Daily Report: Dollar Remains Weak on Geopolitical and Growth Data Concern
Action Insight | Written by ActionForex.com | Feb 26 07 07:41 GMT |
Forex Daily Technical Report Dollar Remains Weak on Geopolitical and Growth Data Concern
Dollar edges lower against majors today and remains weaker across the board so far. One of the factors that contribute to dollar’s weakness is the growing concerns surrounding Iran’s nuclear program. Dollar is also pressured by rising oil and gold prices. Speculation has been building that the U.S. will confront Iran since Iran rejected UN’s call to cease its nuclear program last week. Meanwhile, traders are continuing to adjust their positions ahead of a string of important economic data from US this week that could surprise markets on the downside, including downward revision of Q4 GDP. .
New Zealand dollar shrugged off worse than expected trade deficit which widened from -645M to -833M. Instead, Kiwi surged strongly after National Bank of New Zealand’s business survey that should business sentiments in New Zealand is at a two year high with 25.7% of companies expecting their business to improve over the next 12 months. Prior reading was 24%. This has bolstered the likelihood of a rate hike from RBNZ in Mar 8 and boosted the Kiwi.
March Germany Gfk consumer confidence came in at 4.4, below expectation of 5.0. Prior month’s reading was revised up slightly from 4.8 to 4.9. BoJ also released its Jan minutes but reactions is muted since it’s pretty out-dated. EUR/USD
Daily Pivots: (S1) 1.3117; (P) 1.3152; (R1) 1.3201; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD edges higher to 1.3196 today but lacks follow through momentum in quiet trading. Hourly MACD’s turn below signal line and RSI retreating to below overbought region suggest an intraday top should be formed at 1.3196 already and risk some consolidation. But downside should be contained well above 1.3106 support and bring rally resumption. Above 1.3196 will indicate recent rally has resumed for 1.3296 resistance.
As discussed before, consolidation from 1.3187 should be completed at 1.3078 already. Sustained trading above 1.3187 resistance will confirm this. However, a break below 1.3106 support will indicate that EUR/USD is still bounded in sideway consolidation and risk another dip to below 1.3078 again. But even in such case. We’d expect downside to be contained by 1.3034 cluster support (61.8% retracement of 1.2939 to 1.3187 at 1.3034) and bring rally resumption.
In the bigger picture, corrective fall from 1.3364 should have completed with three waves down to 1.2865. With EUR/USD staying within medium term rising channel (lower channel line at 1.2815 now), medium term up trend from 1.1639 is still in force. Break of 1.3296 resistance will indicate such up trend has likely resumed and EUR/USD should make a new high above 1.3364. However, with bearish divergence condition in weekly MACD and RSI, a medium term top could be around the corner. Upside of this medium term rally could be limited by resistance zone of 1.3668 (04 high) and 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822. But clear reversal pattern or a break of the lower channel line is needed to indicate a medium term top is formed, otherwise, further rise is still in favor.
GBP/USD
Daily Pivots: (S1) 1.9560; (P) 1.9606; (R1) 1.9675; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable continues to trade in tight range below 1.9654 today. Hourly MACD’s turn below signal line suggest that an intraday top should be formed at 1.9654 already and some further consolidation might follow. But still, further rally is still in favor as long as downside is contained above 1.9535 support. Above 1.9654 again will indicate rise from 1.9429 has resumed towards 1.9731 resistance
However, previous break of rising trend line support (1.8517 to 1.8834, now at 1.9715) indicates the rally from 1.8517 should have already completed at 1.9913. Further correction is still in favor as long as cable stays below 1.9731 resistance. Below 1.9429 will indicate corrective fall from 1.9913 has resumed for 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). But, sustained break of 1.9731 will indicate the corrective fall from 1.9913 has already completed and should bring retest of this high.
In the bigger picture, bearish divergence conditions are being displayed in weekly RSI, daily MACD and RSI already, suggesting that the whole up trend from 1.7047 might have completed before reaching mentioned 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). Focus is still on 1.9237/61 cluster support. Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818) first.
Strong rebound from 1.9237/61 cluster support or break of 1.9731 resistance will indicate that the corrective fall from 1.9913 is merely correction to the rise from 1.8517 only and cable could make another high above 1.9913 and attempt to meeting 2.0106 cluster resistance before having a medium term reversal.
