Forex Technical and Fundamental Analysis for November 25, 2011

EUR/USD Technical Analysis for November 25, 2011

EUR/USD rose during the early part of the Thursday session until the PM of Germany was quoted as saying that the Eurobond idea was dead. The idea of having Germany and the core of the EU backstopping all debt was a dream of the markets, and as a result the Euro then sold off. The daily candle looks like a shooting star at the bottom of the fall, and as a result shows more possible selling to come. A break of the bottom of the Thursday session triggers more selling, and will more than likely have the market testing the 1.31 level again. We are selling rallies and a break of the low form Thursday.

EUR/USD Fundamental Analysis for November 25, 2011

It was generally a good day for the EUR/USD as the correctional wave took control of the market and the weak dollar with the absence of U.S. markets supported the battered euro to recover some losses.

The euro was buoyed by steady Germany growth at 0.5% expanding from the previous quarter and also better than expected IFO confidence figures that eased some of the jitters.

The sentiment is rather the same yet the correction is what we can call it now as the low volume and absence of U.S. traders helped in the recovery.

On Friday we still expect choppy trading with low volume prevailing as U.S. markets will return but only with a shortened session and early closing, where the clearing of transactions after the Thursday holiday will keep the fluctuations evident.

We do not have any fundamentals queued for release on Friday yet eyes will be on any outcome from the meeting between Sarkozy, Merkel and Mario with updates on the current abysmal situation. The market already ignored somehow Fitch’s downgrade for Portugal to Junk yet the next step by policy makers can make it or break it, especially as the leaders might debate the ECB option as conditions worsen and delay on the EFSF is clearly aching markets to the extent it is now somehow starting to be seen as overdue.

We also have a new Italian zero-coupon auction which will be watched not for demand and for the discount on the bond and whether we will have another major disappointment like Germany’s earlier in the week.

USD/JPY Technical Analysis for November 25, 2011

USD/JPY fell during the Thanksgiving session as traders continue to buy the Yen against all other major currencies. The pair has been intervened in a couple of times recently, and we think that it is probably going to happen again, but not in this area. The pair is decidedly bearish, but the move down will be very slow at this point as the easy pips from the intervention are already been collected. Selling on rallies is a viable strategy in this pair, and buying at a much lower price such as 75.50 is possible as well – knowing that the BoJ will step back into the markets if the pair falls too far.

USD/JPY Fundamental Analysis for November 25, 2011

The USD/JPY pair dropped early Thursday amid risk aversion, which is still dominant in the FX market increasing demand for the Japanese yen as a haven, while the US dollar retreated against the dollar after its previous gains.

The ongoing concerns regarding the EU debt crisis and the pessimistic fundamentals from major economies drove investors to abandon higher-yielding currencies and focus on the yen.

On the other hand, the greenback is weakening against the euro in a correctional movement after its previous gains, where it soared by 1.2% against the euro, which is helping the Japanese currencies to record more gains.

On Friday at 23:30 GMT (Thursday), Japan will release the annual National Consumer Price Index for October, where it’s expected to come at –0.2% from the previous reading of 0.0%.

The National Consumer Price Index Ex-Fresh Food is expected to show a drop of 0.1%.

Trading will remain choppy and with volatility after the US was out of the market on Thursday and Friday will be an early closing day leaving the market with low trading volume and increase the chance for fluctuations.

GBP/USD Technical Analysis for November 25, 2011

GBP/USD fell again on Thursday as traders continue to sell off other currencies against the US dollar. The 1.55 level is the start of massive support, and goes all the way down to the 1.53 mark. The next 200 pips will be difficult for the bears, but the direction is decidedly down at the moment, and we only sell cable now. Rallies are for selling, and a break of 1.53 has us aggressively short.

GBP/USD Fundamental Analysis for November 25, 2011

On Thursday trading, the pair hovered near 1.5500 crucial level amid volatile trading including a mix of correctional movements and mounting concerns from the euro area, where volume was not high due to thanks giving holiday in the United States. The market experienced some correctional movements in the early trading after the drop in shares and high-yielding assets this week, boosted by an upbeat German IFO report which showed that business climate gauge advanced to 106.6 in Nov. from 106.4 in Oct., compared with estimates of 105.2, providing some hopes amid the latest downbeat data and ongoing European debt woes.

