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Dukascopy Morning Forex Overview : 21/05/2012
Fundamental Analysis
EUR
"Fears of a Greek exit from the euro zone and the negative consequences from that are prevailing"
- Ben Kwong, KGI Asia
European stocks edged lower after Fitch downgraded Greece’s credit rating to ‘CCC’, implying that the country is vulnerable and highly dependent on favourable economic conditions to fulfill its financial obligations.
USD
"If there were scope to do another twist of some type it would be prudent to consider it, especially in the scenario where things are worse and the Fed feels like it needs to move"
- Nathan Sheets, Citigroup Inc.
Fed policymakers might potentially launch another round of Operation Twist rather than a direct asset purchases in case of increased risks or further weakening of the US economy.
GBP
"We must work together to give ...
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A mild relief on Merkel, upbeat U.S. data
After the deep selloff markets recover some of earlier losses triggered by fears of “Grexit”, after politicians failed to find a common ground and name a new coalition government. Meanwhile Angela Merkel in an interview with CNBC reiterated following many European politicians “I want Greece to stay in the Euro” giving markets a minor relief, and a reason to rebound in a normal pullback after being oversold.
The EUR/USD decently off lows, the pair has traded the lowest since January today at 1.2680, and currently trading around 1.2750. Meanwhile, U.S. housing sector continues to show recovery, as building permits fell to 715,000 last month, however March permits were revised upward to 769,000. Housing starts rose to 717,000 units, while March reading of 654,000 was revised to 699,000. On ...
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Windsor Brokers - Short Term Technical Analysis for Majors (07:00 GMT)
EUR/USD
The single currency spirals lower after yesterday’s break below 1.2800 handle and longer-term bull trendline at 1.2770 and today’s loss of the last obstacle at 1.2700, towards 1.2622, January’s yearly low. Negative sentiment keeps the pair under heavy pressure and despite short-term studies being at their extreme levels, the price action continues to increase the pace of descending. Break below 1.2622 to open 1.2586 Aug 2010 low next, with 1.2000/zone expected to come in short-term focus. Initial resistance lies at 1.2720, with more significant barriers at 1.2800/15 and 1.2868.
Res: 1.2700, 1.2720, 1.2800, 1.2815
Sup: 1.2622, 1.2586, 1.2550, 1.2500
GBP/USD
The pair accelerated losses after losing key supports at 1.6050 and 1.6000, with break below 55 day MA at 1.5959, looking ...
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Windsor Brokers - Short Term Technical Analysis for Majors (07:00 GMT)
EUR/USD
Extension below 1.2900 support that was lost yesterday, posted fresh 5-month low at 1.2813, overnight, just ahead of figure support at 1.2800. Negative structure sees potential for further weakness, with yearly low at 1.2622 now coming in focus. Any bounce higher, as hourly studies are in oversold territory, is for now seen as corrective, with strong barrier at 1.2900, previous low / 20 day EMA, while only lift above 1.2955/80 would delay bears.
Res: 1.2860, 1.2880, 1.2900, 1.2955
Sup: 1.2813, 1.2800, 1.2762, 1.2700
GBP/USD
Maintains near-term corrective tone off 1.6050, yesterday’s low, with brief break above 1.6100 handle and 1.6080 zone holding the downside for now. Clearance of 1.6130 zone, yesterday’s high / 55 day EMA / Fib 61.8% of 1.6181/1.6050 downleg is required to ...
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China’s growth engine cooling down
Forex News and Events:
As anticipated in Friday’s newsletter, China cut its Reserve Requirement Ratio for the second time this year. Shielded by easing inflation, Chinese authorities relaxed their grip on banks’ cash reserves parked at the PBoC through a 50 basis point cut effective starting May 18. This measure will allow the RRR to drop to 20% for the main national financial institutions and will release an estimated CNY 400bn in capital into the market. The move came after the publication of a weaker-than-expected Chinese Trade balance on Thursday, indicating exports and imports grew by 4.9% and 0.3% y-o-y respectively, a far cry from the 10 and 11 percent goals for the year. The near-zero import growth could be explained by the piling up of metal domestic inventories and might affect ...
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Euro tumbles to multi-month lows on Greece, Spain banks
The euro slumped for an eighth straight session against the U.S. dollar on Wednesday, reaching its lowest level in over three months, on worries about political turmoil in Greece and the fragility of Spain's banking sector.
The euro hit a two-and-a-half month trough versus the safe-haven yen as a jump in Spanish bond yields showed investors were wary of the rising costs of fixing the country's banks, fueling fears the debt crisis could worsen.
"This is a continuation of a trend that has prevailed over the past week, with Greek political disarray likely to be a drag on the euro for the foreseeable future," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C.
"The rise in Spanish bond yields is adding to the bearish tone and is providing ...
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Euro falls as political risks weigh, nears 3-month low
(Reuters) - The euro fell close to a recent three-month low on Wednesday, on worries that political uncertainty in Greece and a French leadership change may undermine austerity plans key to tackling the euro zone's debt crisis.
The euro remained under pressure after the leader of Greece's Left Coalition party said on Tuesday that the country's commitment to a European Union/International Monetary Fund rescue deal had become null and void.
Greece's two main pro-bailout parties failed to win a majority in weekend elections, leaving questions over the country's ability to avert bankruptcy and stay in the euro.
"One issue is whether this will cause investors to shun risk globally, or be viewed as the euro's problem alone and just lead to weakness in the euro," said Koji Fukaya, director of ...
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Windsor Brokers - Short Term Technical Analysis for Majors (07:00 GMT)
EUR/USD
The pair extends the last week’s weakness off 1.3282 high, with break below initial support at 1.3100, seen last Friday and overnight’s gap lower opening. Test of lower boundary of very strong support zone at 1.3000/1.2950, Mar/Apr lows / Fib 61.8% of 1.2622/1.3485 ascend, weakens the larger picture’s structure, with clear break below 1.2950, expected to accelerate losses towards 1.2900, figure support and 1.2875, 09 Jan 2011 / 23 Jan 2012 lows. Overextended short-term studies see potential for bounce higher, with initial barriers at 1.3030 and 1.3080, with 1.3155, 55 day EMA and double-top at 1.3180, capping the upside.
Res: 1.3030, 1.3080, 1.3100, 1.3155
Sup: 1.2952, 1.2930, 1.2900, 1.2875
GBP/USD
Cable dipped to 1.6115, Fib 38.2% of 1.5817/1.6300 upleg, after losing last ...
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Windsor Brokers - Short Term Technical Analysis for Majors (08:45 GMT)
EUR/USD
The single currency extends its near-term weakness off 1.3282, yesterday’s high, where short-term rally was limited, just ahead of key barrier at 1.3290/1.3300. Brief consolidation above initial support at 1.3200, was short-lived, as more negative data from Eurozone, increased pressure on that pair. Near-term studies weakened further, as the price broke below 1.3200/1.3172 supports, with immediate focus at 1.3157, 27 Apr low and 1.3138, 50% retracement of 1.2993/1.3282 upleg, ahead of more significant support at 1.3100, 23 Apr low / Fib 61.8%. Previous support at 1.3200, now reverts to initial resistance.
Res: 1.3200, 1.3232, 1.3243, 1.3269
Sup: 1.3157, 1.3138, 1.3123, 1.3100
GBP/USD
Commences the third leg of reversal from 1.6300, 30 Apr fresh 8-month high, after initial ...
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