Daily Report: EUR/USD to Retest Record High ahead of FOMC Minutes
November 30th, 2007
U.S. crude oil futures ended lower for the fourth day in five on Friday, falling below $90 for the first time in five weeks as traders speculated that OPEC’s meeting next week would decide on an output increase. Worries that the weakening U.S. economy would curb oil demand also fueled pre-weekend selling, analysts said. On the New York Mercantile Exchange, January crude settled down $2.30, or 2.5%, at $88.71 a barrel, the lowest settlement since Oct. 24’s $87.10. It traded...
Action Insight | Written by ActionForex.com | Nov 20 07 07:41 GMT |
Forex Daily Technical Report EUR/USD to Retest Record High ahead of FOMC Minutes
Dollar edges lower today as markets await Fed minutes and housing data from US. EUR/USD looks set to retest record high of 1.4751 after more than a week of consolidation. Some volatility is seen in the Japanese yen, following initial weakness in Asian stock markets and subsequent rebound. But after all, the yen is still bounded in familiar range against dollar and Euro.
The minutes of FOMC meeting on Oct, where Fed cut rates by 25bps, will be released together with the adjusted projections for growth, inflation and unemployment. Note that Bernanke has already mentioned that there are some changes in the upcoming Fed communications and will take effect starting today. The main points are that headline PCE deflator projections will be included together with core PCE deflator. Forecasts horizon will also be extended to three years. Markets are currently pricing in over 80% of chance that Fed will cut rates by 25bps on Dec 11. However, recent Fedspeak suggested that some members though the cumulative 75bps cut this year is already enough to keep the economy growing moderately while recent data suggests increased risk of re-emergence of inflation. Today’s projections will the most important piece of information to wrap up the expectation for rate cuts and could trigger much volatility in the markets.
Housing starts is expected to deteriorate further to a 14 year low of 1.17M annualized rate with building permits dropping to 1.21m in Oct. However, yesterday’s NAHB housing market sentiments remained steady at 19 in Nov, same as revised reading in Oct. Upside surprise in today’s housing data would provide some relieve that the downturn in housing markets is at least not accelerating. Though, it is still premature to assume that the housing market has bottomed even in such case.
Another piece of important economic data today is Canadian CPI. USD/CAD continues to press 55 day EMA after dovish comments from BoC Dodge as well as retreat in oil prices. Dodge said yesterday that an interest rate cut is possible before of “risks” to economic growth, which is dragged down by global economy and volatility in financial markets. Headline CPI is expected to accelerate from 2.5% yoy to 2.8% yoy in Oct while core CPI is expected to remain steady at 2.0% yoy. EUR/USD
Daily Pivots: (S1) 1.4628; (P) 1.4657; (R1) 1.4693; «www.actionforex.com»
EUR/USD strengthens mildly into European session and at this point, intraday bias is mildly on the upside as long as 1.4632 minor support holds. Retest of 1.4751 high could be seen and decisive break will confirm that recent rally has resumed for next upside target of 1.5 psychological resistance. Below 1.4632 will suggest that EURUSD is still bounded in sideway consolidation and dip to 1.4519 could be seen. But downside is expected to be contained by 1.4441 cluster support (50% retracement of 1.4124 to 1.4751 at 1.4438) and bring another rally.
In the bigger picture, regardless of internal structure, medium term up trend from 1.1639 remains in force and is treated as resumption of long term up trend from 0.8223 (00 low) to 1.3668 (04 high), with subsequent correction ended at 1.1639. Such rally is expected to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004 which will overlap with 1.5 psychological resistance.
On the downside, firm break of 1.4438/41 cluster support will firstly indicate that rise from 1.4014 has completed Secondly, this will warn that whole rise from 1.3360 has also completed with a five wave rally to 1.4751, after meeting 100% projection of 1.3550 to 1.4281 from 1.4014 at 1.4745. In such case, a medium term top is likely in place. Lengthier consolidation could then be seen with a dip into 1.4014/4282 support zone before resuming the medium term up trend. But a break below 1.3851 is resistance turned support is needed to be the first signal that such rally has completed. Otherwise, medium term outlook remains bullish.
GBP/USD
Daily Pivots: (S1) 2.0445; (P) 2.0505; (R1) 2.0559; «www.actionforex.com»
Cable’s rebound from 2.0353 extends further today. With 4 hours MACD recovered above signal line, a short term bottom could be in place. At this point, intraday bias is mildly on the upside as long as 2.0456 minor support holds. Break of 2.0621 resistance will confirm such case and bring strong rebound towards 2.0845 resistance. But still, fall from 2.1161 should still resume as long as this resistance remains intact. On the downside, below 2.0456 will turn intraday flip intraday bias back to the downside for 2.0353 low first and then 2.0243 support.
In the bigger picture, medium term rally from 1.7047, regardless of internal structure, is treated as resumption of long term up trend from 1.3680 (01 low) to 1.9554 (04 high) with subsequent correction ended at 1.7047. Break of 61.8% projection level at 2.0677 now encourages further medium term rally to next projection target of 100% projection 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.2921. On the downside, decisive break of the medium term rising channel (2.0014) is needed to signal that such medium term rally has made a top. Otherwise, medium term outlook remains bullish.
USD/CHF
Daily Pivots: (S1) 1.1133; (P) 1.1167; (R1) 1.1184; «www.actionforex.com».
