EUR/USD back below 1.3000, Spain Focus

Last week’s currency trading review

The EUR/USD was on the sell side from the get go last week as the global QE3 rally faded and traders searched for support back under 1.3000. The longer term outlook for the EUR/USD is quite strong given the navigation of the Eurozone crisis successfully by Draghi so far. Some hurdles continue to be Spain asking for a bailout and the ongoing mess in Greece where talk is they might fail to meet budget cut targets.

USD/JPY is moving lower as risk off commodities and stock markets last week pressure the pair even as the BOJ announced its own bond buying expansion. Adding to the uncertainty is a fresh spat between China and Japan of Island ownership disputes. Yen crosses are giving back some of the substantial gains made over the last month.

Currency Movement last week

EUR/USD was up -1.12% closing at 1.2983, after opening the week at 1.3128.

USD/JPY was down -0.29% closing at 78.13, after opening at 78.36.

GBP/USD was up +0.04% closing at 1.6227 after opening at 1.6220.

AUD/USD was up -0.95% closing at 1.0451 after opening at 1.0550.

This Week’s Trading Preview

Forex Outlook

Pivot: 1.044

Our preference: Short positions below 1.044 with targets @ 1.039 & 1.0365 in extension.

Alternative scenario: Above 1.044 look for further upside with 1.047 & 1.05 as targets.

Comment: as long as 1.044 is resistance, look for choppy price action with a bearish bias.

Key levels
1.04245 last

Forex Economic Data Preview

In the States; On Tuesday, CB Consumer Confidence forecast at 63.1 vs. 60.6 previously. On Wednesday, New Home Sales forecast at 381k vs. 372k previously. On Thursday, Weekly Jobless Claims forecast at 378k vs. 372k previously. Also, Pending Home Sales forecast at -0.7% vs. 2.4% previously. On Friday, Chicago PMI forecast at 52.9 vs. 53.0 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German September ZEW forecast at -19.4 vs. -25.5 previously. PM Thursday, September German Manufacturing PMI forecast at 45.4 vs. 44.7 previously. September EU Manufacturing forecast at 45.4 vs. 45.1 previously. Also on Thursday, ECB President Draghi speaks. In the UK; On Tuesday, BBA mortgage Approvals forecast at 28.4k. On Wednesday, CBI realized Sales are forecast at 6 vs. -3 previously. On Thursday, Final Q2 GDP forecast at -0.5% q/q. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; on Friday, Tokyo CPI forecast at -0.2% vs. -0.5% previously. Prelim August Industrial Production forecast at -0.4% vs. -1.0% previously. In Australia; No major Economic Data this week.

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