Daily Insight: EUR/USD Awaits Eurozone Data
Matt Simpson | May 15, 2014 04:03AM ET
ASIA ROUNDUP:
- Japan GDP growth up to 5.9% following pre-tax rise spending spree, but this growth is expected to contract to 2%. q/q sits at 1.5%.
- Nikkei ignored the positive GDP growth and instead focused on corporate results
- NZD on track for surplus in 2015 with business confidence down to 55.2 compared to 58 last month.
- Preliminary French GDP is stale and below consensus at 0% vs 0.4% expected. EUR/USD hardly flinched as it awaits broader Eurozone data tonight.
UP NEXT:
- EUR Core CPI forecast at 1%, up from last month's 0.7%, and the ECB could really do with this coming in on target to reduce fears of deflation. Over the past 6 month this reading has only come in on target 3 out of 6.
- EUR GDP is forecast to be at a 12-month high at 0.4% - hopefully they have not set themselves up for a disappointment. If GDP and CPI both come in below par then EUR/USD is likely to break below the rising trendline from Oct '13 low
- USD has a plethora of data tonight including CPI, unemployment, mortgage approvals and Philly Fed Index (amongst others). There is around 12 separate numbers released over a 4-hour period so we can definitely expect volatility across the majors tonight. What we do not yet know is how directional moves may be. If we see a mixture of positive/negative numbers then price action can be expected to be erratic and choppy. Hopefully the numbers will reveal clearer directional moves by being USD strong or weak. With GBP/USD and EURUSD at key levels these are obvious pairs to watch. Additionally AUD/USD, whilst still bullish for the near-term, requires weak US data to regain some momentum for the trend.
Pairs to Monitor: EUR/USD, GBP/USD, USD/CAD, AUD/USD
TECHNICAL ANALYSIS:
AUD/USD: Daily pivot is the line in the sand for this session
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Whilst price action is messy and not my usual 'trend momentum' style, the overall target is 0.945 / 50, and there is the possibility that the 0.9332 swing low was the end of an 'A-B-C' correction.
H4 has just closed with a Bullish Piercing Line pattern. Whilst this is clearly a bullish signal, it is just beneath the Daily Pivot. Due to the long list of US data tonight there is a chance we may experience dull A$ trading leading up to this, however any weakness in the numbers should help the bullish bias along i's way towards 0.945.
For long positions I would prefer to wait for a break above the daily pivot to then target 0.940 high (and Daily S1).
As long as we remain below the Daily Pivot then the risk of a retracement to 0.9353 swing low is likely, with a break below here targeting 0.9332 swing low. If this breaks then we are heading dangerously towards my 0.9320 'line in the sand' and risk further losses as the week ends.
Unfortunately the fate of A$ lies in US data tonight, for better or worse.
Gold: Above $1300 favours a bullish breakout, sooner than later
Please view today's video for further clarification on the higher timeframes.
After breaking above $300 and testing the upper triangle line intraday price is suggesting a bullish continuation pattern, with (hopefully) a bullish breakout.
At time of writing we trade just above the daily pivot, with $1300 not too far behind to provide a bed of support.
With US data out tonight, any poor results should play into the hands of Gold (amongst other safe havens such as CHF and JPY). An approach to consider is set buy-stops to catch any bullish breakout and take a longer-term trade to hold till the end of the week, or target $1324 (whichever comes first).
If we break back below $1300 then the odds of hitting the lower triangle line are fairly high as we recycle for another round of 'coiling up' price action. Due to the overall bias being bullish I prefer to see $1278 swing low continue to hold as support. If not we can assume a bearish break from the triangle and for sustained losses.
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