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[Jeshinta]

Technical analysts at Citigroup claim that EUR/JPY may decline to the minimal levels since 2000.

The specialists claim that if euro falls below 95.50 (level close to June 1 minimum), it will slide to 92 yen. On the Ichimoku chart the pair dropped below conversion and base lines which formed the “dead cross” below the Cloud – a bearish signal.

As for the fundamental factors, they are also in favor of Japanese currency: persistent risk-off sentiment and no additional easing announced by the BOJ last week.

As for USD/JPY, it may decline to 77.66 if it breaches the 78.61 level.

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[Jeshinta]

AUD/USD trades on a downside on Wednesday, but remains above $1.0300 and the 200-day MA as currency markets are waiting for the US Beige Book release. Will the US economic conditions give a hint on a necessity of a new QE round? Yesterday the Aussie plummeted right after Ben Bernanke’s testimony in the US Congress, but then rebounded and overcame the $1.0300 mark. The pair trades in an upward channel since early June.

According to analysts at NAB, the Australian currency remains extremely sensitive to changes in risk appetite even despite the positive domestic signals. In their view, AUD/USD will move on a downside as the euro zone’s crisis is far from resolution, US growth remains sluggish and China raises concerns.

Resistance: 1.0318/20 (yesterday’s and July 4 maximum), 1.0328 (July 5 maximum), 1.0370, 1.0469 (April maximum).

Support: 1.0300 (psychological), 1.0277 (200-day MA), 1.0260 (78.6% Fib. retracement), 1.0215 (100-day MA), 1.0200 (psychological), 1.0155 (July 9 minimum).



Chart. Daily AUD/USD

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[Jeshinta]

EUR/USD: Euro won’t be able to sustain gains. The single currency will soon come under renewed negative pressure. As long as EUR/USD is trading under the key resistance of $1.2365, it’s vulnerable for a decline to $1.2163.

GBP/USD: Resistance is at $1.5722, while support is found at $1.5554.

USD/JPY: If the pair drops below 78.61, it will risk sliding to 77.99 ahead of 77.66. Resistance is at 79.39 and 80.10.

USD/CHF: Resistance is at 0.9873. Above this level the greenback will head to 0.9951. Support lies at 0.9686.

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[Jeshinta]

NZD/USD fell to $0.7930 on Tuesday right after the Fed’s Chairman Ben Bernanke refrained from indicating if the regulator is considering new monetary measures, but then bounced back. On Wednesday the pair continues a downward movement and trades below a 200-day MA. Today’s Bernanke’s speech is unlikely to have a strong influence on the pair. NZD/USD traded in an upward channel, but left it in late June and has been moving sideways since then.

According to specialists at Westpac, NZD/USD is likely to trade higher towards a new $0.8005/75 range in a short term, as the market starts to price in a new round of money printing by the Fed.

Some analysts, however, believe the kiwi is strongly overvalued. Analysts at Commerzbank, for example, expect the pair to drop to $0.7800 (55-day MA) in the forthcoming weeks. They will remain bearish until NZD/USD breaks above $0.8316 (April maximum).



Chart. H4 NZD/USD

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[Jeshinta]

EUR/GBP has been trading in a downward channel since July 2011 and is likely to continue the decline. As can be seen from the daily chart, 55-, 100- and 200-period MAs are heading down.

Analysts at Westpac recommend going short on EUR/GBP at current levels, setting a stop at $0.8025 and a target at $0.7650. According to specialists, euro zone’s problems will remain a cloud over the market for weeks and, therefore, will weigh on the single currency.



Chart. Weekly EUR/GBP

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[Jeshinta]

The single currency had dropped from the levels in the $1.2270/2300 area to the day’s minimums around $1.2330.

Euro fell on a media report that quoted German Chancellor Angela Merkel as saying she could not be sure the European project would work. The markets are turning risk-off. In addition, EUR finds itself under pressure after yesterday’s testimony of Ben Bernanke who refrained from discussing specific stimulus measures. The majority of the economists believe that today’s speech of the Fed’s Chairman will be quite similar to what we’ve heard on Tuesday.

Support: $1.2188 (July 17 minimum), $1.2175 (July 16 minimum), $1.2163 (July 13 minimum) and 1.2151 (June 29, 2010, minimum).

