Forex - GBP/USD almost unchanged amid Crimea concerns

The pound was almost unchanged against the U.S. dollar on Monday, as markets were jittery ahead of the release of U.S. economic reports later in the day, as well as mounting concerns over events in Crimea.

Pound holds steady vs. dollar in cautious trade

GBP/USD hit 1.6626 during European morning trade, the session low; the pair subsequently consolidated at 1.6641, inching down 0.03%.

Cable was likely to find support at 1.6568, the low of March 12 and resistance at 1.6717, the high of March 13.

Market sentiment weakened as over 90% of Crimean voters on Sunday chose to break with Ukraine and join Russia. U.S. President Barack Obama said Washington rejected the results of the referendum and warned that the U.S. was ready to impose sanctions on Moscow.

Meanwhile, demand for the greenback remained fragile after a preliminary report on Friday showed that the University of Michigan's consumer sentiment index fell to 79.9 this month, from a reading of 81.6 in February, confounding expectations for a rise to 82.0.

Data also showed that U.S. producer price inflation fell 0.1% in February, confounding expectations for a 0.2% rise, while core producer price inflation, which excludes food, energy and trade, slipped 0.2% last month, compared to expectations for a 0.1% rise.

Sterling was steady against the pound, with EUR/GBP dipping 0.02% to 0.8355.

Later in the day, the U.S. was to publish data on manufacturing activity in the Empire State, as well as reports on industrial production and long term securities transactions.

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GBP/USD Outlook March 17-21

GBP/USD posted sharp drops during the week and ended the week close to a cent lower. This week’s highlights are Employment Change and the Annual Budget release. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.

British NIESR GDP Estimate posted another strong gain, as the British economy continues to move in the right direction. Over in the US, the news was generally positive, as retail sales numbers met expectations, while Unemployment Claims dropped to a three-month low.

Updates:

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

1. Rightmove HPI: Monday, 00:01. This house inflation indicator is an important gauge of activity in the UK housing market. The index posted an excellent gain of 3.3%, and will be hard pressed to post these kinds of numbers in the upcoming release.
2. BOE Deputy Governor Jon Cunliffe Speaks: Monday, 9:30. Cunliffe will discuss the financial markets at an event in London. Remarks that are more bullish than expected are bullish for the pound.
3. BOE Governor Mark Carney Speaks: Tuesday, 17:45. Carney will address an event in London. Analysts all ears when the Governor speaks, and any hints about a potential interest hike could give the pound a boost.
4. Claimant Count Change: Wednesday, 9:30. This is one of the most important events on the calendar and should always be treated a market-mover. The indicator continues to post losses, indicative of an improving economy. Last month’s reading came in at -27.6 thousand, easily surpassing the estimate of -18.3 thousand. Another strong reading is expected in February, with an estimate of -23.3 thousand. The Unemployment Rate is expected to remain at 7.2%.
5. MPC Asset Purchase Facility Votes: Wednesday, 9:30. Analysts carefully monitor the breakdown of the most recent vote on QE, which currently stands at 375 billion pounds. The breakdown is expected to be a unanimous decision (9-0).
6. MPC Official Bank Rate Votes: Wednesday, 9:30. With increased speculation about a rate hike due to the improved British economy, any difference of opinion in the vote on interest rate levels could move the markets. Recent votes have been unanimous, and the markets are expecting the past vote to have been a 9-0 vote in favor of maintaining rates at 0.50%.
7. Average Earnings Index: Wednesday, 9:30. This indicator is an important gauge of consumer inflation. The index has been moving upwards, and came in at 1.1% last month, above the estimate of 0.9%. The upward trend is expected to continue, with the  estimate standing at 1.3%.
8. Annual Budget Release: Wednesday, 12:30. This key event should be treated as a market-mover. The budget includes the government’s forecast for spending and borrowing for the coming year, and market reaction could have a major impact on the direction of the pound.
9. CBI Industrial Order Expectations: Thursday, 11:00. This indicator is based on the views of surveyed manufacturers. The indicator pushed into positive territory last month, with a reading of +3 points. The upward trend is expected to continue, with the estimate standing at 5 points.
10. Public Sector Net Borrowing: Friday, 12:30. The indicator looked sharp in January, posting its first surplus since last July, with a reading of -6.4 billion pounds. This was certainly positive news, but did fall short of the estimate of -9.3 billion. The markets are bracing for a large deficit for February, with an estimate of 7.8 billion. Will the indicator surprise the markets and beat the estimate?

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.6731. The pair quickly touched a high of 1.6741 before reversing directions and dropping all the way to 1.6568, breaking below support at the round number of 1.66 (discussed last week). GBP/USD recovered, closing the week at 1.6644.

