Forex Technical and Fundamental Analysis for September 23, 2011

EUR/USD Technical Analysis for September 23, 2011

 

EUR/USD fell hard and through the all-important 1.35 level on Thursday as traders sold all risk-related assets around the world. The USD was bought hand over fist and the Euro was sold in general as the problems in the EU are still at the forefront of the trading world’s mind. The pair is certainly bearish, and this breakdown is a very, very bad sign. 1.35 could be resistance, and as such we would be willing to sell on weakness there – or on rallies in general when they start to fade. We cannot buy the Euro at this point as there are simply too many issues in the EU involving debt and banking at this point.

EUR/USD Daily Fundamental Analysis for September 23, 2011

Pessimism remains the main theme in the market and the EUR/USD suffered heavy losses on Thursday after the Federal Reserve fuelled fears over the outlook for the recovery which only gave strong advantage to haven demand and to the dollar to extend the gains.

The new austerity measures announced by Greece did little to quell the negativity as the contraction in the services and manufacturing sector in September in the euro area added to fears that the economy is slowing drastically and might enter a new recession.

Fears over the euro area stability and the debt crisis were extended with the overall jitters of recession. The progress in Greece did not offset the woes for now, even as the nation is seen closer to getting the aid in October which will prevent default, where for now the market is only focusing on the downbeat data and not on any of the upside hints.

We saw the market react negatively to the announced measures from the FOMC to purchase $400 billion of long-term debt and selling the same amount in short term securities, where investors saw the action inadequate to the mounting downside pressure on the recovery and will not stimulate growth as quickly and as hoped for keeping the dollar a favourite for gains on strong risk aversion in the market.

On Friday the market is likely to remain influenced by the flow of downbeat data and prevailing jitters, where the end of the week position settlement might add to the volatility yet we see little hope for a recovery to the end of the week especially as the focus remains on the worsening outlook for the global economy all the way from Asia to the United States!

AUD/USD Technical Analysis for September 23, 2011

 

AUD/USD fell hard on Thursday as the parity level finally gave way as support. We find this to be a massively bearish sign and added to the fact that the candle for Thursday closed so close to the bottom, we as now sellers of the AUD in general. The pair would be an attractive sell on rallies, and we expect the parity level to now be resistance if we do bounce from this level. We cannot buy at this point as it is an obviously broken pair.

AUD/USD Daily Fundamental Analysis for September 23, 2011

The dollar found strong support against its major counterparts after the FOMC introduced more stimuli to push the economic recovery on the track.

The Australian dollar extended its losses versus the greenback after the Fed kept the interest rates unchanged at a record low between 0.00 and 0.25%, while it adopting “Operation Twist” to stimulate the slowing economy.

The Fed will purchase by the end of June 2012 $400 billion of long-term securities with remaining maturities of 6 years to 30 years and to sell an equal amount of securities with remaining maturities of 3 years or less.

Moreover, the Australian dollars fell to the lowest levels in more than a month versus its U.S. counterpart as stocks and commodities slid after the Federal Reserve said there are “significant downside risks” to the economic outlook.

On Friday at 00:00 GMT, Australia is to issue its conference board leading index for July after the drop reported in June to -0.8%.

Friday has no data from the U.S. economy and the pair’s movement is expected to rely on the market sentiment.

EUR/CHF Technical Analysis for September 23, 2011

 

The EUR/CHF pair rose, and then fell on Thursday as traders sold off the Euro. The pair is supported by the Swiss National Bank’s “line in the sand” at 1.20. Because of this, the pair stayed afloat in comparison to the EUR in general. The pair does look like it wants to fall apart, but the SNB will certainly get involved if it falls too far. Because of this, we cannot sell, but it appears buying isn’t possible now either. We will simply continue to monitor this pair and wait for any buy signals.

EUR/CHF Daily Fundamental Analysis for September 23, 2011

The effect of the SNB rumours is starting to decline with the EUR/CHF failing to maintain the upside momentum amid the heavy selloff across the board and rising fears of recession.

