Market SRO: Majors & Crosses

USD YEN CHF GBPJPY EURGBP
with the recent rebound of the August US Consumer Confidence to 81.5 contrary to market expectations may probably signal to a better August NFP figure in the upcoming report.

This has been widely expected as the USD initial market price action for the US dollar index have recovered in today's trading sessions. Although, overshadowed by the overseas US reaction regarding the Syrian crisis both on the Oil and precious metals market have somehow capped and limited the USD Index advance to as high as 81.59 basis point

Market SRO: Majors & Crosses

Market's Price Behavior 5.31

Understanding & Knowing how it works! 

The recovery of the US Dollar have was renewed and accelerated after stronger Chicago PMI numbers. Today's economic reports were obviously mixed. Meaning that the Fed would remain on its path to taper-off asset purchases for the year.

The recovery in the USD was likewise supported by the upward revision of the University of Michigan's Consumer Confidence index. Although, the preliminary numbers showed that consumer sentiment improved significantly in May. But the other story affecting the euro today were Bank of Italy Governor Visco's comments on the potential for another rate cut which affected the EURUSD more than the disappointing umeployment data earlier during the European session.

As the Euro dropped to as low as 1.2943 after the statements; affecting the EURGBP cross rates to move lower as well @0.8527. Although, a slight recovery did occur after the news, but the USDx recovered from its lows @83.00 levels and currently working its price back up to the all important levels @83.50 basis point. Meanwhile, the EURGBP cross have likewise recovered from a low @0.8527 and is currently @0.8550 to this writing. Click to continue

Bottomline: NFP & Unemployment Rallies USD & Stocks

Economic Indicators vs. Market Sentiment & Activity indicators: Summary

On the back of shockingly weak Chicago PMI numbers have led the Euro to initially move higher during the earlier trading week above the 1.3150 and pushed the USDx towards the low nearest to the 81.30 basis point levels. Although, consumer confidence rose rose to 68.1 from an upwardly revised 61.9 in March. Economists had expected a reading of 60.8, according to a Reuters poll.

The market is generally convinced that the European Central Bank (ECB) will lower the benchmark rate by 25 basis points, which it did alongside the remarks by Mario Draghi on negative rates which analyst have stated that it was premature to talk about. And the market on the EURUSD have initially stalled as it has been widely expected and even yet have been built-in to the market prices for several days.

Click here to continue.

Market Perspective: EURJPY & USDx

The major trend for the EURJPY cross rate is still intact as the bigger technical perspective on the chart is bullish. The rapid acceleration of the USDJPY behind the fundamentals of the Japanese Yen and strength of the EURO have fueled the the EURJPY cross strength.

Monetary easing from Japan and renewed policy makers in Europe have been the reinforcing factors supporting this trend. That is unless some newer policy changes would take effect or announced to reverse price action in the market. And the FOMC minutes have outweighed these two remaining reasons until a fresh incentive would either reinforced the resurging strength of the US Dollar or otherwise investors confidence on the US economy deteriorates. Knowing these reasons and analyzing market behavior in line with price action would provide a better glimpse as to which currency pairs would best suite market conditions that can deliver a reasonable potential for a trade.
Click here to continue...

EUR & GBP fades vs. USD, EURJPY slips Lower

Interestingly enough, the USDx has been toying its price swings above and below the 80.05/10 for the past couple of trading days. The indecision for a follow-through have been seen by traders as a lack of interest while awaiting for some fresh initiatives from the upcoming University of Michigan Confidence report and the two day meeting with the G20 leaders in Moscow. Eurozone GDP figures continued to show the signs of recession as the EURUSD declines further to this writing.