On the other hand, worries form the euro area remained as the concerns that haunted markets on Wednesday after the rise in German bond yields and decline in demand in the auction dominated investors’ behaviour. Fitch ratings lowered Portugal’s credit rating by one notch sending it to junk status with negative outlook. Moreover, the pound remained near seven-week low versus the greenback even after the news showing that U.K. growth in the third quarter remained unrevised at 0.5%.

The pound has been recently affected by the fears in markets which is triggering demand on the dollar as a refuge as well as expectations the BoE would add further stimulus to boost growth. Policy maker David Miles said on Wednesday the “return to more normal rates of growth is something that is going to be a gradual process over the course of the next two years,” while Ben Broadbent said there was a chance the U.K. may experience another recession. The week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.

Probably, the main focus will remain the latest developments from the euro area amid talks between European leaders regarding the role of the ECB in solving the crisis.

USD/CHF Technical Analysis for November 25, 2011

USD/CHF had a very quiet session on Thursday as the Americans were out celebrating Thanksgiving. The pair originally fell during the session, but bounced back and remains sitting stubbornly in the 0.92 area. The pair hasn’t done it yet, but a breaking of the 0.93 level suggests a trend change in this pair for the foreseeable future. The Swiss National Bank is currently fighting Franc appreciation, and as a result this pair can’t be sold. The US dollar is the last remaining safe haven currency, and in a world full of bad headlines – it makes sense that this pair could rise going forward. We like buying dips at this point.

USD/CHF Fundamental Analysis for November 25, 2011

On Thursday, the pair showed volatile movements on the back of the mixed sentiment which gathered correctional movements and mounting concerns from the euro area, where volume was not high due to thanks giving holiday in theUnited States.

The market experienced some correctional movements in the early trading after the drop in shares and high-yielding assets this week, boosted by an upbeat German IFO report which showed that business climate gauge advanced to 106.6 in Nov. from 106.4 in Oct., compared with estimates of 105.2, providing some hopes amid the latest downbeat data and ongoing European debt woes.

On the other hand, worries form the euro area remained as the concerns that haunted markets on Wednesday after the rise in German bond yields and decline in demand in the auction dominated investors’ behaviour.

Fitch ratings loweredPortugal’s credit rating by one notch sending it to junk status with negative outlook.

As both economies lacked fundamentals, the pair’s movements remained within narrow range on Thursday.

On Wednesday, UBS put the franc under pressure after it said “the Swiss economy slowed significantly in the second half of the year as the strong franc squeezed exporters’ profit margins,” while it predicts growth to slow further to 1% in the fourth quarter.

UBS business cycle indicator showed a drop to 1.4% in the third quarter from 3.3% a year before.

These reports will more likely put pressure on the SNB to intervene to curb the franc’s appreciation amid the high demand on the dollar as a favourite safe haven due to the turbulences in European markets which may increase forecasts of seeing further rise in the pair.

The week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.

Probably, the main focus will remain the latest developments from the euro area amid talks between European leaders regarding the role of the ECB in solving the crisis.

EUR/CHF Technical Analysis for November 25, 2011

The EUR/CHF pair originally popped during the Thursday session, only to give up all of the gains on comments out of Germany that the Eurobond wasn’t an acceptable solution to the debt crisis. There was hope that perhaps the super bonds could be created, but with Germany not participating – they would be worthless. The markets then continued to sell the Euro as a result. The Swiss National Bank is currently ready to defend the 1.20 level to the downside, so any fall is going to be extremely limited at this point. Because of this, we are waiting to see if the 1.20 area can get tested, where we would be willing to buy. The breaking of 1.25 above would be a long-term buy signal.

EUR/CHF Fundamental Analysis for November 25, 2011

The EUR/CHF continued to trade in a tight range on Thursday with the recovery in markets across the board that took advantage of US markets absence and weakened the dollar which accordingly keep the pair stable as both the euro and franc recovered against the dollar.

The sentiment was generally supported by the steady Germany growth at 0.5% expanding from the previous quarter and also better than expected IFO confidence figures that eased some of the jitters. The market saw the decline overrated and the dollar gains exaggerated as they hoped that the meeting between France, Germany and Italy would produce something concrete to ease the jitters.

We do not have any fundamentals queued for release on Friday yet eyes will be on any outcome from the meeting between Sarkozy, Merkel and Mario with updates on the current abysmal situation. The market already ignored somehow Fitch’s downgrade for Portugal to Junk yet the next step by policy makers can make it or break it, especially as the leaders might debate the ECB option as conditions worsen and delay on the EFSF is clearly aching markets to the extent it is now somehow starting to be seen as overdue.