USD/CHF’s fall from 1.1891 extends further today. At this point, intraday bias remains on the downside as long as 1.1204 resistance holds and the current decline is expected extend further to next downside target of important medium term support at 1.1100 (95 low). On the upside, above 1.1204 will a short term bottom is possibly formed and bring recovery to 4 hours 55 EMA (now at 1.1259) and above. But upside should be limited below 1.1597 support turned resistance and bring another fall.
In the bigger picture, medium term down trend from 1.3283 (05 high) has now breached medium term support of 1.1288. The current preferred interpretation is that fall from 1.3282 was initially contained at 1.1919 and turned into sideway triangle consolidation that completed at 1.2467, where the medium term down trend resumed. With this interpretation, next downside target is 1.1100 clusters support (95 low and 100% projection of 1.3283 to 1.1919 from 1.2467 at 1.1103). But downside could be supported there initially on oversold condition and bring rebound. On the upside, even though a stronger rebound would be seen in case of a break of 1.1597 resistance, break of 1.1891 resistance is needed to indicate fall from 1.2467 has completed. Otherwise, medium term outlook remains bearish.
USD/JPY
Daily Pivots: (S1) 109.30; (P) 110.19; (R1) 110.64; «www.actionforex.com».
USD/JPY continues to consolidate within established range of 109.12 and 111.76 today. Further consolidation could still be seen and another recovery to 112.03/39 resistance zone could not be ruled out. But upside should be limited there and bring fall resumption. On the downside, below 109.78 will bring retest of 108.99 medium term support. Sustained break will confirm recent down trend has resumed for next downside target of 100% projection of 124.13 to 111.59 from 117.94 at 105.40 first.
In the bigger picture, the three wave structure of the up trend from 101.65 to 124.13 suggests that it’s corrective in nature. Such development flipped favor to the case that the rally from 101.65 could indeed be the final leg of a long term triangle formation (147.68, 101.22, 135.20, 101.65, 124.13). The break of falling trend line (147.68, 135.20) was merely a throwover in the last leg. Sustained trading below 108.99 low will add more credence to this case and put key long term support zone of 101.22/65 into focus. On the upside, break of 115.91 resistance is needed to be the first signal that fall from 124.13 has completed. Otherwise, medium term outlook remains bearish.
EUR/JPY
Daily Pivots: (S1) 160.18; (P) 161.63; (R1) 162.38; «www.actionforex.com»
EUR/JPY continues to consolidate within established range of 158.67 and 164.30 today. As discussed before, with EUR/JPY still kept below 164.00/26 cluster resistance (61.8% retracement of 167.62 to 158.67 at 164.26) and struggling to take out 55 days EMA, the case that rise from 149.27 has already completed at 167.72 is in favor. That is, price actions from 168.93 is developing into larger scale consolidation and the last falling leg is in progress. Below 160.44 will bring retest of 158.67 and break will indicate fall from 167.62 has resumed for 61.8% retracement of 149.27 to 167.72 at 156.31 first. On the other hand, sustained break of 164.00/26 cluster resistance will flip favors back to the case that price action from 167.72 is merely consolidation to rise from 149.27. and will bring retest of this high and then 168.93 key resistance.
In the bigger picture, break of trend line support (137.16, 150.75) confirmed that medium term rally rally from 130.60 has made an important medium term top at 168.93. However, subsequent sharp correction from there to 149.27 was supported by long term rising channel. Hence, long term up trend from 88.97 (00 low) remains intact. But break of 168.93 high is needed to confirm such up trend has resumed. However, sustained break of 149.27 low will also have the long term rising channel taken out, which in turn add much weight to the case that rise from 88.97 has indeed completed at 168.83 and bring much deeper medium term decline.
Forex News Digest
«c.moreover.com»
Tue, 20 Nov 2007 04:29:00 GMT from CNBC
«c.moreover.com»
Tue, 20 Nov 2007 04:24:00 GMT from Gulf News
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Tue, 20 Nov 2007 03:57:00 GMT from NEWS.com.au
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Tue, 20 Nov 2007 03:30:00 GMT from Yahoo! India
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Tue, 20 Nov 2007 03:19:00 GMT from Shanghai Daily
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
07:00 EUR Germany PPI M/M Oct 0.40% 0.30% 0.20%
07:00 EUR Germany PPI Y/Y Oct 1.70% 1.60% 1.50%
07:15 CHF Swiss Trade balance (chf) Oct 1.558M 1500M 1799M 1708M
09:30 GBP U.K. PSNCR M/M Oct -8.25 B 8.964B
11:00 GBP U.K. CBI distribution trade Nov -9 -6
12:00 CAD Canada CPI core M/M Oct 0.10% 0.40%
12:00 CAD Canada CPI core Y/Y Oct 2.00% 2.00%
12:00 CAD Canada CPI M/M Oct 0.20% 0.20%
12:00 CAD Canada CPI Y/Y Oct 2.80% 2.50%
13:30 USD U.S. Building permits Oct 1.21M 1.261M
13:30 USD U.S. Building permits M/M Oct N/A -4.60%
13:30 USD U.S. Housing starts Oct 1.170 M 1.191M
13:30 USD U.S. Housing starts M/M Oct N/A -10.20%
19:00 USD Minutes of FOMC Meeting
Canada Post is planning to cancel home delivery to nearly half of its customers along some rural routes in Quebec’s Eastern Townships because of road safety concerns. The postal agency is evaluating the safety of mail routes across Canada, after three carriers died and 37 were injured while making deliveries since 2005. Nearly 40 per cent of the routes examined in the Eastern Townships have failed the safety evaluation, because they present a hazard to carriers forced to stop on winding...