Currently, the EURUSD is @1.3333 and the USDx is @80.43 intra-day price from yesterday's candle bar signifying that such corrective move from yesterday's high still has potential to move higher. USDx trades are prefered for now, since the price parameters are more defined within the risk trades taken. And using the 80.05/10 as the pivotal price point, momentum and the volumes on a day to day session.  As USD bulls would expect a better than expected confidence numbers today.
Pls. continue...http://megatrade101.com

AUD Perspective:

The latest report that Australian retailers have sold lesser goods for the month of December, thus missing most analysts' expectations. While consumer confidence was weaker in December keeping consumers to spend lesser has been the culprit for the weakness.The worse-than expected retail sales numbers shows a mixed economic outlook for Australia contrary to an encouraging trade report released yesterday.
To continue...
MegaTrade101.com - The Art of Trading the Foreign Exchange Market with Confidence - AUD Perspective:

Directional Trend 4th Qtr of 2012

The start of the 4th quarter of the year with relative good signs for US manufacturing providing the lift for the US Dollar. The surprising move has kept many analyst and traders in Wall Street to continue their raging arguments on the prospects for Quantitative Easing.

As many traders and hedge fund managers have tirelessly been going back & forth with the same issues the European debt crisis that evolves with Spain taking the recent limelight of the story. Confusing as it may seem to a lot of foreign currency traders and investors; the market conditions in trading have changed its financial landscape of market analysis and trading execution.
Since high frequency trade execution by institutional houses including interbank trading have provided a higher degree of trading difficulty in the market.

A classic example...

Market Price Action - DXY

USD Index: The fundamentals of a positive housing price sector and consumer confidence have supported the US dollar as measured on the daily chart in this figure. Currently, working in Asia @79.78 ( round-off @23.6% FIB) basis point recovery levels from a registered low @78.60 dated Sept 14, 2012.

Likewise, serves as the double bottom support price levels for both the daily & weekly bar formation. In addition, the opening price gap for the following week of Sept 23 have signaled a probable push forward prior to the reports. And successfully supported the technical outlook pushing further to the price high of 79.92 to this writing.

This recovery and price reversal period shall continue with the Fibonacci time zone (gray-vertical-line) trend cycle for another week. Near term objectives and daily extensions are set at the 80.05/75 price range which happens to be within the 38.2% standard retracement levels. Combined technicals applied  for Stochastics / RSI trade tools shows a valid recovery from the lows while expecting daily pullback price action influencing the currency majors and indirectly correlated cross rates. This chart analysis carries a minimum number of at leat 8 technicals tools applied. However, most traders and analyst may vary as to the kind of technical application that they are most comfortable with. And this is what matters the most; as these tools are simply lagging indicators that supports historical and market conditions of prices.

Market Assessment

Global Issues affecting the Financial Market

A more positive tone has been set today with a much better housing sector providing support. With housing prices increasing mildly into positive territory. Improving home equity no matter how slow it maybe would mean some breathing room for the US economy heading towards a recovery.

Improving Housing and unemployment are 2 of the key drivers for a stronger economic recovery along with a recent report that a bigger part of US manufacturing would be heading back towards the US by 2014 would indeed be a welcome treat for the employment figures. This would redefine a clear path for a positive outlook in the next few years to come. However, with the election year and the unresolved European crisis, may provide some changes in the financial landscape especially with the question of Spain and other EU zone countries ability to generate growth while meeting austerity measures may still dampen the prospects of a global growth in the interim years to come.

To top it all...

Pessimism Persist - EUR & GBP vs. DXY

The uncertainty for the European / Soverign Debt crisis, Moody's bank downgrades and the backdrop of Spain & Italy's problems have weigh much longer in the market; while the focus on the coming June 28 summit are making investors more weary of any real resolutions. 

George Soros comments for a workable resolution are well being discussed as a political, fiscal and bank union would place some stability in the financial markets. Although, Germany's Angela Merkel's continued resistance of the EFSF (European Financial Stability Fund) to immediately take over the ECB's holdings of Greek bonds and would not be able to help relieve Spain and Italy from the jump in their borrowing costs.

