Best Investment

Action Insight | Written by ActionForex.com | Mar 30 07 14:26 GMT |
Forex Mid-Day Technical Report Dollar Soars on Strong Data

Dollar strengthens further in early US session after strong data from US. The Fed’s preferred inflation gauge, core PCE deflator, rose by 0.3% mom in Fe, pushing yoy rate to 2.4%, matching last Sep’s peak, indicating inflation risk remains substantially on the upside. Personal income and spending both rose more than expected by 0.6% comparing to expectation of 0.3%. Meanwhile, Chicago PMI staged an impressively strong rebound to 61.7 in Mar, much stronger than expectation of 49.2, and being the strongest reading since Apr 05. Construction spending rose 0.3% in Feb, which is also above expectation of -0.6%.

Released earlier, Eurozone HICP accelerated mildly to 1.9% in Mar as expected while unemployment rate dipped slightly from 7.4% to 7.3%. Sterling was pressured across the board, believed to be due to month-end corporate sales and stops being triggered. Gfk consumer confidence came it at -8 which is inline with expectation. Canadian dollar’s pre data rally was limited after mixed data which seen GDP growing 0.1% only in Jan while PPI rose 0.9% in Feb. EUR/USD

Daily Pivots: (S1) 1.3304; (P) 1.3327; (R1) 1.3354; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/USD dips further in early US session on broad based dollar strength. At this point, intraday bias will remain on the downside as long as EUR/USD stays below 1.3347 minor resistance. As discuss before, as consolidation from 1.3410 is still in progress with 4 hours MACD kept below signal line, further pull back is still in favor to 1.3253 support. But still, Downside of this consolidation is still expected to be contained by 1.3200/02 cluster support (61.8% retracement of 1.3070 to 1.3410 at 1.3200, 38.2% retracement of 1.2865 to 1.3410 at 1.3202) and bring rally resumption.

On the upside, above 1.3347 will suggest that fall from 1.3373 has likely completed and should bring retest of 1.3410. Firm break above 1.3410 cluster resistance (61.8% projection of 1.2483 to 1.3364 from 1.2865 at 1.3409) is needed to confirm recent rally has resumed for next upside target of 1.3668 (04 high). Otherwise, choppy consolidation could extend further.

In the bigger picture, with EUR/USD still trading comfortably within medium term rising channel (1.1639, 1.2483, 1.2978) medium term up trend from 1.1639 is still in progress. The rise from 1.2865 is treated as resumption this up trend. Sustained break of 1.3364/09 resistance zone will confirm this and bring further rise towards 1.3668 resistance (04 high). Focus will be on reversal signal when EUR/USD enter into resistance zone of 1.3668 (04 high) and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 as the whole up trend from 1.1639 could terminate there.

However, break of 1.3200/02 cluster support will warn that the whole rally from 1.2865 has completed and will shift focus back to 1.3070/73 clusters support (61.8% retracement of 1.2865 to 1.3410 at 1.3073). Sustained break of 1.3070/73 clusters support will dampen the above view and indicate that the whole medium term up trend from 1.1639 might have completed earlier then we thought. Focus will be turned back to medium term rising channel (now at 1.2890).

GBP/USD

Daily Pivots: (S1) 1.9600; (P) 1.9628; (R1) 1.9646; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s consolidation from 1.9726 continues and dips further to as low as 1.9545, touching mentioned 1.9554 support. At this point, intraday bias remains on the downside as long as 1.9657 and further decline is still in favor. However, downside of the consolidation from 1.9726 is expected to be contained well above 1.9395 cluster support (61.8% retracement of 1.9183 to 1.9726 at 1.9390) and bring rally resumption. On the upside, above 1.9657 will suggest that current retreated completed and should bring retest of 1.9726 high. Sustained break of 1.9726 resistance will confirm recent rally from 1.9183 has resumed for 1.9913 high.

In the bigger picture, with bearish divergence conditions being displayed in weekly RSI and daily MACD a medium term top should be around the corner. The up trend from 1.7047 should make a top after reaching 2.0076/0106 cluster resistance zone (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067, 61.8% projection of 1.8517 to 1.9913 from 1.9213 at 2.0076. And hence, focus will be on reversal signal as cable approaches these levels.

On the downside, sustained break of 1.9215/17 cluster support will indicate that the whole up trend from 1.7047 might have completed earlier then we thought and should the bring deeper correction to 1.8834 cluster support (38.2% retracement of 1.7047 to 1.9913 at 1.8818) first.

USD/CHF

Daily Pivots: (S1) 1.2144; (P) 1.2164; (R1) 1.2195; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/CHF extends rebound to as high as 1.2239 on broad based dollar weakness and is now pressing mentioned 1.2228/30 cluster resistance (61.8% retracement of 1.2354 to 1.2029 at 1.2230, 38.2% retracement of 1.2550 to 1.2029 at 1.2228). At this point, intraday bias remains on the upside as long as USD/CHF stays above 1.2152 minor support and further rally could still be still to 100% projection of 1.2029 to 1.2227 from 1.2082 at 1.2280. Break will put key near term resistance of 1.2354 (61.8% retracement of 1.2550 to 1.2029 at 1.2351) in focus. On the downside, below 1.2152 will turn intraday outlook consolidative first. But a break below 1.2082 is needed to confirm recent rebound has completed. Otherwise, short term remains on the upside.

