EUR/USD Forecast February 24-28

EUR/USD reached out to higher ground, riding on uptrend support, but did not close at the highs. German Ifo Business Climate, German Retail Sales, and the all-important inflation figures are the main market movers this week. Here is an outlook on the major events and an updated technical analysis for EUR/USD..

The euro already made a nice break to a 6 week high, but could not sustain the gains. Worse than expected French PMIs. German sentiment and attempts to talk down the euro had temporary effects and provided dip buying opportunities. However, the growing notion that the ECB could act while the Fed isn’t likely to halt tapering despite weakness in the US eventually limited the gains. The inflation / deflation discussion will reach a climax now. Will EUR/USD make big moves now? Let’s start,

Updates:

EUR/USD daily graph with support and resistance lines on it. Click to enlarge:

1. German Ifo Business Climate: Monday, 9:00. Business sentiment in Germany, rose to a 30-month high of 110.6 in January after posting 109.5 in December. The release surpassed economists’ forecast of a 110.2 indicating German economy continues its growth trend. Manufacturers and Wholesalers saw improvement in their current business conditions and were also optimistic regarding future conditions. A further increase to 110.7 is expected now.
2. Inflation data (final for January): Monday, 10:00. Consumer prices slowed in December despite the European Central Bank’s statement that the euro isn’t facing deflation. Consumer prices climbed 0.8% compared to 0.9% rise in November, distancing from the ECB’s 2.0% inflation target. Meanwhile, core rates excluding volatile items such as food and energy declined to 0.7%, its lowest level since records began in 2001. However, President Jens Weidmann, a key member of the ECB’s governing council remarked there is only a small risk of deflation and the euro area isn’t heading toward a situation like Japan. CPI is expected to gain 0.7%, while core CPI is predicted to rise 0.8%.
3. GfK German Consumer Climate: Wednesday, 7:00. Consumer sentiment in Germany increased to a six-year high of 8.2 points in February, following 7.7 points in the previous month. German consumers were more confident about domestic conditions hoping a rise in demand as well as global trade will lift Europe’s largest economy and propel the euro zone to faster growth this year. Consumer sentiment is expected to rise to 8.3.
4. German Prelim CPI (February): Thursday. German Consumer Prices reported a negative growth of 0.6% in January compared to a 0.4% gain in December, worse than the 0.4% decline estimated by analysts and far away from the European Central Bank’s 2% target for the Eurozone after falling a revised 19,000 in December. 0.6%
5. German Unemployment Change: Thursday, 8:55. German unemployment declined more than expected in January, falling a seasonally adjusted 28,000 amid growing optimism among companies on German economic activity. January’s decline was preceded by a 19,000 decline in December. Analysts expected a smeller decrease of 5,000. The Bundesbank projected expansion will strengthen further in the coming months. A decline of 10,000 unemployed people is expec5ed this time.
6.   M3 Money Supply: Thursday, 9:00. Euro zone money supply growth stalled in December rising at an annual pace of 1.0% compared to 1.5% in November. Loans to the private sector contracted further, adding concern about deflation signs in the Eurozone economy. The ECB promised to take action should a deflation risk arise. After the bank’s policy meeting in January, ECB President Mario Draghi described two scenarios that could trigger fresh policy action: an increase in money market rates that tightens policy by stealth, or a deterioration in the inflation outlook. Euro zone inflation is running far below the ECB’s target of just under 2%, but the bank choose not to act so far. A small rise to 1.1% is predicted now.
7. German Retail Sales: Friday, 7:00. German retail sales disappointed shop keepers in December, falling 2.5% after a 0.9% gain in the previous month. The reading was a total surprise to analysts forecast of a 0.2% rise. In annual terms, retail sales declined 2.4% despite the constant improvement in the Job market and consumer sentiment. Nevertheless, Analysts project strong retail sales in 2014 if the labor market and consumer confidence continues to improve. Retail sales are expected to gain 1.2% in January.
8. French Consumer Spending: Friday, 7:45. French consumer spending contracted 0.1% in December, after posting a 1.4% gain in November. Analysts expected a bigger decline of 0.2%. On a yearly base consumer spending dropped 0.7% following a 0.1% rise in November. Over the fourth quarter, consumption in goods remained stable, after rising 0.2 percent in the third quarter. A further contraction of 0.8% is expected now.
9. CPI Flash Estimate (February): Friday, 10:00. The euro zone’s consumer price inflation slowed in January gaining 0.7% after a 0.8% rise in December. The reading was weaker than the 0.9% rise projected by analysts. Food, alcohol and tobacco prices increased the most with a 1.7% gain while services increased by 1.1%. Inflation data in the Eurozone is closely monitored by the ECB for monetary policy adjustments. The low levels of inflation may induce the central bank to cut rates in the coming months. Another rose of 0.7% is anticipated now.
10. Unemployment Rate: Friday, 10:00. The unemployment rate in the Euro-area remained unchanged in December, holding at 12%. Analysts expected a small rise to 12.1%. Eurostat said 26.2 million men and women were unemployed in December, 19 million of whom live in the 18-member region that shares the euro as currency. The lowest unemployment rate in the EU was Austria’s 4.9%, followed by Germany at 5.1% and Luxembourg at 6.2%.The highest rates were posted by Greece at 27.8% and Spain at 25.8%. Unemployment rate is expected to remain unchanged at 12%.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar started the week struggling with the 1.37 line (mentioned last week). It then surged, peaking at 1.3773 before dropping to uptrend support (described later) and returning to the previous place.

