Blog

Despite Euro and Pound Rebound, Key Resistance Levels Remain Hold (Medium Term)

EUR/USD climbed 0.5% to 1.1310 yesterday, as indicators suggest that Eurozone’s economic activity is quickly recovering from coronavirus crisis. Research firm Markit reported that the bloc's Manufacturing PMI climbed to 46.9 in June from 39.4 in May and Services PMI rose to 47.3 from 30.5, both stronger than expected. The Composite PMI jumped to the very best level in 4 months at 47.5.
EUR/USD climbed 0.5% to 1.1310 yesterday, as indicators suggest that Eurozone’s economic activity is quickly recovering from coronavirus crisis. Research firm Markit reported that the bloc's Manufacturing PMI climbed to 46.9 in June from 39.4 in May and Services PMI rose to 47.3 from 30.5, both stronger than expected. The Composite PMI jumped to the very best level in 4 months at 47.5.
In fact, EUR/USD has bounced roughly 5% from May's low. The pair reached a 3-year low after the action by the ecu financial institution to launch emergency purchase programme, on the other hand showed resilience whilst the ECB unrolled additional measures. Some investors are speculating that monetary easing is approaching an end and are already anticipating a reversal.

From a technical point of view, EUR/USD posted a rebound on a weekly chart, but the declining line drawn from June 2018 remains intact. The RSI is additionally capped by a declining line drawn from July 2017.
Currently, the pair is trading above both 20-week and 50-week moving averages. The RSI posted a bullish divergence signal, suggesting the loss of downward momentum for the costs .

As the technical configures are mixed, the technical outlook of EUR/USD would be neutral. As long because the overlapping resistance level at 1.1565 isn't surpassed, the pair could consider a consolidation move to 1.07250. Only an opportunity below this level would enhance the bearish outlook and trigger a drop to 1.0350 (the low of 2017).

On the opposite hand, only an opportunity above 1.1565 would suggest a transparent break of the declining line and would turn the outlook to bullish. subsequent resistance level would be located at 1.1900.


Similarly within the U.K., sentiment was lifted by upbeat economic data. The Markit U.K. Manufacturing PMI climbed to 50.1 in June, slightly above the critical 50 mark that separates expansion from contraction, and Services PMI rallied to 47.0 from 29.0 in May.
On a weekly chart, Although GBPUSD posted a pointy rebound from March low at 1.1410, it's still capped by a declining line drawn from December 2019.
Currently, the pair is trading around both 20-week and 50-week moving averages. The RSI is around its neutrality level at 50 and indicates a bullish divergence signal. Both indicators suggest the shortage of momentum for the pair.

In this case, as long because the overlapping resistance level at 1.2850 holds on the upside, the pair remains playing a variety trading and will consider a consolidation move to 1.1950. Only an opportunity below this level would bring a drop to March low at 1.1410.

Alternatively, a transparent break above 1.2850 would bring a re-visit to 1.3515 (the high of December 2019).

Despite Euro and Pound Rebound, Key Resistance Levels Remain Hold (Medium Term)

EUR/USD climbed 0.5% to 1.1310 yesterday, as indicators suggest that Eurozone’s economic activity is quickly recovering from coronavirus crisis. Research firm Markit reported that the bloc's Manufacturing PMI climbed to 46.9 in June from 39.4 in May and Services PMI rose to 47.3 from 30.5, both stronger than expected. The Composite PMI jumped to the very best level in 4 months at 47.5.
EUR/USD climbed 0.5% to 1.1310 yesterday, as indicators suggest that Eurozone’s economic activity is quickly recovering from coronavirus crisis. Research firm Markit reported that the bloc's Manufacturing PMI climbed to 46.9 in June from 39.4 in May and Services PMI rose to 47.3 from 30.5, both stronger than expected. The Composite PMI jumped to the very best level in 4 months at 47.5.
In fact, EUR/USD has bounced roughly 5% from May's low. The pair reached a 3-year low after the action by the ecu financial institution to launch emergency purchase programme, on the other hand showed resilience whilst the ECB unrolled additional measures. Some investors are speculating that monetary easing is approaching an end and are already anticipating a reversal.

