March 11, 2011 major currencies
Following are expected trading ranges and outlooks for nine major currency pairs today:
(Ranges are calculated using recent high and lows, information on the placement of option strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)
EUR/USD to trade with bearish bias. Undermined by negative global risk sentiment, Moody's downgrade of Spain's sovereign debt by one notch to Aa2 with a negative outlook; worries that today''''s gathering of euro-zone leaders in Brussels will under deliver on effective measures for dealing with region's sovereign debt crisis as fiscally stronger members such as Germany, the Netherlands and Finland face political pressures at home not to extend further aid to debt-laden peripheral nations; expectations that Portugal will seek EU/IMF bailout and Greece will restructure its debt obligations. But EUR/USD losses tempered by divergent ECB/U.S. Fed monetary policies, increased expectations for April ECB rate hike, position adjustments before weekend. Data focus: 0700 GMT German February WPI, February CPI, 4Q labour cost index. EUR/USD daily chart negative-biased as stochastics falling from overbought; MACD staging bearish crossover against its exponential moving average. Support at 1.3773 (yesterday's low); breach would target 1.3741 (March 2 low), then 1.3709-1.3701 band (Feb. 28 low-Feb. 24 low), 1.3645 (Feb. 23 low) and 1.3547 (55-day moving average). Resistance at 1.3850 (hourly chart), then at 1.3925 (yesterday's high); breach would temper near-term negative outlook, exposing upside to 1.3942 (Wednesday's high), then 1.3993 (Tuesday's high), 1.4037 (Monday's high) and 1.4281 (Nov. 4 top).
USD/JPY to consolidate amid broad flows to safe-haven USD and JPY (ICE spot dollar index last 77.23 vs 76.71 early Thursday) as global risk sentiment deteriorates (VIX fear gauge rose 8.21% to 21.88), U.S. stocks plunged overnight (DJIA down 1.87%) on unrest in Saudi Arabia, concerns over slowing global economic growth after surprise Chinese February $7.3 billion trade deficit and downward revision of Japan''''s 4Q GDP to minus 1.3% from initial estimate of minus 1.1%; larger-than-expected 26,000 increase in latest U.S. weekly jobless claims (vs +7,000 forecast), wider-than-expected U.S. January trade deficit of $46.3 billion (vs forecast for $41.5 billion deficit); increased worries over euro zone''''s sovereign debt crisis after Moody''''s cut Spain''''s debt rating. USD/JPY undermined by unwinding of JPY-funded carry trades as risk appetite falls, lower U.S. Treasury yields (10-year down 10 bps), Japan exporter sales, yen repatriation flows, worries over more violence in Saudi Arabia as opposition planned 'day of rage' protests today and Riyadh warned it wouldn''''t tolerate demonstrations. But USD/JPY downside limited by USD demand for Japan import settlements, concerns about Japan government debt, position adjustments before weekend. Yen crosses vulnerable to 0200 GMT China February CPI, PPI, retail sales, fixed assets investment, industrial output data. Data focus: 1330 GMT U.S. February retail sales (forecast +1.2% vs +0.3% last), 1455 GMT U.S. March University of Michigan consumer sentiment index (forecast 75.0), 1500 GMT U.S. January business inventories, 2100 GMT Fed''''s Dudley speaks on the U.S. economy. USD/JPY daily chart still positive-biased as MACD & stochastics bullish. Resistance at 83.17 (yesterday''''s high); breach would expose upside to 83.56 (Feb. 22 high), then 83.73 (Feb. 17 high), 83.98 (Feb. 16 reaction high) and 84.32 (200-day moving average). Support at 82.67 (yesterday''''s low), then at 82.54 (Wednesday''''s low); breach would target 82.19 (Tuesday''''s low), then 81.93 (Monday''''s low), 81.69 (March 3 low) and 81.55 (March 2 reaction low).
NZD/USD to consolidate with bearish bias. Undermined by smaller NZD-USD yield advantage after RBNZ yesterday slashed rates by 50 bps to 2.5%, negative global risk sentiment, weaker commodity prices, worries over slowdown in China growth. But NZD/USD losses tempered by position adjustments before weekend. Daily chart negative-biased as MACD bearish, stochastics stays suppressed at oversold, suggesting sideways or lower NZD/USD trading near-term. Support at 0.7318 (yesterday''''s low); breach would target 0.7301 (Sept. 30 low), then 0.7259 (Sept, 23 low), 0.7211 (Sept. 16 low) and 0.7155 (Sept. 8 low). Resistance at 0.7378 (yesterday''''s high); breach would temper near-term negative outlook, exposing upside to 0.7417 (Tuesday''''s high), then 0.7494 (March 3 high), 0.7534 (March 1 high) and 0.7552 (Feb. 28 reaction).
