Month: June 2010

By Fast Brokers – The EUR/USD was hammered by news that Hungary’s previous government put window dressing on their budgets.  Some have whispered that Hungary could be in situation comparable to Greece and will need to undergo further fiscal consolidation in order to right the ship.  Negative news from Hungary ignited uncertainty concerning the exposure of EU banks to Eastern European markets.  The news was enough to tip the scale, sending the EUR/USD tumbling below 1.20 towards February 2006 lows.  As we have stated repeatedly, it’s wise to expect the unexpected from the EU, and Friday’s market activity confirms our suspicions.  Meanwhile, the G 20 will try and settle markets, though it’s unlikely any agreement of substance will come from this weekend’s meeting.  The EUR/USD’s step below 1.20 could prove to be an important near-term development, though the currency pair will likely try to develop a new base soon.  While we’ll have to wait and see how the situation in Hungary plays out, investors should also keep in mind that news can pop up from Spain and Greece as well, not to mention other fiscally troubled EU nations.  Hence, even though Hungary seems to be the next shoe to drop, we’re coming to realize Europe has a big closet.  Next week’s data wire is fairly empty until Thursday’s central bank meetings.  Therefore, psychological forces should be in the driver’s seat over the next few trading sessions.  That being said, keep your eyes on the news wires because even though we’re light on data that doesn’t mean psychological won’t make the market move.

Technically speaking, the EUR/USD faces multiple layers of topside barriers, including 1.20 and 6/4 highs.  As for the downside, the EUR/USD has limited near-term support besides February 2006 lows, though as we said it’s possible the currency pair will try to form a new base around 1.20.

Present Price: 1.1965
Resistances: 1.1975, 1.1991, 1.2017, 1.2034, 1.2052, 1.2064, 1.2083
Supports:   1.1952, 1.1941, 1.1919, 1.1909, 1.1890, 1.1867
Psychological: February 2006 lows, 1.20, 1.19

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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.

By Rita Ruvinski – The Swiss franc traded within a 100th of a cent of a record high against the EUR on concern Europe’s debt crisis will spread, boosting demand for the safest assets. The Swiss currency appreciated as much as 0.5% to a record amid speculation the Swiss National Bank (SNB) may be stepping back from its policy of selling the franc to stem its appreciation.

The SNB tends to increase its interventions in the markets in an attempt to weaken the Swiss Franc. The moves are seen best against the Euro since the Swiss economy is based on exports – Switzerland has a surplus in its trade balance. The main trading partners come from the Euro-Zone – Germany, France, Austria and Italy, all of which border the Alpine nation. A weaker Swiss currency means more value for exports.

In the current crisis, the Japanese Yen and the US Dollar played this role. The Swiss Franc on the other hand tends to move by speculators and the performance of the Swiss economy, which is doing well without interventions. The Swiss National Bank still wants it to fall. But despite the SNB’s efforts, the currency is still strong. The Swiss Franc used to be a “safe-haven” currency that is sought in times of trouble, are things changing?

Technical Analysis

EUR/CHF:

– The market has finally managed to take out key support by 1.4000 to accelerate to fresh record lows with targets 1.3855 & 1.3785 in extension. While we do not rule out the potential for a rebound, the continued downside pressure may push the CHF to 1.35 per EUR within 3 weeks.

EUR/CHF Weekly 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.

By Greg Holden – This article is not about what traders are actually expecting to happen, only a theoretical speculation regarding a recent observation. Crude Oil’s weekly chart scares me. Here’s why: Oil is a commodity which trends in relatively stable patterns. Even when the Euro, US Dollar, or Australian Dollar are acting erratically, Crude Oil tends to continue moving in what can be called “smooth” trends. That is, even when it jumps up and down, it remains inside a larger pattern.

An exception to this does exist, however. Whenever a market anticipates heavy growth, like that being forecast in the mid-2000s, this commodity takes off. But the subsequent sharp increase in oil prices has a nasty habit of bringing the market down sharply. High oil prices impact the entire world’s ability to function industrially. The result of the sharp increase in price, like that seen in 2008, was an added pressure on a financial crisis already underway, grinding the possibility for corrective growth to a halt.

For the time being, Crude Oil remains in a steady trend. No reason to panic. The uncertainties rocking Europe, alongside the dropping Asian equities and return of safe-havens, brings to mind the conditions of early 2008 (the big difference being that Europe is the focus instead of the US).

