Forex Technical And Fundamental Analysis For July 18, 2011

EUR/USD Technical Analysis for July 18, 2011

EUR/USD had down day on Friday , but bounced slightly to form a hammer-shaped candle. The pair is mired with risks that can come out at any time it seems, and it should be said that Italian and Spanish bonds are trading at their highest premium over the Bund ever. This is not a good sign for the Euro , and we feel that buying is almost impossible because of all the danger. However, we don’t like selling yet either – we need a technical set up for that. Perhaps a new low under that Tuesday low, or a rally to sell into.

EUR/USD Fundamental Analysis for July 18, 2011

The EUR/USD on Monday is expected to start a very volatile week as investors start a new week with the debt crisis in mind and act upon the results from the EBA 2011 Stress Tests.The euro fluctuated heavily last week as the debt focus turned to the United States with the warning from the rating agencies for the US that their credit rating is at risk shall the government fail to resolve the deadlock on raising the debt ceiling.

Monday is expected to me very volatile with one eye on the stress tests and the other on the decision from Congress as president Obama asked congressional leaders for a response within two days and that will clear if the debt-limit will be raised or not and accordingly will be reflected on the pair.

In other news on Monday, Germany will start the week with the ZEW Survey for July at 09:00 GMT where the Current Situation Index is expected to slow to 85.3 from 87.6 and the Economic Sentiment is expected to retreat to -11.0 from -9.0.

From the United States, the week will start at 13:00 GMT with the TIC Flows for May. The Net long-term TIC flows in April recorded $30.6 billion and the Total Net TIC Flows were at $68.2 billion.

USD/JPY Technical Analysis for July 18, 2011

USD/JPY rose slightly on Friday , but still remains weak overall. The biggest problem with shorting this pair at this point is that the Bank of Japan has already intervened – and had 4 or more central banks helping it at that time. The BoJ has already warned traders that the Yen isn’t trading on fundamentals , a phrase often used before intervention. Because of this, the risk isn’t worth it to us.

USD/JPY Fundamental Analysis for July 18, 2011

The USD/JPY pair dropped heavily last week, after risk aversion controlled the financial market and drove investors to focus on the lower yielding currencies like the yen, which advanced against its major counterparts. The US dollar and the Japanese yen befitted from the current risk aversion, where the two currencies advanced sharply against their major counterparts as a safe haven for investors.

Furthermore, the USD/JPY pair has been traded in a danger area, where investors were worried from another intervention from the BOJ in the currency market to prevent the yen from further strength against the dollar.

On Monday at 13:00 GMT, the U.S. economy will release the Total Net TIC Flows for May, where the previous reading was $68.2 billion. While the Net Long-term TIC Flows had a previous reading of $30.6 billion.

The NZHB housing market index for July will be publish at 14:00 GMT, where it is expected to come at 15 from the prior reading of 13.

GBP/USD Technical Analysis for July 18, 2011

GBP/USD had down day on Friday, but formed a hammer as traders came in and bought the Pound later in the day. The question then becomes whether or not this is a real move. We believe it is, but the overall bearishness of the pair can’t be ignored either. Any longs should move to break even fairly quickly as headline risks abound, and this pair follows equity markets.

GBP/USD Fundamental Analysis for July 18, 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.

The dollar’s weakness pushed the pair to the upside in the week ending July 15 as the dovish announcements by Standard and Poor’s that the US economy may be prone to a downgrade within the coming three months made the outlook for the US economy bleak, amid the slowdown signaled in the second quarter as depicted by recent data.

Yet, the with the likelihood that there will be no extension to QE2 after its end in June, the dollar may advance against the pound, especially as the latest announcements by BoE policy makers show that there will be no soon tightening in monetary policy. In addition, the ease in inflation to 4.2% in June from 4.5% may encourage the BoE to keep lose monetary policy to support recovery pace that started to wane in the second quarter.