From a technical point of view, EUR/USD posted a rebound on a weekly chart, but the declining line drawn from June 2018 remains intact. The RSI is additionally capped by a declining line drawn from July 2017.
Currently, the pair is trading above both 20-week and 50-week moving averages. The RSI posted a bullish divergence signal, suggesting the loss of downward momentum for the costs .

As the technical configures are mixed, the technical outlook of EUR/USD would be neutral. As long because the overlapping resistance level at 1.1565 isn't surpassed, the pair could consider a consolidation move to 1.07250. Only an opportunity below this level would enhance the bearish outlook and trigger a drop to 1.0350 (the low of 2017).

On the opposite hand, only an opportunity above 1.1565 would suggest a transparent break of the declining line and would turn the outlook to bullish. subsequent resistance level would be located at 1.1900.


Similarly within the U.K., sentiment was lifted by upbeat economic data. The Markit U.K. Manufacturing PMI climbed to 50.1 in June, slightly above the critical 50 mark that separates expansion from contraction, and Services PMI rallied to 47.0 from 29.0 in May.
On a weekly chart, Although GBPUSD posted a pointy rebound from March low at 1.1410, it's still capped by a declining line drawn from December 2019.
Currently, the pair is trading around both 20-week and 50-week moving averages. The RSI is around its neutrality level at 50 and indicates a bullish divergence signal. Both indicators suggest the shortage of momentum for the pair.

In this case, as long because the overlapping resistance level at 1.2850 holds on the upside, the pair remains playing a variety trading and will consider a consolidation move to 1.1950. Only an opportunity below this level would bring a drop to March low at 1.1410.

Alternatively, a transparent break above 1.2850 would bring a re-visit to 1.3515 (the high of December 2019).

Published on: 6/24/20, 12:53 PM

Europe Expected to Drift Lower As Reopening Optimism Fades

Reopening optimism is showing signs of fading with European stocks pointing to a lower open following each day of strong gains
Reopening optimism is showing signs of fading with European stocks pointing to a lower open following each day of strong gains. an equivalent stubborn optimism that saw Asian stocks sneak up to 4-month highs overnight isn't being felt here in Europe. A quiet economic calendar will leave risk sentiment within the driving seat. However, the mixed performance of risk catalysts is confusing investors.


Whilst Boris Johnson announced the easing of more lockdown restrictions as from 4th July, the reduction of the 2-meter rule to 1 meter is unnerving investors following harsh criticism from scientists. Reducing that distance just by one meter increases the probabilities of getting the infection 10-fold, making localised flare ups and a second wave increasingly more likely.
Coronavirus news has been faraway from good on a worldwide scale. Several states within the US still see record daily rises, whist the price is South America has topped 100,000. Yet investors assume that there's alittle chance of a second lockdown on the size of what we've just experienced.

PMI data pointed to resilience in economies
Data within the previous session has show that economies across Europe are particularly resilient with commercial activity learning across the board. PMI data for the united kingdom showed that the contraction in commission sector and manufacturing activity slowed because the sectors continued to rebound from the April nadir. France, outperformed showing that the easing of lockdown measures had resulted in commercial activity quickly returning to expansion.

German IFO business sentiment data focused 
The economic calendar in Europe is quiet today. German IFO business sentiment for June is under the spotlight. Optimism is seen recovering further this month to 85, fromb79.5 in May. The assessment of the present situation is additionally seen improving from 78.9 to 84. The market mood could suffer a setback should the figures disappoint. a robust reading could see EUR/USD test resistance at $1.1422.
Oil extends slide, EIA data focused 
Oil is extending losses from the previous session after US crude stockpiles grew by quite expected, fuelling concerns over oversupply. Crude inventories rose by a bigger 1.7 million barrels last week, consistent with the American Institute of Petroleum, significantly before the 300,000-build forecast. EIA data are going to be keenly awaited today. 
Oil has had an honest run, rallying over 4% in only 3 days before yesterday’s data. the many integrate inventories was seen as an honest catalyst to book profits. On Tuesday oil had been trading at its highest level since prices collapsed in early March. 

