Forex Technical and Fundamental Analysis for October 24, 2011

EUR/USD Technical Analysis for October 24, 2011

EUR/USD rose again on Friday as traders anticipated some grand plan coming out of the EU over the weekend. The fact that it couldn’t break out of its trading range shows just how little faith there actually is in this idea, and it could be setting up for a fall at this point. In fact, the EUR/CHFshowed weakness, and suggests that might actually be the case. However, with the meeting over the weekend, we will need to see what the Monday close looks like in order to make another trade. At this point in time, you should probably be flat in this pair.

EUR/USD Daily Fundamental Analysis for October 24, 2011

The EUR/USD is likely to begin the week on Monday with high volatility, especially as we still await the outcome of the EU summit on Sunday October 23. The uncertainty is high and the market is still optimistic the leaders will present a strong plan to contain the crisis, yet with the mixed signals from Germany and France and their request for a new summit on Wednesday and accordingly lack of clear comments from the summit will extend the volatility for the pair. Therefore, the main focus remains the euro debt crisis and what the leaders will say. The market needs strong and comprehensive plans to continue the rally and otherwise a strong selloff will be seen across the board. Germany will start at 07:30 with the advanced PMI Manufacturing for October which is expected to weaken to 50.0 from 50.3 while the Services PMI to recover slightly to 50.0 from 49.7. The data start on Monday with the advanced estimate for the sectors performance in October at 08:00 GMT. The PMI Services is expected to fall to 48.5 from 48.8 and the PMI Manufacturing is expected to fall to 48.2 from 48.5 and accordingly the Composite PMI is likely to weaken as well from September’s 49.1. The Industrial New Orders for August are due at 09:00 GMT and expected to drop by 0.1% after 2.1% slump the previous month.

AUD/USD Technical Analysis for October 24, 2011

AUD/USDrose during the Friday session as the world awaits the results of the EU meetings over the weekend. The Aussie is a barometer of global risk, and it fared quite well as a result of the market getting excited about possible good news on Sunday. However, the 1.03 – 1.05 levels are just above, and continue to be very resistive. In fact, the pair didn’t break out of its recent consolidation yet, so we would wait. 1.05 has to be closed above on the daily chart for us to buy. On signs of weakness and/or bad news – we are sellers.

AUD/USD Daily Fundamental Analysis for October 24, 2011

The AUD/USD pair retreated last week due to lack confidence in the financial market and risk aversion which returned to control the FX market, driving higher-yielding currencies down such as the Australian dollar. The Australian dollar and other major currencies still affected by the current EU debt crisis, and the delay from EU leaders to announce their plan to contain the crisis. The market will start the week with reaction to what the leaders announce on Sunday after the October 23 summit, although they are embraced for further delay after Germany and France called for another summit on Wednesday, which might see the delay of the measures, yet in general the market will react mainly to what the leaders say which might provide the guidelines for the measures and accordingly if the measures are strong the risk appetite will return and if not a strong selloff will be evident. On Monday at 00:30 GMT, the Australian economy will release the Producer Price Index for the third quarter, where the previous reading was up by 0.8%. The annual Producer Price Index had a previous reading of 3.4%.

EUR/CHF Technical Analysis for October 24, 2011

The EUR/CHF pair fell on the session for Friday as the market rallied in several other “risk” pairs. This was odd, as the Euro exploded against so many of the other currencies. With this in mind, the EUR/CHF is the one that is being supported by a central bank– so why is it falling? We can’t sell this pair because of the Swiss National Bank and its need to push this pair up, but the fact that the Euro fell shows us that it is possible the Euro strength isn’t real. We might be able to buy this pair for a long-term trade, but only if the EU meetings produce something substantial.

EUR/CHF Daily Fundamental Analysis for October 24, 2011

The EUR/CHF outlook for Monday is highly uncertain as the focus is still the debt crisis and what the leaders will say on Sunday. The EU summit is the focus and although already investors see the decision might be delayed till Wednesday in the new summit that Germany and France called for, they are still at least looking for guidelines from leaders and that they are capable of bridging the differences and to present a comprehensive plan. The data start on Monday with the advanced estimate for the sectors performance in October at 08:00 GMT. The PMI Services is expected to fall to 48.5 from 48.8 and the PMI Manufacturing is expected to fall to 48.2 from 48.5 and accordingly the Composite PMI is likely to weaken as well from September’s 49.1. The Industrial New Orders for August are due at 09:00 GMT and expected to drop by 0.1% after 2.1% slump the previous month.

NZD/USD Technical Analysis for October 24, 2011

NZD/USD had a bullish day on Friday as traders continued to get excited about a possible EU rescue package over the weekend. However, the recent consolidation area wasn’t broken, and the real risks are for disappointment from the meeting – which would produce a “risk off” environment, and would be bad for the Kiwi overall. Because of this, we are not comfortable buying this currency unless we see a solid green candle at the close on Monday. Until then, we feel much more comfortable selling signs of weakness.

NZD/USD Daily Fundamental Analysis for October 24, 2011

The NZD/USD pair fell last week amid risk aversion which controlled the FX market, as EU debt crisis still weighed negatively on financial markets with fears and uncertainty. However, the New Zealand economy gives some signs of picking up as rising consumer spending and employment add to evidence the nation’s economy grew modestly in the first quarter, buoyed by record-low interest rates and a surge in commodity prices The market will start the week with reaction to what the leaders announce on Sunday after the October 23 summit, although they are embraced for further delay after Germany and France called for another summit on Wednesday, which might see the delay of the measures, yet in general the market will react mainly to what the leaders say which might provide the guidelines for the measures and accordingly if the measures are strong the risk appetite will return and if not a strong selloff will be evident. On Monday at 21:45 GMT, New Zealand economy will release the Consumer Prices Index for the third quarter, where it had a previous reading of 1.0% and expected to retreat to 0.7%. The annual Consumer Prices Index for the third quarter is expected to come at 4.9% compare to the previous reading of 5.3%.

