Wave analysis and forecast of 27.03 – 03.04

EUR/USD Wave analysis and forecast of 27.03 – 03.04: Downtrend continues.Estimated pivot point is at a level of 1.1050.

My opinion: Sell the pair from correction below the level of 1.1050 with a target at 1.04 – 1.03.

Alternative scenario: Breakdown of the level 1.1050 and consolidation above will allow the pair to continue the rise up to levels 1.13 – 1.14.

Analysis: The fifth final wave continues to develop within bearish trend. Apparently, a local correction in a form of fourth wave of junior level (iv) has just finished and the final fifth wave (v) has started to form. The level 1.1050 is critical in this scenario. If the presumption is correct, the pair will logically continue to drop to a level of 1.03.



GBP/USD Wave analysis and forecast of 27.03 – 03.04: The pair is under correction, but growth might be resumed.Estimated pivot point is at a level of 1.4628.

My opinion: Wait for completion of correction and buy the pair above the level of 1.4628 with a target at about 1.5220 – 1.54.

Alternative scenario: Consolidation below the level of 1.4628 will allow the pair to continue declining to the levels of 1.45 – 1.44 within a downtrend.

Analysis: Presumably, the fifth final wave within long-term bearish impetus has already formed. The counter-trend impetus (i) has formed by now and a local correction in a form of wave (ii) is nearing completion. The level of 1.4628 is critical in this scenario. If this assumption is correct, the pair will resume growth. 





AUD/USD Wave analysis and forecast of 27.03 – 03.04: The pair is expected to rise due to correction.Estimated pivot point is at a level of 0.77.My opinion: Buy the pair from corrections above the level of 0.77 with a target at 0.7986. In case of breakdown and consolidation below the level of 0.77, the selling target can be set at 0.7580 – 0.7480.

Alternative scenario: Breakdown and consolidation below the level of 0.77 will allow the pair to continue declining to the levels 0.7580 – 0.7480.

Analysis: Apparently, a bullish correction in a form of fourth wave (4) continues to form. A wedge is forming now, apparently, with the fourth wave of junior level (iv) nearing completion within. If the presumption is correct, after correction, the pair will continue to grow to a level of 0.7986. The level 0.77 is critical in this scenario.



USD/JPY Wave analysis and forecast of 27.03 – 03.04: The pair is expected to fall due to correction.Estimated pivot point is at a level of 121.96.

My opinion: Sell the pair from correction below the level of 121.96 with a target at 116.80. Buy the pair with a target at 124.00 in case the level 121.96 is broken.

Alternative scenario: Breakdown and consolidation below the level of 121.96 will allow the pair to continue rising to a level of 124.00.

Analysis: Apparently, a bullish impetus in the third wave 3 has finished on the daily time-frame by now. The fourth wave 4 is forming locally. If this assumption is correct and the price does not break the critical level 121.96, the pair will continue to decline to a level of 116.80.



USD/СAD Wave analysis and forecast of for 27.03 – 03.04: The pair is expected to grow.Estimated pivot point is at a level of 1.24.

My opinion: Buy above the level of 1.24 with a target at 1.30.

Alternative scenario: Breakout and consolidation below the level of 1.24 will allow the pair to continue declining to the levels of 1.22 - 1.20.

Analysis: Supposedly, a local bearish correction in a form of wave iv has finished developing. Apparently, the fifth wave starts to form locally. If the assumption is correct, the pair will logically rise to a level of 1.30. The level of 1.24 is critical in this scenario as its breakdown will result in a further decline of the pair. 

Dollar trims losses after upbeat U.S. jobless claims

The dollar trimmed losses against a basket of other major currencies on Thursday, as data showing that the number of people filing unemployment assistance in the U.S. last week fell to a five-week low sparked optimism over the strength of the job market.

In a report, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending March 21 declined by 9,000 to 282,000 from the previous week’s total of 291,000.

Analysts had expected initial jobless claims to fall by 1,000 to 290,000 last week.

The dollar has been under pressure since the Federal Reserve indicated last week that it may raise interest rates more gradually than markets had expected.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.08% to 97.00, off session lows of 96.32.

EUR/USD was steady at 1.0974, down from three-week highs of to 1.1049 hit earlier in the day.

The euro found support earlier, after data showed that the Gfk German consumer climate index was set to rise to 10.0 in April from a reading of 9.7 the previous month, compared to expectations for an uptick to 9.8.

But investors remained cautious as Greece failed in a bid on Wednesday to secure a quick cash payment from the euro zone rescue fund to help stave off potential bankruptcy next month.

Athens had appealed for the European Financial Stability Facility to return €1.2 billion it said it had overpaid when it transferred bonds intended for bank recapitalization this month.