Resistance: $1.2317 (July 17 maximum), $1.2334 (July 10 maximum), $1.2365 (July 5 minimum) and $1.2400 (July 6 maximum).

Bank of Tokyo-Mitsubishi UFJ: EUR/USD may slide to $1.2050 during a week from now as the hopes for more easing from the Fed will be gradually weakening. Resistance lies at $1.2450.



Chart. H1 EUR/USD

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[Jeshinta]

Technical analysts at Commerzbank believe that the greenback may bounce up versus its Canadian counterpart after the retracement to 1.0123/1.0085 (50% Fib of April-to-June rise, the 200-day MA) is over. The specialists think that USD/CAD’s advance may resume after correction in June and July. In the medium term the bullish outlook will be confirmed when the pair rises above 1.0362 (June maximum). In this case the longer-term targets will be 1.0523 (November maximum) and 1.0575 (200-week MA).



Chart. Daily USD/CAD

Analysts at MIG Bank point out that USD/CAD is holding above the key support of 1.0100 (close to 200-day MA) and even if US dollar dips below this level, it will be only a short-term move. In this case the bank recommends buying USD at 1.0050. According to MIG, the medium term outlook for the pair will change from bullish to neutral only if it slides below 0.9800.

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[Jeshinta]

The bulls were pushing GBP/USD up for three consecutive days and the sterling nearly managed to overcome the resistance of the downward trend, existing since June. However, the pair returned to the channel today on the back of the important UK data releases and now trades close to the strong $1.5600 level.

The BoE meeting minutes held on July 4-5 revealed the MPC voted unanimously in favor of maintaining the interest rate at 0.5%, while 7 members voted in favor of expanding the QE by a further £50 billion. According to analysts at ING, the increased support for additional QE means that it will possibly be expanded to £450 billion by the end of 2012. A new QE round is expected to weigh on the British currency. The unemployment rate in Britain unexpectedly declined to 8.1%.

Commerzbank specialists expect GBP/USD’s growth to be limited on the upside by 55- and 200-day MA’s ($1.5685 and $1.5751). They forecast the pair to decline towards the $1.5407/1.5393 support area (June 8 and July 12 minimum). The next support lies at $1.5270/35 (2012 minimums).



Chart. Daily GBP/USD

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[Jeshinta]

The MSCI Asia Pacific Index (MXAP) of shares added 1.5% yesterday. JPY rose against all but one of its 16 major peers amid concern no progress will be reached on the euro zone’s crisis, what will increase demand for a safe Japanese currency. USD weakens against the high-yielding currencies such as AUD, NZD and CAD. Mild weakness in the U.S. has been positive for risky currencies as the stimulus becomes more and more likely. Demand for risky assets was also supported as volatility for major currencies slid to the lowest since November 2007.

GBP/USD strengthens on Thursday. Yesterday the pound dropped after the minutes of the BoE meeting this month showed the decision to keep its interest rate at a record low 0.5% was unanimous, while 7 members voted in favor of expanding the QE by a further 50 billion pounds.

Although US dollar is broadly weakening, the single currency is even weaker. EUR/USD seems unable to overcome resistance at $1.2300. German lawmakers vote on a 100-billion euro bailout for Spanish banks (12:00 GMT). Angela Merkel will likely get the majority needed to for this piece of legislation to pass successfully. The sole euro-related data release is the publication of the region’s current account (08:00 GMT). The market’s attention will focus, though, on French and Spanish debt auctions (8:50-9:50 GMT). Euro is trading at record minimums vs. Aussie and kiwi and at more than 20-year minimums against loonie.

In the US, as usual on Thursdays, watch for the jobless claims figures (12:30 GMT). In addition, there are 2 more important releases: existing home sales and Philly Fed manufacturing index (14:00 GMT). The Fed’s Chairman Ben Bernanke told lawmakers on Wednesday that it was "certainly possible" that the central bank could take new steps to support the economic recovery if the situation at the labor market doesn’t improve.

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[Jeshinta]

The single currency got hurt as fears about the euro zone’s future flared up again yesterday after German Chancellor Angela Merkel said that a solution to the bloc’s problems was not yet in sight. German lawmakers vote on a 100-billion euro bailout for Spanish banks (12:00 GMT).

