01th of April, 2008

By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
Yesterday EURUSD failed to make break out upside from 1.5904 and 1.5560 ranging area. Although I am beginning to doubt the bullish strength, today I am expecting that EURUSD is going to make another test to break upside and maintain to move above 1.5904. Immediate minor support is 1.5725.

EURUSD Daily Supports and Resistance

S1= 1.5715
S2= 1.5669
S3= 1.5579
R1= 1.5851
R2= 1.5941
R3= 1.5987

GBPUSD Outlook
So far, GBPUSD maintain to move below 1.9863 (50% Fibonacci retracement from 1.9336 to 2.0397) which is very supporting for continuing bearish view. Nearest target is 1.9743( 38.2 Fibonacci retracement from 1.9336 to 2.0397) and then 1.9585.

GBPUSD Daily Supports and Resistances

S1= 1.9769
S2= 1.9706
S3= 1.9601
R1= 1.9937
R2= 2.0042
R3= 2.0105

USDJPY Outlook
We saw a weaker Dollar against the Japanese Yen yesterday, but USDJPY is still moving in ranging market between 100.63 and 98.77 area ( 38.2% and 23.6% Fibonacci retracement from 108.60 to 95.73). I am expecting USDJPY would break out from that ranging movement today.

USDJPY Daily Supports and Resistances:

S1= 99.08
S2= 98.26
S3= 97.71
R1= 100.45
R2= 101.00
R3= 101.82

USDCHF Outlook
Still in bearish mode, but USDCHF need to at least break the minor support at 1.9850 before targeting 0.9636 (17/03/2008 low). Immediate resistance at 0.9988. Keep watching the co-relation with EURUSD.

USDCHF Daily Supports and Resistances

S1= 0.9881
S2= 0.9815
S3= 0.9759
R1= 1.0003
R2= 1.0059
R3= 1.0125

We can expect some volatility during this week as everyone gets ready for the most important Non-Farm Payrolls figure in the US which will be released on Friday. With the German unemployment figure released on Tuesday, we might expect Mr Trichet to alter his hawkish stance despite the fact that recent euroland CPI figures suggested some inflationary pressures. 

On a technical note, price is still situated in an overbought condition and it still seems that a possible double top has formed on the daily chart. Therefore if price breaks free from the consolidation between 1.5835 and 1.5745 to the downside, a suitable bearish trading condition will present itself.

On the other hand, Sterling is picking up some serious momentum to the downside and if the 1.9840/50 low is taken out and sustained, we will once again take this opportunity to trade within this bearish probability as the continuation of the downtrend from 2.1160 is still sustained.

The manufacturing data which will be released on Tuesday in the UK might give us an indication of how and where the BoE might ease as euroland receives most of the UK’s exports and a weakening Sterling especially against the Euro might be a pivotal point for the BoE to interpret.

Mon, 31th of March, 2008

By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
On the daily chart, EURUSD is moving in ranging market condition, trapped between 1.5904 and 1.5560 (Fibonacci retracement from 1.4450 to 1.5904) area. So, I think we need a break out. An upside break out will bring EURUSD to 1.6000 area, while a downside break out could end the bullish view.

EURUSD Daily Supports and Resistance

S1= 1.5744
S2= 1.5695
S3= 1.5648
R1= 1.5840
R2= 1.5887
R3= 1.5936

GBPUSD Outlook
GBPUSD has a big potential to be in a bearish trend. After failed to maintain move above 1.9989 area, the Sterling could make 1.9743 ( 38.2 Fibonacci retracement from 1.9336 to 2.0397) area as the next target. Immediate support seen at 1.9863 (50% Fibonacci retracement)

GBPUSD Daily Supports and Resistances

S1= 1.9853
S2= 1.9762
S3= 1.9644
R1= 2.0062
R2= 2.0180
R3= 2.0271

USDJPY Outlook
Like EURUSD, the Japanese Yen is moving in ranging market between 100.63 and 98.77 area ( 38.2% and 23.6% Fibonacci retracement from 108.60 to 95.73). So we also need a break out. I am expecting for an upside break out since I saw a hammer formation on the weekly chart.