We also have a new Italian zero-coupon auction which will be watched not for demand and for the discount on the bond and whether we will have another major disappointment like Germany’s earlier in the week.

AUD/USD Technical Analysis for November 25, 2011

AUD/USD rose during the session on Thursday as traders started short-covering. The pair is decidedly bearish, and sold back off later in the session. The pair finished the day forming a shooting star at the bottom of the fall, and shows that further weakness is probably in store. The breaking of the bottom of the session’s range would be another sell signal in this pair. The 0.9350 level below seems to be calling and we think that the pair will oblige the markets. The rallies are to be sold, and we don’t buy the Aussie because of the massive amounts of headline risks out there currently.

AUD/USD Fundamental Analysis for November 25, 2011

The AUD/USD pair advanced slightly early Thursday trying to cover some of its previous losses against the greenback, where the Aussie reached to its lowest level in seven weeks the day before.

The Aussie recovered on greenback’s weakness and needed correction, where the federal currency is losing momentum against the euro and other major currencies in a correction movement after its previous gains.

However, we could not consider this slight gain for the AUD/USD pair a new wave or a new trend, as the expectations remains for further losses for the pair. China acknowledged that growth is weakening and cut the reserve requirements for rural lenders in a step to support growth which over the short term is a positive impact but over the longer term it is a proof that the nation is starting to suffer from downside pressures on growth and accordingly will affect demand from Australia and pressure aussie negatively.

On Friday both economies will not release any fundamentals, where the pair will move depending on the market sentiment. Trading will remain choppy and with volatility after the US was out of the market on Thursday and Friday will be an early closing day leaving the market with low trading volume and increase the chance for fluctuations.

USD/CAD Technical Analysis for November 25, 2011

The USD/CAD pair fell on Thursday, but bounced towards the end of the light volume session to form a hammer at the top of the recent upward move. The pair is looking to break out of the recent highs, and if it does – it could go much further. It is looking a bit extended at this point, and because of this – we like buying dips as they come. The pair may or may not give us this opportunity, and if it doesn’t we would buy fresh highs as it looks set to go to 1.10 and maybe even beyond. We aren’t selling at the moment – at least until we close on the daily chart below 1.03 or so.

USD/CAD Fundamental Analysis for November 25, 2011

The USD/CAD traded in line with the market sentiment on Thursday where investors took advantage of the absence of the U.S. and Canada for Thanksgiving and that helped the recovery after the sharp selloff seen on Wednesday.

The sentiment is still the same and the overall debt fears are predominant yet the market recovered from Wednesday’s losses as they saw the dollar gains excessive, and the rebounded helped loonie recover the losses especially with commodities and especially oil recovering.

On Friday we do not expect heavy changes on the market with choppy trading and volatility with Canada and the United States returning to the market yet for an early closing session which might still see low trading volumes though with the clearing on the floor and end of the week the volatility will prevail ahead of the weekend and another busy week for global financial markets.

NZD/USD Technical Analysis for November 25, 2011

NZD/USD rose slightly during the Thursday session, but confirmed the bearish stance that it has taken recently. The daily candle is a shooting star at the bottom of the down move, and as a result looks like we are heading much lower. We stated yesterday that the 0.70 is probably going to be seen in this pair, and the Thursday action certainly suggests this as well. We like selling rallies in this pair as long as we are under 0.75, and will continue to do so going forward. A break below the lows of Thursday has us getting a bit more aggressive in our selling.

NZD/USD Fundamental Analysis for November 25, 2011

The NZD/USD pair advanced early Thursday from its lowest level in eight months, as the greenback lost momentum against other major currencies which opened the way for the Kiwi to cover some of its previous losses.

On the other hand, New Zealand’s trade deficit narrowed unexpectedly during October to NZ$282 million from September deficit of NZ$751 million.

The good trade data helped the Kiwi to gain more ground against the US dollar, where current correction helped higher-yielding currencies to record some gains.

However, the market sentiment did not change which means the general trend for the NZD/USD pair is still to the downside.

On Friday both economies will not release any fundamentals, where the pair will move depending on the market sentiment. Trading will remain choppy and with volatility after the US was out of the market on Thursday and Friday will be an early closing day leaving the market with low trading volume and increase the chance for fluctuations.

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