In Europe the market’s attention will focus on French and Spanish debt auctions (8:50-9:50 GMT). Spain will try to sell 3 billion euro of 5, 7 and 10-year bonds, while France would sell 8 billion euro in shorter-term debt. The yield on Spanish 10-year bonds was at 6.93% on Wednesday, close to the critical 7% level which is regarded as unsustainable in the long term.

EUR/USD seems unable to overcome resistance at $1.2300. The odds are that the single currency will once more try to retest this level, but then fail around $1.2320.

Analysts at Commerzbank repeat what they have said earlier this week: EUR/USD won’t be able to overcome resistance at $1.2365/1.2425 (38.2% and 50% Fibonacci retracements of July decline) and will slide to $1.1934 (the symmetrical triangle downside target) and $1.2053 (200-month MA) and $1.1876 (2010 minimum).

Support: $1.2275 (intraday support), $.2260 (July 6 minimum/July 13 maximum), $1.2235 (July 10 minimum).

Resistance: $1.2297 (today’s maximum), $1.2306 (yesterday’s maximum), $1.2317 (Tuesday’s maximum).



Chart. H1 EUR/USD

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[Jeshinta]

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2175, $1.2190, $1.2300, $1.2325, $1.2335, $1.2350, $1.2400;

USD/JPY: 80.00;

AUD/USD: $1.0195, $1.0300;

GBP/USD: $1.5500, $1.5700;

EUR/GBP: 0.8065.

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[Jeshinta]

EUR/NZD has been trading sideways in a NZ$1.5507-1.5324 range for most of July as the euro’s bearish movement slowed down. The pair remains in a downward channel since May. As can be seen from a daily chart, the 55-, 100-, and 200-period MAs are heading down. EUR/NZD, therefore, is just waiting for new signals from the euro area to continue a decline.

Analysts at JPMorgan Chase believe concerns the euro bloc’s debt crisis is worsening could push the pair to NZ$1.51, beating the NZ$1.5324 record it reached on July 16.



Chart. Daily EUR/NZD

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[Jeshinta]

NZD/USD strengthens for a third consecutive day on Thursday, enjoying the increased demand for the high-yielding assets. The pair trades above the 100- and 200-day MAs. Specialists at HSBC expect NZD/USD to edge higher, driven mostly by growing demand for the Aussie. In their view, the pair is likely to reach $0.8040-0.8060 in a short-term.

Analysts at JPMorgan disagree: according to them, NZD/USD is forming a bearish head-and-shoulders pattern on a daily chart. A drop of the kiwi below the $0.7840/70 support area may confirm a deeper corrective phase after an uptrend in June, causing the pair to weaken further. A decline to $0.7640 would become likely.



Chart. Daily NZD/USD

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[Jeshinta]

USD/JPY hit 6-week minimum at 78.47 during today’s Asian session testing levels below support at 78.60. US currency weakened after the Fed’s Chairman Ben Bernanke said on Wednesday that the central bank may ease policy unless the labor market shows gains.

RBS: The market isn’t quite factoring in the QE3, but many see the trend of global central banks providing liquidity unlikely to change. Yen strengthened despite rising risk assets as the Bank of Japan is seen as less dovish than other major central banks.

All eyes are no on US data due at 12:30 and 14:00 GMT: weekly jobless claims, existing home sales for June and the Philadelphia Fed business outlook survey for July.

RBS: Strong US data will likely prompt dollar-buying, while weak data could increase expectations for a third round of quantitative easing, leaving the trend intact of buying risk assets with the euro and the dollar as global funding currencies.

Resistance: 79.00 (previous support), 79.40 (July 13 maximum, July 3 minimum), 79.60 (July 10 maximum), 80.00 (psychologically important level), 80.62 (June minimum), 81.78 (mid-April maximum) and 84.19 (March maximum).

Support: 78.60 (June 15 minimum) and 78.00 (the level of potential BOJ intervention).

One may try setting small longs on bullish candles (for example, hammer).



Chart. Daily USD/JPY

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[Jeshinta]

AUD/USD keeps strengthening for a fifth consecutive day on Thursday on the back of the improved risk sentiment and despite the drop of the NAB business confidence in Q2. The pair trades on a 11-week high and above a 200-day MA. On a daily chart we see three strong bullish candles; however, the Aussie’s growth is limited on the upside by a strong resistance at $1.0469 (April maximum).