AUD/USD Technical Analysis for July 18, 2011

AUD/USD had down day on Friday, but found support at the 1.0650 area, right where the Tuesday hammer formed. It appears that 1.08 is the key to gaining to the level of 1.10 in this pair. We still like buying dips, and will continue to do so as long as we are above 1.05.

AUD/USD Fundamental Analysis for July 18, 2011
The AUD/USD pair traded lower last week, as the US dollar advanced against its major counterparts after the EU debt crisis spread to Italy and Spain, which increased fears between investors.

The greenback dominated the currency market most of last week, as the markets returned to focus on the lower yielding currencies due to the EU debt crisis.

On the other hand, the U.S. economy is facing a gloomy outlook after Moody’s Investors Service announced that it may downgrade the US treasuries debt rating, the fact that could give investors a good reason to abandon any risky investment, causing a sell-off in the financial market.

On Monday, the Australian new motor vehicle sales for June will be released at 01:30 GMT, where the previous reading was down by 7.6% while the annual reading had a previous reading of –14.5%.

At 13:00 GMT, the U.S. economy will release the Total Net TIC Flows for May, where the previous reading was $68.2 billion. While the Net Long-term TIC Flows had a previous reading of $30.6 billion.

NZD/USD Technical Analysis for July 18, 2011

NZD/USD had down day on Friday at first, but managed to bounce back and form hammer by the end of the day. This pair has shown its strength over the last couple of years, and this looks like another great example. Because of this, we like buying on all dips.

NZD/USD Fundamental Analysis for July 18, 2011
The NZD/USD soared last week to record its all time high, as the New Zealand dollar advanced against its major counterparts after the New Zealand GDP came better than expectations during the first quarter.

The New Zealand economic growth expanded in the first quarter more than twice as much as the analysts’ forecasts, where the cheerful 1st quarter for the New Zealand came as strongly supportive for the nation’s currency.

Furthermore, the better than expected and previous industrial data from China could boost the New Zealand outlook, as the strong manufacturing sector in China will help to increase demand on New Zealand exports.

On Monday at 22:30 GMT (Sunday),the New Zealand economy will release the Performance Services Index for June, where the previous reading was 52.8.

The New Zealand Consumer Prices Index for the second quarter will be released at 22:45 GMT (Sunday), where the expectations are for 0.8% rise in line with the previous reading. On the other hand, the annual reading is expected at 5.1% from the previous rise of 4.5%.

At 13:00 GMT, the U.S. economy will release the Total Net TIC Flows for May, where the previous reading was $68.2 billion. While the Net Long-term TIC Flows had a previous reading of $30.6 billion.

The NZHB housing market index for July will be publish at 14:00 GMT, where it is expected to come at 15 from the prior reading of 13.

AUD/NZD Technical Analysis for July 18, 2011

AUD/NZD had down day on Friday, sending the pair much lower as the uptrend seems to be coming to an end. The pair looks set to target the 1.25 level, and we have the next major support area as 1.23 – a few hundred pips below. We like selling rallies as the market has certainly shown its hand at this point.

AUD/NZD Fundamental Analysis for July 18, 2011 The AUD/NZD pair retreated sharply after the New Zealand dollar recorded its all time high against the dollar. The AUD/NZD pair is expected to continue its downside movement during the upcoming period as the cheerful New Zealand outlook supports the currency.

The cheerful data from the New Zealand economy and the risk aversion in the financial market helped the New Zealand currency to control the AUD/NZD pair last week.

On Monday at 22:30 GMT (Sunday),the New Zealand economy will release the Performance Services Index for June, where the previous reading was 52.8.

The New Zealand Consumer Prices Index for the second quarter will be released at 22:45 GMT (Sunday), where the expectations are for 0.8% rise in line with the previous reading. On the other hand, the annual reading is expected at 5.1% from the previous rise of 4.5%.

The Australian new motor vehicle sales for June will be released at 01:30 GMT, where the previous reading was down by 7.6% while the annual reading had a previous reading of –14.5%.