The Greek government is expected to present a detailed list of proposed reforms to its eurozone partners by next Monday.

The pound was also little changed, with GBP/USD at 1.4888, pulling away from a one-week high of 1.4994.

The U.K. Office for National Statistics earlier reported that retail sales increased 0.7% last month, above forecasts for a gain of 0.4%.

Core retail sales, which exclude automobile sales, rose 0.7% last month, compared to forecasts for a 0.4% rise, after falling 0.3% in January.

Separately, the Confederation of British Industry said that its index of realized sales rose to 18 in March from 1 the previous month, exceeding expectations for a reading of 15.

Elsewhere, the dollar was still lower against the yen and the Swiss franc, with USD/JPY down 0.46% to 118.94 and with USD/CHF retreating 0.42% to 0.9556.

The Australian, New Zealand and Canadian dollars pared earlier gains but remained broadly stronger, with AUD/USD adding 0.18% to 0.7859 and NZD/USD rising 0.20% to 0.7622, while USD/CAD sliding 0.53% to trade at 1.2452.

Forex - Japanese yen flat after minutes show concern on consumer prices

The yen was flat after February Bank of Japan board minutes released on Friday cast concern on the trend in consumer prices.

elsewhere, the central bank chief in Australia is due to speak and investors are focused on continued interpretation of the U.S. Federal Reserve.

USD/JPY traded at 120.81, flat, while AUD/USD changed hands at 0.7650, also flat.EUR/USD traded at 1.0659, up 0.01%.

Consumer prices may flatten and real wages may also drop as a sharp drop in global oil prices takes its toll, the Bank of Japan said Friday in minutes released from its February 17-18 board meeting.

The remarks suggest continued concern over hitting a target of sustained 2% inflation this fiscal year even as economic growth looks more promising, bank board members said, adding that the pace of buying government bonds to support easing needs to be assessed.

"Some members pointed out that volatility in the JGB market had increased recently," said the minutes.

They also showed, "A few members, noting that this reflected adjustment in market participants' views on future interest rates, which had been tilted somewhat too much to the downside, expressed the view that QQE continued to steadily exert its intended effects as the yield curve remained at a low level."

Later RBA Governor Glenn Stevens gives a speech at an American Chamber of Commerce in Australia (AMCHAM) luncheon an Melbourne (1310 AEDT, 0210 GMT).

Overnight, the U.S. dollar rebounded against the euro on Thursday, one day after experiencing its largest one-day drop in more than six years amid indications from the Federal Reserve that it could raise interest rates by June.

On Wednesday, Fed chair Janet Yellen said the Federal Open Market Committee will remove a reference to remaining patient as it decides on the timing of hiking interest rates above current levels of near 0%.

The euro is down by more than 10% against its American counterpart this year, as the start of its highly-anticipated bond buying program coincided with expectations of tightening by the Fed.

The U.S. Dollar Index, which measures the strength of the greenback against a basket of six other major currencies, was quoted at 99.42, down 0.03% in Asia.

In Brussels, there was little progress in talks between Greece and its euro zone creditors aimed at settling the reform measures needed by Athens to secure a critical bailout package.

If a resolution is not reached by Thursday night, the next opportunity for an accord will be on Monday afternoon when Greece prime minister Alexis Tsipras is scheduled to meet with Germany chancellor Angela Merkel in Berlin.

While the Fed appeared to be hawkish with the removal of patience, Yellen appeared to strike a dovish tone with forecasts for weaker inflation and GDP growth.

The Fed expects Real GDP to grow between 2.1 and 3.1% for the remainder of 2015, while it predicted inflation of 0.6% to 0.8% by the end of the year. For 2016, the Fed projects that inflation will be between 1.7% and 1.9%.

Last month in testimony before Congress, Yellen said that the Fed wanted to see inflation move toward its target goal of 2% before it raised interest rates.

In spite of the revisions, Yellen went out of her way to note that overall the forecast was not weak. She pointed to improvements in the labor market, forecasts for "above trend growth," and estimates of lowering unemployment to 5% by year's end to underscore her optimism.

“We do see considerable underlying strength in the US economy in spite of what looks like a weaker first quarter,"

Daily Strategy March 19th, 2015

Technical Analysis: EUR/USD: Our preference: Bullish setups within 1.0680 – 1.0815 with targets @ 1.0936 & 1.1046 in extension. Alternative scenario: Below 1.0680, watch for bearish setups with 1.0579 as target and 1.0505 in extension. Comment: EUR/USD has pulled back into the confluence zone.  Note that hourly stochastic is oversold, RSI is falling from the overbought area. GOLD: Our preference: Bullish setups on a pull-back move to within 1159.60 – 1167.10 with targets 1169.44 & 1177.73 in extension. Alternative scenario: Below 1159.60 watch for bearish setups with 1156.01 as target and 1150.88 in extension. Comment: Gold price currently is in bullish bias. Note that 20 MA has crossed above 50 MA are falling on hourly chart. Note also that hourly stochastic has crossed down, RSI is overbought.