USD/CHF
Daily Pivots: (S1) 1.2279; (P) 1.2344; (R1) 1.2394; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF continues to trade in tight range above 1.2294 today. Hourly MACD’s turn above signal line and RSI’s recovery from oversold region suggest that an intraday low should be formed and further consolidation recovery could follow. But still, we’d expect upside to be limited below 1.2409 resistance and bring another fall. Below 1.2294 again will indicate fall from 1.2550 has resumed for next downside target of 1.2268 resistance turned support. Above 1.2409 resistance. is needed to shift short term focus back to the upside.
In the bigger picture, previous break of 1.2374 support should have completed a head and shoulder top formation (with ls: 1.2547, h: 1.2571, rs: 1.2550) and should be an important indication of reversal. Firm break of 1.2268 resistance turned support will confirm that the whole rally from 1.1878 has completed after failing to break through mentioned medium term falling trend line (1.3283 to 1.2760). Also, weekly MACD will still be kept negative with daily MACD staying below signal line. This will favor the case that whole down trend from 1.3283 is still in force. In such case, deeper decline should be seen towards 61.8% retracement of 1.1878 to 1.2571 at 1.2143 and even further to retest 1.1878 low.
On the upside, above 1.2436 will turn focus back to the medium term falling trend line again (now at 1.2488). Sustained break of this medium term falling trend line will indicate that whole medium term down trend from 1.3283 has already completed at 1.1878. Further rally should then be seen towards 1.2768 cluster resistance(61.8% retracement of 1.3283 to 1.1878 at 1.2746) first. Break of 1.2768 cluster resistance will add much weight to the case that whole corrective rise from 1.1288 (04 low) has resumed and further rally should be seen towards 1.3283 (06 high) or above.
USD/JPY
Daily Pivots: (S1) 120.75; (P) 121.18; (R1) 121.43; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY edges further lower to 120.75 today, inch above mentioned 4 hours 55 EMA (now at 120.70). As discussed before, with with 4 hours MACD dragged below signal line and RSI back from overbought region, a short term top should be formed at 121.61 already. Hence, further correction is still expected to follow as long as USD/JPY stays below 121.16 minor resistance. However, downside should be contained by 120.32 cluster support (50% retracement of 118.96 to 121.61 at 120.29) and bring rally resumption.
On the upside, above 121.16 will indicate the retreat from 121.61 has completed and should bring retest of this high. But firm break of 121.61 is needed to indicate rise from 118.96 has resumed for a retest of 122.17 high first. Otherwise, consolidation from 121.61 should still be in progress with risk of another fall before completion. Meanwhile, sustained trading below 120.29/32 cluster support will dampen this view and put 118.96 low back into focus.
In the bigger picture, consolidation from 122.17 should have completed with three waves down to 118.96, after meeting 38.2% retracement of 114.41 to 122.17 at 119.21. Break of 122.17 high will indicate rally from 114.41 and medium term up trend from 108.99 has resumed. At this point, the preferred interpretation of the rise from 108.99 is that the first move has completed at 117.87. Subsequent price actions to 113.95, 119.86 and 114.41 is treated as interim consolidation that’s skewed upward by the rise to 119.86. Rise from 114.41 is treated as resumption of the whole up trend. With this interpretation, next upside target will be 100% projection of 108.99 to 117.87 from 114.41 at 123.29. However, break of 118.96 support will raise some doubt about this interpretation. In such case, a deeper decline should follow to retest medium term rising channel (now at 116.58) first.
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http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
21:45 NZD New Zealand Trade Balance Jan -833M -645 M -433 M
21:45 NZD New Zealand Imports Jan 3.31B 3.05 B 3.33 B
21:45 NZD New Zealand Exports Jan 2.48B 2.50 B 2.90 B
05:00 JPY BOJ meeting minutes Jan
07:00 EUR Germany Gfk index Mar 4.4 5 4.8 4.9
14:40 USD Fed Bies Speaks in New York
16:00 EUR ECB Quaden Speaks in Antwerp
17:30 GBP BoE Blanchflower Speaks in U.K.
EUR Germany CPI prelim. M/M Feb 0.50% -0.20%
EUR Germany CPI prelim. Y/Y Feb 1.80% 1.60%
EUR Germany HICP prelim. M/M Feb 0.50% -0.20%
EUR Germany HICP prelim. Y/Y Feb 1.90% 1.80%
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/