These would add more volatility in the market meanwhile volume transactions would persist to move lower until a clearer direction would be seen and felt in the market place. Meanwhile, the major reports for the week are seen as a possible catalyst as to where the actual market direction for the USD and the Euro would take. US Consumer confidence, Durable Goods, Home sales and the GDP figures on top of the University of Michigan Confidence makes up the list for the US side; while the succeeding German unemployment figures, and the UK Gross Domestic Product will take the lead for the European market.

EURUSD DAILY AS OF 6.25

Now with that said, let us take a look and analize how the technical charts coincides with the fundamentals. The behavioral market patterns of prices have been induced by traders and mainstreet investors to the direction as perceived by how the market has been reacting to the European debt crisis. The single currency of the Euro has taken the lead as prices continue to move lower and currently at the 1.2480 as of this writing. In our June 18 market view that prices were still within the rising channel but the prices have moved outside of that channel; thus the market heading south to the 1.2380 is now in the making. Likewise, the confirmation of Cable breaking the 1.5580 price support has signaled a longer term bear market that may turn market participants into hysteria mode. This has placed the US Dollar in a better footing still retaining its crown as the World's Reserve Currency. And remains to have enough room for the next leg higher as the 80.05 - 80.89 basis point range has held from the previous trading actions from its correction. As a matter of due diligence; it would be good to check what the USDx levels were when the EURUSD was at the 1.2380 and compare it with the GBPUSD. It is equally important to watch the closing price levels of these three major pairs and relatively compare it to the closing of the USDx at the end of this 2nd quarter and the opening price levels on the first trading day of the 3rd quarter where the outcome of the June 28 summit meeting would result-into. Unless a market spook would occur before or after the EU summit over the weekend as it is ripe to turn itself into an extreme hysteria market.

Technical Perspective: EURO vs. USDx

The EURUSD continued its decline due to the uncertainty of the global market and the recovery of the USDx from last week's trading activity. On the technical perspective, a retest of the previous low of 1.3025 is currently open for assault as long as the rally for the USDx would continue with its current pace working at the 79.80 basis point nearing its 1st resistance level of 80.05.

The closing price for the week is critical now with the USDx registering a higher low at the 78.09/10 support area. This USD rally was triggered by the testimony of FED Chairman Ben Bernanke's quiet stance on QE3, US consumer confidence and renewed interest for USD flight to quality investor shifting from the previous metals dramatic plunge to its current low levels. Daily price corrective moves are expected but the overall market sentiments are still bearish. The 2nd level of support would be at the 1.2950/80 levels that may well meet some bids and long liquidation for most position traders still has a bullish GBPUSD outlook.

EU Majors Confirms 11.01 Analysis

USD influenced by EU-Italy Crisis

The price direction for the Euro today, half-way through the week re-confirms the Price reversal called last Nov 01. Its really not a matter of price but rather the re-affirmation of the overall market sentiment that has gauge investors shifting funds out of the Euro-zone. This has provided a price stability for the time being with the tight consolidation levels of the US dollar, as measured by the USDX Hi/Lo band where the current 77.42 basis point is nearing the high resistance band. The technical breakout may only occur with a strong momentum towards the end of the week's trading which would culminate with the release of the University of Michigan's confidence report on Friday.

When this happens a re-test of the 78.85 would likely be seen with extensions at the higher band and within breaking an inverted H/S formation that is reflected as a mirror imaged from the previous H/S daily chart formation. The high probability that the same would occur on the way higher when it happens. This has been a repeat only that the opposite circumstances would be inversely related to the down swing of the recent movement of the US dollar index when it touched a 74.72 low Oct. 27, 2011.

The location of the projected price direction when such a break higher would be beyond the Ichimoku Senkao Span A(green) breaking a neckline towards the next FIB retracement along the 78.85 basis point. Extensions higher would occur upon a completion of several daily pull backs until fresh volumes and price settlements would be made towards the week ahead. While the overlay STOCH/RSI still breaths positive with a 21/9 measure as compared to the T4-FIB 61.8% extension which would establish an overbought area if it attempts it in one spike upwards. This can only happen if and when a sudden unexpected event happens in both continents. But weigh in from the other is equally important. This can justify the technical outlook thus far. 

