Daily Report: Markets Still in Range ahead of US Data
February 2nd, 2008 by 
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Action Insight | Written by ActionForex.com | Mar 30 07 07:22 GMT |
Forex Daily Technical Report Markets Still in Range ahead of US Data
Markets are basically still bounded in established range today. Reaction to mixed Japanese data released earlier today was muted as traders are probably holding their bets with Japanese Q1 Tankan survey in sight for Monday. Meanwhile, dollar traders are cautious ahead of today’s Feb PCE data on the current inflation outlook. However, more volatility could instead be triggered by Chicago PMI which would build up the sentiments towards next Monday’s ISM manufacturing index.
Consumer inflation in Japan dipped back to negative zone as CPI fell by -0.2% while core CPI fell by -0.1%. Comments from officials were mixed with Finance Minister Omi said he doubts the economy is still experiencing deflation. Meanwhile, Economic Fiscal Policy Minister Ota said the end to falling prices in “in sight”. Other Feb data include housing spending which rose 1.3%, industrial production which dropped -0.2%, unemployment rate which stayed at 4.0%.
Germany retail sales rebounded by rising 0.9% in Feb, after a sharp fall of -5.1% in Jan. Other data from European session include Gfk consumer confidence from UK, Eurozone HICP in Mar, unemployment rate in Feb and confidence data in Mar.
Some important economic indicators are scheduled to release in US session including Feb core PCE which is expected to accelerate further to 2.4% yoy. Moderation in inflation has bottomed at 2.2% last Nov but started to pick up again in Jan. Further acceleration will echo FOMC’s view that inflation risk remains on the upside and it’s still Fed’s predominant concern. Chicago PMI disappointed in Feb and dropped further to 47.9. A rebound is expected in Mar to bring this index to 49.2, but still kept in contractionary level. Canadian GDP in Jan and PPI in Feb will also be closely watched to see if it can bring USD/CAD out of recently established range for more downside movements. EUR/USD
Daily Pivots: (S1) 1.3304; (P) 1.3327; (R1) 1.3354; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Outlook remains unchanged in EUR/USD. With 4 hours MACD staying below signal line, consolidation from 1.3410 is probably still in progress and should extend further, with risk on another fall to towards 1.3253 support. However, downside of this consolidation is still expected to be contained by 1.3200/02 cluster support (61.8% retracement of 1.3070 to 1.3410 at 1.3200, 38.2% retracement of 1.2865 to 1.3410 at 1.3202) and bring rally resumption.
On the upside, firm break above 1.3410 cluster resistance (61.8% projection of 1.2483 to 1.3364 from 1.2865 at 1.3409) is needed to confirm recent rally has resumed for next upside target of 1.3668 (04 high). Otherwise, choppy consolidation could extend further.
In the bigger picture, with EUR/USD still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) medium term up trend from 1.1639 is still in progress. The rise from 1.2865 is treated as resumption this up trend. Sustained break of 1.3364/09 resistance zone will confirm this and bring further rise towards 1.3668 resistance (04 high). Focus will be on reversal signal when EUR/USD enter into resistance zone of 1.3668 (04 high) and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 as the whole up trend from 1.1639 could terminate there.
However, break of 1.3200/02 cluster support will warn that the whole rally from 1.2865 has completed and will shift focus back to 1.3070/73 clusters support (61.8% retracement of 1.2865 to 1.3410 at 1.3073). Sustained break of 1.3070/73 clusters support will dampen the above view and indicate that the whole medium term up trend from 1.1639 might have completed earlier then we thought. Focus will be turned back to medium term rising channel (now at 1.2890).
GBP/USD
Daily Pivots: (S1) 1.9600; (P) 1.9628; (R1) 1.9646; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Outlook in cable remains unchanged. With 4 hours MACD kept below signal line, consolidation from 1.9726 is likely still progress and more choppy consolidation would still be seen with risk of for a retest of 1.9570 support remains. However, downside is still expected to be contained well above 1.9395 cluster support (61.8% retracement of 1.9183 to 1.9726 at 1.9390) and bring rally resumption. On the upside, sustained break of 1.9726 resistance will confirm recent rally from 1.9183 has resumed for 1.9913 high.
