MPC) releases a Rate Statement, outlining the economic and financial reasons that lead to the Rate modification. Usually if no change is made to the Official Bank Rate, the MPC Statement will not be released. Like we mentioned in our EUR/USD outlook, the US Unemployment Claims numbers are announced at 1:30 pm GMT and this fact will affect the GBP/USD pair as well.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.11: �We have signs that fragmentation is being gradually repaired� � Mario Draghi, ECB President


EUR/USD

The statement above and other positive comments made by the European Central Bank President, Mario Draghi launched the pair into higher territory and resulted in a decisive break of both 1.3090 and 1.3170 resistance levels, exposing the strong resistance located at 1.3290. Yesterday�s technical outlook proved to be wrong, and the recent move confirms once more the fact that important fundamental events can overthrow any technical aspects.



Technical Outlook

After such a powerful move up, we consider that the bulls are in complete control of the market and they will push price even higher after a retracement. The Relative Strength Index is in extreme overbought territory at the moment so a retracement is likely to occur, generated also by some profit taking and closure of existing positions. After that potential retracement, price is likely to touch or even break the important resistance at 1.3290.

Fundamental Outlook

The Euro zone doesn�t announce any high impact indicators today but the momentum created by Draghi�s hawkish comments is likely to drive the pair higher. The United States release their Trade Balance at 1:30 pm GMT (the difference between exports and imports) and if the value is higher than the anticipated -41.1B (previous was -42.2B), we could experience some US Dollar strength.


GBP/USD

The pair was affected by Mario Draghi�s comments but not to the same extent as the EUR/USD was. However, the bulls controlled the market throughout the whole day and the US Dollar had little strength against the Pound sterling.



Technical Outlook

We expect the pair to break the resistance created at 1.6130 and head into the next level of resistance located at 1.6200. This period is characterized by high positive correlation between the two pairs and since the US Dollar is weak, the resistance levels lose strength. The Relative Strength Index is showing an overbought condition so we anticipate a small retracement before the pair can move higher.

Fundamental Outlook

The most important economic indicator that will affect the British Pound directly today is the Manufacturing Production released at 09:30 am GMT. An increase is anticipated, from the previous of � 1.3% to 0.6%. Higher values than expected usually strengthen the Pound and could drive the pair higher. The US Trade Balance that we mentioned earlier is likely to affect the GBP/USD pair as well.

Written by: Bogdan Giulvezan

The article above is based on the writer�s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.

[pasfx]

2013.01.14: Sky high


EUR/USD

The strong bullish momentum pushed the pair higher once more during Friday�s trading session and the resistance zone created around 1.3290 � 1.3300 was decisively broken. The US Trade Balance was announced at -48.7B, a lot worse than anticipated (-41.1B) and it definitely contributed to the weakening of the US Dollar.



Technical Outlook

Fundamental Outlook



GBP/USD

Friday was a day with no clear direction for the GBP/USD pair and although it broke the resistance located at 1.6130, during the day it hovered above and below it, finishing the week just a few pips above.



Technical Outlook

Fundamental Outlook

[pasfx]

2013.01.15: Bounce or Break?


EUR/USD

The resistance level of 1.3380 was touched during today�s trading session and briefly broken but the bulls didn�t have enough power to keep price above it and price slowly retraced under resistance. The Euro zone Industrial Production numbers came out lower than expected, at -0.3% from a forecast of 0.2% but we don�t attribute the small retracement to those worse than expected values.



Technical Outlook

Fundamental Outlook



GBP/USD

The two analyzed pairs seem to move out of correlation lately and yesterday we saw the GBP/USD fall significantly lower compared to the EUR/USD after failing to maintain itself above the level of 1.6130.




Technical Outlook

Fundamental Outlook