AUD/USD to trade lower; vulnerable to 0200 GMT China data. AUD/USD undermined by negative global risk sentiment, weaker commodity prices (CRB spot index ended down 5.78 yesterday at 354.45), concern over slower China growth. But AUD/USD losses tempered by AUD-USD interest differential, position adjustments before weekend. Daily chart negative-biased as MACD & stochastics bearish; bearish parabolic stop-and-reverse signal hit at 1.0041 yesterday; 5-day moving average staged bearish crossover against 15-day MA. Support at 0.9988 (yesterday''''s low); breach would target 0.9973-0.9963 band (100-day moving average - Feb. 22 low), then 0.9939 (Feb. 15 low), 0.9864 (Jan. 31 low) and 0.9828 (Jan. 20 low). Resistance at 1.0052 (hourly chart), then at 1.0117 (yesterday''''s high); breach would temper near-term negative outlook, targeting 1.0132-1.0134 (Wednesday''''s high-Tuesday''''s high), then 1.0185-1.0189 band (Monday''''s high-March 3 high) and 1.0201 (March 1 high).
USD/CHF to consolidate. Supported by broadly stronger USD undertone, expectations of SNB''''s CHF-selling intervention. But USD/CHF gains tempered by flows to safe-haven CHF amid worries over political unrest across the Middle East and North Africa; unwinding of CHF-funded carry trades as risk appetite falls; CHF demand on weaker EUR/CHF as euro-zone sovereign debt worries weigh on the cross; position adjustments before weekend. Daily chart positive-biased as stochastics rising from oversold; MACD staged bullish crossover against its exponential moving average. Resistance at 0.9362-0.9369 band (yesterday''''s high-Wednesday''''s high); breach would target 0.9392 (Feb. 23 high), then 0.9421 (38.2% Fibonacci correction of 0.9775-0.9202 Feb. 11-March 2 decline), 0.9489 (50% correction, near 55-day moving average), 0.9505 (Feb. 22 high) and 0.9538 (Feb. 18 high). Support at 0.9277 (yesterday''''s low), then at 0.9264-0.9256 band (Wednesday''''s low-Tuesday''''s low); breach would expose downside to 0.9233 (Monday''''s low), then 0.9220 (March 4 low), 0.9202 (record low hit March 2) and psychological 0.9100 level.
GBP/USD to trade lower. GBP/USD eased yesterday after BOE left its policy rate unchanged at record low 0.5% and its gilt-purchase program at GBP200 billion as widely anticipated. Pair undermined by negative global risk sentiment, concerns about negative impact of UK government austerity measures on economy. But GBP/USD losses tempered by speculation of BOE rate hike in coming months to rein in rising inflation, position adjustments before weekend. GBP sentiment also soothed by stronger-than-expected 6.8% annual growth in UK January manufacturing output (vs +6.5% forecast) which is fastest pace since November 1994. Data focus: 0930 GMT UK January CML regulated mortgage survey, February producer prices. Daily chart negative-biased as MACD & stochastics bearish; 5-day moving average staged bearish crossover against 15-day MA. Support at 1.6036-1.6029 band (yesterday''''s low-Feb. 25 low); breach would expose downside to 1.5985 (Feb. 16 low), then 1.5962 (Feb. 11 reaction low), 1.5951 (55-day moving average), 1.5890 (100-day moving average) and 1.5821 (Jan. 31 low). Resistance at 1.6126 (hourly chart), then at 1.6216 (yesterday''''s high); breach would temper near-term negative outlook, exposing upside to 1.6243 (Wednesday''''s high), then 1.6342 (Monday''''s high), 1.6457 (Jan. 19, 2010 reaction high) and psychological 1.6500 level.
