GBP/USD Outlook March 24-28

GBP/USD lost ground throughout the week, dropping about 160 points. The pair closed the week slightly below the 1.65 line. This week’s highlights are CPI, Retail Sales and Current Account. Here is an outlook for the main events moving the pound, and an updated technical analysis for GBP/USD.

British Claimant Count Change looked sharp but it wasn’t enough to prevent the pound from taking a nasty spill last week. In the US, the dollar surged after Janet Yellen’s comments that interest rate could rise early next year.

Updates:

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

1. Nationwide HPI: Tuesday, 25th-28th. This house inflation indicator is an important gauge of activity in the UK housing market. The index posted a respectable gain of 0.6% last month, matching the forecast.
2.  CPI: Tuesday, 9:30. CPI is considered the most important inflation indicator and an unexpected reading can affect GBP/USD. The index dipped below the 2.0% level last month, the first time it has done so in over four years. CPI has been steadily dropping since mid-2o13, and this trend is expected to continue, with an estimate of 1.7%.
3. BBA Mortgage Approvals: Tuesday, 9:30. This indicator has been steadily moving higher, pointing to increased activity in the housing sector as well as stronger consumer spending. The indicator hit a six-year high, jumping to 50.0 thousand last month. This beat the estimate of 47.9 thousand. The estimate for the upcoming release remains at 50.0 thousand.
4. PPI Input: Tuesday, 9:30. This indicator looks at inflation in the manufacturing sector. The index has run into turbulence, posting 5 declines in the past 6 releases. The January reading posted a decline of -0.9%, missing the estimate of -0.4%. The markets are expecting a turnaround in the upcoming release, with an estimate of +0.4%.
5. RPI: Tuesday, 9:30. The Retail Price Index includes housing costs, which are not covered by CPI. The index rose to 2.8% last month, edging above the estimate of 2.7%. The estimate for February stands at 2.6%.
6. CBI Realized Sales: Tuesday, 11:00. This is a leading indicator of consumer spending. The indicator has been showing some strong movement, and jumped to 37 points in the previous release, up from 14 points a month earlier.
7. Retail Sales: Thursday, 9:30. Retail Sales is the primary gauge of consumer spending and often has an impact on the direction of GBP/USD. The indicator took a hit in February, posting a decline of 1.5%. This was lower than the estimate of -0.9%. Better news is expected in the upcoming release, with an estimate of +0.5%. Will the indicator meet or beat this prediction?
8. GfK Consumer Confidence: Friday, 00:05. GfK continues to point to weak consumer confidence. The indicator has posted two straight releases of -7 points. Little change is expected in the upcoming release.
9. Current Account: Friday, 9:30. Current Account deficit ballooned to -20.7 billion pounds last month, up from -13.0 billion pounds a month earlier. The markets had expected a deficit of -13.8 billion. The markets are expecting a turnaround in the February release, with an estimate of -13.5 billion. Current Account is closely linked to currency demand, as a rising deficit indicates foreigners are purchasing smaller amounts of pounds.
10. Final GDP: Friday, 9:30. Final GDP, released each quarter, is always eagerly anticipated by the markets, and an unexpected reading can have a significant impact on the movement of GBP/USD. The indicator has been steady in recent releases, and the estimate for Q4 stands at 0.7%.

* All times are GMT

GBP/USD Technical Analysis

GBP/USD opened the week at 1.6641. The pair quickly touched a high of 1.6666 but it was all downhill from there. GBP/USD dropped to a low of 1.6475, which is a support level (discussed last week) and closed the week at 1.6484.

Live chart of GBP/USD:

Technical lines from top to bottom

We begin with resistance at 1.7180, which has served in a resistance role since October 2008.

1.6990 is next. This line is protecting the key psychological level of 1.70.

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 has switched back to a resistance role, following the dollar’s strong move higher.

The round number of 1.6600 was easily broken as the pound fell sharply. It starts off the weak as a strong resistance line.

1.6475 was the low of the week. It is currently a weak support line, and could be tested early in the week.

1.6343 is the next support level. This line saw some activity in early February but has provided strong support since that time. The next support line is 1.6247.

1.6163 was a key resistance line in October and November 2012.

The round number of 1.60 is the final support level for now. This psychologically important level has remained firm since November.