In the bigger picture, with bearish divergence conditions being displayed in weekly RSI and daily MACD a medium term top should be around the corner. The up trend from 1.7047 should make a top after reaching 2.0076/0106 cluster resistance zone (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067, 61.8% projection of 1.8517 to 1.9913 from 1.9213 at 2.0076. And hence, focus will be on reversal signal as cable approaches these levels.
On the downside, sustained break of 1.9215/17 cluster support will indicate that the whole up trend from 1.7047 might have completed earlier then we thought and should the bring deeper correction to 1.8834 cluster support (38.2% retracement of 1.7047 to 1.9913 at 1.8818) first.
USD/CHF
Daily Pivots: (S1) 1.2144; (P) 1.2164; (R1) 1.2195; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Outlook in USD/CHF remains unchanged. With 4 hours MACD staying above signal line, consolidation from 1.2029 is still in progress and further recovery cannot be ruled out. But still, upside is expected to be limited by 1.2228/30 cluster resistance (61.8% retracement of 1.2354 to 1.2029 at 1.2230, 38.2% retracement of 1.2550 to 1.2029 at 1.2228) and bring decline resumption.
On the downside, a break below 1.2075 will turn intraday bias back to the downside and bring retest of 1.2029 cluster support (78.6% retracement of 1.1879 to 1.2571 at 1.2027) first. Firm break of 1.2029 will confirm recent decline has resumed for next downside target of 1.1879 support (06 low).
In the bigger picture, medium term outlook remains bearish with USD/CHF staying below both 55 days EMA and 55 weeks EMA. Daily and weekly MACD are staying negative, supporting this view too. The preferred interpretation at this point is that the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction nand price actions from there represent resumption of such down trend. Sustained break of 1.1878 will add more credence to this view and bring further medium term weakness towards 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404.
However, note that USD/CHF is still bounded in wide range of 1.1878 to 1.2768. A rebound to above 1.2354 resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.
USD/JPY
Daily Pivots: (S1) 117.10; (P) 117.59; (R1) 118.54; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY’s choppy consolidation continues today. As discussed before, the path of such consolidation will likely be choppy and unpredictable. And with 116.38 support remains intact, risk for another rise remains, probably for a retest of 118.42 resistance. However, upside is still expected to be limited by 100% projection of 115.13 to 118.49 from 115.75 at 119.10 and bring another fall.
On the downside, break of 116.38 support will be the first signal that such consolidation has completed and should bring retest of 115.13 low. Break will confirm that fall from 122.17 has resumed for next downside target of 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02).
In the bigger picture, our view remains unchanged. Previous break of medium term rising channel support (108.99, 114.41, 117.87) indicates the whole up trend from 108.99 has completed at 122.17. Weekly MACD’s stay below signal line is still supporting this. The corrective nature of the rise from 108.99 swings favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The fall from 121.17 should then the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first with much possibility of further fall to retest 108.99 low.
However, decisive break of 119.48 fibo resistance will argue that the price actions from 122.17 is developing into large range consolidation instead. A retest of 122.17 high could be seen in such case. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.
EUR/JPY
Daily Pivots: (S1) 155.98; (P) 156.72; (R1) 158.09; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/JPY’s rebound extended further but is still kept below 158.01 high. Short term outlook remains neutral at this point. A short term top is formed after rise from 150.75 failed to take out 157.61/73 cluster resistance (100% projection of 150.75 to 155.72 from 152.64 at 157.61, 78.6% retracement of 159.63 to 150.75 at 157.73) decisively and formed a top with bearish divergence conditions in 4 hours MACD and RSI. Hence, firm break above 158.01 again is needed to confirm short term bullishness has resumed for 159.63 high. Otherwise, risk of another fall remains.
