Next Directional Move

With the lack of economic releases; markets held pretty well near major intraday resistance levels befo re losing the strength as the day progressed. The EUR/USD was trading near 1.2600 this morning, before getting sold off sharply to resume the expected downside direction and printed new low at 1.2495. Stochastic is providing strong exhaustion signs, thus as we approach the weekend it’s preferred to be neutral on the pair for the rest of the day. The main expected next support level at 1.2475, while to the upside 1.2600-1.2640 is the key area to watch. The GBP/USD tested 1.5630 support, after breaking the latest low at 1.5730 to continue the bearish trend. A strong support is expected among 1.5630-1.5600 area, as further downside below shall extend the bearish trend dramatically. ...

It has been a lacklustre day post the G8 meeting at the weekend (yawn), the drop in Mark Zuckerberg's net worth seems to be more of a talking point than the continuing Eurozone crisis. But, the Eurozone banking index gives it all away. Bankia, Santander and the usual Spanish suspects all turned lower as we headed into London's lunchtime, which dragged the overall European banking sector down to its lowest level since November 2011. Within a matter of hours EURUSD followed suit and is making fresh lows of the day at 1.2730 (at the time of writing). Official EU disappointment Although a temporary bottom may be in place at 1.2624 in EURUSD, the G8 summit highlighted a couple of things that remain negative for the single currency: 1, how divided the Eurozone (and the world) is about how to ...

Majors resumed the bearish tone against the greenback after a slight recovery with the start of the trading session, where the U.S dollar headed to new highs and continues to bag meaty gains against its major counterparts. The overall scene is clearly derived by Greek jitters, while a care-taker government leads the country until June’s fresh elections. It seems that markets have already started the pricing process of a Greece exit; if that is true, the selloff we have seen is just the beginning. Spain weighed on markets as well, the country dipped technicaly into recession as the economy contracted by 0.3% in the first quarter which is the second consecutive contraction. while Moody`s rating agency plans an immenent yp to 21 Spanish banks downgrades according to Spanish newspaper ...

Sunrise Market Commentary - Fixed Income Weak US payrolls push core bonds higher again - On Friday, it was weaker US payrolls that helped core bonds eke out more gains, but non-core bonds held up quite well. Spreads even narrowed in the intra-EMU bond markets. We fear that this won't be the case today, as French and Greek election results inject uncertainty into markets. - Currencies: Euro testing key support levels - On Friday, trading in the major euro cross rate was rather calm, but the pressure remained to the downside. The US payrolls were unable to change this pattern. This morning, EUR/USD is testing the key 1.2974 support while EUR/GBP is trading south of the 0.8068 level. A sustained break below these levels would raise a red alert for the single currency. The ...

Private sector jobs creation in the form of ADP report missed estimates of 170,000 to print a modest 119,000 gain, down from 201,000 in February. The figure is considered a good indication for the NFP number and thus weighs on investors’ expectations. The initial reaction has been risk negative so far, as the higher yielders are adding to their earlier losses against the greenback, while the JPY rallies. Anyhow, markets were already under downside pressure today after figures showed deepening contraction of the European manufacturing sector. The Risk-off mode is expected dominate the scenes over the short term eying tomorrows ECB rate decision and press conference, in addition to Friday’s NFP release. The EUR/USD has broken the main short term ascending trend line in addition to the ...

Forex News and Events: What started out as a risk positive day has slowly reversed itself. The catalysis looks to have been the weak EC business and consumers surveys that suggested Europe remains in a gloomy economic state. The EC Economic Sentiment Indicator dropped from 94.5 to 92.8 showing a decline for the second consecutive month. The countries underlying studies showed a sharp drop in the Italian read while Germany also registered a lower read to 103.03 from 104.3. These numbers suggest that the recent pullback in economic data, including PMI reads, were not just a one off rather indications of a broader trend. The divergence between countries remains wide with the peripheral economies facing deep recessions. We all know that the key to this European crisis is growth and without it, ...

Sunrise Market Commentary - Fixed Income: Core bonds hit by profit taking, non-core bonds gain - Risk aversion ebbed away following Monday's rout, leading to some modest profit taking in core bonds. Non-core bonds did well and yield spreads versus Germany narrowed. Spain and the Netherlands outperformed yesterday. Investors will stay largely sideways today, ahead of this evening's FOMC statement and press conference of Mr. Bernanke. - Currencies: Euro slightly higher as tensions ease - On Tuesday, most markets saw a setback on Monday's sharp sell-off in risky assets. In this move, EUR/USD returned to the 1.32 area, but a technically significant break didn't occur. EUR/GBP came near the 0.8143 August 2010 low. Today, the focus of currency trading will be on the Fed. The ...

Higher-yielders recovered briefly some of yesterdays losses, risky assets look fragile ahead of the main releases from the U.S; in the form of consumer confidence and new home sales. Confidence among consumers is expected to show a slight setback while new home sales expected to signal further recovery within the housing sector. In general, the risk-off theme continues to dominate the scenes , while markets eagerly waiting tomorrow's FOMC meeting outcome for a clue that will outline the next short term direction. The EUR/USD rebounded slightly currently trading just below the 50-days SMA; meanwhile a bearish technical pattern could be in the process of completion, where we expect the bearish sentiment to dampen further upside for the pair. Anyhow, 1.3210-1.3220 is the main resistance ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD The Australian dollar suffered after Australia‘s Q1 CPI inflation report came in much weaker than expected. Headline inflation fell sharply to +1.6% y/y (cons. 2.2%, prev. 3.1%). Market expectations had already been lowered by yesterday’s PPI report, but the scale of the miss was still surprising, and AUD promptly dropped 70pips. The rates market had previously priced in a full 25 bp cut from the RBA on May 1, but is now looking for 32bp of easing at the time of writing. Our Australia economists doubt it will come to that – instead they stick to their view that a full 50 bp of easing is indeed on the way, but will be spread evenly between the May and June RBA meetings. ECB policymakers continued to make their voices heard overnight with ...