USDJPY  Daily Supports and Resistances:

S1= 98.75
S2= 98.28
S3= 97.46
R1= 100.04
R2= 100.86
R3= 101.33

USDCHF Outlook
The Swiss Franc has consistently moved below 0.9988 area for the last three days, so the bearish trend is still in my favor. I also pay a high attention to the co-relation with EURUSD. If EURUSD makes a break out upside, the bearish view for USDCHF has a big chance to continue and targeting 0.9636 (100% Fibonaci retracement). Immediate resistance is at 0.9988.

USDCHF Daily Supports and Resistances

S1= 0.9909
S2= 0.9868
S3= 0.9825
R1= 0.9993
R2= 1.0036
R3= 1.0077

By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
Yesterday, the EURUSD was losing power to go upside. The pair opened at 1.5842 but closed at 1.5778, forming a hammer formation on the candle chart. Remember, the last time EURUSD made a reversal about 560 pips (from 1.5904 to 1.5341), it formed a doji a day before (see Chart #1). Immediate support is still at 1.5558 (23.6 % Fibonacci retracement from 1.4450 to 1.9504).

Chart #1

EURUSD Daily Supports and Resistances:

S1= 1.5720
S2= 1.5662
S3= 1.5600
R1= 1.5840
R2= 1.5902
R3= 1.5960

So, EURO! How high can you go?

By Setyo Wibowo (analyst@fxinstructor.com)

EURUSD Outlook
After maintain to move above 1.5350 support area yesterday, the bullish momentum for EURUSD seems unstoppable. I am expecting that today we could see the price reach 1.5904 (17/03/2008 high), or even find a new high. Immediate support is seen at 1.5558 (23.6 % Fibonacci retracement from 1.4450 to 1.9504).

EURUSD Daily Supports and Resistances:

• S1= 1.5665
• S2= 1.5487
• S3= 1.5390
• R1= 1.5940
• R2= 1.6037
• R3= 1.6215

GBPUSD Outlook
Although Sterling’s bullish momentum as not as strong as EURUSD, I believe the GBPUSD is still going up as long as the pair maintain to move above 1.9989 area ( 61.8 % Fibonacci retracement from 1.9336 to 2.397). The nearest target is 2.0152 then 2.0204 area.

GBPUSD Supports and Resistances:

• S1= 1.9964
• S2= 1.9853
• S3= 1.9780
• R1= 2.0148
• R2= 2.0221
• R3= 2.0332

USDJPY Outlook
After failed to maintain moving above 100.63 resistance level, we can see 2 bearish candle for the last 2 days. Very bearish scenario in my point of view. I expect the USDJPY to able to move below 99.77 area to keep this strong bullish momentum, targeting 97.66 (19/03/2008 low) before aiming for 95.73 level.

USDJPY Daily Supports and Resistances:

• S1= 98.45
• S2= 97.93
• S3= 96.99
• R1= 99.91
• R2= 100.80
• R3= 101.37

USDCHF Outlook
The Swiss Franc were able to maintain below 0.9988 yesterday, and closed at 0.9987. Technically speaking, USDCHF is strongly moving toward 0.9786 (18/03/2008 low) and then 0.9644 area.

USDCHF Daily Support and Resistances:

• S1= 0.9807
• S2= 0.9727
• S3= 0.9574
• R1= 1.0040
• R2= 1.0193
• R3= 1.0273

EURUSD Outlook

It looks like the support level at 1.5350 (38.2 % Fibonacci retracement from 1.4450 to 1.9504) is strong enough to stop USD stronger reversal and continuing EURUSD bullish trend. EURUSD is now finding new immediate support around 1.5560-70 area (23.6% Fibonacci retracement and 13/03/2008 high) targeting 1.5904 again.