Technical lines from top to bottom:

The 2013 high of 1.3895 is the top line looming above. 1.3830 was a more serious peak that was seen with better volume and was challenged afterwards in 2013.

1.3773 was a cap in February and beforehand in December 2013. The round number of 1.37, is another resistance line after capping the pair in December.

1.3650 provided support in December and worked as resistance in September 2013, and is also a significant line. Also the February rally fell short of this line. Below, 1.3560 worked as good support twice during February 2014.

The January 2014 low of 1.3515 provides minor support on the way down. 1.3450 worked as resistance in August 2013 and as support in September and October. It is now a key line on the downside.

The round number of 1.34 worked as resistance several times in 2013, and is strengthening now. 1.3320 worked as a double top in early September and it was crossed only with a Sunday gap. It remains a clear separator of ranges.

It is closely followed by 1.3295, which was the bottom in November and is part of the broken trend line. 1.3175 capped the pair during July 2013.

1.3100 is worked as temporary resistance in December 2012 and is becoming more important once again, after capping a recovery attempt in June and then in July and providing support in September. Below, 1.3050 is minor support after holding the pair in August 2013.

Steep uptrend support

Since early February, EUR/USD is riding on a sharp uptrend support line (thick black on the chart). Can it hold on to it?

I turn from neutral to bearish on EUR/USD

After ignoring weak data day after day, things might change this week, with the all important inflation numbers. The strong euro and the fragile recovery probably led to another poor CPI in Germany and in the euro-zone, and these could trigger a negative deposit rate in March. The ECB and the euro could certainly come under pressure.

In the US, a downgrade of GDP is already priced in. Despite all the weakness in the US, the Fed is determined to continue tapering. Technically, the attempt to break out of range to the upside had little success and uptrend support is in jeopardy now.

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Forex Weekly Outlook Feb. 24-28

Weaker than expected data was reported almost everywhere. After suffering losses, can the US dollar emerge as a winner? Euro-zone inflation, Us consumer confidence, Housing data, Unemployment Claims and GDP data from the US, UK and Canada are among the major events on our calendar. Here is an outlook on the main market-movers this week.

The weakness was seen everywhere: a terrible Philly Fed Index in the US, a disappointing growth rate in Japan, a weak PMI in China, lower business sentiment in Germany and a rising unemployment rate in the UK, among others. Nevertheless, it seems that one central bank is not deterred: the Federal Reserve. Meeting minutes from the last decision showed again that the taper train is on the track. So, after a streak of losses, can the US dollar make a comeback? Let’s start:

Updates:

1. German Ifo Business Climate: Monday, 9:00. German business confidence soared to 110.6 in January from 109.5 in December, rising to the highest level since July 2011. The reading surpassed forecasts of 110.2, indicating German economy is expanding full steam. The Bundesbank has projected a strong expansion in 2014, after the weak final quarter of 2013 where German economy shifted from domestic demand to global trade. Another climb to 110.7 is expected this time.
2. US CB Consumer Confidence: Tuesday, 15:00. Consumers sentiment unexpectedly edged up in January to 80.7 from 77.5 in December, reaching a five-month high amid renewed optimism about the economy and labor market. Economists expected a weaker reading of 78.3. US jobs market improved offering plentiful positions and higher wages propelling consumer purchases and confidence. A small decline to 80.2 is forecasted.
3. UK Second Estimate GDP: Wednesday, 9:30. The first release of UK GDP showed a growth rate of 0.7% in Q4 2013, which is quite solid growth. A confirmation of this figure is expected in the second release. According to NIESR monthly estimates, GDP has increased by 0.8% in the three months ending in January 2014. The Bank of England is expected to keep interest rates on hold until the second quarter of 2015 and annual GDP growth will reach 2.5% in 2014 and 2.1% in 2015. 
4. US New Home Sales: Wednesday, 15:00. The annual number of new home sales disappointed for the second consecutive month with a seasonally adjusted annual rate of 414,000 units, much weaker than the 445,000-unit pace registered in November missing predictions for a rise to 457,000. Many blamed the harsh winter conditions for the ongoing fall in the housing sector with a 36.4% fall in the Northeast which was hit by cold temperatures. This fall is not consistent with the strong demand reflected in the declining inventory for new and existing homes, indicating this is only a temporary setback. Another drop to 406,000 is expected now.
5. US Durable Goods Orders: Thursday, 13:30.  Orders for long-lasting U.S. manufactured goods excluding transportation items plunged unexpectedly in December by 1.6% after a 1.2% gain in the previous month posting the biggest decline since March 2013. Most orders were weak, with the exception for machinery, and electrical equipment, appliances and components rising. Durable goods orders fell 4.3% in December after a 3.4% climb in November, pulled down by weak demand for transportation equipment, primary metals, computers and electronic products and capital goods.  Durable Goods Orders are expected to decline 0.7% while core Durable Goods Orders  are expected to fall 0.1%.
6. US Unemployment Claims: Thursday, 13:30. The number Americans filing applications for unemployment benefits dropped by 3,000 last week, to a seasonally adjusted 336,000, indicating firing has not increased. The number of applicants became stable in recent weeks despite modest levels of hiring in January and February, signaling business confidence is improving. In recent months, frigid weather slowed down hiring, retail sales and home construction. Job growth for the past two months reached only a half the monthly average for the previous two years. However lower unemployment rate of 6.6% was an improvement from December. Another drop to 333,000 is anticipated now.
7. Euro-zone Flash CPI: Friday, 10:00. As the focus of the ECB shifted to inflation (or the lack of it), the importance of CPI has risen. The surprising drop in inflation in October triggered a rate cut in November. Year over year CPI is expected to remain unchanged at 0.7%. However, a strong euro and a fragile recovery could result in a new low for CPI and perhaps for core CPI, which also bottomed out at 0.7% so far. A drop to new cycle lows could trigger a negative deposit rate from the ECB in March.
8. Canadian GDP: Friday, 13:30. The Canadian economy expanded by 0.2% in November, in line with market forecast, rising for the fifth straight month amid a recovery in the oil industry outpaced a decline in manufacturing. This increase was preceded by a 0.3% increase in both September and October. Oil and gas extraction rose 2.6%, after a 0.7% decline in October, and mining and quarrying increased by 1.3%. Overall manufacturing output climbed 0.4% while the service sector increased by 0.2%. Canadian economy is expected to contract 0.2% this time.
9. US GDP: Friday, 13:30. According to the first release, the US economy grew by 3.2% in Q4 2013. Already at that release, there were worries about the quality of this growth, with an inventory buildup taking a large part in that growth. After a few weak figures, expectations are for a downgrade of growth to 2.6% at the second and not final release.
10. US Pending Home Sales: Friday, 15:00. The number of contracts to purchase previously owned homes in the U.S. plunged in December by 8.7% following a 0.3% decline in the preceding month. This was the worst reading since May 2010 amid higher borrowing costs and bad weather conditions halting sales. Analysts expected a modest drop of 0.3%, but unusually cold weather discouraged potential buyers. A rise of 2.9% is forecasted.
11. Mark Carney speaks: Friday, 15:30. BOE Governor Mark Carney will speak in Frankfurt on Central Bankers. Earlier this month Carney said there is a need to change the compensation structures so that banks could see whether employees had taken undue risks or behaved badly and that compensation of bankers should be withheld and deferred for a very long time. These comments were made after news that Barclays was paying bigger bonuses despite announcing plans to cut staff in response to a fall in profits. Carney may also refer to the developments in the housing market and the means to prevent a bubble from developing. Any comment on the interest rate will be closely scrutinized after Carney hinted a hike in Q2 2015.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

*All times are GMT.

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Forex Trading Signal for 24th Feburary 2014

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

For more easy access,,,,,,Download our mobile application on your mobile :   Click Fxsignals 

EUR/USD

 Up Trend :

We will experience a downward movement once the market opens on

23rd Feburary : 22:00pm GMT, before this signal will be triggered.

 (1) Buy

Entry Point: 1.37370

Take Profit: 1.37570

Stop Loss:   1.37000

 

GBP/USD

Down Trend:

As the market closed on a downward direction,,, the momentum will continue once the market opens on 23rd Feburary : 22:00pm GMT,,, probably it will hit 1.66000 before it will retrace back to 1.66462

(1) SELL

Entry Point: 1.66462

Take Profit: 1.66262

Stop Loss:   1.66762

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
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