The EURUSD declined yesterday to reach an intra-day low of 1.2637. The decline continued overnight with the pair falling as low as 1.2614. The EURUSD has been falling steadily since speculation intensified that the ECB is ready begin purchasing European corporate bonds and will be stepping up the stimulus provided to the Eurozone countries. The Eurozone economy is struggling to emerge from an extended period of slow growth and is in danger of slumping into a recession with the German and French economies displaying worrying economic data over recent months. Yesterday US CPI exceeded expectations bolstering the USD while in Canada Retail Sales disappointed and the Bank of Canada voted to keep rates on hold at 1%. Canadian CB interest rates are unchanged in 5 years. Also, the US Dollar weakened against the CAD as the news of gunfire in the Canadian Parliament broke across newswires. In other big news the unexpectedly large build in US Crude Oil Stockpiles saw the Crude Oil plunge $2.50 from $82.60 to $80.10. A declining Gold and Oil Price generally helps support the value of the USD.
Overnight NZD CPI came in weaker than expected and in China the HSBC Flash Manufacturing PMI was better than forecast at 50.4 vs 50.2 previous. This morning French Flash Manufacturing PMI was lower than expectations at 47.3 vs 48.8 previous while French Flash Services was roughly in line with what markets expected. The Spanish Unemployment Rate decreased dramatically from 24.5% to 23.7% painting an improving employment picture for the Spanish economy. In contrast to the weak French data, the German and Eurozone Flash Manufacturing and Services PMIs were all far better than anticipated and gave the EURUSD a 50 pip boost from 1.2614 to 1.2664.
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 still negative for the EURUSD although there is more hope for the bulls now due to the price action of the last two weeks.
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 30 Min Chart
EURUSD 4 Hour Chart
Pivot Point Table
The GBPUSD continued its descent falling to 1.5998 from above 1.6127 yesterday. In yesterday's report we noted: "Looking at the Hourly Chart there is a double Head and Shoulders, one smaller inside of a larger Head and Shoulders. The first H&S is at 1.6127 and the higher one is at 1.6227. The pair had managed to penetrate the first area of 1.6127 on its way to 1.6180 but fell short of the larger level at 1.6227 and has gone below 1.6127 falling to 1.6112 in the process. The price has remained within the weekly range of 1.6080 -1.6181. We noted in yesterday's write-up that: "A failure to rise above the 1.6227 area will lead to a bearish Head and Shoulders pattern that could push the pair lower." - The pair duly crashed and has reached below 1.6000 moments ago.The GBPUSD is still holding above last week's low point of 1.5875. Strong CPI data in the US helped strengthen the USD against the GBP, while moments ago weak Retail Sales of -0.3%m/m vs expectations of -0.1% in the UK pushed the pound even lower. There is no more data in the UK coming up today although there are several US data points coming up. Tomorrow the GBP Preliminary GDP q/q will have a big effect on this pair The RSI (Relative Strength Index) is approaching 30 which can be a buy signal if interpreting the RSI according the classic method. The Index is now at 35 and has recently been bouncing higher off the 30-34 readings and declining off 66.6-70 readings - on the H4.
Support levels for GBPUSD can be seen at 1.6000, 1.5950, 1.5900, 1.5850, 1.5800, 1.5725, and 1.5650. Resistance to the upside at 1.6075, 1.6127, 1.6200, 1.6250, 1.6300, 1.6375, 1.6450, 1.6500.
GBPUSD H1 Minute Chart
GBPUSD 4 Hour Chart
GBPUSD Pivot Table