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Monday, 30 September 2013

EURUSD STILL LOOKING BULLISH ON SHORT TERM


FUNDAMENTAL BEAM
EUR/USD consolidated its gains from the previous week, unable to pick a new direction just yet. The rate decision and its accompanying press conference, as well as final PMIs are the highlights of this week. Check out these events and more as well as an updated technical analysis for EUR/USD.
The German elections saw a victory for Merkel, but the lack of a clear majority now puts the euro-zone’s locomotive in a long period of coalition negotiations and uncertainty. Positive news came from climbing services PMI’s but the disappointing German business confidence reading. With somewhat tighter conditions in financial markets, will Draghi follow through and announce a new liquidity program (LTRO) for European banks? In the US, the due dates for a government shutdown and even a technical default due to the debt ceiling are getting closer, and this weighs on the dollar. What’s the next move for the pair? Let’s start.
Updates:
EUR/USD daily graph with support and resistance lines on it.
  1. German Retail Sales: Monday.6:00. German retail sales unexpectedly narrowed by 1.4% in July, following another decline of 0.8% in the previous month, signaling a shaky recovery in Europe’s largest economy. Economists projected an increase of 0.5%. However on a yearly base, sales climbed 2.3% from a year earlier. However despite this decline which could be explained by higher food prices, everything else looks positive and German business sentiment constantly improves. A rise of 0.9% is expected.
  2. CPI Flash Estimate: Monday, 9:00. CPI flash estimate in the Eurozone retreated to 1.3% in August from 1.6%, in the previous month, remaining below the ECB’s 2.0% target. However despite the encouraging signs of recovery in the Eurozone, investors are awaiting to see the outcome of Germany’s elections and its effect on the Euro. The CPI flash estimate is predicted to remain at 1.3%.
  3. Manufacturing PMIs: Tuesday. Markit release of the Euro-area manufacturing sector in August revealed an improvement. Italy and Spain showed higher activity, following nearly two years of contraction. Final manufacturing PMI in the Euro zone reached 51.4 in August from 51.3 in July. Italian manufacturing PMI came in at 51.3 in August from 50.4 in July, while the Spanish manufacturing crossed the 50 point line to expansion, reaching 51.1 in August, following 49.8 a month ago. These positive results provide further backing that Euro zone’s economy, has pulled out of recession. Manufacturing sector in Spain is expected to expand to 51.6, Italian manufacturing to 51.2, and the Eurozone manufacturing to 51.1.
  4. German Unemployment Change: Tuesday, 7:55. German unemployment increased by seven thousand in July, missing predictions for a 5,000 contraction. Nevertheless, unemployment rate remained at 6.8% in August. German economy reported a 0.7% growth in the second quarter; however, the Bundesbank cut the annual growth forecast for 2013 in June to 0.3%, despite predicting a gradual recovery for the rest of the year. A drop of 5,000 claims is expected now.
  5. Unemployment Rate: Tuesday, 9:00. Despite growing optimism in the Eurozone’s economy, unemployment rate remained stubbornly high in the bloc’s weaker countries, highlighted the gap between north from the struggling south. Overall unemployment remained at a record high of 12.1%. There is a huge difference in jobless rates between countries such as Germany, where the job market is robust, and Greece or Spain where more than one in four workers have no job. Therefore, despite the recovery trend in the Euro-area, the central bank must remain in strongly accommodative mode for the foreseeable future. No change in unemployment rate is expected.
  6. Spanish Unemployment Change: Wednesday, 7:00. Spanish unemployment remained nearly unchanged in August at 4.7 million, while economists projected a 5,200 contraction. The slight improvement was due to an increase in the number of tourist visits in July. Growth rate is expected to be flat or may reach 0.2% in the third and fourth quarters. Unemployment in Spain is projected to grow by 12,300 this time.
  7. Rate decision and press conference: Wednesday, 11:45. European Central Bank President Mario Draghi is ready to deploy another long-term refinancing operation to provide funding to Europe’s banking system if required. Excess liquidity in the financial system is approaching the 200 billion-euro ($270 billion) level the ECB has previously signaled as a lower limit. The ECB has also tried to keep money-market rates unchanged by issuing forward guidance on its official interest rates, saying that they will remain where they are or lower for an extended period. No change in rates is expected.
  8. Services PMIs: Thursday. Italy’s service sector edged up less than expected in August reaching 48.8, from 48.7 in July, still in contraction, despite the sign of recovery reflected in the manufacturing sector’s PMI. The data indicates weak domestic demand is weighing on service sector. Meanwhile, Spanish service sector climbed to 50.4 crossing to expansion, following 48.5 in the previous month. Spain’s economy has been in recession since mid-2011, the second since a decade-long property bubble burst in 2008, though the government has said it expects to see quarterly growth in the second half of 2013. Meanwhile, Eurozone Service sector edged up to 50.7 in August, from 49.8 in July, indicated a return to growth for the Eurozone service sector, ending a one-and-a-half year sequence of contraction. Service sector in Spain is expected to reach 50.9, Italian to 49.3 and the Eurozone service sector to 52.1.
  9. Retail Sales: Thursday, 9:00. Retail sales in the Eurozone increased 0.1% month in July following a 0.7% contraction in the previous month. From July 2012, retail sales declined 1.3% in the 17-member currency union. Among reporting countries, retail sales dropped in eight countries and rose in 14. A rise of 0.3% is anticipated.
  10. German PPI: Friday, 6:00. Price inflation weakened unexpectedly in July, missing economists’ forecast for an increase of 0.2%. The producer price index moved up 0.5% on an annual basis in July, following a 0.6% gain in the previous month. The drop occurred due to a fall in the prices of in intermediate goods, which decreased by 1% from July 2012. A small increase of 0.1% is expected now.
TECHNICAL BEAM

US stocks market fell sharply on Monday as deadlock in Congress appeared increasingly likely to lead to the first partial shutdown of the federal government in almost two decades.
The Dow Jones Industrial Average lost close to 140 points as the markets opened (0.91%) and the S&P 500 and Nasdaq exchanges were all down close to 1% in early trading before recovering slightly.

I  AM BULLISH ON EURUSD
This however is not a coincidence looking at our previous prediction of the USDCHF. Market would therefore continue bullish following the incomplete formation of the wave three leg with a market price of 1.3712. On completing this wave leg, a significant retracement down to 1.34702 to complete a corrective wave leg B to continue the completion of the wave leg C above 1.3972 and above as seen in the chart above.

NOTE: Price predictions produced by FibonacciPrice&PatternTrader may be affected by unforseen events like hurricane, earth quake, flood and other natural disasters consequently changing price patterns already predicted. Hence we advice strict adherence to money management techniques.

HAPPY TRADING

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1 comment:

  1. Unknown1 October 2013 at 04:07

    EURUSD Now defined with a visible bullish short term target of 1.37420
    Happy Trading

    ReplyDelete

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