In the bigger picture, medium term outlook remains bearish with USD/CHF staying below both 55 days EMA and 55 weeks EMA. Daily and weekly MACD are staying negative, supporting this view too. The preferred interpretation at this point is that the whole down trend from 1.3283 is still in progress with the first move from 1.3283 finished with three waves down to 1.1919. Subsequent rebound to 1.2768 was the interim correction and price actions from there represent resumption of such down trend. Sustained break of 1.1878 will add more credence to this view and bring further medium term weakness towards 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404.

However, note that USD/CHF is still bounded in wide range of 1.1878 to 1.2768. A rebound to above 1.2354 resistance will dampen this view and indicate that the fall from 1.2571 has completed after meeting 1.2027 fibo support. Another rise could then be seen to retest this high and then the upper end of the range at 1.2768.

USD/JPY

Daily Pivots: (S1) 117.10; (P) 117.59; (R1) 118.54; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY’s rally from 116.38 extends further on broad based dollar strength. At this point, further rise is still in favor as long as USD/JPY stays above 117.48 minor support. As discussed before, the path of consolidation from 115.13 could be choppy and unpredictable. But upside is still expected to be limited by 100% projection of 115.13 to 118.49 from 115.75 at 119.10. But a break of 116.38 support is needed to signal that such consolidation has completed first and bring retest of 115.13 low. Otherwise, risk of further recovery remains. Meanwhile, firm break of 115.13 low will confirm that fall from 122.17 has resumed for next downside target of 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02).

In the bigger picture, our view remains unchanged. Previous break of medium term rising channel support (108.99, 114.41, 117.87) indicates the whole up trend from 108.99 has completed at 122.17. Weekly MACD’s stay below signal line is still supporting this. The corrective nature of the rise from 108.99 swings favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The fall from 121.17 should then the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first with much possibility of further fall to retest 108.99 low.

However, decisive break of 119.48 fibo resistance will argue that the price actions from 122.17 is developing into large range consolidation instead. A retest of 122.17 high could be seen in such case. But still, firm break above this resistance is needed to confirm medium term rally from 108.99 has resumed. Otherwise, medium term outlook will be neutral at best.

EUR/JPY

Daily Pivots: (S1) 155.98; (P) 156.72; (R1) 158.09; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/JPY edges higher today but upside is still kept below 158.01 high. Short term outlook remains neutral at this point. A short term top is formed after rise from 150.75 failed to take out 157.61/73 cluster resistance (100% projection of 150.75 to 155.72 from 152.64 at 157.61, 78.6% retracement of 159.63 to 150.75 at 157.73) decisively and formed a top with bearish divergence conditions in 4 hours MACD and RSI. Hence, firm break above 158.01 again is needed to confirm short term bullishness has resumed for 159.63 high. Otherwise, risk of another fall remains.

Meanwhile on the downside, break of 155.34 low again (50% retracement of 152.64 to 158.01 at 155.33), which should also bring sustained trading below mentioned rising trend line, will indicate the the whole rise from 150.75 has already completed and deeper decline should then been seen to 152.64 support.

In the bigger picture, we’re treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fall from 159.63 should represent the fourth wave correction and has already met it’s target of 38.2% retracement of 137.16 to 159.63 at 151.05) and lower channel line (143.60 to 159.63, 137.16, now at 151.32). Prior strong rebound from the channel line is so far consistent with this view. Hence, retest of 159.63 high should be seen and EUR/JPY should make a new high before finally forming a medium term top.

However, below 152.64 support again will dampen the above view and indicate that the rebound from 150.75 could probably be a correction to fall from 159.63 only. This will also put the channel support back into focus. Sustained break of the channel will indicate that a major medium term top already in place at 159.63 and that much deeper decline is indeed underway towards 147.71 support first.

Forex News Digest

http://www.bloomberg.com/apps/news?pid=20601087&sid=aBi2Wes_bAdE&refer=home

http://www.bloomberg.com/apps/news?pid=20601083&sid=aOMj0GLBcM48&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=aSZWsghYXR2k&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=a7Uf43IIi9Do&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=av_fu4xyavcw&refer=currency

http://www.bloomberg.com/apps/news?pid=20601083&sid=akfY4UqlEbng&refer=currency

http://c.moreover.com/click/here.pl?r866924724
Fri, 30 Mar 2007 10:03:00 GMT from AP via MSN Money

http://c.moreover.com/click/here.pl?r866909513
Fri, 30 Mar 2007 09:49:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r866829823
Fri, 30 Mar 2007 08:36:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r866804952
Fri, 30 Mar 2007 08:11:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r866788956
Fri, 30 Mar 2007 07:53:00 GMT from New Zealand Herald

http://c.moreover.com/click/here.pl?r866770855
Fri, 30 Mar 2007 07:33:00 GMT from Bloomberg

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
Previous Revised
0.80% 1.00% 0.30%
1.30% 0.60% 0.60%
-0.20% -0.10% 0.00%
4.00% 4.00% 4.00%
-0.20% -0.70% -1.70%
0.90% 0.90% -5.10%
1.90% 1.90% 1.80%
7.30% 7.30% 7.40%
111.2 109.7 109.7
-4 -4 -5
6.1 5.4 5.4
22.3 20 19.6
-8 -8 -8
0.30% 0.20% 0.30% 0.20%
2.40% 2.40% 2.30% 2.20%
2.30% 2.20% 2.00% 1.90%
0.60% 0.30% 1.00%
0.60% 0.30% 0.50%
0.10% 0.20% 0.40%
0.90% 0.70% -0.10% 0.20%
61.7 49.2 47.9
0.30% -0.60% -0.80% -0.50%
88.4 88.5 91.3

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/

Mid-Day Report: Dollar Soars on Strong Data

Archived Entry

Ads