EUR/USD: Stay Long After Higher Euro Zone HICP Reading

GROWTHACES.COM Forex Trading Strategies
Trading Positions
EUR/USD trading strategy: long at 1.1200, target 1.1450, stop-loss 1.1090
GBP/USD trading strategy: long at 1.5400, target 1.5580, stop-loss 1.5330
USD/CAD trading strategy: short at 1.2530, target 1.2320, stop-loss 1.2630
AUD/USD trading strategy: long at 0.7805, target 0.8020, stop-loss 0.7710
NZD/USD trading strategy: long at 0.7525, target 0.7700 stop-loss 0.7425
EUR/CHF trading strategy: long at 1.0690, target 1.0990, stop-loss 1.0590
EUR/JPY trading strategy: long at 133.55, target 136.00, stop-loss 132.30
GBP/JPY trading strategy: long at 183.60, target 186.60, stop-loss 182.20
Pending Orders
AUD/JPY trading strategy: buy at 92.55, if filled - target 94.80, stop-loss 91.40, risk factor **
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Source: Growth Aces Forex Trading Strategies

EUR/USD Went Up After Higher Euro Zone HICP Reading
(stay long for 1.1450)

• The manufacturing PMI amounted to 51.0 in February, unchanged from January’s six-month high and below the earlier flash estimate of 51.1.
• But new export orders rose at the fastest pace since July last year, suggesting a weakened currency is helping drive demand from abroad. That may have encouraged firms to take on staff at the quickest rate since April last year.
• Price pressures in Euro zone manufacturing remained on the downside during February. Lower oil prices continued to filter through to costs, leading average purchase prices to decline sharply again.
• Strong improvement in manufacturing performance was signalled by Ireland and Spain. Italy, Germany and the Netherlands reported modest growth of production. PMI readings for France, Greece and Austria all signalled contractions in February.

• Euro zone consumer prices fell 0.3% yoy in February after a 0.6% annual drop in January and a 0.2% fall in December. A fall by 0.4% yoy was expected. Core inflation amounted to 0.6% yoy, the same as in January.
• Euro zone unemployment rate fell for the third month in a row to 11.2% in January from 11.3% in December.
• U.S. economic growth braked more sharply than initially thought in the fourth quarter amid a slow pace of stock accumulation by businesses and a wider trade deficit. GDP rose at a 2.2% pace (qoq annualized), revised down from the 2.6%. The economy grew at a 5% rate in the third quarter.
• Growth in consumer spending was revised down by 0.1 percentage point to a 4.2% pace in the fourth quarter, still the fastest since the first quarter of 2006. Business spending on equipment was revised to show it rising at a 0.9% instead of the previously reported 1.9% contraction. GDP growth contribution from inventories was revised down to 0.1 percentage point from 0.8 percentage point previously. Trade deficit subtracted 1.15 percentage points from GDP growth, revised from the previously reported 1.02 percentage point. Residential construction spending was revised down, while government spending was not as weak in the fourth quarter as previously reported.

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• New York Federal Reserve Bank President William Dudley, a permanent voter on the Fed's policy setting committee, said: “I believe that the risks of lifting the federal funds rate off of the zero lower bound a bit early are higher than the risks of lifting off a bit late.” On the other hand, Cleveland Federal Reserve Bank president Loretta Mester (non-voting) said that there were risks to holding interest rates lower for too much longer, including potential financial stability concerns and an erosion of public confidence in the economy.
• Fed Vice Chair Stanley Fischer said the Federal Reserve will not follow a pre-determined series of interest rate hikes once it begins tightening policy later this year. He added: “Our interest rate policy will continue to be data driven.”
• The University of Michigan says its index of consumer sentiment slid to 95.4 in February from an 11-year high of 98.1 in January. A big drop in gasoline prices, which increased consumers' purchasing power, has reversed in recent weeks and that was probably the main reason for a fall in consumer sentiment.
• The EUR/USD fell on Friday after the release of revised GDP growth in the USA (down vs. preliminary estimate, but better than forecast). The USD did not react to a fall in consumer sentiment and important “dovish” comments from a voting FOMC member William Dudley. The EUR/USD reached its new lows today in Asia at 1.1160.
• Today the EUR is appreciating against the USD on higher-than-expected Euro zone HICP reading and trading again above the psychological level of 1.1200.
• We do not change our EUR/USD long position taken at 1.1200. Our target is 1.1450. The nearest resistance level is 1.1245, daily high on February 27. We do not see strong reasons for further depreciation of the EUR against the USD and in our opinion long position is relatively safe now.
• There are a lot of U.S. data releases scheduled for this week, but markets will focus mainly on the U.S. ISM index (today 15:00 GMT for manufacturing and on Wednesday 15:00 GMT for services) and non-farm payrolls data (Friday 13:30 GMT). We have also the ECB meeting this week. ECB President Mario Draghi will deliver a new set of macroeconomic forecasts. We may expect some upward revisions for GDP growth forecasts by the ECB, which will support the EUR.