USD/CAD to trade with bullish bias. Underpinned by negative global risk sentiment; weaker commodity and oil prices; Canadian January trade surplus of just C$116 million (well below forecast for C$2.6 billion surplus). But USD/CAD gains tempered by position adjustments before weekend. Data focus: 1200 GMT Canada February labor force survey. USD/CAD daily chart positive-biased as stochastics turned bullish at oversold; MACD staging bullish crossover against its exponential moving average. Resistance at 0.9766-0.9775 band (yesterday''''s high-March 2 high); breach would target 0.9789 (Feb. 28 high), then 0.9813 (previous base set Feb. 21), 0.9885 (55-day moving average) and 0.9901 (Feb. 24 high). Support at 0.9725 (hourly chart), then at 0.9680 (yesterday''''s low); breach would temper near-term positive outlook, targeting 0.9664 (Wednesday''''s low), then psychological 0.9600 and 0.9500 levels.
EUR/JPY - to trade with risks skewed lower. Cross hurt by negative global risk sentiment, heightened worries over euro-zone sovereign debt, yen repatriation flows, Japan exporter sales. But EUR/JPY losses tempered by increased expectations for April ECB rate hike, Japan importer demand, position adjustments before weekend. EUR/JPY daily chart mixed as MACD bullish, but stochastics bearish near overbought. Support at 114.19 (yesterday's low); breach would expose downside to 114.00 (previous cap set Jan. 27), then 113.07 (March 3 low) and 112.51 (March 2 low). Resistance at 114.86 (hourly chart), then at 115.27 (yesterday's high); breach would expose upside to 115.98-116.00 (March 4 high-psychological level), then psychological 117 & 118 levels.
EUR/GBP - to consolidate. Daily chart mixed as MACD bullish, but stochastics bearish at overbought. Resistance at 0.8608 (yesterday's high, matching Wednesday's high), then at 0.8637 (Tuesday's high); breach would target 0.8653 (Jan. 28 high), then 0.8672 (Jan. 26 swing high) and 0.8750 (downtrend resistance line from Dec. 30, 2008 high of 0.9805). Support at 0.8529 (yesterday's low); breach would expose downside to 0.8510 (100-day moving average), then 0.8476 (March 3 low) and 0.8458 (March 1 reaction low).
Following are expected trading ranges and outlooks for nine major currency pairs today:
Immediate Range Larger Range
USD/JPY 82.67-83.17 82.54-83.56
EUR/USD 1.3773-1.3850 1.3741-1.3925
AUD/USD 0.9988-1.0052 0.9963-1.0117
NZD/USD 0.7318-0.7378 0.7301-0.7417
GBP/USD 1.6029-1.6126 1.5985-1.6216
USD/CHF 0.9277-0.9369 0.9256-0.9392
USD/CAD 0.9725-0.9775 0.9680-0.9789
EUR/JPY 114.19-114.86 114.00-115.27
EUR/GBP 0.8529-0.8608 0.8510-0.8637
(Ranges are calculated using recent high and lows, information on the placement of option strikes, and technical analysis - Fibonacci levels, trendlines and moving averages.)
EUR/USD to trade with bearish bias. Undermined by negative global risk sentiment, Moody's downgrade of Spain's sovereign debt by one notch to Aa2 with a negative outlook; worries that today''''s gathering of euro-zone leaders in Brussels will under deliver on effective measures for dealing with region's sovereign debt crisis as fiscally stronger members such as Germany, the Netherlands and Finland face political pressures at home not to extend further aid to debt-laden peripheral nations; expectations that Portugal will seek EU/IMF bailout and Greece will restructure its debt obligations. But EUR/USD losses tempered by divergent ECB/U.S. Fed monetary policies, increased expectations for April ECB rate hike, position adjustments before weekend. Data focus: 0700 GMT German February WPI, February CPI, 4Q labour cost index. EUR/USD daily chart negative-biased as stochastics falling from overbought; MACD staging bearish crossover against its exponential moving average. Support at 1.3773 (yesterday's low); breach would target 1.3741 (March 2 low), then 1.3709-1.3701 band (Feb. 28 low-Feb. 24 low), 1.3645 (Feb. 23 low) and 1.3547 (55-day moving average). Resistance at 1.3850 (hourly chart), then at 1.3925 (yesterday's high); breach would temper near-term negative outlook, exposing upside to 1.3942 (Wednesday's high), then 1.3993 (Tuesday's high), 1.4037 (Monday's high) and 1.4281 (Nov. 4 top).
