Key Economic Data - Coming Up Today (All Times GMT+3)
The EURUSD moved slightly higher following the better than expected outcome in the European Bank Stress Results. European political figures have hailed the results as proof the EU banking crisis is over, although this is in the author's view without a doubt an impressive exaggeration. The EU Crisis may be approaching towards the latter end of its curve, though the record near zero interest rate, the impending huge covered bond and stimulus program by the ECB and the weakness in the Euro currency as well as the weakness in many Eu countries economies highlight that the bottom is not in yet. Although there is sure to be volatility in the EURUSD in the weeks ahead the pair remains in a downtrend as witnessed in the H4 chart where the pair is below the downtrend channel, indicating technical weakness. Based on their mornings' price action I favour declines in the pair today and tomorrow but a breach above 1.2750 will indicate an upside breakout and may not likely favour puts above this level.
At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel as seen in the H4. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish. - This has been the outlook for over a month now but the picture is a little more mixed as the pair has re-entered the lower end of the downtrend channel as seen in the H4 Chart. Overall the bias is sill negative for the EURUSD although there is slightly more hope for the bulls now due to the price action of the last three weeks. Despite this the RSI on the Weekly Chart has rebounded from 20 to 30 and this indicator is suggesting a possible advance in the pair. The data and indicators will never all be alignment and this is a part of trading, trying to forecast the actual direction. It can even be the case that all the data and indicators are showing one way and the market follows the opposite. This is called in trading terminology: the market is climbing the wall of worry. This is because logic suggest that if all the bad factors are priced in, there is no more to go in that particular direction.
There must always be an end or reversal to every trend.
Today we have the German Ifo Business Climate for the Euro and later this afternoon the Flash Services PMI and Pending Home Sales in the US. Later in the week there will be important data in the USD that will impact all markets.
EURUSD Support areas include 1.2600 1.2500, 1.2425, 1.2300. Resistance levels above are at 1.2700, 1.2845, 1.2800, 1.2900,1.30 figure level, followed by 1.3165.
EURUSD 5 Min Chart
EURUSD 1 Hour Chart
EURUSD 4 Hour Chart
Pivot Point Table
Gold fell last week after rising above $1250 an ounce. The precious metal peaked at $1255 and then declined to close the week $30 dollars lower at $1226, shedding approximately 2.5% from high to low. One of the reasons for this, was the rally in the US Dollar from the middle of the week onwards. Other factors attributed to the pullback of Gold from 6 week highs are the end of the bond buying program by the Federal Reserve and the expectations of a positive European Stress Test Results. The impact of both of these developments is to reduce the attractiveness of the yellow metal as a safe haven and/or inflation hedge. The Fed is expected to end the bond purchase program this month and this is a major change, after 6 years of unending Central Bank support and stimulus to markets through investment banks and institutions. At present also the dire state of affairs in the Eurozone creates a major source of demand for Gold. The cause of this demand is that investors and institutions fear a bank collapse and potentially this causing a cascade of bank runs. In this scenario wealth in the form of deposits or paper investments could disappear whereas Gold holdings will remain intact protecting their wealth.
Gold has rebounded from the major support line at $1180 and bounced back as high as $1255. Now we await the price action to see if we will retest the lower support. If the price can be contained above $1180 the bias is bullish. Below $1180 the bias is strongly bearish.
Support levels for Gold can be seen at $1220, $1210, $1200 and $1190 and $1180. Resistance to the upside materializes at $1235, $1240, $1250, $1260, $1275.
Gold 5 Minute Chart
Gold Hourly Chart
Gold 4 Hour Chart
Gold Pivot Table