As safe-havens have re-emerged, the likelihood of the US Dollar surging have come to fruition and we see some safety commodities, like Gold and Silver, rising; while oil experiences a steady drop, since it lacks that safety allure. But the moment oil breaks out of its smooth trend it has a historic tendency of becoming erratic (as shown below).

I must re-emphasize, this does not say that traders are anticipating such an occurrence. Only that the possibility exists and we would be wiser to pay attention this time around. If the price of oil continues to fall outside of its current uptrend, there’s a chance it will repeat the movements of 2007-2008… a slim chance, but one that exists nonetheless. This chance also appears to be growing slightly more probable as many are now claiming that an investment in BP would be prudent given the recent situation in the Gulf of Mexico and its impact.

I consider myself an optimist and would hate to see such a turn of events take place, but each passing week brings more news which points to Europe’s despair looming larger and larger. One can’t help but make the comparison with the crash of 2007-2008, and Crude Oil’s concurrent price abnormality, with what’s happening now. Of course, Crude Oil could just be reaching the lower border of its recent trend and promptly bounce back up, as many are expecting, and this article will have been for naught.

Traders, place your bets!

Crude Oil Weekly 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.

Last Friday, I asked the question in my blog whether to buy or sell the Australian dollar. There, I detailed the several bearish technical and fundamental signals that I saw. At that time, the AUDUSD pair had rallied all the way up to 0.8500 after marking a new 2010 low at 0.80669 last May 25. During the course of its rebound, however, I noticed that it was forming a rising wedge which was again a bearish pattern. Note also that the pair was having a hard time moving past 0.8500. At one point, it was able to reach 0.85514 but then it weakened soon afterward. Incidentally, this recent high was perfectly in line with the 38.2% Fibonacci retracement level of the latest down wave, making the 0.8500 region a tougher hurdle to scale. The unfortunate (well, at least for the Aussie bulls’ perspective) happened last Friday when the AUDUSD finally broke down from the rising wedge formation.

Now, with the stochastics far from being oversold, the Aussie still has a lot of space to cover below. A break of this year’s low at 0.80669 could send it somewhere above 0.7700 which is the minimum downside target given its breakdown from a massive double top formation last May 18.

The breakdown in the Australian dollar was due to the sovereign default scare by Hungary and the weak non-farm employment change in the US in May. Payrolls in the US only increased by 431,000 last month against the 521,000 projection. This result further intensified the fear that was brought about by Hungary. In a statement made by Hungarian official, they said the country’s fiscal difficulty was grave and that a default was very much a possibility. This, of course, led the investors to sell-off the higher yielding currencies like the AUD in exchange for the safer USD and JPY.

In my other post today, I noted that the non-dollar currencies or the higher yielding currencies could open up weak since the Asian market has yet to price in last Friday’s events. Given the gravity of the situation in Hungary and the weight of the NFP report, which by the way is the mother of all economic reports, the AUDUSD pair could even gap down to begin this week’s trading. In the mean time, on deck today is the May ANZ job advertisements. The account fell by 1.2% last month. Though, a little gain is seen this time around. However, an unexpected decline here could further dampen the investors’ confidence on the AUD. A rise, on the one hand, could slow down the currencies present slide.

More on LaidTrades.com …

By Anton Eljwizat – The GBP has dropped significantly versus the Yen in the past week, and it is currently traded around 131.55. And now as evident in the data below, the 4-hour chart is giving bullish signals, indicating that GBP/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 4-hour chart of the GBP/JPY currency pair.

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

• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.

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

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure.

GBP/JPY 4-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.

Source: ForexYard

Following the U.S. Non-Farm Payrolls publication on Friday, the Dollar and the Yen resumed their bullish trend. As a result, the Euro saw a 9-year low against the Yen, as the EUR/JPY pair dropped to the 108.06 level. This week’s trading will continue to be influenced by the European debt crisis that doesn’t provide signals of recovery. Can the Euro drop further?

Economic News

USD – Positive Employment Data Strengthens the Dollar

The Dollar rallied vs. most of the major currencies during last week’s trading session. The Dollar continues to soar vs. the Euro, and the EUR/USD pair has dropped below the 1.900 level. The Dollar strengthened against the Yen and the Pound as well.

