EUR/USD Forecast Mar 31- Apr 4

EUR/USD was pressured lower once again, as ECB members released dovish comments. And now, it is money time, with the ECB decision preceded by the all important inflation numbers. Is the ECB ready to act? Here is an outlook on the highlights of this week and an updated technical analysis for EUR/USD.

Various members of the European Central Bank expressed more dovish comments than usual. Standing out were Jozef Makuch who said that there is “growing readiness to act” regarding deflation and Jens Weidmann of the Bundesbank, who did not rule out QE. In addition, the euro was hurt by weaker German business confidence and PMIs. In the US, data was somewhat better than expected, with a nice drop in jobless claims and strong consumer confidence covering for weaker new home sales. What’s next for the pair? Let’s start:

Updates:

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

1. German Retail Sales: Friday, 8:00. German retail sales surged in January to their strongest gain in seven years rising 2.5%, reaffirming predictions that consumer spending will boost German economy this year. January’s big gain topped market forecasts of a 1.2% rise and followed a 1.7% decline in December. Optimistic consumer sentiment and low interest rates increase spending and boost economic activity. Retail sales are expected to drop 0.3%.
2. CPI Flash Estimate: Monday, 9:00. Inflation in the euro area accelerated at the same pace in February as in the month before, rising 0.8% on a yearly base. Analysts expected a weaker reading of 0.7%. Meanwhile core CPI, excluding energy, food, alcohol & tobacco, edged up 1% in February, following 0.8% in January. A rise of 0.6% is anticipated now.
3. Manufacturing PMIs: Tuesday. Manufacturing activity in Italy declined to 52.3 in February from 53.10 in January. Manufacturing PMI averaged 51.23 from 2012 until 2014, reaching an all time high of 54.90 in October of 2013 and a record low of 48 in June of 2013. Meantime, manufacturing PMI in Spain edged up to 52.50 in February from 52.20 in January. The average PMI from 2011 to 2014 reached 46.41 indicating continuous contraction. Spain is expected to reach 52.9, while Italy is predicted to drop to 52.2.
4. German Unemployment Change: Tuesday, 7:55. German unemployment declined in February by 14,000, its lowest level in nearly 1-1/2 years. The improvement in the labor market went hand in hand with growth in domestic demand. The sharp drop in the number of unemployed was larger than the 10,000 decline forecasted by analysts. In case the labor market continues to improve offering better wages, consumer spending will expand further and boost domestic demand in 2014. German unemployment is expected to drop by 9,000 this time.
5. Unemployment Rate: Tuesday, 9:00. The unemployment rate in the Eurozone 18 member states remained unchanged in January at 12%. The same rate was maintained for the fourth consecutive month. The rate of unemployment in the larger 28-member European Union was also stable, at 10.8%, sustained since October 2013. Compared to January 2013, the number of unemployed has declined by 449,000 in the EU and by 67,000 in the Eurozone. The lowest unemployment rate in the EU was Austria’s 4.9%, followed by Germany at 5%and Luxembourg at 6.1%. However, 11 out of 28 states in the EU had unemployment rates at 10% or higher in January. The highest rate for January is in Spain, where unemployment is at 25.8%, and 28% in Greece. The unemployment rate in the Eurozone is expected to remain unchanged at 12%.
6. ECOFIN Meetings: Wed-Thu. ECOFIN meetings are held in Brussels attended by Finance Ministers from EU member states. The members discuss financial issues, concerning the euro and government finances.
7. Services PMIs: Thursday. Spain’s service sector continued to expand in February, reaching 53.7 following a higher score of 54.9 posted in January. The reading suggests the path to recovery is still sluggish. Meanwhile, Italy’s business activity increased at the fastest pace in almost three years, reaching 52.3. New orders improved at an accelerated rate, but net job losses were still high in January. February’s decrease was only marginal, and the slowest in the current three-year sequence of backlog depletion. Spanish manufacturing is expected to expand further to 54.1 while Italy is expected to remain at 52.3.
8. Retail Sales : Thursday, 9:00. The Eurozone’s volume of retail sales edged up in January by 1.6% following a 1.3% drop in the previous month. Analysts expected a more modest rise of 0.9%. German retail sales climbed 2.5% in January and France registered a 1.2% increase. Despite a pick-up in growth domestic demand in the Eurozone remained weak, with a stubbornly high unemployment rate. An improvement was visible in southern Europe.  A decline 0.3% is expected now.
9. ECB rate decision : Thursday, 11:45, press conference at 13:30.  Assuming that both CPI and Core CPI do not fall below 0.5% in the flash reading for March, the ECB is likely to refrain from new stimulus in March. Draghi showed us that the bar is high for more stimulus in the previous meeting. In addition, recent data from France shows that the fragile recovery is widening and this could also hold back policymakers. A lack of action in policy does not meet a lack of market action: Draghi may certainly raise the so far subtle rhetoric regarding the exchange rate. The high value of the euro weighs on exports and pushes inflation lower due to cheaper imports. It seems like 1.40 is the “line in the sand” and it will not come as a surprise if Draghi plays down the euro. However, verbal intervention is usually short lived, and action will probably be needed later on in the year..
10. German Factory Orders: Friday, 10:00. German factory orders rebounded in January, rising 1.2%, following a 0.2% drop in the previous month. The increase was driven by foreign demand, outside the 18 countries using the euro. Economists expected a lower increase of 1.1%. Domestic orders edged up 1.6%, while foreign orders overall rose 1%. Non-eurozone orders soared 7.2%, but orders from within the bloc dropped 8.8%. A further rise of 0.5% is forecast.