Live chart of GBP/USD:

Technical lines from top to bottom

We start with resistance at 1.7383. This line marked the start of a rally by the pound back in April 2006, which climbed as high as the 2.11 level.

1.7180 has served in a resistance role since October 2008.

1.6990 is next. This line has been protecting the key 1.70 level and has held firm since October 2008.

1.6823 held firm as the pound moved higher late in the week before retracting. This line has some breathing room as the pound trades just above the 1.67 line.

1.6705 continues to see action and was breached again this week. With the dollar showing some improvement, this line has switched to a support role.

The round number of 1.6600 was briefly broken as the pair posted sharp gains. It recovered and remains a support line, although not a strong one.

1.6475 continues to provide strong support. 1.6343 is the next support level. This line saw some activity in early February but has provided strong support since then. 1.6247 follows.

The final support level for now is 1.6163. This was a key resistance line in October and November 2012.

I am neutral on GBP/USD.

GBP/USD dipped last week, but remains at high levels, as the British economy continues to produce solid numbers. UK Claimant Change is always a market-mover, and the Annual Budget Release out of London will be closely watched. The Federal Reserve is expected to trim QE for a third time, and this could give the dollar a boost.

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EUR/USD Forecast March 17-21

EUR/USD had a successful week, rising to a new 2+ year high, overcoming obstacles.. Where is it headed now? Inflation data, Weidmann’s speech, German ZEW Economic Sentiment and EU Economic Summit are the main market-movers. Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.

It seemed like smooth sailing for the common currency: fears about China didn’t really hurt it, and some global optimism sent the pair to a two year high. Yet all this didn’t last: when Draghi opened his mouth and tensions rose in the Russia – Ukraine conflict, the euro took a hit but eventually staged an impressive recovery to high ground. Can the euro break above 1.40 or is this already too much?

Updates:

• Mar 17, 10:36: Crimean Referendum threatens Europe’s Economic Balance: Sterling continued to lose ground against most currency pairs last week following the domestic account deficit data and concern regarding...
• Mar 17, 9:01: Will the euro strength story continue?: Last week has largely been a Euro story. The common currency has enjoyed strong interest following last week’s European Central...

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

1. Inflation data: Monday, 10:00. Euro zone consumer prices plunged 1.1% in January, pulled down by a fall in non-energy industrial products, registering the fastest monthly drop ever recorded. Annual inflation remained at 0.8%, far below the European Central Bank’s target. Economists forecasted a price rise of 0.9% in January. Greece and Cyprus remained stuck in deflation. Only three countries in the bloc, Estonia, Latvia and Slovakia, saw a price increase in January. CPI is expected to edge up 0.8%, while Core CPI is predicted to gain 1.0%.
2. Jens Weidmann speaks: Monday, 15:00. Deutsche Bundesbank President Jens Weidmann will speak in Kiel. Weidmann supported ECB President, Mario Draghi’s view that economic recovery is moderate but still fragile and called the Euro-zone citizens to trust the ECB to handle monetary policy to achieve price stability.
3. German ZEW Economic Sentiment: Tuesday, 10:00. The ZEW survey of economic sentiment in Germany fell to 55.7 points in February, dropping 6 points from the previous month. The weak reading was influenced by uncertainties regarding the employment condition, US concerns that the current economic growth could lose momentum and emerging economies volatility. The ZEW survey is expected to decline to 52.3.
4. ZEW Economic Sentiment: Tuesday, 10:00. Economic expectations in the euro zone, declined in February by 5.4 points to 68.5. Analysts expected a higher reading of 73.9. The decline in sentiment may attributed to concerns about U.S. economic recovery, and market volatility in emerging markets. Despite the relatively weak reading, ZEW President Clemens Fuest believes this decline in economic expectations is a temporary setback, since the majority of surveyed financial market experts remain optimistic. A further decline to 67.3 is expected now.
5. EU Economic Summit: Thursday. A European Union summit in Brussels will seek ways to enhance the European industrial base as a driver for economic employment growth. “The regulatory framework both at European and national levels must be made more conducive towards investment and innovation and the reassuring of manufacturing jobs,” the document adds, referring to a drive to reverse a trend of losing employment to other regions of the world. The summit, will also hold “a first policy debate on the framework for climate and energy in the period from 2020 to 2030 and agree on the way forward in terms of orientations and procedure.
6. Current Account: Friday, 9:00. The eurozone’s current account surplus decreased to 21.3 billion euros ($A32.44 billion) in December from 23.3 billion euros in November. Over the 12 months to December, the current account showed a surplus of 221.3 billion euros, compared with a surplus of 128.6 billion euros a year earlier. Current account surplus is expected to contract to 18.4 billion.
7. Consumer Confidence: Friday, 15:00. Consumer confidence in the euro zone surprisingly deteriorated in February, posting its first fall since November. Consumer sentiment fell to -12.7 points from -11.7 points in January, indicating recovery is still very fragile. In the European Union as a whole, consumer sentiment also fell, but to a lesser extent, to -9.3 points from -8.8 points in January. Consumer confidence is expected to improve to -12.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar started the week with some nice range trading between the 1.3830 and 1.3895 lines mentioned last week. It then surged higher and reached a level of 1.3965 before falling back to the previous range.