I am neutral on GBP/USD.

GBP/USD has hit a serious tailspin, and much will depend on British retail sales and CPI numbers this week.  The taper train continues to chug along in the US and this has helped the dollar. US employment numbers have generally been solid and market sentiment  with regard to the US dollar remains positive.

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EUR/USD Forecast March 24-28

EUR/USD was not able to conquer 1.40 and was eventually hit hard. Is this a temporary dip or a change of courseFlash manufacturing and services PMIs, German Ifo Business Climate and inflation data are the main market-movers this week. Here is an outlook on the main events ahead.

The disappointing ZEW economic sentiment from Germany only had a temporary effect, and it seemed that the euro could still move higher. But later came Janet Yellen: the Fed tapered bond buys once again and Yellen also released a comment about raising rates. The resulting dollar strength sent EUR/USD below uptrend support. The Russia – Ukraine crisis is humming in the background.

Updates:

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

1. Flash Manufacturing and Services PMIs: Monday. The Euro-area advanced modestly in the services sector but slightly disappointed in the Manufacturing sector. The Eurozone manufacturing Purchasing Managers’ Index reached 53.0, following January’s final reading of 54.0 and below expectations of 54.2. Services PMI reached 51.7, after a final reading of 51.6 in January. The decline in the manufacturing sector indicated recovery is still fragile. German manufacturing sector reported a weaker than expected reading of 54.7 compared to January’s final reading of 56.5 and analysts’ expectations of 56.3. However, services PMI edged up to 55.4 after a final January reading of 53.1 and analysts’ forecast of 53.4. All in all, German economy continues to lead the Eurozone’s recovery. Contrary to Germany, France continued to disappoint with a 48.5 reading in the manufacturing sector after getting close to expansion in January and the services sector fell to 46.9, compared to a previous reading of 48.9 and analysts’ expectations of 49.4. French Manufacturing is expected to rise to 49.8 and its service sector to 47.9. German Manufacturing is predicted to decline to 54.7 and services to 55.8. The Eurozone Manufacturing is expected to remain at 53.2 and services are also expected to remain unchanged at 52.6.
2. German Ifo Business Climate: Tuesday, 9:00. German business sentiment unexpectedly advanced in February to the highest reading in 2 1/2 years indicating a solid growth trend in Europe’s largest economy. The survey revealed sentiment edged up to 111.3 from 110.6 in January, beating forecasts of a 110.7 reading. Domestic demand is constantly improving and German GDP also gained 0.4% in the last quarter suggesting Germany will continue to be the locomotive of Europe this year. A decline to 110.9 is expected now.
3. GfK German Consumer Climate: Wednesday, 7:00. German consumer confidence boosted to a seven-year high of 8.5in March following 8.3 in February. This improvement demonstrates the German economy’s strength. The Majority of responders were confident in Germany’s growth trend this year. High job security and growing incomes as well as low inflation helped to boost consumer confidence. German consumer confidence  is expected to remain at 8.5.
4. M3 Money Supply: Thursday, 9:00. The euro zone’s M3 money supply increased more-than-expected in January rising an annualized rate of 1.2%, following 1.0% in December 2013. Economists expected a smaller advance of 1.1% . However, loans to private sector dropped at a pace of 2.2% annually, compared to expectations for a 2.1% decline, after falling 2.3% in December. M3 money supply is expected to increase 1.3%.
5. German Import Prices: Friday, 8:00. Germany’s import prices continued to decline in January, contracting 0.1%, slightly lower than expected, following a flat reading in December 2013. In a yearly base, import price index dropped 2.3% while economists expected a 2.4% drop in January. The main reason for this decline was falling energy prices and non-ferrous metal. A rise of 0.3% is anticipated now.
6. German CPI: Friday. Germany’s inflation increased in February, rising 0.5%, mainly due to price increases of food products. On a yearly base, CPI was 1.2% higher than in February 2013. The European Central Bank defines price stability as an annual average inflation rate of just below 2% over the medium term. The tame inflation enables the ECB to maintain rates unchanged. Inflation is expected to rise by 0.4%.
7. French Consumer Spending: Friday, 7:45. French consumer spending fell sharply in January, dropping 2.1% from a 0.2% gain in the previous month. Lower spending on energy and new cars, was the main reason behind this fall. The reading was far worse than the 0.8% drop anticipated by analysts. Durable goods acquisitions declining by 4.3% and auto spending weakened by 7.7%. Consumer spending is also affected by worries about unemployment. The European Commission stated that consumer spending would be the make-or-break factor for the French economy this year. French consumer spending is expected to climb 1.0%

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar began the week capped by the 1.3940 level (mentioned last week). It then dropped and reached a low of 1.3750 before staging a modest recovery towards 1.38.

