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Fundamental Currency Analysis
USD: The U.S. Dollar Index is currently +0.0790 or +0.09% higher to 85.3140 after opening the day at 85.9380 in Asia. The Greenback is higher against most major currencies after rising sharply yesterday. No important U.S. economic numbers were released yesterday, but expected later today will be Core Retail Sales (+0.2%), PPI (+0.1%), Retail Sales (-0.1%), Core PPI (+0.1%), the Empire State Manufacturing Index (20.3), Business Inventories (+0.4%) and the Fed’s Beige Book.
EUR: The Euro is trading lower against the U.S. Dollar today after a -0.7% decline yesterday. The rate was pressured by concerns that Germany could be at the beginning stages of recession after German ZEW Economic Sentiment declined to -3.6 from a previous reading of +6.9, and compared to an expected reading of +0.2. Also weighing on the pair was Eurozone Industrial Production, which declined -1.8% m/m compared to an expected decline of -1.5%, and Eurozone ZEW Economic Sentiment, which printed at 4.1 versus 7.1 anticipated. Later today, ECB President Mario Draghi will speak at the opening of two ECB sponsored events in Frankfurt.
GBP: Sterling is trading fractionally higher against the U.S. Dollar today after a -1.1% decline yesterday. The sharp decline in Cable came after UK CPI increased only +1.2% y/y down from a previous reading of +1.5% and compared to an anticipated reading of +1.4%, Also out was RPI, which increased +2.3%, in line with expectations and PPI Input, off -0.6% m/m versus an expected decline of -0.4%.
JPY: The Japanese Yen is lower against the Greenback today after yesterday’s fractional decline and in the wake of Revised Industrial Production, which declined -1.9% m/m compared to an expected decline of -1.5%. Also, a 30-year Bond Auction had a yield of 1.63% and a bid to cover ratio of 2.6, versus a previous auction’s result of 1.68%/3.6.
CHF: The Swiss Franc is trading fractionally lower against the U.S. Dollar today after declining -0.8% yesterday. The decline came in the wake of Swiss PPI, which declined -0.1% m/m compared to an expected increase of +0.3%. Swiss ZEW Economic Expectations (-7.7 last) are due out later today.
AUD: The Aussie is higher against the Greenback today after declining -0.5% yesterday. The increase in the rate comes after Westpac Consumer Sentiment Index showed a reading of +0.9% compared to a previous decline of -4.6%, and New Motor Vehicle Sales, which increased +2.9% m/m versus a previous reading of -1.6% downwardly revised from -1.8%.
CAD: The Canadian Dollar made a 5-year low against the Greenback today as oil prices tumbled and the Canadian 10-year government bond yield fell to its lowest level since May of 2013. Today’s decline of -1.2% is in addition to the Loonie’s -2.9% drop against the Greenback yesterday. No significant Canadian economic data was released yesterday or is expected to be released later today.
NZD: The Kiwi is fractionally lower against the U.S. Dollar today ahead of the tentative release of the Global Dairy Trade Price Index (-7.3% last) and the Business NZ Manufacturing Index (56.5 last).
Highlighted Chart of the Day: EUR/USD
[See Image Above]
A daily candlestick chart of the EUR/USD currency pair appears above showing the rate consolidating in a near term triangular pattern drawn in orange as it trades within a medium term down channel shown in red. In addition, the rate is trading below its falling 200 day Moving Average shown in green, and its 14 day RSI drawn in blue in the indicator box is falling gently within central neutral territory. (See additional technical analysis in the section below.)
Technical Analysis for the Majors
EUR/USD: The Euro fell to 1.2624 this morning after also falling yesterday, as it consolidates above its recent 1.2500 low and below 1.2791 in what appears to be a near term triangular pattern. Resistance is seen at 1.2681/98 and 1.2663, with support observed at 1.2604 and 1.2500. Its falling 200 day MA now lies at 1.3475, and its 14 day RSI is now in central neutral territory at the 42.32 level. Its outlook is neutral near term but bearish medium term. (See highlighted chart above.)
USD/JPY: USD/JPY fell to 106.66 yesterday, but ended up higher on the day and has also risen this morning, as its three wave a-b-c correction off of its recent 110.08 high unfolds lower within a descending wedge pattern now approaching its apex. Resistance appears at 107.52/81 and 107.75/81, with support noted at 107.05 and 106.66/80. The rate’s 14 day RSI remains in central neutral territory at the 44.77 level, and the rate is trading above its rising 200 day MA currently at 103.28. Its outlook is mildly bearish near term and bullish medium term.
GBP/USD: Cable fell to a new recent low at 1.5876 this morning after falling sharply yesterday, as it broke support at 1.5951 to continue its medium term decline. The rate has now broken below its 50.0% Fibonacci retracement level of its long term rally from 1.4812 to 1.7190 at 1.6001, targeting its 61.8% Fibo level that provides theoretical support at 1.5720. Falling trendline resistance also appears at 1.6275. Furthermore, the rate’s 200 day MA lies at 1.6696 with a falling slope, and its 14 day RSI has fallen into lower neutral territory at the 31.79 level. Its outlook is bearish near term and medium term.
USD/CHF: The Swissy rose to 0.9561 this morning after also rising yesterday, as the rate consolidates below its recent 0.9683 high. The rate is also trading above what seems to be a double bottom in the 0.9467/68 region with a neckline at 0.9592. Support is now seen at 0.9497 and 0.9467/68, with resistance noted at 0.9554/67 and 0.9595/0.9618. The rate’s 14 day RSI now reads in central neutral territory at the 56.07 level, and the rate is trading above its rising 200 day MA now situated at the 0.9023 level. Its outlook is neutral near term and bullish medium term.
AUD/USD: The Aussie rose to 0.8811 yesterday, but then fell to 0.8674 this morning before recovering, as it consolidates above its recent 0.8641 low and below 0.8897. The rate remains above its recently broken medium term down trend line now drawn at 0.8390 that provides theoretical support. Resistance is seen at 0.8811/33 and 0.8897, with support noted at 0.8747 and 0.8683. The rate remains below its mildly falling 200 day MA now at 0.9218, and its 14 day RSI now reads in lower neutral territory at the 42.51 level. Its outlook is neutral near term and bearish medium term.
USD/CAD: USD/CAD rose to a new five year high this morning at the 1.1343 level after also rising yesterday, as the rate has now broken its consolidation phase to push past resistance at the 1.1296 level. The rate is bumping up against a rising resistance trendline now at 1.1343, with a rising support line drawn at the 1.0957 level. Its 14 day RSI now reads in upper neutral territory at the 67.99 level, and the rate is trading above its rising 200 day MA now at 1.0946. Its outlook is bullish near term and medium term.
NZD/USD: The Kiwi rose to 0.7915 yesterday, but then closed lower on the day only to rise mildly this morning, as it consolidates above its recent similar lows of 0.7706 and 0.7712 and below the 0.7972 level. The rate fell back below the falling lower line of its medium term descending wedge pattern now drawn at 0.7870, with its declining upper line currently situated at 0.8016. Support is noted at 0.7781/93 and 0.7706/12, with resistance seen at 0.7915/27 and 0.7972. Also, its 14 day RSI now reads in central neutral territory at the 41.95 level, and the rate remains well below its falling 200 day MA now at 0.8468. Its outlook is neutral near term and bearish medium term.
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