EURUSD Daily Supports and Resistances

• S1= 1.5470
• S2= 1.5313
• S3= 1.5219
• R1= 1.5721
• R2= 1.5815
• R3= 1.5972

GBPUSD Outlook

After strengthen and break 1.9989 level (61.8% Fibonacci retracement from 1.9336 to 2.0397), the Cable is now in strong bullish momentum. The nearest target is 2.0152 (19/03/2008 high) which I expect could be touched today.

GBP Daily Supports and Resistances

• S1= 1.9907
• S2= 1.9767
• S3= 1.9688
• R1= 2.0126
• R2= 2.0205
• R3= 2.0345

USDJPY Outlook

The USDJPY break the 100.63 resistance area (38.2% Fibonacci retracement from 108.60 to 95.73) yesterday, but close down below at 99.98. I expect this to be a trigger for continuing the overall bearish scenario targeting 98.77 (23.6 %Fibonacci retracement) and then 95.73 (17/03/2008 low)

USDJPY Supports and Resistances

• S1= 99.39
• S2= 98.80
• S3= 97.99
• R1= 100.79
• R2= 101.60
• R3= 102.19

USDCHF Outlook

Like the other major pairs, I expect the USDCHF back to it’s major trend, bearish. Yesterday the Swiss Franc failed to maintain moving above 1.0197 area (38.2% Fibonacci retracement from 1.1096 to 0.9636). I expect it to reach and maintain below 0.9988 area ( 23.6 % Fibonacci retracement) today to keep it in bearish momentum.

USDCHF Daily Supports and Resistances

• S1= 1.0061
• S2= 1.0058
• S3= 1.0078
• R1= 1.0044
• R2= 1.0024
• R3= 1.0027

EURUSD Outlook

Yesterday EURUSD failed to break 1.5350 support (38.2 % Fibonacci retracement from 1.4450 to 1.5904). Although this fact keep the bullish trend intact, the correctional downward movement could not be said to be complete. Today, EURUSD might be testing that level again.

Chart #1

EURUSD Daily Support and Resistance:

• S1 = 1.5366
• S2 = 1.5297
• S3 = 1.5253
• R1 = 1.5479
• R2 = 1.5523
• R3 = 1.5592

GBPUSD Outlook

Unable to break 1.9743 support, the GBPUSD find a new resistance at 1.9895 (06/03/08 low). A break upside could trigger movement to 1.9950 area (see red lines
in chart #2). The CCI has crossed the psychological -100 level up. Very tricky for me.

Chart #2

GBPUSD Daily Support and Resistance:

• S1 = 1.9797
• S2 = 1.9718
• S3 = 1.9678
• R1 = 1.9916
• R2 = 1.9956
• R3 = 2.0035

USDJPY Outlook

The USDJPY has break the 100.62 resistance (38.2 Fibonacci retracement from 108.60 to 95.73) and now aiming for 102.17 (50 % Fibonacci retracement, see red
lines in chart #3). Although the bearish momentum still intact, but it seems to losing power now.

Chart #3

USDJPY Daily Support and Resistance:

• S1 = 99.65
• S2 = 98.75
• S3 = 98.13
• R1 = 101.17
• R2 = 101.79
• R3 = 102.69

USDCHF Outlook

Yesterday the USDCHF break the key level 1.0197 (38.2% Fibonacci retracement from 1.1096 to 0.9636). The continued optimism for the US economy rising among market players could bring USDCHF upside towards 50% Fibonacci retracement (see chart #4).

Chart #4

USDCHF Daily Support and Resistance:

• S1 = 1.0258
• S2 = 1.0327
• S3 = 1.0407
• R1 = 0.9985
• R2 = 1.0123
• R3 = 1.0298

Welcome back. After a long weekend markets opened the week with not quite a bang but some interesting numbers and equally interesting moves among the majors and their crosses where we saw textbook reactions and some funnymentals off the commodity group.  

With European markets closed for Easter Monday volumes were thin and news sparse allowing us to focus on the only release of note US Existing Home Sales coming out at 5.03 million firmer than consensus expectations of 4.85 million right around the edge of our +/- 0.18 trigger for reacting to the figure. As it is the results should add to the camp of dollar optimists as further evidence that we have already seen the worst of the US downturn.  