USD/JPY to consolidate amid broad flows to safe-haven USD and JPY (ICE spot dollar index last 77.23 vs 76.71 early Thursday) as global risk sentiment deteriorates (VIX fear gauge rose 8.21% to 21.88), U.S. stocks plunged overnight (DJIA down 1.87%) on unrest in Saudi Arabia, concerns over slowing global economic growth after surprise Chinese February $7.3 billion trade deficit and downward revision of Japan''''s 4Q GDP to minus 1.3% from initial estimate of minus 1.1%; larger-than-expected 26,000 increase in latest U.S. weekly jobless claims (vs +7,000 forecast), wider-than-expected U.S. January trade deficit of $46.3 billion (vs forecast for $41.5 billion deficit); increased worries over euro zone''''s sovereign debt crisis after Moody''''s cut Spain''''s debt rating. USD/JPY undermined by unwinding of JPY-funded carry trades as risk appetite falls, lower U.S. Treasury yields (10-year down 10 bps), Japan exporter sales, yen repatriation flows, worries over more violence in Saudi Arabia as opposition planned 'day of rage' protests today and Riyadh warned it wouldn''''t tolerate demonstrations. But USD/JPY downside limited by USD demand for Japan import settlements, concerns about Japan government debt, position adjustments before weekend. Yen crosses vulnerable to 0200 GMT China February CPI, PPI, retail sales, fixed assets investment, industrial output data. Data focus: 1330 GMT U.S. February retail sales (forecast +1.2% vs +0.3% last), 1455 GMT U.S. March University of Michigan consumer sentiment index (forecast 75.0), 1500 GMT U.S. January business inventories, 2100 GMT Fed''''s Dudley speaks on the U.S. economy. USD/JPY daily chart still positive-biased as MACD & stochastics bullish. Resistance at 83.17 (yesterday''''s high); breach would expose upside to 83.56 (Feb. 22 high), then 83.73 (Feb. 17 high), 83.98 (Feb. 16 reaction high) and 84.32 (200-day moving average). Support at 82.67 (yesterday''''s low), then at 82.54 (Wednesday''''s low); breach would target 82.19 (Tuesday''''s low), then 81.93 (Monday''''s low), 81.69 (March 3 low) and 81.55 (March 2 reaction low).
NZD/USD to consolidate with bearish bias. Undermined by smaller NZD-USD yield advantage after RBNZ yesterday slashed rates by 50 bps to 2.5%, negative global risk sentiment, weaker commodity prices, worries over slowdown in China growth. But NZD/USD losses tempered by position adjustments before weekend. Daily chart negative-biased as MACD bearish, stochastics stays suppressed at oversold, suggesting sideways or lower NZD/USD trading near-term. Support at 0.7318 (yesterday''''s low); breach would target 0.7301 (Sept. 30 low), then 0.7259 (Sept, 23 low), 0.7211 (Sept. 16 low) and 0.7155 (Sept. 8 low). Resistance at 0.7378 (yesterday''''s high); breach would temper near-term negative outlook, exposing upside to 0.7417 (Tuesday''''s high), then 0.7494 (March 3 high), 0.7534 (March 1 high) and 0.7552 (Feb. 28 reaction).
AUD/USD to trade lower; vulnerable to 0200 GMT China data. AUD/USD undermined by negative global risk sentiment, weaker commodity prices (CRB spot index ended down 5.78 yesterday at 354.45), concern over slower China growth. But AUD/USD losses tempered by AUD-USD interest differential, position adjustments before weekend. Daily chart negative-biased as MACD & stochastics bearish; bearish parabolic stop-and-reverse signal hit at 1.0041 yesterday; 5-day moving average staged bearish crossover against 15-day MA. Support at 0.9988 (yesterday''''s low); breach would target 0.9973-0.9963 band (100-day moving average - Feb. 22 low), then 0.9939 (Feb. 15 low), 0.9864 (Jan. 31 low) and 0.9828 (Jan. 20 low). Resistance at 1.0052 (hourly chart), then at 1.0117 (yesterday''''s high); breach would temper near-term negative outlook, targeting 1.0132-1.0134 (Wednesday''''s high-Tuesday''''s high), then 1.0185-1.0189 band (Monday''''s high-March 3 high) and 1.0201 (March 1 high).