Published on: 6/24/20, 12:52 PM

Big Earnings This Week and the Market Outlook

Can the S&P hold up?
On Tuesday, IHS Markit (INFO) is awaited to post 2Q EPS of $0.66 vs. $0.71 the prior year on revenue of $1.1B, in line with last year. The Co provides global data and analytics, and on June 11th, Altium, a provider of PC-based design software for engineers, announced a partnership with the Co so as to offer its users actionable lifecycle status updates during the planning process to end delays thanks to components becoming obsolete. Technically speaking, the RSI is above its neutrality area at 50. The MACD is positive and below its signal line. The stock could retrace within the short term. Moreover, the stock is trading above both its 20 and 50 day MA (respectively at $70.97 and $68.04). We are watching the ultimate target of $80.30 with a stop-loss set at $69.40. 

On Thursday, Nike (NKE) is anticipated to release 4Q EPS of $0.12 vs. $0.62 the prior year on revenue of $7.6B compared to $10.2B last year. The Co designs and manufactures sportswear, and on June 11th, Chief military officer John Donahoe stated that the Co will take steps to raised support racial equality, including but not limited to adding the June 19 commemoration of the top of slavery to the company's list of paid holidays, consistent with Bloomberg. From a chartist's point of view, the RSI is above its neutrality area at 50. The MACD is positive and below its signal line. The stock could retrace within the short term. Moreover, the stock is below its 20 day MA ($97.93) but above its 50 day MA ($91.22). We are watching the ultimate target of $110.90 with a stop-loss set at $92.20. 

Additionally on Thursday, Accenture (ACN) is predicted to announce 3Q EPS of $1.85 vs. $1.93 the prior year on revenue of $10.9B compared to $11.1B within the year before. The Co may be a leading global information technology services provider and on June 15th, Accenture Federal Services, a subsidiary of the Co was awarded a 341 million dollar contract to help the U.S. Department of Commerce in updating its business systems and data platforms. From a technical point of view, the RSI is above 50. The MACD is positive and below its signal line. The stock could retrace within the short term. Moreover, the stock is trading under its 20 day MA ($203.11) but above its 50 day MA ($189.61). We are watching the ultimate target of $228.70 with a stop-loss set at $193.40. 

Finally on Thursday, Darden Restaurants (DRI) is probably going to unveil 4Q LPS of $1.64 vs. an EPS of $1.76 the prior year on revenue of $1.2B compared to $2.2B last year. The Co owns and operates a spread of branded restaurants, and its current analyst consensus rating is 20 buys, 10 holds and 0 sells, consistent with Bloomberg. watching a daily chart, the RSI is below 50. The MACD is positive and below its signal line. The MACD must penetrate its zero line to expect further downside. Moreover, the share stands below its 20 and 50 day MA (respectively at $78.59 and $72.86). We are watching the ultimate target of $58.40 with a stop-loss set at $81.90. 

Looking at the S&P 500 CFD, the index appears to be during a consolidation range after breaking out of a short-term down trend on Monday, last week. The index is currently finding rough support on its 20-period moving average, which is below its 200-period moving average, a bearish signal. However price is advancing and therefore the bias remains bullish as long because the S&P can stay above its low of the week at 3038. Price is predicted to cut around before retesting 3116 and making its way back to 3156. If price cannot hold above 3038 support, we could see the index fall back to 2998. 

Published on: 6/22/20, 3:55 PM

US Futures rise, watch AAL, WMT, AXP

The S&P 500 Futures are trading on the upside despite a bearish gap opening on Monday morning
The S&P 500 Futures are trading on the upside despite a bearish gap opening on Monday morning as investors digested Apple's announcement of closing some stores in Arizona, Florida, North Carolina and South Carolina thanks to resurgence in coronavirus cases.

Later today, the Federal Reserve System Bank of Chicago will post May National Activity Index. The National Association of Realtors will report May existing home sales (4.1 million units expected).