The Australian currency was supported today by the German Bundesbank’s decision to begin adding Australian dollar assets such as government bonds to its foreign reserve holdings before the end of September. It is interesting to note that the demand for the Australian assets has increased over the last year, supporting the currency despite ongoing turmoil in the world economy, lower interest rates and a slide in commodity prices.

Resistance: 1.0450 (April 12-13 double top); 1.0469 (April maximum); 1.0500 (psychological); 1.0557 (March 27 maximum)
Support: 1.0400 (psychological); 1.0320/28 (July 4-5 maximums); 1.0278 (200-day MA)



Chart. Daily AUD/USD

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[Jeshinta]

It’s been a while since we’ve wrote something about USD/CHF. The pair is moving gently up within rising daily trend. On H1 chart we see a falling wedge formation – an argument for the bullish view on the pair. The pair may rise to 1.0150 and higher. At the same time, there’s still room for correction to 0.9700. Analysts at MIG Bank recommend setting a buy limit at this point targeting 0.9850/1.0150/1.0400 and stopping below 0.9550.

Support: 0.9750, 0.9715, and 0.9700.

Resistance: 0.9780, 0.9800 and 0.9870.



Chart. H4 USD/CHF

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[Jeshinta]

US unemployment claims increased by 386K last week, beating a 367K consensus forecast and an unexpectedly low previous increase by 350K. Today’s data raise investor’s doubts on the US labor market rebound.



Photo: Reuters

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[Jeshinta]

This week all the high-yielding assets were benefitting from the prospects of a new quantitative easing in the US and China. The risk-on mood was also supported by the raw materials prices growth and a lack of news from Europe. As a result, US dollar was generally losing to its counterparts.

Today, however, the greenback edged higher as the market players were taking profit of the weekend. In addition, investors are preparing for some gloomy data in Europe next week and weaker Australian CPI which may show the slowest annual growth pace since June 1999.

The MSCI Asia Pacific Index (MXAP) of shares lost 0.6% today, trimming a weekly gain to 1.4%. In Asia forex trading was quiet. Demand for AUD and NZD vs. the greenback is limited on Friday. USD/CAD has reached a 2-month low, additionally supported by a speculation the Bank of Canada will be the first regulator to raise interest rates. Watch for Canadian CPI data released today at 12:30 GMT.

EUR/USD is trading on the downside. German PPI contracted by 0.4% in June (vs. -0.2% m/m expected). All attention on the market will be focused on the Eurogroup meetings. Euro zone officials are to outline the first tranche of Spain’s banks bailout. Spanish 10-year yields stayed yesterday close to the critical level of 7%.

Events to watch today:

Euro area: Eurogroup meetings
Great Britain: public sector net borrowing (consensus: 11.8B; previous: 15.6B)
Canada: CPI (consensus: -0.2%; previous: -0.1%); core CPI (consensus: -0.1%; previous: 0.2%)

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[Jeshinta]

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (2 p.m. GMT).

Here are the key options expiring today:

EUR/USD: $1.2200, $1.2225, $1.2250, $1.2260, $1.2300 (large), $1.2325, $1.2375, $1.2385;

USD/JPY: 78.70, 79.30;

AUD/USD: $1.0250, $1.0295, $1.0300, $1.0347;

GBP/USD: $1.5600, $1.5650;

AUD/JPY: 82.00.

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[Jeshinta]

Eurogroup’s conference starts today at 10:00 GMT. Euro zone finance ministers are expected to approve an agreement to lend up to 100 billion euro to Spain for the recapitalization of the nation’s banks.

The region’s finance chiefs are to sign memorandum of understanding (MoU) with Spain stating the terms of the aid. The exact size of the loan will probably be determined later this year: firstly, Spanish banks have to pass stress tests (results are due in September), so that it will become clear how much money they really need. Restructuring plans are to be drawn up in October, as set out in the timeline annexed to the MoU, says euro zone official cited by Reuters.

Spain expects 30 billion euro in a first tranche of bailout that will be available immediately for state-rescued banks that urgently need funds. The first injection of capital into banks not already rescued by the state and unable to raise capital by themselves can be expected by October, after reviews by the Spanish government and the European Commission.

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