The most significant data that was published from the U.S. economy during last week has referred to the jobs sector. The Non-Farm Employment Change failed to reach expectations for a 521,000 rise, yet the end result was still extremely positive. The report showed that the payrolls in the U.S. have climbed by 431,000 on May, marking a 10-hear high. In addition, the Unemployment Rate dropped back to 9.7% during May. These two employment indicators have proven that the U.S. economy is recovering despite the European debt crisis. In addition, the housing sector continues to show recovery signals as well. The Pending Home Sales report, which measures the change in the number of homes under contract to be sold, have rose by 6.0% during April. It seems that as long as the leading economic indication, such as housing and employment, will continue to deliver positive data, the Dollar will continue to strengthen.

As for this week, many interesting publications are expected from the U.S. economy. The most significant news is expected close to the weekend when the Trade Balance, the Unemployment Claims, the Retail Sales and the Consumer Sentiment reports will be published. If the reports will continue to provide recovery signals, the Dollar is likely to strengthen further against the major currencies.

EUR – Euro Weakens to a 9-Year Low against the Yen

The Euro’s freefall continued during last week’s trading session. The Euro dropped about 400 pips against the Dollar and about 300 pips against the Pound as well. Yet the most significant slide took place vs. the Yen, as the EUR/JPY pair dropped to the 108.17 level, marking a 9-month low.

The reason for the Euro’s bearish trend remains the Euro-Zone’s debt crisis. This week’s catalyst for the Euro’s slide was the concerns regarding the Hungarian sovereign debt. There are concrete concerns in Europe that the European sovereign debt crisis might spread to Eastern Europe as well. The main concern revolves around insuring the losses of these countries, and the Euro-Zone’s ability to sustain such losses. In addition, the economic data from the Euro-Zone has weakened the Euro as well. The European Retail Sales dropped by 1.2% on April, failing to reach expectations for a 0.1% rise. The combination of deep concerns regarding the Euro-Zone’s future and the negative economic data are weakening the Euro and have potential to weaken it further.

As for the week ahead, the most significant news publication seems to be the Minimum Bid Rate, which is the European Interest Rates announcement for June. Analysts expect the Bank of Europe to leave rates at 1.00%, however any rates manipulations is likely to have a sharp impact on the market. Traders should also follow every publication regarding the European debt crisis as this issue continues to be the main reason for the weak Euro.

JPY – EUR/JPY Drops to a 9-Year Low

The Yen saw mixed results against the major currencies during last week’s trading. The Yen began last week with sharp drops vs. the Dollar, the Euro and the Pound. However as the week progressed, the Yen managed to correct most of its losses, and even mark a 9-Year high vs. the Euro.

The Yen tumbled at the beginning of the previous week due to a political turmoil, which eventually led to a new Japanese Prime Minister – Nakoto Kan. As long as there was uncertainty regarding the Japanese leadership, the Yen declined. However, once the political turmoil was over, the Yen managed to rebound and to recover most of its losses. Currently, the European debt crisis continues to strengthen the Yen. The debt crisis is creating high-uncertainty in the market, and the Yen is considered to be a safe asset. As a result, many investors open long positions on the Yen, in order to avoid large risks.

Looking ahead to this week, a batch of data is expected from the Japanese economy. Traders are advised to follow the Core Machinery Orders and the Final Gross Domestic Product (GDP) reports. If the end result will reach expectations, the Yen is likely to be supported as a result.

Crude Oil – Crude Oil Drops Below $70 a Barrel

Crude Oil dropped once again during last week’s trading session. Crude Oil dropped about 400 pips from $74 a barrel to less than $70 a barrel as the trading week opened Sunday night.

Crude Oil continued to drop during last week’s trading on concerns that the Euro-Zone’s debt crisis will lead to a decline in demand for energy. In addition, the European woes are leading to high-uncertainty in the market that drives investors to look for safer assets. Another reason for the slide of Crude Oil is the strong Dollar. Crude oil is traded in Dollars, and thus whenever the Dollar rally, Crude Oil tends to drop in response. It now seems that as long that the European debt crisis will continue to have a large impact on the market, Crude Oil has potential to drop further.

As for this week, traders are advised to follow the leading publications from the Euro-Zone and the U.S. as this seems to have the largest impact on Crude Oil. In addition, traders should follow the U.S. Crude Oil Inventories report on Wednesday as this publication tends to have an instant impact on the market.

Technical News

EUR/USD

The pair may see a much needed correction today as the RSI for the pair is floating in the oversold territory on the hourly, 2 hour, 4 hour, 8 hour and daily charts. A bullish cross is evident on the 2 hour, 4 hour and 8 hour charts’ Slow Stochastic. Furthermore, a breach of the lower Bollinger Band is evident on the daily chart. Going long for the day may be advised.

