Guest post by Jay Hawk at Orbex
Fundamental Currency Analysis
USD: The U.S. Dollar Index is currently down -0.2220 or -0.26% to 85.5100 after opening at 85.6960 in Asia earlier today. The Greenback is off against most major currencies as traders tread cautiously ahead of Wednesday’s FOMC Statement and in the wake of Friday’s disappointing New Home Sales number. The annualized number of New Home Sales dropped to 466K compared to an expected 473K. Later today, the National Association of Realtors releases Pending Home Sales (+1.1%).
EUR: The Euro is trading higher against the U.S. Dollar today, after the results of the EBA stress tests released over the weekend. According to the latest reports, only eight lenders of the original 25 banks found with a shortfall continue to be short a total of EUR 6.35B out of EUR 25B. All 17 other banks that originally fell short have made up the funds with no major European banks found lacking. Today’s Eurozone data includes the German Ifo Business Climate index (104.6), the M3 Money Supply (+2.2%) and Eurozone Private Loans (-1.3%).
GBP: Sterling is trading steady against the U.S. Dollar today ahead of UK CBI Realized Sales (29) out later this morning. Also, MPC Member Nemat Shafik is scheduled today to deliver a speech entitled “Making Markets Fair and Effective” at the London School of Economics.
JPY: The Japanese Yen is gaining against the Greenback today. Today’s only economic data release out of Japan is the SPPI, which increased by +3.5% y/y, as was widely anticipated.
CHF: The Swiss Franc is up slightly against the U.S. Dollar today as the Swissy trades in sympathy with the Euro, and with no significant Swiss economic data due out until Thursday.
AUD: The Aussie is trading steady against the Greenback today with no significant economic data due out of Australia.
CAD: The Canadian Dollar is up a fraction against the U.S. Dollar today with no Canadian economic numbers due out today.
NZD: The Kiwi is trading higher against the U.S. Dollar today ahead of Wednesday’s release of the RBNZ’s Official Cash Rate (3.50%) and Rate Statement.
AUD/USD currency pair is showing the rate consolidating within a medium term triangular pattern after having broken out of a declining channel that resulted from a downside break of a long term trading range. The rate is now approaching the apex of the triangle and may be close to breaking out after making a modest upside breach on an intraday basis. In addition, the rate is trading below its gently falling 200 day Moving Average, and its 14 day RSI in the indicator box is rising mildly in central neutral territory. (See additional technical analysis in the section below.)
Technical Analysis for the Majors
EUR/USD: The Euro rose to 1.2714 this morning after falling slightly yesterday. The rate has sustained its downside break from its corrective short term up trend after its recent 1.2500 low, but is now rising to suggest a likely retest of that lower trendline now drawn at 1.2754. Medium term declining trendline resistance is now drawn at the 1.2821 level. Resistance is seen at 1.2705/14 and 1.2730, with support seen at 1.2605/24 and 1.2500. Its falling 200 day MA now lies at 1.3423, and its 14 day RSI is rising gently within central neutral territory at the 46.96 level. Its outlook is mildly bullish near term and bearish medium term.
USD/JPY: USD/JPY fell to 107.85 this morning after also falling yesterday, as the rate consolidates below its recent 108.34 high. This peak followed an upside break above a resistance trendline of a corrective down channel that followed its medium term 110.08 high. Support appears at 107.78 and 107.38/52, with resistance noted at 108.34 and 108.00. The rate’s 14 day RSI is falling gently within central neutral territory and now reads at the 53.88 level, and the rate is trading above its rising 200 day MA currently at 103.54. Its outlook is neutral near term and medium term.
GBP/USD: Cable rose slightly this morning after showing a modest rise yesterday, as it corrects higher off its recent low at 1.5994. The rate also remains below its 1.6183 high made near the upper resistance line of its medium term descending wedge pattern now drawn at 1.6146. The rate remains above its 50.0% Fibonacci retracement level of its long term rally from 1.4812 to 1.7190 at 1.6001, with its 38.2% Fibo level providing theoretical resistance at 1.6282. Furthermore, the rate’s 200 day MA lies at 1.6666 with a falling slope, and its 14 day RSI has flattened out within central neutral territory to read at the 47.38 level. Its outlook is bullish near term and bearish medium term.
USD/CHF: The Swissy fell this morning to 0.9488 after rising slightly yesterday, as the rate corrects lower off its recent 0.9559 high but remains between its previous 0.9360 low and 0.9683 high. The rate has sustained losses below its recently broken near term up channel, the lower line of which is now drawn at 0.9546 despite a recent retest. In addition, the rate remains above its rising medium term trendline support line now drawn at 0.9262. Support is seen at 0.9467/68 and 0.9395/97, with resistance noted at 0.9559/61 and 0.9592/96. The rate’s 14 day RSI is falling slightly in central neutral territory and reads at the 51.86 level, and the rate is trading above its rising 200 day MA now situated at the 0.9054 level. Its outlook is bearish near term and bullish medium term.