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. The round number of 1.38 is now a pivotal line in the range. It served as resistance in December.

1.3740, which provided some support at the end of 2013 is now key support to the downside. 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.

Broken uptrend support

The pair clearly secured a break below the uptrend (thick black line on the chart) that accompanied the pair since February.

I turn from bearish to neutral on EUR/USD

EUR/USD might find a new balance in these levels. The fresh tightening intentions of the Fed are certainly dollar supportive, but they might be watered down and / or sidelined after the storm we have seen. Flows into the euro-zone from China into the euro-zone support the common currency, but if the exchange rate nears 1.40 once again, there is a good chance we will hear again from Draghi, and this could cap any euro rise. All in all, we could have a balanced week before the key events in the next one.

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USD/JPY Forecast March 24-28

The Japanese yen was sensitive to geo-political wobbles once again but eventually lost ground to the mighty greenback Fresh inflation numbers are the highlights of the week. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

The fears that the Crimea referendum would spur out of control supported the Japanese yen, and USD/JPY fell to low support. But then, the FOMC decision for a third taper and especially Yellen’s comment about raising the rates sent the pair much higher. The pair is back to a higher, well defined trading range.

Updates:

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

1. CSPI: Tuesday, 23:50. The corporate services price index is another measure of inflation, the BOJ’s primary target. After a slightly disappointing rise of 0.8% in January, a rise of over 1% is expected for February.
2. Inflation numbers: Thursday, 23:30. Japan releases a big batch of inflation figures. The Tokyo core consumer price index is the most important number, as it is a fresh number for the month of March. Japanese inflation is advancing and reached 0.9% in February. Another tick up to 1% is expected. The National Core CPI is also moving higher and already reached 1.3% in January. A similar number is likely in February. Non-core numbers are also published, but they are overshadowed by the core ones.
3. Household Spending: Thursday, 23:30. More spending means a stronger economy and stronger price pressure. Spending by consumers rose at an annual level of 1.1% in January, above expectations. A somewhat slower y/y increase is expected for February.
4. Unemployment Rate: Thursday, 23:30. Japan enjoys a very low unemployment rate of only 3.7%. While this is not a target of the central bank, the figure is useful for observing the overall health of the economy. No change is expected.
5. Retail Sales: Thursday, 23:50. An increase of 4.4% was recorded between January 2013 and January 2014. This exceeded expectations and was probably a front running of the sales tax hike due in April. For February, another strong y/y growth rate is expected. The plunge is expected once the tax arrives.

* All times are GMT.

USD/JPY Technical Analysis

Dollar/yen started the week by trading under the 102 line (mentioned last week) and it fell to support at 101.20. From there the pair shot back up, settling above the round 102 and challenging 102.74.

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.

101.20 provided strong support for the pair during March 2014 and is the low line of support. 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 turn from neutral to bullish on USD/JPY

Even if following Fed speeches might try to water down Yellen’s “6 months remark”, the genie is out of the bottle and the Fed tightening is not that far in the distance. A rise in US yields could certainly support the pair. In Japan, the sales tax hike is getting closer and the BOJ is ready to double down on its action. Even if the BOJ eventually refrains from big moves, the mere threat of action weighs on the yen.

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Forex Weekly Outlook Mar. 24-28

The US dollar had a successful week, rising against most currencies thanks to a hawkish move from the Federal Reserve. German Ifo Business Climate, Inflation data in the UK, US consumer sentiment and housing data as well as jobless claims are the highlight events . Here is an outlook on the main market-movers this week.

