EUR/USD: Still Bearish
Growth Aces | Oct 15, 2014 07:44AM ET
EUR/USD: short at 1.2750, target 1.2530, stop-loss 1.2820
USD/CHF: long at 0.9590, target 0.9750, stop-loss 0.9450
NZD/USD: short at 0.7880, target 0.7500, stop-loss 0.8000
EUR/CHF: long at 1.2085, target 1.2160, stop-loss 1.2045
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(we keep the target at 1.2530)
- Germany's CPI for September was confirmed as unchanged mom and up 0.8% yoy. The reading was in line with the previous estimate. We have US retail sales and PPI readings later today, but in our opinion the reaction to the data will be rather limited (unless there is a strong surprise). The market is waiting rather for tomorrow’s inflation in the Euro zone and industrial output data from the USA.
- The sentiment towards the EUR/USD remains bearish despite the shift in monetary policy expectations after last-week FOMC minutes and dovish comments from Fed officials. Macroeconomic data from the Euro zone are still very weak and deflation fears are intensifying.
- Technical situation is supportive for our short position. The 10-dma is capping the upside and there are no significant support levels before 1.2529 (30-dma lower Bollinger). Our target is at the level of 1.2530.
- Investors are focused on today’s speech of the ECB’s President Draghi in Frankfurt (18:00 GMT). He is expected to call on European governments to assist the ECB in its economic rescue plan by supporting growth friendly policy, and by encouraging spending.
Significant technical analysis' levels:
- Resistance: 1.2661 (10-dma), 1.2684 (hourly hig Oct 14), 1.2718 (21-dma)
- Support: 1.2624 (hourly low Oct 15), 1.2605 (low Oct 10), 1.2583 (low Oct 7)
USD/CAD hits 5-year high as Crude Oil prices fall.
(we have taken profit on our long position and will be looking to get long again) - The CAD dropped to a five-year low against the USD in the European session. The renewed weakness in the CAD has been triggered by the ongoing selloff in the crude oil market, where prices have fallen below USD 90 a barrel. At the same time, the Organization of Petroleum Exporting Countries has shown little sign it will cut output.
- The USD/CAD hit a fresh 5-year high at 1.1375. We have taken profit on our long position (1.1150-1.1350). GrowthAces.com is looking to get long again. We have placed a bid at 1.1280. We have Canadian existing home sales data today (probably not so important for the market) and manufacturing sales tomorrow (eyed more closely by the market).
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Significant technical analysis' levels:
- Resistance: 1.1400(psychological level), 1.1500 (psychological level), 1.1531 (high Jul 14, 2009)
- Support: 1.1290 (session low Oct 15), 1.1190 (low Oct 14), 1.1168 (low Oct 13)
GBP/USD slightly above 11-month low after mixed employment report
(further fall to 1.5722 is likely) - Britain's jobless rate fell to 6.0% between June and August, the lowest level since the three months to October 2008 and below the median forecast of 6.1%. Growth in employment eased to 46k, its slowest pace since the March-May period of 2013. A fall in the number of people claiming unemployment benefit was the smallest since April last year, down 18.6k in September from August. Average weekly earnings, including bonuses, rose by 0.7% in the three months to August, up slightly from 0.6% in the three months to July.
- The Bank of England is watching for signs of a pickup in labour costs as it considers when to start raising interest rates. However, the UK economy is slowing and inflation is on a downtrend. Data released on Tuesday showed annual inflation in September fell sharply to 1.2% from 1.5% in the previous month. In such an environment the BoE is unlikely to raise rates in the first half of 2015, particularly given political uncertainty ahead of the general elections in May.
- The GBP/USD fell to an 11-month low of 1.5878 in Asia and then recovered slightly during the European session. In our opinion the outlook is still bearish. We expect the GBP/USD to test 1.5722 (61.8% of 1.4814-1.7192) soon. However, the uncertainty is high on this currency pair. In our opinion no positions are justified from the risk/reward perspective at the moment.
Significant technical analysis' levels:
Resistance: 1.6009 (daily low Oct 10), 1.6054 (10-dma), 1.6095 (high Oct 14)
Support: 1.5854 (low Nov 12, 2013), 1.5776 (low Sep 13, 2013), 1.5722 (61.8% of 1.4814-1.7192)
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