Forex Technical and Fundamental Analysis for August 22, 2011

EUR/USD Technical Analysis for August 22, 2011

The EUR/USDrose on Friday, but managed to find the top of the recent downtrend channel resistive. The pair looks like it is stuck between two levels at the moment, the 1.4250 and 1.45 levels. The market is confused, as the two currencies involved belong to two economies that are both suffering. This will continue to make this a scalper’s pair, and not a long-term trading environment. The closer we get to 1.45, the more likely we are to try a short position. The closer to 1.41, the more likely we are to try a long position. Either way, those are going to be small positions that we will be taking profit quickly from.

EUR/USD Daily Fundamental Analysis for August 22, 2011

The EUR/USD continues to fluctuate heavily with the prevailing tension and pressure in the market from the worsening growth outlook and deepening debt crisis in the euro area. On Monday the pair is expected to start another week with the same bearish and weak sentiment with the lingering pressure and fear over the outlook, especially with the expected flow of weak data and contraction to be reported in the euro area manufacturing. The lack of major data on Monday will leave the focus on the faltering sentiment and any chances for action from central banks and finance chiefs after Japan states the necessary for coordinated G7 steps to contain the crisis. Eyes remain on the weekend as well and whether any surprise move from policy makers alter the outlook for the start of the week which remains pessimistic and focused on the rising downside pressure over the recovery.

AUD/USD Technical Analysis for August 22, 2011

The AUD/USDinitially rose on Friday, but was pushed back at the 1.05 level as trader began to sell off everything risk related again. The pair now sits a little bit above the 1.03 area, which could serve as support. Although this pair looks weak in the short-term, that area will certainly provide some kind of support, and we feel selling would be hard to do. If we can break above the 1.06 level – this pair goes to 1.0750 and 1.10 eventually. Until then, we will sit on our hands. A break below parity would be a long-term signal to sell.

AUD/USD Daily Fundamental Analysis for August 22, 2011

Asian stock markets added to heavy losses acrossAsiaon Friday, as risk appetite evaporated on a fresh wave of concerns about global growth, with exporters among the worst performers. The Australian currency, nicknamed Aussie, fell for a second day versus its U.S. counterpart as Asian stocks extended the global decline in equities, curbing appetite for higher-yielding assets. Moreover, the investors moved to the low yielding currencies after the Citigroup Inc. cut its forecasts forU.S.growth amid concern about a global economic slowdown, damping demand for higher-yielding investments. On the other hand, Aussie declined versus all majors after the RBA minutes noted that the Bank won’t increase the interest rates until the end of the year to continue supporting economic recovery amid the European debt crisis that it will pressure growth. The U.S. economy will issue the Chicago Fed Activity Index for July at 12:30 GMT, where it’s expected to drop by 0.48 from the previous fall of 0.46.

EUR/CHF Technical Analysis for August 22, 2011

The EUR/CHF pair continues to sit still as the Swiss National Bank has stepped into the market to keep it afloat. The pair cannot fall because of the SNB, but one gets the impression it is only a matter of time before it gets overrun again. The troubles in Europe aren’t going away, and this pair will eventually fall as a result. The market is temporarily contained at this point, but it is only a matter of time before we see a large candle on the daily chart. The trend is down, so we suspect it might be a red candle.

EUR/CHF Daily Fundamental Analysis for August 22, 2011

Eyes are still on the Swiss National Bank as the franc remains favoured in this time of uncertainty which is keeping the EUR/CHF biased to the upside with the risk aversion and fear of recession. We ended last week on Friday with the same pessimistic sentiment that is mostly to continue with us this week with the downbeat growth signals expected from major economies, confirming further the fears of another recession. This downbeat sentiment keeps the franc favoured for gains on the back of have demand and likely to be the trend with the start of the week unless policy makers and the SNB surprise us again with an unexpected weekend move, which so far is unlikely, yet we will still keep an eye on the SNB for any unexpected moves. The volatility will prevail on Monday with the lack of major news, where the data will start only from Switzerland at 07:00 GMT with the M3 Money Supply for the year ending in July after the reported previous 5.2%.

NZD/USD Technical Analysis for August 22, 2011

The NZD/USDpair rose, and then fell on Friday. The candle for the day looks very weak, and is actually a bit of a shooting star. The pair looks set to test the 0.8000 level, and if that area doesn’t hold – we expect a lot of room to the downside as this would be seen as a major break of support. The pair could rally, but it is looking increasingly weak, and we would be interested in selling it we do. Until then, this pair could bounce around quite a bit.

NZD/USD Daily Fundamental Analysis for August 22, 2011

New Zealand’s currency (Kiwi) has declined to the most in three weeks, and extended its loss versus greenback to the longest losing streak since May 2010, after commodity prices declined. On the other hand, Asian stocks fell, with the regional index revisiting levels from last week’s global stocks rout, amid signs the world economy is slowing and Europe’s debt crisis will damage the banking system. The New Zealand currency slumped to the lowest level in two weeks, affected by the bad outlook for the global economic recovery, while started its sharp downside movement after the Standard & Poor’s 500 index posted its biggest loss since February 2009. On Monday, the NZ economy won’t release any fundamental data, but theU.S.economy will issue the Chicago Fed Nat Activity Index for July at 12:30 GMT, where it’s expected to drop by 0.48 from the previous fall of 0.46.