Though too early to conclusively say the numbers suggest we may have seen the bottom for US housing in the January/December periods prompting some textbook response with respect to Euro and Cable where knee-jerk reactions saw a firmer dollar even as there is growing evidence that a housing slump is now taking root in their respective economies. Chart wise failure to break key daily Fib retracement levels in EURUSD and GBPUSD however should keep markets on its toes today with the return of liquidity. 

For the commodity pairs however reaction to the numbers appears to be a funnymental with a convoluted intermarket cause and effect. We actually saw the Aussy, Loonie and Kiwi firming after initial whipsaws on the idea that stabilizing US housing should mean the commodities pullback will not be severe, this complementing with charts where much as with the European currencies the dollar is facing some key daily price levels with these currencies.  

And then we have the Yen pairs where we have gotten used to such convoluted intermarket reactions that lately it has become axiomatic that anything that’s good for the US is taken as good for risk taking appetite and likely to push currencies paired with the JPY higher.  

Going forward high impact figures will be coming out of Canada with January Retail Sales on the cards where consensus expectations for the headline figure is at 1.1% and ex-Auto numbers are seen coming out at 0.5%. At this point focus should be on the core numbers where a bounce off the unexpected contraction in the prior month should tie in well with what we are seeing from the charts where USDCAD is coming off stiff daily resistances.  

Something to help this bearish view for USDCAD is US Consumer Confidence for the month where market is expecting to see fresh lows with median forecasts at 73.6 a number that could put a quick end to the greenbacks recent bounce.

The Greenback is strengthening against the EUR and ESPECIALLY the GBP due to risk aversion as carry trades are under pressure due to plunging stock markets. Other commodity currencies are also feeling pressure due to the drop in gold and oil prices.

The Sterling also plunged after the release of the MPC minutes. The minutes indicated that BoE’s decision to keep rates on hold was done by a 7-2 vote. The general consensus was for a 8-1 vote. Therefore this dovish tone, accompanied by risk aversion is reflected in the new bearish major trend we can see on our charts. Most of the indicators, especially the MACD, signals that bearish momentum is increasing as well..

The EUR is quite steady and resilient at this time (although we can clearly see that bearish momentum is increasing as well) and we might still see a strong EUR consolidation as opposed to a sharp decline as we see on other pairs, especially the GBP

On this bearish note, may you all enjoy a happy and fulfilling long weekend!

As I was working on this post I found that I have to do a bit of rewrite with the New York Fed surprisingly cutting the discount rate 25bps at the open of Asian markets. This comes just ahead of the FOMC meeting Tuesday where market talk is looking for another aggressive easing in the Fed Funds Rate, and after going to the rescue of troubled Bear Stearns Friday breaking with four decades of laissez-faire practice.  

Far from soothing investor nerves reactions in the currency markets thus far suggests the Feds efforts may be having an opposite effect, the rescue and hints of aggressive easing seen more as symptoms of the malaise affecting financials markets rather than a cure. For now with this latest move a rate cut tomorrow is looking more and more a certainty, the question in peoples minds being, will it be 50bps or 75bps. While it is always a difficult and risky proposition to front run any decision what is clear at the moment is that the Fed cannot afford any form of miscommunication and their actions to me speak more loudly than their word.  

To the trader the question then becomes which pair should I go for? Would I go for higher yielders betting on Euro, or the Aussy or Kiwi, or would I go more for the risk aversion story. That trouble in financial markets would mean a stronger Swiss Franc and the Japanese currency. One thing I can be confident of is either way being in the dollar at the moment would be an act of faith and courage.  

To answer our dilemma we once again look at other markets, will all this lead to a decline in equities and ‘flight to quality’, ie interest bearing instruments, which would tell me go more for the Aussy and Kiwi. Or will it lead to a one-two punch on investor sentiment will a general pull back in all the asset classes likely to translate more into real haven plays with Yen and the Swiss Franc the greater beneficiaries.