USD/CHF to consolidate. Supported by broadly stronger USD undertone, expectations of SNB''''s CHF-selling intervention. But USD/CHF gains tempered by flows to safe-haven CHF amid worries over political unrest across the Middle East and North Africa; unwinding of CHF-funded carry trades as risk appetite falls; CHF demand on weaker EUR/CHF as euro-zone sovereign debt worries weigh on the cross; position adjustments before weekend. Daily chart positive-biased as stochastics rising from oversold; MACD staged bullish crossover against its exponential moving average. Resistance at 0.9362-0.9369 band (yesterday''''s high-Wednesday''''s high); breach would target 0.9392 (Feb. 23 high), then 0.9421 (38.2% Fibonacci correction of 0.9775-0.9202 Feb. 11-March 2 decline), 0.9489 (50% correction, near 55-day moving average), 0.9505 (Feb. 22 high) and 0.9538 (Feb. 18 high). Support at 0.9277 (yesterday''''s low), then at 0.9264-0.9256 band (Wednesday''''s low-Tuesday''''s low); breach would expose downside to 0.9233 (Monday''''s low), then 0.9220 (March 4 low), 0.9202 (record low hit March 2) and psychological 0.9100 level.
GBP/USD to trade lower. GBP/USD eased yesterday after BOE left its policy rate unchanged at record low 0.5% and its gilt-purchase program at GBP200 billion as widely anticipated. Pair undermined by negative global risk sentiment, concerns about negative impact of UK government austerity measures on economy. But GBP/USD losses tempered by speculation of BOE rate hike in coming months to rein in rising inflation, position adjustments before weekend. GBP sentiment also soothed by stronger-than-expected 6.8% annual growth in UK January manufacturing output (vs +6.5% forecast) which is fastest pace since November 1994. Data focus: 0930 GMT UK January CML regulated mortgage survey, February producer prices. Daily chart negative-biased as MACD & stochastics bearish; 5-day moving average staged bearish crossover against 15-day MA. Support at 1.6036-1.6029 band (yesterday''''s low-Feb. 25 low); breach would expose downside to 1.5985 (Feb. 16 low), then 1.5962 (Feb. 11 reaction low), 1.5951 (55-day moving average), 1.5890 (100-day moving average) and 1.5821 (Jan. 31 low). Resistance at 1.6126 (hourly chart), then at 1.6216 (yesterday''''s high); breach would temper near-term negative outlook, exposing upside to 1.6243 (Wednesday''''s high), then 1.6342 (Monday''''s high), 1.6457 (Jan. 19, 2010 reaction high) and psychological 1.6500 level.
USD/CAD to trade with bullish bias. Underpinned by negative global risk sentiment; weaker commodity and oil prices; Canadian January trade surplus of just C$116 million (well below forecast for C$2.6 billion surplus). But USD/CAD gains tempered by position adjustments before weekend. Data focus: 1200 GMT Canada February labor force survey. USD/CAD daily chart positive-biased as stochastics turned bullish at oversold; MACD staging bullish crossover against its exponential moving average. Resistance at 0.9766-0.9775 band (yesterday''''s high-March 2 high); breach would target 0.9789 (Feb. 28 high), then 0.9813 (previous base set Feb. 21), 0.9885 (55-day moving average) and 0.9901 (Feb. 24 high). Support at 0.9725 (hourly chart), then at 0.9680 (yesterday''''s low); breach would temper near-term positive outlook, targeting 0.9664 (Wednesday''''s low), then psychological 0.9600 and 0.9500 levels.
EUR/JPY - to trade with risks skewed lower. Cross hurt by negative global risk sentiment, heightened worries over euro-zone sovereign debt, yen repatriation flows, Japan exporter sales. But EUR/JPY losses tempered by increased expectations for April ECB rate hike, Japan importer demand, position adjustments before weekend. EUR/JPY daily chart mixed as MACD bullish, but stochastics bearish near overbought. Support at 114.19 (yesterday's low); breach would expose downside to 114.00 (previous cap set Jan. 27), then 113.07 (March 3 low) and 112.51 (March 2 low). Resistance at 114.86 (hourly chart), then at 115.27 (yesterday's high); breach would expose upside to 115.98-116.00 (March 4 high-psychological level), then psychological 117 & 118 levels.
EUR/GBP - to consolidate. Daily chart mixed as MACD bullish, but stochastics bearish at overbought. Resistance at 0.8608 (yesterday's high, matching Wednesday's high), then at 0.8637 (Tuesday's high); breach would target 0.8653 (Jan. 28 high), then 0.8672 (Jan. 26 swing high) and 0.8750 (downtrend resistance line from Dec. 30, 2008 high of 0.9805). Support at 0.8529 (yesterday's low); breach would expose downside to 0.8510 (100-day moving average), then 0.8476 (March 3 low) and 0.8458 (March 1 reaction low).