* All times are GMT

EUR/USD Technical Analysis

Euro/dollar started the trading week with a spike to 1.3875 which was rapidly erased. After falling below 1.38, the pair tested the 1.3740 line (mentioned last week), dropped below it, but eventually closed above.

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, which was a long serving 2013 peak comes back into the focus after capping the pair in March 2014.

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 bearish on EUR/USD

Not only does the ECB want EUR/USD to refrain from crossing 1.40, it probably wants it even lower, as we understand from recent comments. Even if the central bank does not act, rhetoric will probably strengthen to weaken the currency. Soft German inflation numbers strengthen the notion.

In the US, we see no real retreat from Yellen’s “6 month from QE end to rate hike” comment, and the data is certainly positive. An OK NFP should be enough to keep the greenback bid.

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USD/JPY Forecast Mar. 31 – Apr. 4

The Japanese yen was looking for a new direction. A busier week awaits the pair with the Tankan indices being the highlights. Here is an outlook on the major events moving the yen and an updated technical analysis for USD/JPY.

While the Ukraine-Russia crisis faded away once again, fears about Chinese growth helped the yen, countering the Yellen effect. There is an increasing notion that the BOJ may act to counter the effect of the sales tax hike which happens this week, even if the Tokyo Core Inflation finally reached 1% and the Japanese unemployment rate fell to 3.6%. In the US, data was mixed but somewhat leaned to the upside, especially with the encouraging drop in jobless claims. What will take the pair out of range? Let’s start:

Updates:

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

1. Manufacturing PMI: Sunday, 23:15. Markit’s manufacturing purchasing managers’ index for Japan dropped to 55.5 points in February after a nice series of rises. Another drop is likely now. Note that the figures above 50 represent growth.
2. Industrial Production: Sunday, 23:50. The preliminary industrial output move for February is expected to show a slowdown in growth after a big leap of 3.8% in January. The normal fluctuations are in a more limited range.
3. Housing Starts: Monday, 5:00. Year over year, housing starts rose 12.3% in January. As this figure is quite volatile, the impact can be somewhat limited. A similar y/y rise is expected now.
4. Tankan Manufacturing Index: Monday, 23:50. The official BOJ indicator for the manufacturing sector rose to 16 points in Q4 2014, reflecting quickly improving conditions among manufacturers. This is the highest post crisis level. The 1200  large manufacturers that are surveyed could show a small decline in conditions, but the figure will likely remain positive for Q1 2014.
5. Tankan Non-Manufacturing Index: Monday, 23:50. Similar to the manufacturing sector, also the services sector enjoyed a big jump: 20 points in Q4 after 14 in Q3 2013. A smaller decline is probable for this sector.
6. Average Cash Earnings: Tuesday, 1:30. This area of the economy is in the limelight for the Japanese government, which wants to see wage rises as a push for higher inflation, and not only rises in imported goods. In January, earnings dropped by 0.2%, far below expectations and after a few positive months. This blow will likely be corrected with a rise of a similar scale now.
7. Monetary Base: Tuesday, 23:50. Since BOJ governor Haruhiko Kuroda began acting around one year ago, the main tool was an expansion of the monetary base: more in circulation. So, the year over year rises have been significant in the past year, reaching a peak of 55.7% back in February. Another big rise is likely in March.

* All times are GMT.

USD/JPY Technical Analysis

Dollar/yen began the week with a rise towards the 102.74 line mentioned last week, but couldn’t top it. The pair then returned back to support at 102, and then fell below, but never went too far before eventually returning to range.

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 remain bullish on USD/JPY

The dreaded sales tax hike is here and the BOJ will not hesitate to act. Pressure from the government to push inflation and growth higher could probably see more action soon, and this could certainly weaken the Japanese yen. In the US, the rate hike genie is out of the bottle and the Fed tightening is not that far in the distance. Another OK Non-Farm Payrolls would be enough to give the dollar another boost.