Meanwhile, the current market situation with the EURUSD at 1.3603 low and 1.5932 low for the GBPUSD respectively has proven the investors prevailing market sentiments for the continuation of the US Dollar to move higher--another flight to quality safer bet versus the crisis in the Euro zone.

The defining analysis is based on the market's price behavior with a true reflection of the Price Page indicator which is indicative of the historical prices and price directional price extensions. As price extensions are derived from the average day & weekly trading range plus /minus the difference of the extended price higher/lower from the previous day/week's prices. And the number of days/weeks where such consolidation has occurred would be the measure of the directional trend higher/ lower.

FX Analytics - EUR/GBP/AUD

The dynamics of the currency market has now proven to be continuing where we have actually left off from May of this year. with the EURUSD pair; from a registered high last May at 1.4940 was a first signal of a Price & Trend Reversal followed by a series of weekly volatility until a corrective move from the middle of July through the 3rd week of August, which showed a wide trading range from a low of 1.3836 to 1.4550.

This corresponded with the US dollar weakness only until the last week of August. The irony of the matter, was that the signal for a continuing bearish directional trend can only be identified on an overall monthly chart formation. However, the back and forth fundamentals between the US and Europe has made it difficult to find a perfectly good timing for traders meeting a wider trading range each day that almost averaged between 150-250 pips on both directions of the market. Where short term trades would easily be taken out.

EURUSD Weekly Chart

With that said, the EURUSD & GBPUSD has finally gave way to the downside with more velocity setting the pace for the US Dollar to really get a new lifeline for its recovery. The 72.90 basis point proved to be quite supportive in spite of the several attempts reaching the 73.40/50 levels before the much awaited recovery working at the 77.38 basis point as of this writing. Although, support prices for both pairs have come to a slight corrective mode where certain buyers have emerged from the past couple of weeks price drop. This correction would be short-lived while the fundamentals this week would dictate the immediate price direction. The GBP & EU zone core consumer price index for August followed by Jobless claims, and the US retail sales for the earlier part of the week may provide some hints before the US University of Michigan confidence report would be coming out.

 

Aussie Dollar Daily Chart

Meanwhile, the Aussie dollar has dropped to its lower levels currently at the 1.0280 and would be re-attempting to reach its previous low parity levels again within the next couple of weeks ahead or even earlier. The technical candlestick formation for the AUDUSD thus far shows its bearish signal as indicated on the left hand figure.

The probability to reach parity levels would be attempted in the next trading days ahead as it levels off while the US Dollar Index continues its rally.

Highlights & Analysis

With the State of the Union Address on Tuesday, the President would surely emphasize on the administration's accomplishment for both the economy and jobs creation looking forward with the agenda agreed during the meeting with Hu Jintao of China. Deals made and with a new economic team that strives for improve competitiveness in the global market in exports and jobs creation will highlight a positive tone for the US Dollar. Although, the troubles in Ireland have placed some slight pressure on the Euro as of this trading session at the levels of 1.3572 corrective move.

However, the reports for the week would play a significant part as UK GDP expected to be at 2.6 vs. 2.7 would weigh on the GBPUSD with some influence between the cross rate of the EURGBP to be steadier from the previous week working at 0.8514; whereas the 0.8550-80 levels may find some resistance for the next corrective move thereafter.

On the other hand, the USDX would rely more from the coming FOMC meeting, Durable goods orders, Consumer Confidence from the University of Michigan and the Friday's US Gross Domestic Product. These reports would be dictating the directional trend for the USDX in spite of its technically motivated bearish chart formation both on a daily and weekly basis. With an opening week of 78.30bp would provide a week of wider fluctuations on both directions but would maintain a bearish tone as it has indeed been bid-off to the lows below the 78.65/80 levels. And its initial target of 78.05 would be re-tested but will find some bouncing support and fresh longs on these levels. Most of the bullish positions has been settled from smaller speculators found mostly from retail trades.

Please visit our complete analysis at: http://www.megatrade101.com