Fed Chair Janet Yellen, hinted about a rate hike in the spring of 2015 causing a multi-layered USD rally. Positive US data released at the end of last week backed the Fed’s intentions. Philly Fed Manufacturing Index rebounded to 9 points in March. Furthermore, US weekly unemployment claimsrose less than expected to 320K, continuing the recovery process in the US labor market. But are we seeing a serious change or will her words be watered down? The biggest victim was CAD, which reached a new multi year low, and also GBP/USD suffered. EUR/USD was also hit by disappointing German data. The yen enjoyed the Ukraine crisis and the kiwi showed its own strength. Let’s start:

Updates:

1. German Ifo Business Climate: Tuesday, 9:00. German business sentiment edged up in February to 111.3 from 110.6 in January. The release was better than the 110.7 predicted by analysts. The rise suggests that economic recovery is continuing to improve despite some weak figures in exports and industrial output. The survey shows retailers are more satisfied with current economic conditions and consumer spending is rising. A small decline to 110.9 is predicted this time.
2.  UK inflation data: Tuesday, 9:30. Inflation in the UK fell in January to 1.9% from 2.0% in the previous month due to lower tobacco prices. The rate declined below the Bank of England’s 2% target for the first time in more than four years. In the first half of 2013 inflation nearly reached 3.0% but descended in the second half of the year. Prime minister David Cameron commented that this fall in inflation is further evidence that UK’s economic plan is working. Low inflation enables future planning without surprises. Another decline to 1.7% is anticipated now.
3. US CB Consumer Confidence: Tuesday, 14:00. Americans were more pessimistic about the US economy in February according to the Conference Board survey. Consumer confidence declined to 78.1 from 79.4 in January, contrary to predictions for 80.2 points. The Expectations Index, fell to 75.7 points in February from 80.8 January’s 80.8. Responders were concerned over the short-term outlook for business conditions, jobs, and earnings. Meanwhile, current conditions assessment has improved. Consumer confidence  is expected to improve to 78.7.
4. US New Home Sales: Tuesday, 14:00. New U.S. home acquisitions edged up to a 468,000annualized pace in January, exceeding forecasts of a 406,000 reading. This five year high release was preceded by 427,000 in December, indicating the housing sector remains strong despite recent falls, even in the midst of unusually cold weather. If the job market continues to improve, the housing sector would return to solid growth. Home sales are expected to reach 447K this time.
5. US Durable Goods Orders: Wednesday, 12:30. Orders for long-lasting U.S. goods excluding transportation unexpectedly climbed 1.1% in January following a 1.9% plunge in December, suggesting factory activity may yet improve despite recent falls. However, durable goods fell 1.0% in January after posting a 4.3% fall in the previous month. Nevertheless, the harsh weather conditions had a big role in the recent industrial decline. The manufacturing sector is expected to do better in the coming months. A small rise of 0.3% is anticipated this time.
6. US Unemployment Claims: Thursday, 12:30. US jobless claims rose less than expected last week, increasing 5,000 to 320,000 Analysts expected claims to reach 327,000. The four-week moving average declined by 3,500 to 327,000. Continuing claims increased to 2,889,000, compared to a downwardly revised 2,848,000 recorded a week earlier. The better than expected release suggests the weak Non-farm payrolls release was a onetime event affected by the cold weather. Jobless claims are expected to reach 326,000.
7. US Pending Home Sales: Thursday, 14:00. Contracts to buy existing U.S. homes edged up 0.1% in January after a 5.8 drop caused by unusual winter storms, harsh weather and limited inventory. This small scale rise was less than the 2.9 climb anticipated by analysts. Nevertheless, conditions are expected to improve in the coming months despite tight credit conditions. A further rose of 0.2% is expected now.

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

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Forex Trading Signal for 24th 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: 1.37890  

Take Profit: 1.38290

Stop Loss:   1.37590

 

GBP/USD

Down Trend:

(1) SELL

Entry Point: 1.64930  

Take Profit: 1.64530

Stop Loss:   1.65230

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
Daily forex signals are sent ontime to only our subcribers.

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Forex Trading Signal for 21st 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

 Down Trend : 

 (1) SELL

Entry Point: 1.37910  

Take Profit: 1.37510

Stop Loss:   1.38210

 

GBP/USD

Down Trend:

(1) SELL

Entry Point: 1.65180   

Take Profit: 1.64780

Stop Loss:   1.65480

NOTE: The above posted Signals are delayed 2 - 4 hours after it has been  generated.
Daily forex signals are sent ontime to only our subcribers.

To subcribe: click here

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