Dollar remains broadly lower after U.S. housing data

Investing.com - The dollar remained mostly lower against a basket of other major currencies on Tuesday, after the release of downbeat U.S. housing starts data as investors awaited the conclusion of the Federal Reserve's policy meeting on Wednesday.

In a report, the U.S. Commerce Department said that U.S. housing starts declined by 17.0% last month to hit 897,000 units from January’s total of 1.081 million units, worse than expectations for a decline of 2.4% to 1.049 million.

                      

The report also showed that the number of building permits issued last month increased by 3.0% to 1.092 million units from January’s total of 1.060 million. Analysts expected building permits to fall by 0.5% to 1.065 million units in February.

Market participants were eyeing Wednesday’s Fed statement to see if it would drop its reference to being patient before raising rates and signal that it is ready to hike rates depending on economic data.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.38% to 99.76, still close to Friday's highs of 100.78, the strongest since September 2003.

EUR/USD climbed 0.61% to 1.0632.

The euro found support after the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 1.8 points to 54.8 this month from February’s reading of 53.0. Analysts had expected the index to improve by 5.2 points to 58.2 in March.

The index of euro zone economic sentiment increased to a 13-month high of 62.4 in March from 52.7 in February, above forecasts for a gain to 58.2.

A separate report showed that euro zone consumer price inflation fell 0.3% last month, in line with expectations and unchanged from a preliminary estimate. Euro zone inflation declined by 0.6% in January.

The rate remains firmly below the European Central Bank's target of near but just below 2%.

The dollar slipped lower against the yen, with USD/JPY down 0.11% at 121.20. Earlier Tuesday, the Bank of Japan maintained its stimulus program but cut its inflation outlook, citing temporary declines in oil prices.

Japan's annual core consumer inflation slowed to 0.2% in January, well below the BOJ's 2% target.

Meanwhile, the dollar rose against the pound, with GBP/USD down 0.48% to 1.4759 and declined against the Swiss franc, with USD/CHF sliding 0.49% to 1.0025.

The Australian, New Zealand and Canadian dollars were little changed, with AUD/USD at 0.7645 and NZD/USD at 0.7364, while USD/CAD stood at 1.2772.

Statistics Canada reported on Tuesday that manufacturing sales dropped 1.7% in January, compared to expectations for a 1.0% decline, after a 1.6% rise the previous month.

Euro Trading Higher Ahead Of The ECB President’s Speech

On Friday, the EUR declined 1.35% against the USD and closed at 1.0483.

In economic news, Germany’s wholesale price index rebounded 0.5% MoM in February, following a drop of 0.4% in January.


In the US, the Michigan preliminary consumer confidence index surprisingly fell to a reading of 91.2 in March, reversing market expectations of an advance to a level of 95.7. The index had registered a reading of 95.4 in the preceding month.

In the Asian session, at GMT0400, the pair is trading at 1.0519, with the EUR trading 0.34% higher from Friday’s close.

The pair is expected to find support at 1.0443, and a fall through could take it to the next support level of 1.0366. The pair is expected to find its first resistance at 1.0615, and a rise through could take it to the next resistance level of 1.0711.

Trading trends in the pair today are expected to be determined by the ECB Chief, Mario Draghi’s speech, scheduled later today.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

Dollar Momentum Takes On A Life Of Its Own

The dollar's advance has accelerated since the end of February.The momentum has surprised everyone. Pullbacks continue to be shallow. The move appears to have taken on a life of its own. Consider last week, as the euro slumped more than 3%, sterling more than 2%, and the dollar-bloc more than 1%. US yields fell sharply.

The US 10-Year yield fell 15 bp. It has completely retraced the increase spurred by the strong jobs data on March 6. The yield on the December Fed funds futures contract fell 7 bp to 51.5 bp. It settled at 49.5 bp the day before the employment report. 

The magnitude of the slide in the currencies (leaving aside the yen) has extended the technical condition. If support is to designate the price at which demand is forthcoming, it is difficult to meaningfully discuss technical support when many of the major currencies have not seen these levels in many years. 

If resistance denotes where supply is triggered, the technical indicators may be more helpful here. Euro resistance is seen in the $1.0640-$1.0720 area. Aggressive bears may try their hand near $1.0600, partly on ideas that euro bounces remain limited in time and magnitude. 