Technical lines from top to bottom:

The all important round number of 1.40 is of high political importance. We have seen how getting close to the line triggered a critical comment that sent it down. Below, 1.3940 served as resistance back in 2011.

The 2013 high of 1.3895 is the top line looming above and it is becoming more important. 1.3830 was a 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 and now switches to strong support. The round number of 1.37, is another support 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.

I turn from bullish to bearish on EUR/USD

While the bar is high for ECB action such as setting a negative deposit rate, the bar is high for verbal intervention when the euro is high. 1.40 seems to be a level that the ECB will not tolerate. Has the rally topped out?

In addition, the crisis in Ukraine could still have a negative impact on the common currency. In the US, we have all the reasons to believe a third taper move is coming. Despite the not-so-impressing figures, the Fed is on a tightening cycle and this is USD positive.

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USD/JPY Forecast March 17-21

The Japanese yen was supported at first by China and then by Ukraine, that made a comeback to the limelight. Trade balance is the big event after a busy week. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

Q4 growth was revised to the downside, to 0.2%, as expected. This adds pressure for more fiscal and monetary stimulus. Worries about growth in Chinaserved as the safe haven trigger and this was yen positive, allowing consolidation after the recent rise. The rate decision in Japan offered little, but the BOJ may still act in April. Everything is possible. In the US, figures were OK, but not more than that. The Ukraine story could continue dominating the scene for some time.

Updates:

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

1. Trade Balance: Tuesday, 23:50. Since the terrible earthquake, tsunami and nuclear tragedy 3 years ago, Japan needs to import energy at a much greater scale, shifting its trade balance to negative. After a deficit of 1.82 trillion yen in January, a smaller one is likely now.
2. All Industries Activity: Wednesday, 4:30. This figure by METI disappointed with a drop in December. After the 0.1% slide, an increase of a similar scale is expected.

* All times are GMT.

USD/JPY Technical Analysis

Dollar/yen began the week with a slide to the 102.74 line (mentioned last week), practically erasing the jump higher. It then changed course and found support only above the 101.35 line.

Technical lines from top to bottom

The top line is the peak seen in the turn of the year: 105.44. This was challenged several times. Below, 104.80 capped the pair during January.

Below, 103.77 provided support for the pair in January and served as a clear separator of ranges. 102.74 was a stubborn peak during February and is the top line of the current trading range.

102 is a round number that provided support to the pair in late January and is now a pivotal line in the range.

101.35 replaces the previous peak of 101.44 after working as support in February. 100.75 was a cushion for the pair during several days earlier in the year and is the last defense before the very round number.

100 is the ultimate support line and the last line for now.

I am neutral on USD/JPY

While the fears regarding China are already priced in, Ukraine returned to be a wild card. So, we could see the yen strengthening, depending on the events in Crimea over the weekend. However, the intent of the Fed to taper once again can turn the pair upwards once again.

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Forex Weekly Outlook March 17-21

The yen is the winner of a turbulent trading week which saw new highs for the euro and the kiwi. The first rate decision by Janet Yellen is the main event. Among other highlights are the German Economic Sentiment, speeches by heads of central banks, UK employment data, as well as US employment and housing data. These are the main market movers on Forex calendar. Here is an outlook on the influential events for the coming week.

US data was mixed: retail sales advanced nicely,rising 0.3%, in February but this came on top of downwards revisions. Furthermore, US jobless claims edged down by 9,000 to 315,000, its best reading since November 2013, However, consumer confidence dropped. EUR/USD climbed to new 2+ year highs, and was only temporarily hit by a comment from Draghi. NZD/USD reached new highs on a hawkish RBNZ statement that accompanied the rate hike andAUD/USD managed to focus on local job strength while escaping worries about China. Action will probably continue. Let’s start,

Updates:

• Mar 17, 10:36: Crimean Referendum threatens Europe’s Economic Balance: Sterling continued to lose ground against most currency pairs last week following the domestic account deficit data and concern regarding...