European indices are trading within the red. No major economic data news were released except the U.K. Industrial Trends Survey factory orders posting a decline twice above expected in June at -58, but slightly better than the previous month historical low at -62. Later today, the Eurozone’s Consumer Confidence Index for June are going to be released (-15.0 expected).

Asian indices closed mixed. The Hong Kong HSI dropped 0.54% and therefore the Japanese Nikkei lost 0.18% while the China Mainland CSI 300 added 0.08% and therefore the Australian ASX 200 ended flat (+0.03%)

WTI petroleum Futures are gaining some ground, following Friday rally. the amount of U.S. oil rigs as of June 19 dropped by 13 from every week ago to 266, and oil rigs in Canada fell by 4 to 17, consistent with Baker Hughes. internet long position of WTI petroleum slid 7.1% on week to 354,363 contracts as of June 16, reported the Commodities Futures Trading Commission.

Gold is gaining ground while the US dollar consolidates on rising COVID-19 cases. 

Gold rose 3.89 dollars (+0.22%) to 1747.76 dollars.

EUR/USD rose 30pips to 1.1208 while GBP/USD gained 38pips to 1.2388.

US Equity Snapshot

 

American Airlines (AAL) plans to boost 3.5 billion dollars in shares and notes, to strengthen its record .

Walmart (WMT), the retailer, was upgraded to "buy" from "neutral" at UBS.

American Express (AXP), a globally integrated payments company, was downgraded to "sell" from "neutral" at UBS.

Published on: 6/22/20, 3:54 PM

Currency Pair of the Week: NZD/USD

There are many factors which could affect the direction of NZD/USD in the week .
New Zealand recently has been reporting zero, or nearly zero, new coronavirus cases daily! The country also moved its coronavirus alert right down to A level 1 from A level 2. that's amazing once you check out the speed of increase compared to another countries round the world, like the us . Note that the border remains closed to non-New Zealand residents. NZD/USD has taken this news as a sign to travel bid as traders feel the New Zealand economy will recover quicker than the US economy. we'll determine what the Royal Bank of latest Zealand (RBNZ) is thinking on Wednesday!

The RBNZ is predicted to go away rates unchanged at 0.25%, which is where rates are since they lowered them from 1% on March 15th. At the May 13th meeting, the RBNZ also raised the quantity in their Quantitative Easing Program from NZD 33 billion to NZD 60 billion. Economic data has been better than expected recently, for the foremost part, and traders are going to be watching the news conference afterwards for signs of cautious optimism from the financial institution . But given it's only been a month and a half since the last RBNZ meeting, the financial institution will presumably retain a dovish tone as Governor Orr recently said that negative rates are still on the table.

The US Dollar, on the opposite hand, has been moving lower. The US Federal Reserve System was extremely dovish at their last meeting. The Fed said they might continue buying Treasuries and MBS a minimum of at the present pace and most member of the FOMC saw rates near unchanged through 2022. additionally , the Fed announced that they might begin buying corporate bonds additionally to ETFs.

Technically, on the daily chart of NZD/USD, we will see that price bounced off their March 19th lows near .5469 and commenced trading during a sideways channel between .5843 and .6176 until the pair finally broke out on May 26th. The pair traded aggressively higher through the 200 Day Moving Average and saw horizontal resistance at .6593 on June 9th. NZD/USD had been consolidating during a pennant formation until TODAY when the pair broke higher above the downward sloping trendline. The target for the breakout from the pennant formation is near .7100. The consolidation also allowed for the RSI to unwind into neutral territory. 

On a 240-minute timeframe, we get a far better check out the worth escape of the pennant formation. there's some short-term horizontal resistance near .6518, but the strong resistance is at the highest of Triangulum near .6584. Support comes in at the downward sloping trendline near .6430, where buyers are going to be waiting. Below there, support is at rock bottom trendline of Triangulum near .6380 then the 38.2 Fibonacci retracement level from the May 15th low to the June 9th high near .6330.

