The euro and franc open lower

The appetite for risk is quite mixed among asset classes ahead of the US open. All foreign currencies open with some degree of weakness. The Aussie led the losers, as weak local economic data compounded negativity created by the dovish RBA report a day earlier. The euro and franc open lower, and the yen at a new 2 ½-year low. The appetite for risk is limited in the short run and remains low in the medium term. The Asian stock indexes advanced. The European bourses are up and the US stock markets are higher in pre-open trading. But gold, oil and silver are down.

The short-term outlook for most of the foreign currencies is sideways to slightly bearish. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is long on the euro, franc and Canadian dollar, and short yen, pound and Australian dollar.

Good luck!


Overnight

  • China: The Cabinet approved a plan to increase the minimum wages to 40% of average salaries and to lift the percentage of profit contribution by state-owned companies' to the treasury by 5% by 2015.

  • UK: The BRC Shop Price Index declined to 0.6% in January, less than +1.5% in December.

  • Australia: Retail sales fell 0.2% in December, the same as in November.

  • Germany: The purchasing managers' index for the construction sector increased to 47.7 in January from 43.3 in December.


Today's economic calendar

  • Canada: Ivey Purchasing Managers Index for January


EUR – March

The LGR Model: Long since January 24

The March euro opens a little lower in the US after reversing from a one-week low on Tuesday. It marked a new 14-month high on Friday. The euro is trading in a short-term bullish flag targeting the 1.3750 area and in a medium-term bullish flag targeting the 1.4200 area. It is trading above the 21-day exponential moving. The euro bottomed at an over two-year low in July.

The short-term outlook is sideways to slightly bearish. The medium-term outlook is slightly bullish and the LGR model is long.

Good support is at 1.3460. The 21-day exponential moving average follows at 1.34295.

Immediate resistance is at 1.3600. The next cap is 1.3660. A pivot high is at 1.3715.

INDICATORS

Fast stochastics: Bearish

MACD: Sideways

Ichimoku: Bullish

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Bullish

LONG-TERM: Slightly bullish


JPY – March

The LGR Model: Short since January 24

The oversold March Japanese yen opens at a new 2 1/2-year low. The yen is trading below the neckline of a long-term head–and-shoulders pattern and the target is the 1.0580 area. It is trading well below the 21-day exponential moving average. The yen had peaked on September 13.

The short-term outlook is slightly bearish. The medium-term outlook is bearish and the LGR model is short.

Initial support is at 1.0630. Further support is at 1.0580 and 1.0520.

Immediate resistance is at 1.0735. Further resistance is at 1.0850.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Bearish

LONG-TERM: Bearish


GBP – March

The LGR Model: Short since February 1

The March pound is seeking a floor after sinking to a 6 ½-month low on Tuesday. The pound is approaching the bottom of a long-term (four-year) triangle in the 1.56 area. There is also a double top formation targeting the 1.54 area. It is trading below the 21-day exponential moving average but is not oversold any more. The pound had marked a 17-month high on January 2 and bottomed on June 1.

The short-term outlook is sideways. The medium-term outlook is sideways and the LGR model is short.

Immediate support is at 1.5625. Further support is at 1.5505.

Initial resistance is at 1.5720. Further resistance is at 1.5805 and 1.5875.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Bearish

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


CHF – March

The LGR Model: Long since January 15

The March Swiss franc opens at a one-week low on demand for EUR/CHF. It marked a 10-month high on Friday. The franc is trading in a medium-term symmetrical triangle. It had marked a seven-month high on December 20 and a 19-month low on July 24.

The short-term outlook is sideways to slightly bearish. The medium-term outlook is slightly bullish and the LGR model is long.

Initial support is at 1.0925. Further support is at 1.0875 and 1.0820.

Immediate resistance is at 1.1045. The top of the uptrend is at 1.1090. Further resistance is at 1.1200.

INDICATORS

Fast stochastics: Slightly bearish

MACD: Slightly bullish

Ichimoku: Slightly bullish

OUTLOOK

NEAR-TERM: Sideways to slightly bearish

MEDIUM-TERM: Slightly bullish

LONG-TERM: Sideways


CAD – March

The LGR Model: Long since January 31

The March Canadian dollar opens slightly lower but still around the 21-day exponential moving average. The loonie had reached a six-month low on January 25. It is trading below the 50% mark of the June-September uptrend. The loonie had peaked at a 2 ½-month high on January 11. The Canadian dollar had marked a high for the uptrend on September 14 and a significant bottom on June 1.

The short-term outlook is sideways. The medium-term outlook is sideways and the LGR model is long.

Initial support is at .9955. Further support is at .9825.

Immediate resistance is at 1.0055. Significant resistance is at 1.0175.

INDICATORS

Fast stochastics: Bullish

MACD: Sideways

Ichimoku: Sideways

OUTLOOK

NEAR-TERM: Sideways

MEDIUM-TERM: Sideways

LONG-TERM: Sideways


AUD – March

The LGR Model: Short since February 4

The March Australian dollar opens at a 2 ½-month low after having an outside day and closing a little lower fell on Tuesday. The Aussie marked a new high for the uptrend on January 10.

The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is short.

Initial support is at 1.0220. Further support follows at 1.0135.

The 100-day exponential moving average caps at 1.0331 and the 21-day exponential moving average resists at 1.0408. The top of the uptrend is at 1.0547.

INDICATORS

Fast stochastics: Bearish

MACD: Bearish

Ichimoku: Slightly bearish

OUTLOOK

NEAR-TERM: Slightly bearish

MEDIUM-TERM: Sideways

LONG-TERM: Sideways

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