Significant technical analysis' levels:
Resistance: 1.1245 (high Feb 27), 1.1317 (10-dma), 1.1345 (21-dma)
Support: 1.1098 (low Jan 26), 1.1047 (low Sep 8, 2003), 1.1000 (psychological level)

GBP/USD: Strong PMI Helped GBP Bulls
(stay long for 1.5580)

• Mortgage approvals for house purchases numbered 60,786 in January, edging up from 60,349 in December to hit the highest level since September of last year. The BoE said net mortgage lending, which lags approvals, rose by GBP 1.56 billion, the same kind of pace seen in December. Consumer credit grew by GBP 817 million in January, picking up pace slightly from December. Lending to non-financial businesses increased of nearly GBP 1.9 billion, its highest since May last year, compared with a plunge of nearly GBP 4 billion in December.
• Earlier on Monday, mortgage lender Nationwide said British house prices rose at the slowest annual pace since September 2013, increasing by 5.7%.
• UK PMI rose a full point to 54.1 in February from an upwardly revised January reading. That was higher the median forecast for 53.4. The PMI suggested British manufacturing output is growing at a quarterly rate of around 0.5%, compared with a 0.2% expansion in the final three months of 2014. Growth was led by the consumer goods industry, although solid expansions in output were also registered at intermediate and investment goods producers.
• The GBP/USD broke below 1.5400 today in Asia. Stronger-than-expected UK manufacturing PMI supported the GBP. Traders’ attention this week will be focused on the remaining PMI releases (construction and services).
• We stay long on the GBP/USD. The target of our long position is near this-year high of 1.5588 (on January 2)

Significant technical analysis' levels:
Resistance: 1.5459 (high Feb 27), 1.5554 (high Feb 26), 1.5588 (high Jan 2)
Support: 1.5384 (low Fe 27), 1.5333 (low Feb 23), 1.5320 (21-dma)

AUD/USD: Waiting For An On-Hold Decision Tomorrow
(stay long)

• The TD Securities-Melbourne Institute's monthly measure of consumer prices was flat in February from January when it edged up 0.1%. The annual pace slowed to 1.3%, the lowest since October 2009. The TDMI survey showed prices fell in February for fruit and vegetables, holiday travel and accommodation, and newspapers, books and stationery. That helped offset a bounce in petrol prices following big falls in the previous couple of months. Inflation excluding fuel, fruit and vegetables was flat for February while the annual pace slowed to 2.3% yoy.
• The Housing Industry Association said its survey of large volume builders showed sales of new homes rose 1.8% mom in January. Sales of multi-units climbed 9.9% in the month, while sales of detached homes edged up only 0.1%.
• Business inventories fell in Australia by 0.8% qoq in the fourth quarter vs. a rise by 1.2% qoq. The reading was much worse than the median forecast for a rise of 0.1% qoq. Business inventories are looked to have subtracted around 0.75 percentage points off economic growth. The GDP report for the fourth quarter is due on Wednesday.
• The AUD/USD fell on Monday after mixed local economic data and concerns about China's slowing economy, the main trade partner of Australia, reinforced the case for more interest rate cuts. China lowered interest rates on Saturday and Chinese PMI manufacturing data were released on Sunday. China’s manufacturing PMI inched up to 49.9 in February from January's 49.8, a whisker below the 50-point level separating growth from contraction on a monthly basis, but nevertheless above more pessimistic median forecast for a 49.7 reading.
• The Reserve Bank of Australia holds its March policy meeting tomorrow and there is much speculation it could follow up a February easing with a cut to 2.0%. Interbank futures imply a 54% probability of a move this week, rising to 84% by April. In our opinion the RBA will not change rates in March.
• We stay AUD/USD long in anticipation for an on-hold decision tomorrow.

Significant technical analysis' levels:
Resistance: 0.7794 (21-dma) 0.7817 (10-dma), 0.7914 (high Feb 26)
Support: 0.7756 (hourly low Mar 2), 0.7721 (low Feb 13), 0.7644 (low Feb 12)

Written By: Growth Aces