There are many factors which could affect the direction of NZD/USD in the week . These factors include the amount of latest coronavirus cases in New Zealand and therefore the US, the RBNZ meeting on Wednesday, and therefore the technical picture after the worth escape of the pennant formation. Keep an eye fixed on the RBNZ news conference also for clues on whether price will still target from the breakout of the pennant.

Published on: 6/22/20, 3:53 PM

 EUR/USD Slightly Leading DXY

Since January 1st of this New Year , the US Dollar Index (DXY) has been on a 1 way move higher. The index has been during a long-term channel since mid 2018, and eventually broke below it in December, only to be halted at the five hundred retracement level from the lows on June 13th , 2018 to the highs on October 1st of last year. More recently, over the last 2 weeks, the DXY has broken through a key inflection point near 97.50/97.75. At this level, price broke through:

The upper trendline of the downward sloping channel, formed off the October 1st highs.
The bottom trendline line of the upward slopping channel from 2015
The 200 Day Moving Average
On a 240-minuted chart of the DXY, the upward trend is fully effect. However, there's many resistance just above. Price is currently trading near 98.15. there's horizontal resistance near 98.25, also because the 61.8% retracement level from the October 1st highs to the December 31sr lows near 98.40. (98.50 is that the target for the flag pattern which was formed off the lows as well). On addition, the RSI is over 75. Any reading above 70 is worth expecting possible pullbacks in price.

The Euro makes up almost 58% of the US Dollar index. So, it's no surprise that because the US Dollar Index moves higher, the EUR/USD would move lower. The EUR/USD was during a falling wedge since mid-2018, and on December broke higher out of the wedge. Price halted at the 61.8% retracement level from the highs on June 24th to the lows October 1st and reversed. More recently, over the last 2-week, EUR/USD has broken through a key inflection area near 1.1100. Near this level, price broke through:

The 200 Day moving average near 1.1135
The upper trendline of the falling wedge
The rising trendline off the lows from October 1st
Price is currently at horizontal and psychological support near 1.1000.

On a 240-minuted chart of the EUR/USD, the downward trend is fully effect. Price has moved lower out of a head and shoulders pattern and has already broken through horizontal support and therefore the 61.8% retracement level from the October 1st lows to the Decmeber31st highs, whereas DXY has not broken through its corresponding levels). additionally , the RSI is oversold and diverging with price, whereas the DXY isn't diverging. The target for the top and shoulders pattern is near 1.0935, which is additionally horizontal support.

If it seems to be the case that the EUR/USD is basically leading the DXY, one would expect the DXY to push higher through the near term resistance levels.
 
Published on: 1/31/20, 11:00 PM

GBP/USD Slumps As Brexit Back In Focus & On Stronger Dollar

Sterling was out of favour on Wednesday because the focus turned back to Brexit and therefore the UK’s future relationship with the EU. European Commission President Ursula von der Leyen marked out her red lines, warning the united kingdom to stay closely to EU rules if it wanted to reach a far-reaching trade affect the EU.

A level playing field is what the EU are trying to find . Time will tell whether it's what Boris Johnson is ready to supply . The pound remains struggling as traders doubt whether 1 year are going to be sufficient tine to agree a deal.

Dollar Advances After Strong ADP Data
The US dollar was on the front foot at the beginning of Wednesday boosted by flows into shelter assets. Yet whilst US – Iran tensions eased, and risk sentiment picked up the dollar remained firm thanks partially to strong ADP data.
ADP private payroll report added a whopping 220,000 jobs in December, this was well before expectations of 160,000 jobs and November’s 67,000 jobs created. Despite the impressive data, the dollar is paring gains, as flows towards riskier assets devour .


Up Next
The British Parliament is predicted to vote through the Brexit Withdrawal Bill tomorrow. No hold ups are expected. As tension continues t ease within the Middle East US dollar investors could turn their attention towards Friday’s NFP.

Levels to observe
Cable is lacking bullish momentum on 4 hrs chart, below the $1.32 handle and below the 50 sma. GBP/USD is testing support at $1.31. A breakthrough here could see the worth test $1.3055 opening the door to $1.30. an opportunity above $1.3212 could bring a more bullish outlook.
 
Published on: 1/11/20, 1:53 AM