USD/JPY Technical Analysis for August 22, 2011

The USD/JPY pair fell hard on Friday, especially during the US session. The pair is suffering from the “flight to safety” trade at the moment as traders buy the Yen in droves around the world. This pair is important to watch however, as the Bank of Japan intervenes as a direct result of what happens here. The breaking of 76 will certainly pique the interest of the bank. The last intervention was at 77, and the BoJ has been very vocal about watching this pair. Intervention is probably a certainty at this point. It only comes down to when now. The daily candle looks supportive as traders certainly didn’t want to be short of this pair over the weekend with all of the risk involved in selling it.

USD/JPY Daily Fundamental Analysis for August 22, 2011

The USD/JPY pair continued its bearish move reaching its post-war levels, where investors increased demand for lower-yielding currencies due to the uncertainty regarding the global recovery. The slowing U.S. economy and the disappointing Japanese data increased concerns over the global recovery, which in turn drove investors to abandon the higher-yielding currencies and focus on the safe haven investments. On the other hand, the Japanese currency advanced against other majors despite comments from the Japanese Finance Minister that the government is monitoring the yen’s movements, and another intervention in the FX market could be witnessed. The Japanese economy will release the supermarket store sales for July at 05:00 GMT, where the previous reading showed a rise of 0.1%. The convenience store sales for July will be released at 07:00 GMT, where it had a prior reading of 9.0%. The U.S. economy will issue the Chicago Fed Activity Index for July at 12:30 GMT, where it’s expected to drop by 0.48 from the previous fall of 0.46.

GBP/USD Technical Analysis for August 22, 2011

The GBP/USDpair rose above the 1.65 area again on Friday, and fired off a lot of stops in that area. However, it should be noted that the area also produced a shooting star, and this could be a sign of selling to come at this point. The USD certainly could get a boost from a flight to safety, and this would have this pair reentering the 1.60 – 1.65 consolidation area. The pair will be directly affected by the trader sentiment on Monday. A break below the lows on Friday is a sell signal. The breaking of the highs is a very bullish signal as well.

GBP/USD Daily Fundamental Analysis for August 22, 2011

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data. If the negative general negative sentiment seen last week continued, it is more likely that the pair will move to the downside as the dollar is predicted to benefit from being a safe have currency. The main focus this week will be on growth data from both economies as investors will be eager to see whether there will be revisions to the second quarter readings to assess the extent of the slowdown. In theU.S., the annualized GDP for the second quarter is predicted to be downwardly revised which may increase worries that the slowdown would lead theU.S.to another recession, whileU.K.growth is estimated to remain unrevised.

USD/CAD Technical Analysis for August 22, 2011

The USD/CADpair had a wild day on Friday as the market sold it off, and then bought it later. The resulting candle looks somewhat similar to a hammer, but is in the middle of consolidation. The oil markets have been rocked back and forth, and as a result – this pair seems like it doesn’t know what to do. We have two important levels that we are watching: parity and 0.98. If either one of those areas get broken on a daily close – we are trading in that direction.

USD/CAD Daily Fundamental Analysis for August 22, 2011

The USD/CAD pair dropped on Friday, as a slight wave of optimism after Spain announced more budget cuts to help reduce the swelling deficit overshadowed fears over the outlook for global growth, which provided the CAD with momentum to rise against the USD, pushing the USD/CAD pair to the downside. Moreover, the consumer price index was released from Canada for July, where CPI rose in line with expectations, signaling core inflation remains under control in Canada. The uncertainty that continues to dominate global financial markets should continue to boost demand for lower yielding and more safe assets, and accordingly, we preserve our bullish outlook for the USD/CAD pair, and any downside movements are not expected to prevail for long, since risk aversion will provide the USD/CAD pair with the needed bullish momentum. Monday August 22: No major data is queued for release from both the United States and Canada on Monday, as the start of the week will be focused on the prevailing downbeat sentiment and fear of the worsening outlook.

USD/CHF Technical Analysis for August 22, 2011

The USD/CHF pair had a fairly quiet day on Friday, even though the stock markets weren’t quiet at all. The pair is being artificially held up by the Swiss National Bank at the moment, and the lack of motion shows this. The pair is certainly in a down trend, and the SNB might be overrun if the situation in Europe gets any worse. The pair can’t be bought, and it really can’t be sold at this point either. We need a large candle in one direction or another to show us the way forward. The 0.8000 level just above should be resistive, and if it gives way would be a bullish sign.

USD/CHF Daily Fundamental Analysis for August 22, 2011

As of 07:00 GMT, the Swiss economy will release money supply M3 for the year ending April, yet it is expected to have slight effect on the pair’s movements, where theUSwill release some mortgage data. If the negative general negative sentiment seen last week continued, it is more likely that the pair will move to the downside as the franc is predicted to strengthen. However, further monetary intervention or announcements by Swiss policy makers may enable the franc to continue its drop as targeted by the SNB which pledged to take all necessary measures to halt the franc’s runaway. The main high this week is the Swiss trade data which will show the status of exports in the month of July and how much it was affected by the franc’s appreciation.  In the U.S., the main focus will probably on GDP for the second quarter as the annualized GDP for the second quarter is predicted to be downwardly revised which may increase worries that the slowdown would lead the U.S. to another recession.

 

About the FX Empire:
The FX Empire is dedicated to providing the most expert and timely technical and fundamental analyses to our readers. Coupling those with our Forex broker overviews and our Forex news updates assists our readers in making the best possible financial decisions for themselves. Our readers are among the best informed in the market, everyday.

Check out the latest Brokers Reviews by FX Empire: Capital Spreads Review, Citi FX Pro Review.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.