Given the psychological importance of parity (seemingly more so than the other currencies, including the Swiss franc, the Canadian dollar and the Australian dollar), it seems reasonable to expect some profit-taking before parity is seen. A bounce before, say from the $1.0150-$1.0200 area would not be surprising. 

Sterling resistance is seen in the $1.4925-50 area. Sterling fell to almost $1.4700. Support is elusive. Bank of England Governor Carney seemed to reverse his earlier signals and encouraged the market to push out expectations for when he will deliver the first rate hike. The national election in early May is very much on investors' minds. The polls show no clear outcome, which boosts uncertainty and volatility. 

For the first time since 2007, the dollar spent the entire week above JPY120. Despite the potential breakout, technical indicators are not generating a strong signal. As the fiscal year-end approaches at the end of the month, we see some risk that the dollar pulls back. The JPY119.80-JPY120.00 may offer initial support. 

The US dollar broke out of the triangle pattern we have been monitoring against the Canadian dollar. Support now is seen the steep trend line drawn off the March 5 low. It is found just below CAD1.2700 at the start of the new week. The Australian dollar needs to establish a foothold in the $0.7700-$0.7740 range to stabilize the tone. Disappointing US retail sales and the decline in oil prices left little resistance to the tug from the declining yields in Europe. 

The May crude oil futures contract has surpassed April in open interest. It fell over $4 a barrel last week. After consolidating in February and early March, oil prices appear to be resuming their decline. The May contract hit a low of $45.52 in late-January. This is unlikely to offer serious support. A move toward $40 seems likely, but we see the risk extending to the late-2008/early 2009 lows in the $32.50-$33.70 area. 

The S&P 500 lost about 1.25% last week. The technical tone deteriorated. However, a little shelf has been carved out with four session lows above 2040. The 38.2% retracement of the rally off the early-February low is found just below 2034. Key support is seen in the 1970-1980 area. Since last October, the end of S&P 500 pullbacks have been signaled by the price action, often in the form of a gap higher opening or one day reversal patterns. None exists now, but watch for one in the coming days to signal the end of this correction.

EUR/USD tumbles over 1% as risk sentiment wanes

The euro tumbled over 1% against the U.S. dollar on Friday, to trade close to 12-year lows as the release of downbeat U.S. economic reports dampened risk sentiment and as concerns over the outcome of Greece's bailout talks persisted.

EUR/USD hit 1.0504 during U.S. morning trade, the session low; the pair subsequently consolidated at 1.0517 down 1.10%.

The pair was likely to find support at 1.0493, Thursday's low and a 12-year low and resistance at 1.0717, the high of March 11.

The U.S. Department of Labor reported that producer prices fell 0.5% last month, confounding expectations for a 0.3% gain, after a 0.8% decline in January.

Core producer prices, which exclude food, energy and trade, also slipped 0.5% in February, compared to expectations for a 0.1% rise, after a 0.1% downtick the previous month.

Separately, the University of Michigan said that its consumer sentiment index fell to a four-month low of 91.2 this month from 95.4 in February, disappointing expectations for a rise to 95.5.

The University of Michigan also said that its inflation expectations for the next 12 months rose to 3.0% in March from 2.8% last month.

Meanwhile, the euro remained under pressure after the European Central Bank began purchasing securities on Monday as part of an asset-buying program amounting to €60 billion a month.

Concerns over the situation in Greece also weighed, as the eurogroup of finance ministers continued talks in Brussels to discuss a reform package put forward by Greece as part of its bailout review.

Greek Prime Minister Alexis Tsipras said on Thursday that the country will be able to fulfill its financial responsibilities, even if creditors don't a pay a tranche of aid.

The euro was steady against the pound, with EUR/GBP at 0.7143.

GOLD & EUR-USD DAILY REPORT 11/03/2015

Gold fell to a new low under 1167.30. This development confirms that wave 3 of (5) is in progress and opens the door to gold staying weak to considerably lower levels. See the weekly chart for the longer-term perspective.

[Approaching a bottom] Key Level: 1.1217

EURUSD continued lower Tuesday and closing on its lows remains vulnerable. That said, keep in mind that the current decline likely represents a terminal thrust from a triangle, a finishing fifth wave. It should bring the larger decline to an end. A rally in five waves at small degree would offer the first hint a bottom has been established.

The increased chatter in the financial press about the strength of the dollar and the resulting expectation that EURUSD will trade at parity is another reason to believe the decline from May 2014 is mature. The Daily Sentiment Index is once again in single digits. Are there any sellers left?

