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Key Economic Data

EURUSD

The EURUSD has staged a near-term rebound from the Yearly and two yearly lows made at 1.2248. The price rose as high as 1.2243 last night to move almost 100 pips off the low. Earlier ths morning the pair has advanced to 1.2368. The pair in a brief rally has tken out all the new lows made over the last weeks at 1.2248, 1.2251, 1.2271, 1.2281, 1.2301 and the key level at 1.2357. The pair is now trading at 1.2351 just below the 1.2357 which had held for a time as the yearly low before being broken last week on the way down to 1.2248. German Trade Balance data was stronger than expected and released at 20.6 Billion monthly, versus a consensus expectation of 18.1B. French Trade Balance data revealed a 4.6 Billion monthly deficit which was 100 million more than forecast but 100 Million less than last month's figure. Swiss Unemployment data showed the Unemployment Rate declining from 3.2% to 3.1% and this boosted the CHF against the US Dollar. Coming up on the calendar today is the GBP Manufacturing Production and Industrial Production data that are expected to show further growth in both areas. Also today's GBP 30-year Bond Auction and the NIESR GDP Estimate are significant releases for the Pound. For the US economy and the USD the JOLTS Job Openings and the Wholesale Inventories are the main releases today. The USDJPY weakened from 121.88 on Monday to 119.74 this morning.

From the 15.09.2014 with the EURUSD at 1.2977 I initiated an outlook that the EURUSD remains bearish. I had included the following sentence in each daily article for these past three months as we have worked our way down by 725 pips to 1.2251.

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 our consistent outlook for three months.


My outlook has now changed to neutral and cautiously bullish on EURUSD. There is one short term factor behind this change as well as two longer term factors. The first factor which is short-term but could provide the catalyst for an initial bounce is that the EURUSD has declined throughout 2014 from a yearly opening price at 1.3776 and there is a huge long USD short EUR exposure in the market. This means that in order to cash in on these short positions at some point they need to be bought back meaning plenty of buying interest in the EUR vs the USD. The main reason this could happen in December is this will allow the profits of the trades to be booked by banks and funds for the end of year performance. The second and longer term cause for a rebound revolves around the saturation of negative news and opinion on the EUR, the ECB has announced several initiatives with the lowering of interest rate, covered bond purchases and the plans for EU QE. At the same time in the US talk of interest rate rises have been ramped up as has been the value of the US although the Fed may find it difficult to follow through with rate rises considering the weakness in global economic growth and in Europe and China. These factors could support he Euro and weigh on the Dollar. Finally looking at the Daily and Monthly time frames on the pair it is possible to discern that the on the Monthly the first 3 months of the recent decline were heavy with large falls and full down candles. The following months of decline has seen the pair attempt fightbacks and there has been a progressive weakening in the penetration of the declines. Again on the Daily it is possible to see that whereas the market fell strongly and found no support on its way from 1.3990 to 1.2500 in the areas between 1.2251 and 1.2600 the EUR has begun showing signs of strength and an indicator that there is some life left in the battered Euro.The 1.2301, 1.2357, 1.2402 and 1.2444 levels are key pivot points to a recovery towards 1.2500 and above. The first two levels were broken this morning and 1.2402 and 1.2444 remain on the way to 1.2500.

The RSI on the EURUSD Weekly Chart has crossed back above 30 climbing from 25.4 yesterday to 30.0 with the rally that has taken place. Readings of 30 and below on the RSI are considered oversold and this could raise the possibility of a near term recovery in the pair. A cross above 30 can be a bullish indicator. The next move will be to see if the RSI stabilizes and moves higher or if it will fall back towards the reading of 15 made in September this year. The EURUSD has declined for each of the last 5 months and opened for December at 1.2437. Any close above this level for December will break the run before it turns six consecutive months. At present EURUSD is facing a 6th consecutive monthly loss.

EURUSD Support areas include 1.2320, 1.2300, 1.2250, 1.2200, 1.2150. Resistance levels above are at 1.2300, 1.2450, 1.2600, 1.2700, 1.2845, 1.2800, 1.2900 & 1.30.

EURUSD 5 Minute Chart

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EURUSD Hourly Chart

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EURUSD 4 Hour Chart

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EURUSD Daily Chart

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EURUSD Pivot Point Table

EURUSD Levels
Resistance 1 1.2387
Resistance 2 1.2414
Resistance 3 1.2462
Pivot 1.2339
Support 1 1.2310
Support 2 1.2264
Support 3 1.2236