Forex Daily Outlook

Euro Pushing Lower, China Trade Surplus Slumps

U.S. Dollar Trading (USD) a quiet open the week with stock markets remaining strong but FX markets less interested in selling the USD in response. China’s January Trade Surplus showed a sharp contraction as imports surged 51%. In US stocks, DJIA -5 points closing at 12268, S&P +3 points closing at 1332 and NASDAQ +7 points closing at 2817. Looking ahead, January Retail Sales are forecast at 0.6% vs. 0.66 previously.

The Euro (EUR) fell to 3 week lows as concerns about the rescue of a large German bank reigniting old fears. Focus is also remaining on Portugal the next in line for a bailout as debt costs continue to remain at crisis level for the small European country. Overall the EUR/USD traded with a low of 1.3427 and a high of 1.3560 before closing the day around 1.3490 in the New York session. Looking ahead, Q4 GDP forecast at 0.4% vs. 0.3% previously. Also released, German February ZEW survey forecast at 20 vs. 15.4,

The Japanese Yen (JPY) was strong as USD/JPY fell in Asia from light profit taking but was well supported near Y83. Q4 GDP showed a -0.3% print vs. -0.5% forecast but is still negative, showcasing the struggles of the Japanese economic recovery. Overall the USD/JPY traded with a low of 83.08 and a high of 83.2 before closing the day around 83.35 in the New York session.

The Sterling (GBP) staged a minor rally going into Europe but found sellers lined up and pulled back to 1.6000 support once again. The BOE inflation report is the highlight of the week as BOE Governor King will have to write his 10^th letter outlining the central banks response to the higher than mandated target of 2%y/y. Overall the GBP/USD traded with a low of 1.5980 and a high of 1.6081 before closing the day at 1.6025 in the New York session.

The Australian Dollar (AUD) held on to gains better than most as the risk sensitive currency tracked stocks higher. The outlook for Aussie is close related to stock markets and commodities which for the short term are well supported. The longer term direction will be resultant on the speed at which US normalize their interest rates. Overall the AUD/USD traded with a low of 0.9979 and a high of 1.0076 before closing the day at 1.0025 in the New York session. Looking ahead, RBA Meeting Minutes.

Oil & Gold (XAU) trading in the precious metal is getting more compressed everyday around the $1360 level. Overall trading with a low of USD$1353 and high of USD $1367 before ending the New York session at USD$1362 an ounce. Continued to ease on profit taking. WTI Oil Closed -$0.68 at $84.90 a barrel.

 

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3364	1.3396	1.3490	1.3621	1.3736
USD/JPY	81.13	82.34	83.35	83.68	83.91
GBP/USD	1.5964	1.5953	1.6030	1.6113	1.6138
AUD/USD	0.9897	0.9955	 1.0025	1.0137	1.0152
XAU/USD	1343.00	1348	1363	1371	1379
OIL/USD	82.50	84.00	84.90	86.50	88.00

 

 

Euro – 1.3490                    

Initial support at 1.3396 (Jan 20 low) followed by 1.3364 (50% retrace of 1.2867-1.3862). Initial resistance is now located at 1.3621 (Feb 11 high) followed by 1.3736 (Feb 10 High)

 

Yen – 83.35

Initial support is located at 82.34 (Feb 10 low) followed by 81.13 (Feb 4 low). Initial resistance is now at 83.68 (Jan 7 high) followed by 83.91 (Dec 21 high).

Pound – 1.6030

Initial support at 1.5985 (Feb 14 low) followed by 1.5964 (Feb 11 low). Initial resistance is now at 1.6113 (Feb 11 high) followed by 1.6138 (Feb 10 High).

 

Australian Dollar – 1.0025

Initial support at 0.9955 (61.8% retrace of 0.9804-1.02) followed by the 0.9897 (76.4% retrace of 0.9804-1.02). Initial resistance is now at 1.0137 (Feb 11 high) followed by 1.0152 (Feb 9 high).

Gold – 1363

Initial support at 1348 (Feb 8 low) followed by 1343 (Feb 7 low). Initial resistance is now at 1371 (Jan 20 high) followed by 1379 (Jan 19 high).

 

Oil – 84.90

Initial support at 84.00 (Intraday Support) followed by 82.50 (Intraday Support). Initial resistance is now at 86.50 (Intraday Resistance) followed by 88.00 (Intraday Resistance).

 

 

Written by Anthony Darvall

 

 

 

 

 

 

 

 

 

 

 

 

 

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