EUR/USD – support at 1.3159 has been broken
The support at 1.3159 has been broken. • EUR/USD has broken to the downside out of its horizontal range between the support at 1.3159 and the resistance at 1.3308. Further short-term weakness is favoured as long as the hourly resistance at 1.3191 (intraday high) holds. Supports are given by the rising trendline and 1.3041 (13/12/2012 low). • The higher low in July 2012 (compared to July 2010) and the recent new high above the strong resistance at 1.3172 suggest an improvement of the underlying trend. A strong resistance is at 1.3487 (24/02/2012 high).
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Japan Market Following in US’ Footsteps
Japan is following in the footsteps of the man who laid the groundwork for the greatest global inflationary operation of the modern era. We see the Yen in the top panel of the chart below forming a similar pattern to that which USD made from 2000 to 2002 as an epic bubble in credit expansion was being fomented in the US. The similarity in the charts (with a decade stagger) is striking and it is probably no coincidence that Japan has chosen to leverage its currency – which had been chronically strong since the 2007 beginnings of the US-triggered global financial meltdown – just as the US did with the once strong ‘King’ dollar in and around 2001.
READ MOREIn 2013, EURUSD Can Target 1.36/1.44
The pro-growth monetary policy should mildly support economies throughout the world in 2013, despite the persistence of different risk factors. The US dollar may decline further. What will happen to stocks and bonds? US dollar: More declines ahead The EURUSD played a starring role during the last part of 2012. This uptrend, which started in July after President Draghi declared the European Central Bank’s (ECB) willingness to buy unlimited bonds, is still ongoing. The market is meeting an important resistance at 1.33 and corrections are therefore possible. Uncertainty exists regarding Italy’s capability of forming a meaningful government after the political elections next year in February. However, the medium-term uptrend remains intact for the Euro against the US dollar. The ECB should not cut rates short-term, as the economy, though weak, is improving. The latest Purchasing Manager’s Index (PMIsurvey signaled that productivity has bottomed out and should start to rise over the medium-term. The ECB’s “wait and see” approach can support the Euro to reach higher levels. Since 1977, bull-moves within long-term bull cycles have lasted between 20% and 30%, top to bottom, before fading away. Consequently, an increase above 1.3350 can raise the price of the euro to 1.36, and [...]
READ MOREEUR-JPY (Forex)
Challenging the strong resistance at 111.44/111.60. • EUR/JPY’s rise is overextended but, yesterday, it managed to make new highs. It is now challenging the strong resistance at 111.44/111.60. Given the general overbought conditions, we favour a phase of weakness in the next few days. • EUR/JPY has moved above its long-term downtrend (linking the October 2009 top with the April 2011 top). Monitor the test of the key resistance at 111.60 (31/10/2011 high). Short 3 at 111.30, Objs: 110.35/108.10/106.10, Stop: 112.25
READ MOREEUR/USD(Bouncing on support at 1.2875) updated 11-12-2012
Await fresh signal. Bouncing on support at 1.2875. . • EUR/USD has successfully tested the key support at 1.2875. Resistances for a bounce are given by 1.2973 (07/12/2012 high) and 1.3046 (04/12/2012 low). • The underlying trend is negative (see the succession of lower highs since May 2011 peak). Therefore we expect limited upside potential given the strong resistance at 1.3172 (17/09/2012 high) and the overall overbought conditions.
READ MOREEUR / USD (Await fresh signal)
. Testing support at 1.2875. • EUR/USD has weakened after failing to break the resistance at 1.3140 (17/10/2012 high). Monitor the test of the key support at 1.2875. An hourly resistance is at 1.2973 (07/12/2012 high). Another support can be found at 1.2834 (intraday low). • The underlying trend is negative (see the succession of lower highs since May 2011 peak). Therefore we expect limited upside potential given the strong resistance at 1.3172 (17/09/2012 high) and the overall overbought conditions.
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