ESRB, European Systemic Risk Board

PRESS RELEASE

10 March 2015

ESRB publishes report on regulatory treatment of sovereign exposures

Today the European Systemic Risk Board (ESRB) has published a report on the regulatory treatment of sovereign exposures in the books of banks and insurance corporations. These exposures have been seen by many as a source of fragility in the recent and prolonged episodes of financial stress, while others have seen them as a factor of crisis mitigation. According to the ESRB, the current regulatory framework of sovereign exposures needs to be re-examined at a global level.

The report describes the regulatory treatment of sovereign exposures in the European Union, analyses the incentives that it may create, provides data measuring those exposures and offers analytical explanations of recent developments.

The report argues that, from a macro-prudential point of view, the current regulatory framework may have led to excessive investment by financial institutions in government debt. The report recognises the difficulty in reforming the existing framework without generating potential instability in sovereign debt markets. It examines a set of possible options which may be considered, both in banking and insurance, and offers a detailed discussion of the pros and cons.

For media enquiries please call William Lelieveldt on +49 69 1344 7316.

EUR/USD remains a sell on spikes

“The EUR/USD pair bounces from its lowest level in 12 years, having been so far as low as 1.0721, on the back of escalating concerns related to Greek debt woes.”

“The dollar's latest short term slide followed a headline coming from the US White House advisor, expressing concerns over dollar strength affecting economic growth.”

“Nevertheless, temporal bounces are seen as selling opportunities in the pair, already retreating from the high of the spike at 1.0780, now the immediate resistance.”

“Technically the 1 hour chart shows that the technical indicators are aiming to bounce from extreme oversold levels, albeit the pair develops well below a bearish 20 SMA.”

“In the 4 hours chart the technical indicators also head north, but remain in extreme oversold levels, as the RSI holds around 23.”

“Support levels: 1.0725 1.0690 1.0660”

“Resistance levels: 1.0780 1.0815 1.0850”

US stocks fall more than 1%

The Dow Jones Industrial Average dropped 219 points, or 1.2%, to 17,778. The S&P 500 index fell 23 points, or 1.1%, to 2,056, and the Nasdaq Composite lost 64 points, or 1.30%, to 4,878. 

Strong US nonfarm payrolls published last Friday fueled prospects the Fed could raise interest rates sometime mid-year, boosting the greenback across the board and weighing on stocks and commodities. 

The US dollar index reached an 11-year high of 98.50 while EUR/USD fell to its lowest level in 12 years at 1.0725 on Tuesday.

Meanwhile renewed concerns about Greece debt situation also depressed risk sentiment and stocks across the globe.

Forex - Aussie weakens after NAB survey, China prices data disappoints

The Australian dollar fell sharply on Tuesday as a business survey and price data from China disappointed on demand prospects.

Producer prices year-on-year for February fell 4.8%, more than the 4.3% decline expected. But consumer prices year-on-year for the same month rose 1.4%, faster than the 0.9% gain expected.

A mixed picture of inflation in February no doubt will fuel the debate over deflation and future rate cuts. CPI sharply beat market expectations and January's CPI could be the bottom of the current cycle. thereby easing pressure for the People's Bank of China to cut rates further.

The NAB February business conditions survey stayed at plus2 in February, while business confidence fell to zero from plus-3.

The fall in confidence is disappointing but not entirely surprising given news about the RBA cash-rate cut in February mostly talked of a weakening economy. This is in contrast to the RBA's admission it decided it was appropriate to provide additional support "not because things had turned for the worse but rather because of the lack of compelling signs that economic growth was picking up as was earlier expected."

AUD/USD traded at 0.7643, down 0.82%, while USD/JPY changed hands at 121.89, up 0.61% and EUR/USD fell 0.54% to 1.0794 as Greece talks continue.

Overnight, the dollar remained lower against a basket of other major currencies on Monday, holding just under a 11-1/2 year peak as investors locked in profits from Friday's rally sparked robust U.S. jobs data.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 98.15, up 0.54%.

Friday’s stronger-than-expected U.S. employment report solidified expectations that the Federal Reserve will raise interest rates around the middle of this year, boosting the dollar.

The euro remained under pressure as the eurogroup of euro zone finance ministers prepared to hold talks to discuss a reform package put forward by Greece as part of its bailout review.

Last month Athens reached a temporary agreement with its lenders to extend its bailout by four months, but the reform package must be signed off by creditors before it can access further financial aid.

Ahead of the talks eurogroup head Jeroen Dijsselbloem warned that Greece must stop wasting time and start developing its reform package.

Also Monday, the European Central Bank confirmed that it started asset purchases under its quantitative easing program.