USD/JPY Technical Analysis for October 24, 2011

The USD/JPY pair spiked lower on Friday and even managed to peak below the 76 handle. The area has been massive support, and as such – repelled the surge eventually. However, this was a serious test of the will of the Japanese central bank, which didn’t do much it appears. (It can be said that there are rumours of them stepping in “quietly” at the 76 handle, however this is just speculation.) We still believe in the range, and think this could be a good spot for a scalp. However, the EU meeting over the weekend could produce massive fireworks in the markets at the open on Monday, so smaller positions are urged.

USD/JPY Daily Fundamental Analysis for October 24, 2011

The USD/JPY pair ended last week with looses, as the EU leaders didn’t announce their plan to contain the EU debit crisis, which drove investors to shift to lower yielding currencies such as the yen and the greenback. The market will start the week with reaction to what the leaders announce on Sunday after the October 23 summit, although they are embraced for further delay after Germany and France called for another summit on Wednesday, which might see the delay of the measures, yet in general the market will react mainly to what the leaders say which might provide the guidelines for the measures and accordingly if the measures are strong the risk appetite will return and if not a strong selloff will be evident. On Monday at 23:50 GMT (Sunday), Japan will release the Merchandise Trade Balance Total for September, where the expectations refer to a surplus of 200.4 billion yen while the previous reading was down by 775.3 billion yen. The Adjusted Merchandise Trade Balance is expected to show a deficit of 147.8 billion yen compare to the previous deficit of 294.4 billion yen. On the other hand, the annual Merchandise Trade Exports for September is expected to rise to 1.1 from the previous of 2.8, while the annual Merchandise Trade Imports is expected to come at 12.6 from 19.2.

GBP/USD Technical Analysis for October 24, 2011

In a surprising show of strength, the GBP/USDpair broke above the resistance area at 1.58 on Friday. The level had been keeping the market down, and as such the market popped after it gave way. However, the 1.60 level is roughly the 50% retrace of the total move, and it should provide massive resistance to the cable pair. We think the buy move has already ran too far, so looking for weakness closer to the 1.60 level is probably the best route for selling. The pair made an impressive move – but there are a lot of headwinds and potential headline risks out there that could push this pair down.

GBP/USD Daily Fundamental Analysis for October 24, 2011

On Monday, 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. Still, the main focus is the latest developments from the euro area. In the week ended October 21, the pair showed decline amid worries stemming from the euro area which triggered safety demand on the dollar, yet the pair managed to rebound on improvement in theU.K.data. However, if the European plan failed to ease the jitters in markets, the dollar may advance against the pound once again. On the other hand, with more money printing by the BoE to bolster the economy, the pound is expected to face downside pressure as it will be oversupplied.

USD/CAD Technical Analysis for October 24, 2011

USD/CADfell on Friday and tested the parity support level in the process. The daily close is looking weak, but the level has held up. The market will be highly correlated to the oil markets, and they look ripe for a pullback. Because of this, we suspect a bounce is coming in this pair. The selling of it will be very difficult unless we manage to break below parity, and hold that to a daily close. The market should be observed for the Monday close, and not traded until we see the market’s position at that point.

USD/CAD Daily Fundamental Analysis for October 24, 2011

The USD/CAD pair extended its drop on Friday, where rising hopes that EU leaders will be able to craft a plan to ease the European debt crisis at next week’s EU summit boosted demand for higher yielding asset, which provided the Canadian dollar with bullish momentum to push the USD/CAD pair to the downside. Moreover, strong earnings from U.S. companies on Friday pushed equity markets to rise strongly in the United States, which further boosted demand for higher yielding assets, as the U.S. dollar fell sharply against major currencies. Also, Canada released the CPI for the month of September, where CPI rose above expectations, adding more bullish momentum to the CAD, and pushing the USD/CAD pair lower. Traders will continue to monitor the latest developments from Europe, where more optimism could provide the USD/CAD pair with more bearish momentum on Monday. Nonetheless, the uncertainty remains very high in markets, and that could lead the USD/CAD pair to fluctuate over the coming days until the EU summit begins next week. Monday October 24: We don’t have any major fundamentals from Canada or the United States on Monday, which means that the focus is likely to remain on Europe, and whether EU leaders will be able to reach an agreement to solve the euro zone debt crisis.

USD/CHF Technical Analysis for October 24, 2011

USD/CHF fell again on Friday as investors sold off the Dollar against everything in response to the anticipation of the EU bailout meetings over the weekend. The idea of the meeting producing something major seems to be the focus of the markets. However, the Swiss National Bank is still willing to work against the Franc, and we think this pair only has limited downside because of that. The pair is a “buy only” pair at this point, and with that in mind – we are not willing to join this move. We are looking for a supportive candle in which to buy this pair currently.

USD/CHF Daily Fundamental Analysis for October 24, 2011

On Monday, 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. Still, the main focus is the latest developments from the euro area. In the week ended October 21, the pair showed decline amid worries stemming from the euro area which triggered safety demand on the franc, where investors started to resort to it amid speculations there will be no further interventions from the SNB to curb the franc’s appreciation despite the ongoing calls of raising the euro cap against the franc to 1.40 from the current 1.20. Thus, if the European plan failed to ease the jitters in markets, the franc may advance against the dollar once again.

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