Meanwhile on the downside, break of 155.34 low again (50% retracement of 152.64 to 158.01 at 155.33), which should also bring sustained trading below mentioned rising trend line, will indicate the the whole rise from 150.75 has already completed and deeper decline should then been seen to 152.64 support.
In the bigger picture, we’re treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fall from 159.63 should represent the fourth wave correction and has already met it’s target of 38.2% retracement of 137.16 to 159.63 at 151.05) and lower channel line (143.60 to 159.63, 137.16, now at 151.32). Prior strong rebound from the channel line is so far consistent with this view. Hence, retest of 159.63 high should be seen and EUR/JPY should make a new high before finally forming a medium term top.
However, below 152.64 support again will dampen the above view and indicate that the rebound from 150.75 could probably be a correction to fall from 159.63 only. This will also put the channel support back into focus. Sustained break of the channel will indicate that a major medium term top already in place at 159.63 and that much deeper decline is indeed underway towards 147.71 support first.
Forex News Digest
http://www.bloomberg.com/apps/news?pid=20601083&sid=akfY4UqlEbng&refer=currency
http://www.bloomberg.com/apps/news?pid=20601083&sid=a7Uf43IIi9Do&refer=currency
http://www.bloomberg.com/apps/news?pid=20601083&sid=aCncMTsyfZXc&refer=currency
http://www.bloomberg.com/apps/news?pid=20601083&sid=aRP5tiOA5iJY&refer=currency
http://c.moreover.com/click/here.pl?r866571893
Fri, 30 Mar 2007 04:12:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r866510573
Fri, 30 Mar 2007 03:00:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r866471079
Fri, 30 Mar 2007 02:20:00 GMT from Daily Times
http://c.moreover.com/click/here.pl?r866462378
Fri, 30 Mar 2007 02:12:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r866457518
Fri, 30 Mar 2007 02:06:00 GMT from Yahoo! Canada
http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
22:45 NZD New Zealand GDP Q/Q Q4 0.80% 1.00% 0.30%
23:30 JPY Japan Household spending Feb 1.30% 0.60% 0.60%
23:30 JPY Japan National CPI Y/Y Feb -0.20% -0.10% 0.00%
23:30 JPY Japan Unemployment rate Feb 4.00% 4.00% 4.00%
23:50 JPY Japan Industrial production M/M Feb -0.20% -0.70% -1.70%
06:00 EUR Germany Retail sales M/M Feb 0.90% 0.90% -5.10%
08:30 GBP U.K. Gfk Consumer Confidence Mar -8.00% -8.00%
09:00 EUR Eurozone HICP Y/Y Mar 1.90% 1.80%
09:00 EUR Eurozone Unemployment rate Feb 7.30% 7.40%
09:00 EUR Eurozone Economic Confidence Mar 109.7 109.7
09:00 EUR Eurozone Consumer Confidence Mar -4 -5
09:00 EUR Eurozone Industrial Confidence Mar 5 5
09:00 EUR Eurozone Business Climate Mar 1.55 1.56
09:00 EUR Eurozone Services Confidence Mar 20 20
12:30 USD U.S. Core PCE M/M Feb 0.20% 0.30%
12:30 USD U.S. Core PCE Y/Y Feb 2.40% 2.30%
12:30 USD U.S. PCE index Y/Y Feb 2.20% 2.00%
12:30 USD U.S. Personal income Mar 0.30% 1.00%
12:30 USD U.S. Personal spending Mar 0.30% 0.50%
12:30 CAD Canada GDP M/M Jan 0.20% 0.40%
12:30 CAD Canada PPI M/M Feb 0.70% -0.10%
12:30 USD Fed Plosser speaks
13:45 USD U.S. Chicago PMI Mar 49.2 47.9
14:00 USD U.S. Construction spending Feb -0.60% -0.80%
14:00 USD U. of Michigan survey Mar 88.5 91.3
16:00 USD Fed Bernanke speaks
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/
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