EUR/USD update

EURUSD D1 (04-01-2016 0039).png

Euro’s anticipated bullish move appears to have run out of steam near 1.1418. Given the four day winning streak, a short-term loss of momentum may see prices consolidate in range of 1.1376 – 1.1418 ahead of payrolls.

A weaker wage growth number wud be enough to send EUR abv 1.148 and twd hurdles at 1.1460-1.15 levels.

Conversely, strong wage growth figures cud push spot below 1.1346 indicating short-term top is in place abv 1.14. Still overall bullish invalidation is seen only below rising trend line support

 

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EUR/USD targets 1.1418

EURUSD D1 (03-31-2016 1616)

Euro’s rebound from 1.1310 followed by a break above 1.1376 (Feb 11 high) has opened doors for 1.1418 (23.6% of May 14 high-Mar15 low).

The move indicates a recovery from Dec low of 1.0517 has resumed and a break above 1.1418 would see prices challenge offers around 1.15.

However, short-term loss of bullish momentum could see the spot fall back to 1.13, but overall outlook stays bullish unless support at 1.1257 is breached.

Gold – Falling trend line intact despite dovish Fed

So much noise about the dovish Fed everywhere, but Gold’s downtrend stays intact.

Daily Chart

gold.png

Gold failed to take out falling trend line hurdle today and a weak closing is pretty much a done deal, which means we are heading back to $1200 levels.

Gold’s move forces me to think –

  • Does precious metal traders know Fed is going to hike rates in April or June
  • Or markets feel equities and other risk assets are undervalued. However, anybody calling equities undervalued must be kidding

Hence I am forced to believe someone out there believes policy tightening will continue ..

GBP/JPY keep selling unless trendline hurdle is breached

GBP/JPY daily chart

GBPJPY D1 (03-31-2016 0021).png

This could be a major sell opportunity and here is why

  • Latest poll in UK have shown sentiment is shifting favor of Brexit. This is bad news for GBP
  • I believe Fed is fooling markets and may retain hawkish tone and could actually move rates by June and that would hurt GBP more in the short-term, given the Brexit fears
  • Wobbly oil and hawkish talk from Fed could hurt stocks as well and this improve demand for JPY

On Chart, we see spot failing to take out falling trend line hurdle. So I would recommend traders to attempt selling GBP/JPY with small stops above trend line hurdle. The immediate downside tgt is 160.00 and 158.45.

Brek below 158.45 would put buy side arguments to rest and force buyers to unwind their positions leading to sharp sell-off to 155.00 levels.

Dow – will the bullish break on charts last?

Daily Chart

Dow.png

Equities love cheap money and thus also love Yellen talk dovish. No wonder then we see a  bullish break on charts.

Prices sit well above channel… but the question is will it last? here are few points to consider..

  • Q1 is about to end and banks may come out with bad results
  • Oil is looking wobbly again
  • and most important, stocks are trading at a level last seen on Dec 17, which means we are back where we were before the first rate hike happened!

Hence, i doubt Fed’s cheap talk. I guess its an effort just to weaken the dollar ahead of the second rate hike

 

Quick look EUR/GBP

  • renewed selling in Cable ensured EUR/GBP kept gains abv 0.7842 (50% of Jul 2013 high-Jul 2015 low) suggesting erratic decline from last Thu may have run out of steam and doors are opened for a re-test of 0.7928.
  • Bullish 1-hr RSI also adds credence to the possibility of upside being achieved in next 24 hours or so.
  • 0.7848 should be treated as demarcation line between bulls n bears.

Supp – 0.7848, 0.7774, 0.7705

Res – 0.7897, 0.7928, 0.7946