The sentiment remained strongly bearish across the board on Thursday after the Fed warned of the significant pressures over the outlook and risks to growth which stem from the debt crisis in the euro area.

Gains to the euro on the back of the eased Greek default woes were short lived, where the new measures adopted by Greece failed to uplift the sentiment as the recession woes grew stronger.

The week’s data ended on Thursday with contraction in services and manufacturing activity in the euro area in September according to the flash PMI index which further fuelled the risk of entering another recession that will only add to debt woes as governments struggle to meet the budget targets.

On Friday the lack of data from both economies will leave the focus on the deteriorating sentiment and heavy volatility will be seen after the massive selloff on Thursday as investors see the recession a reality more each day.

NZD/USD Technical Analysis for September 23, 2011

 

NZD/USD fell hard and through the 0.8000 support level on Thursday as traders sold off all commodities and risk-related assets globally. The Kiwi will remain sensitive to falls in the commodity markets and stocks in general. The NZD looks very vulnerable, and we feel that rallies are to be sold as the market has taken a decidedly ugly turn now that we have blown through the 0.8000 level.

NZD/USD Daily Fundamental Analysis for September 23, 2011

The Kiwi declined heavily versus greenback as the NZ economy expanded less than market’s expectations, as nation’s exports fell 0.5% due to the weakening in machinery and meat shipments.

New Zealand dollars dropped versus after the US’s government left the benchmark interest rates unchanged at a record low between 0.00% and 0.25%, while also announced more monetary easing measures in order to support the ailing recovery.

On the other hand, the Kiwi suffered further losses after the Chinese economy reported that September’s manufacturing PMI may drop to 49.4, which is the third contraction in three months, where the Chinese market is the largest for Australian and New Zealand products.

Moreover, investors shifted their investments from higher yielding currencies to the dollar after the Fed said it will buy $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and sell an equal amount of Treasury securities with remaining maturities of 3 years or less.

Friday has no data scheduled from the NZ and the U.S. where the pair’s movement is expected to rely on the market sentiment in addition to the market volatility.

USD/JPY Technical Analysis for September 23, 2011

 

The USD/JPY pair fell hard on Thursday as traders continue to look for safety assets, of which the Yen is considered one. The pair is supported by the Bank of Japan, and words were released reminding the market of this on Thursday as well. This would make us extremely wary of shorting this pair, although it certainly looks very bearish at this point. Because of this, we are not trading this pair at this point, as the intervention that the FX markets seem to be egging on could be dangerously close. However, you cannot buy just hoping the BoJ will do it. It is much more prudent and wise to simply walk away from this pair at the moment.

USD/JPY Daily Fundamental Analysis for September 23, 2011

The USD/JPY pair advanced early Thursday as greenback grabbed all the attention and soared against its major counterparts, after the Feds showed great concern regarding the U.S. economic growth outlook.

The Federal Open Market Committee announced extra measures to ease its monetary policy, trying to ease the slowdown in the U.S. economy while holding the benchmark rate unchanged between 0.00% and 0.25%.

Risk aversion hit the market sharply after the Fed’s decision, as investors shifted their investment to the lower yielding currencies, pushing the dollar and the yen to their highest levels against other majors.

On the other hand, the Japanese yen drooped slightly against the dollar due to strong buying positions on the Federal currency; while the yen needs the upside correction after it has been traded in its post-war levels against the greenback.

Friday has no data about the Japanese economy or the U.S. economy, and the pair’s movement is expected to rely on the market sentiment in addition to the market volatility. Renewed fears of any Japanese intervention in the market might help the pair keep the upside bias amid the heavy volatility.

GBP/USD Technical Analysis for September 23, 2011

 

 

The GBP/USD fell hard again on Thursday, forming the second long red candle in a row. The pair is broken by all accounts, and we are in a downtrend by just about any metric. However, we are expecting a bounce sooner or later – of which we would be happy to sell. If we get a rally, we will sell on signs of weakness at this point in time. We expect 1.53 to be supportive, as well as the 1.50 area. 1.55 should now be resistive. Selling rallies continues to be our strategy for this pair now.

