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Intraday Forex Technical Report

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U.S. Update: Week close with no definitions

Fri, Jun 26 2009, 15:53 GMT
by Valeria Bednarik

FXstreet.com Independent Analyst Team

What happened in Asia

Nikkei rose in Asia, closing 0.8% up, and Euro seize the opportunity to slowly regain the upside against dollar and yen, despite the general outlook for the hegemonic currency remains shady. Anyway rising stocks and oil prices supported a bearish dollar as growing demand for derivates mirrors improvement in the global economy, and such wakes appetite for riskier assets.

What happened in Europe

Early Europe, Germany’s inflation rate remained at zero in June, the lowest level in more than 12 years, while consumer prices, rose 0.4% in the month. The annual figure is the lowest inflation reading since harmonized data were first compiled in 1996. In Switzerland, the KOF indicator, which points to the economy's likely performance in six months' time, rose to -1.65 from -1.85 points in May that was also upwardly revised from a previously reported -1.86 points, printing the first clear increase in almost two years.

Downside pressure for greenback continued in Europe, after comments from China's central bank that said that it will push reform of the international currency system to make it more diversified and reduce over-reliance on the current reserve currencies, primarily the U.S. dollar. Euro hit an intraday high of 1.4108 while Gbp rose to 1.6534. Swissy, also gain ground on dollar weakness thus the aggressive intervention of SNB past Wednesday and Thursday proved that the Swiss authorities are committed to stop the franc's rise against both, euro and dollar, with market players aware of this and cautious.

In the U.S. Consumer spending rose in May for the first time in three months as incomes jumped by the most in a year surging 1.4%, the most since May 2008, but savings also surged, as people opted to sit out the recession rather than spend.

What to expect

University of Michigan sentiment index rose to 70.8 in June, versus 68.7 printed in May, but was not enough: stocks remain under selling pressure after past Thursday rebound, with DJIA barely above 8400 points and S&P hovering around 910 level. Lack of definitions continues across the currency markets, and attention now will turn to next week ECB decision and U.S. Nonfarm Payrolls. Range movements will continue to in deep as no real clues of macroeconomic improvement are here, despite the excess of speculation about bottoming crisis across the world.

EUR/USD Outlook

Consolidation continues in the pair, thus bias has changed to slightly bullish in the daily as seems likely to see a daily close above the 20 SMA and momentum about to cross the 100 line. Inside a triangle, today’s high reach exactly the descendant trend line of it and come back, yet price remain quite close to breaking point; as long as price remains above 1.4000, chances of an upward continuation are valid for next week. Break and confirmation above such figure, will find immediate resistance at 1.4170 zone, followed by the 1.4337 highs. Above this level, probable target will remain between 1.45/1.46 zone. Failure to hold above 1.4000, will expose the downside with 1.3900, ascending trend line as mayor support. Under that level, 1.3750/1.3800 is the zone to watch for a longer term bearish break.

Published on  Fri, Jun 26 2009, 15:56 GMT