All of the foreign currencies futures open marginally lower in the US after falling on Friday. Except for the Nikkei, the Asia/Pacific stock markets closed down, all of the European bourses are down, and oil and gold are trading down as well. The US stock indexes are lower in pre-open market.
I expect the European and commodity currencies to decline for about two weeks, but still need to gauge if this sustained decline will start by the middle of the week (because these currencies are oversold in the short term) or is already in play. If you consult W.D. Gann theory (the spring-equinox), you’ll see that the downturn has already begun. My model is now short all of the foreign currencies futures except for the Swiss franc.
The short-term outlook for the European and commodity currencies is bearish for half a day, so they should now consolidate and sideways for the yen. The consolidation will happen only if the US stock markets don’t fall sharply. The medium-term outlook is sideways for all the foreign currencies futures.
Of notice:
- John Lipsky, first deputy managing director of the IMF warned that the G7 economies face acute challenges in tackling high public debt and unwinding existing stimulus measures will not come close to bringing deficits back to prudent levels.
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Analysis based on:
“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
“Technical Analysis Applications” - McGraw-Hill, 2004
Overnight:
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Australia: No data
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Japan: No data
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Eurozone: No data
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UK: The recovery in the UK economy is expected to remain sluggish in 2010, the Confederation of British Industry said.
Today’s economic calendar:
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US: No data
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Canada: No data
EUR- March
Luca Model: Short since March 18 (reversing long since February 26)
The June euro extended its losses since late Wednesday to a near three-week low and remains close to the low of the downtrend. The short-term outlook was slightly bearish for half a day and is now sideways. The medium-term outlook is sideways and my model reversed its long position.
CME CoT: Euro shorts declined by 19K contracts following a rebound in the currency.
Immediate resistance is at 1.3600. The 21-day moving average resists at 1.3658. Distant resistance is at 1.3740.
Initial support is at 1.3489. Further support lies at 1.3433 from a pivot low.
INDICATORS
Fast stochastics: Bearish (oversold)
MACD: Bullish (overbought)
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish for half a day, then sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
JPY - March
Luca Model: Short since March 5
The June Japanese yen opens marginally lower after marking time in an inside range overnight. The short-term outlook is sideways. The medium-term outlook remains sideways and my model is short.
CME CoT: The net long yen position fell sharply in line with the Bank of Japan’s monetary policy easing and the Prime Minister’s comments that the government must take firm measures against yen strength.
Initial support is at 110.22. Below 109.84, distant support lies at 109.24.
The 21-day moving average resists at 110.94. Above 111.56, distant resistance is at 112.49.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
GBP - March
Luca Model: Short since March 19 (reversing long since March 11)
The oversold June pound recovered most of the overnight losses after briefly breaking the support line rising since March 1. The short-term outlook was slightly bearish for half a day and is now sideways. The medium-term outlook is sideways and my model reversed its long position.
CME CoT: The pound suffered another increase in net short positions.
Good resistance is 1.5079. The next cap is 1.5172. The 21-day moving average lies at 1.5208.
Immediate support is at 1.4922. The next support is 1.4864. The bottom of the downtrend is 1.4772.
INDICATORS
Fast stochastics: Bearish (oversold)
MACD: Bullish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish for half a day, then sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CHF - March
Luca Model: Long since February 26
The June Swiss franc opens slightly lower in an inside range. The short-term outlook was slightly bearish for half a day and is now sideways. The medium-term outlook is sideways and my model is long.
The 55-day moving average resists at .9461 and the 100-day moving average resists at .9517. Further resistance is at .9557 and .9603.
Initial support is at .9398 from the 21-day moving average. The next support follows at .9338 from the bottom of its rising channel.
INDICATORS
Fast stochastics: Bearish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish for half a day, then sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CAD – March
Luca Model: Short since March 19 (reversing long since February 26)
The overbought June Canadian dollar remained under pressure overnight after falling on Friday from a new high for the uptrend. The short-term outlook was slightly bearish for about half a day and is now sideways. The medium-term outlook is sideways and my model went short. Be careful, the loonie is in a steep rising wedge!
Immediate resistance is at .9876. Above the high of the uptrend at .9938, further resistance is seen at .9970.
Below .9803, further support is at .9776 and .9731 from the 21-day moving average.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bearish for about half a day, then sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
AUD – March
Luca Model: Short since March 19 (reversing long since February 26)
The June Australian dollar fell for a third day. The short-term outlook was slightly bearish for about half a day and is now sideways. The medium-term outlook is sideways and my model went short.
Initial resistance is at .9059. The next cap is .9094. The new high of the uptrend is .9164. Strong resistance follows at .9218.
The 21-day moving average supports at .9002. Distant support is at .8885.
INDICATORS
Fast stochastics: Sideways (overbought)
MACD: Bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Slightly bearish for about half a day, then sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bullish