GBP/USD Daily Fundamental Analysis for September 23, 2011

On Thursday, the pound continued its decline against the dollar, hovering around eight-month low, as worries stemming from the U.S. and the current sluggish growth pace worldwide sparked demand on low-yielding currencies.

The Fed Chairman, Ben Bernanke, said there are “significant downside risks” to the economic outlook of theU.S.and said the Fed would sell $400 billion of short-term securities and buy an equivalent amount of long-term securities to reinvigorate the economy. Bernanke’s announcements were translated negatively by investors, pushing demand on the dollar.

In addition, manufacturing and services data from the euro area showed contraction in the two key sectors while U.S. jobless claims showed a rise, adding to signs that the sluggish growth pace is counting.  

On the other hand, the latest comments by the BoE referred to the need of buying more bonds and keepingU.K.interest rate at its low level to spur the weak recovery.

On Friday, U.K. BBA loans for house purchase for the month of August will be released at 08:30 GMT, while theU.S.lacks economic fundamentals.

USD/CAD Technical Analysis for September 23, 2011

 

USD/CAD shot straight up on Thursday as traders sold off the oil markets globally. The CAD is highly sensitive to the price of oil, and the fact that the world was buying Dollars suddenly makes this pair a great buy. The pair is known for making violent moves after consolidating for long periods of time. It appears that we are ready to really get moving now, and that the parity level should be a bit of a floor. 1.03 is a resistive area, but the writing seems to be on the wall. We would love to see a pullback and a supportive candle on the 4 hour above the parity level to get us buying for a larger move.

USD/CAD Daily Fundamental Analysis for September 23, 2011

The USD/CAD pair extended its gains on Thursday, as the pair rose sharply well above parity and hit the highest level in almost a year, as pessimism dominated global markets over the outlook for global growth after the Fed signaled downside risks to growth are “significant”, where the Fed announced an Operation Twist, which did little to ease fears in markets, while slowing economic activities in China and Europe intensified fears among traders, as they indulged in a huge selling wave that sent higher yielding assets tumbling to the ground, while providing lower yielding assets including the U.S. dollar with strong bullish momentum, which sent the USD/CAD pair sharply higher on Thursday.

Moreover, retail sales data from Canada disappointed investors, as retail sales fell in July below expectations, which weighed down on the Canadian dollar, and allowed the USD/CAD pair to extend its gains.

We expect the USD/CAD pair to extend its gains over the coming period, since signs of slowing global growth, in addition to the European debt crisis, are likely to keep demand for lower yielding assets strong, and that will provide the USD/CAD pair with more bullish momentum over the coming period.

Friday September 23:

No data is queued for release from Canada or the U.S. economy which will leave trading influenced by the prevailing market sentiment.

USD/CHF Technical Analysis for September 23, 2011

 

The USD/CHF pair rose on Thursday, as the world bought Dollars in general. The Swiss Franc is being actively shorted and jawboned down by the Swiss National Bank, and as such – it has lost its “safe haven” status. This makes sense that the pair rises, as traders run for safety, they buy the USD and toss out the SNB. Besides, who wants to fight a central bank? The pair looks strong, and we believe that a temporary floor is in at the 0.9000 level. Shorting isn’t advised rather we prefer buying dips in general.

USD/CHF Daily Fundamental Analysis for September 23, 2011

On Thursday, the franc retreated the dollar as the latest announcements by the Fed Chairman sparked concerns, thereby enhancing safety demand on the dollar which became more attractive as a haven amid the ongoing interventions by the SNB to weaken the franc. The Fed Chairman, Ben Bernanke, said there are “significant downside risks” to the economic outlook of theU.S.and said the Fed would sell $400 billion of short-term securities and buy an equivalent amount of long-term securities to reinvigorate the economy. Bernanke’s announcements were translated negatively by investors, pushing demand on the dollar. In addition, manufacturing and services data from the euro area showed contraction in the two key sectors while U.S. jobless claims showed a rise, adding to signs that the sluggish growth pace is counting.   On Friday, the week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.

 

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