USD/CAD Technical Analysis for July 18, 2011

USD/CAD had down day on Friday , breaking through a minor support area at 0.9550. This shows that the pair is still aiming to reach 0.9450 – an area that would certainly signal a move back to the all-time lows if violated. By all accounts, this pair looks like that is what it wants to do. We sell rallies in this pair, and it serves us well.

USD/CAD Fundamental Analysis for July 18, 2011
The USD/CAD pair fell on Friday, as the USD lost momentum against the CAD due to concerns over the ability of U.S. lawmakers to reach a deal that will raise the debt ceiling and reduce the budget deficit, while rising crude oil prices also supported the CAD against the USD, and pushed the USD/CAD pair to the downside.

The pair’s outlook could change to the downside over the coming period, especially since markets will be stressing the possibilities of QE3, and that should put downside pressure on the USD and accordingly push the USD/CAD pair further to the downside. Nonetheless, if U.S. lawmakers were able to reach an agreement to raise the debt ceiling over the weekend, we should expect the USD to be able to rise against the CAD on Monday.

Monday July 18:

The United States, the week will start at 13:00 GMT with the TIC Flows for May. The Net long-term TIC flows in April recorded $30.6 billion and the Total Net TIC Flows were at $68.2 billion.

USD/CHF Technical Analysis for July 18, 2011

USD/CHF had down day on Friday , after rallying earlier in the day. The end result was a shooting star-shaped candle for the second day in a row. This pair is a classic “sell the rallies” pair at this point, and anytime it pops up in value – it should be sold. We won’t buy, no matter the set up.

USD/CHF Fundamental Analysis for July 18, 2011 Both economies lack fundamentals which suggest that there would be calm trading on the pair that is expected to follow the general trend in market as it will not able to get direction from data.

In the week ended July 15, the dollar weakness pushed the pair down on threats that S&P may downgrade the U.S. standard AAA rating within the coming three months which worsened the outlook of the economy amid the slowdown seen from second quarter data.

However, with lower possibility that there would be a third round of stimulus by the Fed, the dollar may gain some strength, especially as Bernanke referred that the economy will show progress in the second half of the current year.

EUR/JPY Technical Analysis for July 18, 2011

EUR/JPY had a flat day on Friday, but still remains weak overall. The pair looks very weak, and as such – we want to see a retest of the 113.50 area for resistance before we get into a sell position. The USD/JPY will be watched for extreme selling, which could trigger central bank intervention. The EUR/JPY pair will move in sympathy if intervention does happen. Because of that, we will eventually look to sell this pair, but keep one eye on the USD/JPY simultaneously.

EUR/GBP Technical Analysis for July 18, 2011

EUR/GBP had down to neutral day on Friday, ending the day basically unchanged. The pair seems content to hang around this area, and it should be said that it feels like sitting this low after the quick fall isn’t out of kilter. Because of this, we think that the market could go lower, and with all of the headline risks, we think it is a sound thesis. The 0.87 area, if closed below, could be a trigger for fresh selling.

EUR/CHF Technical Analysis for July 18, 2011

EUR/CHF had down day on Friday, even after a short-lived rally. The candle looks like a shooting star, and as such shows that there could be more downside momentum. Of course, the 1.15 level should produce some kind of reaction as bottom pickers will certainly try the area. The pair is sell-only, and we like to sell rallies every time this they come.

GBP/JPY Technical Analysis for July 18, 2011

GBP/JPY had a flat day on Friday, but still remains weak overall. The pair looks very weak, and as such – we want to see a retest of the 130 area for resistance before we get into a sell position. The USD/JPY will be watched for extreme selling , which could trigger central bank intervention. The GBP/JPY pair, as well as all Yen-related pairs, will move in sympathy if intervention does happen. Because of that, we will eventually look to sell this pair, but keep one eye on the USD/JPY simultaneously.

GBP/CHF Technical Analysis for July 18, 2011

GBP/CHF had a move up on Friday , but quickly turned that around to produce a losing day. The pair simply cannot get out of its own way at this point, and as such – we are sellers. You simply cannot buy at this point, as that has proved costly for years. We sell rallies.

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