GBP/USD

The RSI for the pair is floating in the oversold territory on the 2 hour and 4 hour charts. A bullish cross is evident on the 4 hour and 8 hour charts’ Slow Stochastic as well as the hourly MACD. Going long for the day may be a good option.

USD/JPY

The RSI for the pair is floating in the oversold territory and a bullish cross is evident on the 4 hour chart’s Slow Stochastic. Going long for the day may be a good option.

USD/CHF

The RSI for the pair is seen floating in the overbought territory on the 2 hour and 4 hour charts. A bearish cross is evident on the 2 hour, 4 hour and 8 hour charts’ Slow Stochastic. Going short for the day may be advised.

The Wild Card

NZD/USD

An upward correction may be expected for the pair today as the RSI for the pair seems to be floating in the oversold territory on the 2 hour and 4 hour carts with a bullish cross evident on the 2 hour, 4 hour and 8 hour charts’ Slow Stochastic. Furthermore, a breach of the lower Bollinger Band is evident on the 4 hour and 8 hour charts. Forex traders may be advised to go long for the day.

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.

Now don’t tell me that I did not warn you. In my last post about the fiber or the EURUSD pair, I pointed to the likelihood of another breakdown. At that time, the pair was already consolidating into a descending triangle. And as I’ve said, this formation was bearish due to the fact that the sellers were more aggressive in pushing down the prices. The pair was also trading along a medium term downtrend.

Last Friday, the pattern’s support finally gave way and the price fell from an opening of 1.21786 to close 1.19678. That’s more than 200 pips! Now, the euro still has a lot of room to move lower against the greenback since it has not yet reached its minimum downside target which is just above 1.1600 (computed by projecting the height of the pattern from the point of breakout).

The news that triggered the breakdown in prices of the non-dollar currencies were the less-than-stellar US non-farm employment change for the month of May and a threat of a sovereign default by Hungary. In my blog last Friday, I was actually really worried about the outcome of the NFP report. I noted that if the employment change missed its target for the month, such could rock the markets since a strong figure was already anticipated hours ahead of the US session. In short, the market priced-in a robust growth in employment despite the weaker-than-expected ADP employment change. The official non-farm payrolls, however, only tallied 431,000 in May which short of the 521,000 projection.

Another event that further crushed the investors’ confidence was the news of a possible sovereign default by Hungary. Hungarian finance officials said that the country’s economic situation is ‘critical’ and that the possibility of a default is not too far fetched. This sparked some concerns among investors that the debt crisis which began in Greece may be spreading across the economic region.

On Monday, expect the EURUSD’s price to weaken as soon as the Asian session opens. Remember that the events that transpired (the weak NFP employment change and the default scare of Hungary) are not yet ‘priced-in’ in the Asian market. Hence, there is even a possibility that the non-dollar currencies like the euro may gap down to begin the week. Moreover, the anticipated 0.4% dip in the German factory orders in April after logging a gain of 5.0% in March could weigh down on the currency as well.

So again, the EURUSD could gap down to start this week’s session. Remember, you heard this first here at LaidTrades.com!

By eToro – The force of the swings in market momentum continued to be strong this week as the market was dominated with news that created a lot of volatility.  The week was punctuated by a weaker than expected US employment report that pressured the equity indices down to the low end of the weekly trading range.

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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.

After touching 1.1449 support, USDCHF rebounded strongly from 1.1430, suggesting that a cycle bottom has been formed on 4-hour chart. Now the bounce from 1.1430 is more likely resumption of uptrend from 1.0434 (Apr 1 low), and another rise to 1.1900 is expected, however, a break above 1.1730 previous high is needed to confirm the resumption of uptrend.

Daily Forex Signals

USDJPY consolidated in a range between 88.14 and 94.98 for several months. Another rise towards 94.98 would more likely be seen in a couple of weeks, a break above this level will indicate that the uptrend from 84.82 has resumed, then next target would be at 100.00 area. Key support is at 88.14, a breakdown below this level will suggest that the fall from 94.98 is resumption of long term downtrend from 124.16 (2007 high), then deeper decline could be seen to 80.00 or even lower.

For long term analysis, USDJPY is in bullish movement from 84.82, as long as 88.14 support holds, another rise towards 100.00 is still possible in next several weeks.

Weekly Forex Analysis