1. German ZEW Economic Sentiment: Tuesday, 10:00. German economic climate dropped more than expected in February, reaching 55.7 from 61.7 in the previous month, thanks to emerging market concerns. This release marked the second consecutive fall; economists expected a small decline to 61.3. Nevertheless, analysts expect Germany to continue its growth trend this year leading its Eurozone members to recovery. German economic climate is forecasted to decline further to 52.3.
2. US Building Permits: Tuesday, 12:30. Building permits plunged in January to 937,000, falling 5.4% from December. The release was considerably weaker than the 980,000 expected by analysts. The unusually cold weather and snow storms stopped growth in the housing sector. On an annual basis, starts fell 2.0% from January 2013, to 898,000, the lowest level since August 2011, while building permits, were up 2.4% from a year ago. A stronger reading of 970,000 is expected this time.
3. US inflation data: Tuesday, 12:30. U.S. consumer prices increased in January, thanks to a rise in demand for electricity and heating fuel, caused by the cold winter. Consumer Price Index climbed 0.1%, following a 0.3% in December. In the 12 months to January, consumer prices edged up 1.6% after increasing 1.5% in December. Meanwhile, core CPI, excluding volatile energy and food components, also rose 0.1% for a second consecutive month. In the 12 months to January, core CPI rose 1.6%, following a 1.7% increase in December. Both CPI and core CPI are expected to gain 0.1%.
4. UK employment data: Wednesday, 9:30. The British unemployment rate unexpectedly climbedin the fourth quarter, reaching 7.2% from 7.1% in the third quarter a fact that compelled the BOE to keep interest rates unchanged. Meantime, jobless claims fell 27,600 in January, beating economists forecast of 18,300. However the pace of decline will moderate in the coming months due to a certain decline in economic activity. For as long as unemployment remains above the 7% threshold, monetary policy will not be changed. Jobless claims are expected to decline by 23,300 while unemployment rate is expected to remain unchanged at 7.2%.
5. Fed decision: Wednesday, 18:00, press conference at 18:30. The taper train is on track and the Fed is very likely to reduce its bond buys by another $10 billion. After the Fed prepared markets for the tapering during a long period of time, only a major disaster could change the course. The recent OK NFP left little doubts. In addition, the composition of the FOMC is more hawkish, and Yellen would need to prove she is tough enough. It is her first decision and being a woman probably also plays a role. In the press conference, she is expected to show continuity, following in the footsteps of Bernanke, and in line with her recent lengthy testimonies in Washington. The move is largely priced in, and a strengthening of the dollar in the aftermath of the decision could be quite limited.
6. NZ GDP: Wednesday, 12:45. New Zealand economy expanded more than expected in the third quarter, rising 1.4% following a revised 0.3% increase in the preceding quarter. The main contributors were agriculture and the dairy sector. The strong growth and rising inflation prompted the RBNZ to raise rates in March to 2.75% making New Zealand the first major developed economy to tighten in the current cycle. New Zealand economy is expected to expand by 1.0% this time,1%
7. Haruhiko Kuroda speaks: Thursday, 7:15. BOE Governor Haruhiko Kuroda will speak in Tokyo. Kuroda said in a news conference in March that he rules out the need for further easing measures at this point, unless economic conditions worsen. Market volatility is expected. Analysis: Temporary Insanity and USDJPY
8. US Unemployment Claims: Thursday, 12:30. The number of new claims for unemployment benefits unexpectedly dropped 9,000 last week to a seasonally adjusted 315,000.This was the best reading since November. Economists expected a rise in claims to a level of 334,000. The four-week average fell 6,250 to 330,500, the lowest since early December. Improved weather conditions have contributed to the improvement in the job data. The number of people still receiving benefits after an initial week of aid fell 48,000 to 2.86 million in the week ended March 1. That was the lowest level since December. A small rise to 327,000 is forecasted.
9. US Existing Home Sales: Thursday, 14:00. U.S. existing home sales dropped more than expected in January, reaching an 18 month-low of 4.62 million unit’s annual rate following 4.87 million in the previous month. The cold weather and house shortage were behind this decline. Economists projected a higher figure of 4.73 million. A rise to 4.65 million is predicted now.
10. US Philly Fed Manufacturing Index: Thursday, 14:00. Factory activity in the U.S. mid-Atlantic region contracted in February reaching -6.3 after posting 9.4 in January, amid a fall in new orders. Analysts expected a high reading of 9.2. New orders plunged to -5.2 from 5.1 increase and the employment component contracted to 4.8 from 10.0. However, economists believe manufacturing will pick-up in the coming months. Factory activity is expected to increase to 4.2.

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Forex Trading Signal for 17th March 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 : 

 (1) BUY

Entry Point: 1.38980  

Take Profit: 1.39400

Stop Loss:   1.38680

 

GBP/USD

Up Trend:

(1) BUY

Entry Point: 1.66270    

Take Profit: 1.66570

Stop Loss:   1.65900

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