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Forex - Weekly outlook: March 31 - April 4

The dollar rose to two-week highs against the yen on Friday, as indications that China’s government is prepared to do more to shore up the cooling economy bolstered risk appetite.

Dollar ends week higher against yen and euro

Market sentiment was boosted after China's premier Li Keqiang said the country has policies in place to counter economic volatility. The remarks eased concerns over recent signs of a slowdown in the world’s second-largest economy.

Data on Friday showing that U.S. consumer spending rose 0.3% last month after a downwardly revised gain of 0.2% in January also lifted the dollar higher against the yen.

USD/JPY rose 0.64% to end Friday’s session at 102.83, the highest since March 12. For the week, the pair gained 0.57%.

The euro edged up from one-month lows against the dollar following the comments, with EUR/USD inching up 0.07% to settle at 1.3752, recovering from lows of 1.3702. The pair ended the week down 0.61%.

The euro remained under pressure after European Central Bank officials indicated earlier in the week that they are considering fresh policy options to stave off the risk of deflation in the region.
ECB governing council member and Bundesbank head Jens Weidmann said Tuesday that a negative deposit rate could be an appropriate way to address the impact of strong gains in the euro.

The same day ECB President Mario Draghi that the central bank stood ready to act if inflation slipped lower than the ECB expected.

Data on Friday showing that the annual rate of inflation in Spain slipped 0.2% in March fuelled concerns that deflation could threaten the economic recovery in the euro area. A separate report showed that the annual rate of inflation in Germany slowed in March.

The dollar was lower against the pound on Friday, with GBP/USD up 0.185 to 1.6640 at the close of trade.

Sterling remained supported after a report on Friday showed that U.K. fourth quarter growth was left unrevised at 0.7% for the final three months of 2013. Another report showed that the U.K. current account deficit came in at a larger-than-expected 22.4 billion pounds in the fourth quarter.

Elsewhere, the Australian dollar rose to a four-month high of 0.9295 against the greenback on Friday, before trimming back gains slightly to settle at 0.9247. AUD/USD ended the week with gains of 1.33%.

The Aussie was boosted as recent reports indicated that the economy is picking up, while hopes for fresh stimulus measures from China also supported the Australian’s dollar’s gains. Meanwhile, NZD/USD edged down 0.18% to 0.8654 at the close on Friday, after hitting two-and-a-half year highs of 0.8696 earlier in the session. The pair ended the week with gains of 1.31%.

In the week ahead, investors will be looking to Friday’s U.S. nonfarm payrolls report for March for further indications on the strength of the labor market, while Monday’s euro zone inflation report will also be in focus, ahead of the ECB policy meeting and press conference on Thursday.

Monday, March 31

Japan is to release preliminary data on industrial production.

New Zealand is to produce private sector data on business confidence, while Australia is to publish data on private sector credit.

Switzerland is to publish its KOF economic barometer.

The U.K. is to release data on net lending to individuals.

The euro zone is to produce preliminary data on consumer price inflation, which accounts for the majority of overall inflation.

Canada is to publish the monthly report on gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth.

Tuesday, April 1

Japan is to publish its Tankan manufacturing and non-manufacturing index, as well as data on average cash earnings.

China is to release data on manufacturing activity.

The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

The euro zone is to release data on the unemployment rate. Germany is release data on the change in the number of people unemployed, while Spain and Italy are to release reports on manufacturing activity.

Switzerland is to release its SVME manufacturing index.

The U.K. is to release data on manufacturing activity.

Later Tuesday, the Institute of Supply Management is to publish a report on U.S. manufacturing growth.

Wednesday, April 2

Australia is to produce data on building approvals, a leading indicator of future construction activity.

The U.K. is to produce private sector data on house price inflation, as well as official data on construction activity.

In the euro zone, Spain is release data on the change in the number of people unemployed.

The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to release data on factory orders.

Thursday, April 3

Australia is to release data on retail sales and the trade balance, the difference in value between imports and exports.

China is to produce data on service sector activity.

The euro zone is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. Spain and Italy are to publish data on service sector activity.

The U.K. is also to release data on service sector growth, while the Bank of England is to announce its benchmark interest rate.

Later in the day, the European Central Bank is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.

Both the U.S. and Canada are to publish data on the trade balance, and the U.S. is also to publish the weekly report on initial jobless claims. Meanwhile, the ISM is to publish a report service sector activity.

Friday, April 4

Germany is to publish data on factory orders.

Canada is to publish data on the change in the number of people employed and the unemployment rate. The nation is also to publish its Ivey PMI

The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.

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Forex Trading Signal for 31st 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: 1.37430 

Take Profit: 1.37850

Stop Loss:   1.37130

 

GBP/USD

Up Trend:

(1) BUY

Entry Point: 1.66290 

Take Profit: 1.66700

Stop Loss:   1.65900

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