Last week the Eurostat showed that unemployment in the eurozone fell to 10.8% in September from 10.9% the month before and below market estimates of 11% although the eurozone’s annual inflation rate was 0% in October, a weak reading that could help push the European Central Bank (ECB) to expand its stimulus program.
The US Federal Reserve is moving toward raising interest rates and winding down central bank asset purchases, but European Central Bank (ECB) remains firmly in loosening mode according to its lasts statement suggesting that more stimulus was needed to support the weakening Eurozone economy.
Wages in the US were unchanged in September, the weakest reading in six months, after a 0.5 % advance the prior month. That meant total incomes rose just 0.1% after a 0.4% increase in August. The economists were expecting for incomes to rise 0.2%.
Since the start of the year the currency fell more than 7.5% and is in a distribution phase since mid-October, breaking down the upward channel. Last week the EURUSD went back and forward without any clear trend and closed in the red near the open of the week, creating a doji pattern. The stochastic is showing a strong bearish momentum and crossed below the 50 mid line.
Expecting a downward move to year low at 1.0462 on a break below previous week low at 1.0896 (scenario 1) or a bounce from a key level at 1.1105 could push the currency down to year low at 1.0462 (scenario 2).
The European Central Bank (ECB) managed to move financial markets last despite leaving the monetary policy unchanged. ECB President Mario Draghi said the bank was weighing the need for more monetary stimulus and was ready to act at its December meeting. The euro depreciated.
Draghi also said that some members of the bank’s policy-making council had raised the possibility of acting immediately rather than waiting.
Japanese Finance Minister said last week that it was unlikely the central bank would expand easing now. By the end of last week he said that any decision on monetary policy, and whether to expand monetary stimulus, should be left to Kuroda and the Japanese bank.
Monetary policy alone isn’t enough for inflation to reach the Bank of Japan’s target of 2%, according to Japan’s finance minister.
In the two and a half years since Haruhiko Kuroda became Bank of Japan (BoJ) governor, inflation in Japan hit a peak of 1.5% before dropping back below 0% in August. Although Kuroda has repeatedly said he sees prices rising again to meet the target next year, expectations are high for the bank to add to stimulus at its meeting this week.
Since the beginning of the year the EURJPY fell 7.8% and changed phase going from bullish to a distribution phase. The pair initially rose last week but found enough selling pressure at 136.22 to give back all of its gains and closed in the red near the low of the week. Stochastic in showing bearish momentum and is below the 50 mid line.
Expecting a downward move to a weekly support at 128.57 on a break below previous week low at 133.37 (scenario 1) or a break above previous week high at 136.38 could throw the pair to a weekly resistance at 139.73 (scenario 2).
Last week the European Central Bank (ECB) released comments suggesting that more stimulus was needed to support the weakening Eurozone economy and that it was ‘clearly missing’ its target and posited that it was ‘obvious that additional sets of instruments were necessary’. Markets had already anticipated a move from the ECB to loosen policy further and these expectations were bolstered by these dovish remarks.
The US consumer price index (CPI) data still at 0.0%, wage growth weakening at 2.2% and the Philadelphia Fed index printed at -4.5 compared to market expectations of -2.0 turning the outcome clear as investors only now only see a rate rise from the US central bank in 2016.
Since the start of the year the currency fell more than 4.5% and is in a bullish phase since the start of September, trading above the 10-week moving average. Last week the EURUSD tried to rally with a narrow range but found enough resistance to give all its gains back to the market, closing in the red near the low of the week, creating a shooting star pattern. The stochastic is showing a bullish momentum and is above the 50 mid line.
Expecting a downward move to the base of the channel at 1.1142 on a bounce from a weekly resistance at 1.1534 (scenario 1) or a break above the weekly resistance at 1.1534 could push the currency up to another weekly resistance at 1.2041 (scenario 2).
The Euro fell last week, after the European Central Bank (ECB) cut back its inflation and growth targets but implied it may expand its quantitative easing programme (QE).
The ECB revised Gross Domestic Product (GDP) growth for 2015 down to 1.4% from 1.5%. Meanwhile the growth target for 2016 dropped to 1.7% from 1.9% and the target for 2018 dropped to 1.8% from 2%.
The US dollar slipped last week under pressure from renewed uncertainty about the timing of the Federal Reserve’s (Fed) plan to raise ultra-low interest rates after mixed signals of US jobs data.
Since the start of the year the currency fell more than 6.5% and is still in an accumulation phase, trading above the 10-week moving average. Last week the EURUSD went back and forward without any clear direction with a narrow range, closing in the red near the open of the week, creating a doji pattern. The stochastic is showing a slight bearish momentum but is still above the 50 mid line.
Expecting an upward move to a weekly key resistance at 1.1534 on a bounce from an upward trend line at 1.1005 (scenario 1) or a break above the weekly resistance at 1.1534 could push the currency up to 1.2041 (scenario 2).
The EURUSD plunged below 1.1400 for the first time since November 2003 after the announcement of the European Central Bank purchase program the pair has fallen more than 340 pips. The program will start in March of 2015 and will last until September 2016, corporate and government bonds will be purchased to a level of 60 billion euros a month.
Today on the economic data we have the Markit Manufacturing PMI in January from Euro zone that is expected to rise from 50.6 to 51 signaling that economy is expanding. On the US side we will also have the Markit Manufacturing PMI in January that is estimated to rise from 53.9 to 54 showing that business conditions in the manufacturing sector are improving.
EURUSD fell like an asteroid during yesterday session making fresh lows at 1.1315 and close near the low of the day creating an impulsive candle. The pair is in a well-established bearish phase and has fallen 6.15% since the start of the year. Stochastic in showing an oversold market but even with the pair well into oversold territory, we should not fight the strong downward trend.
Expecting downward move to a Fibonacci extension at 1.1270 on a bounce of a Fibonacci level at 1.1427 (scenario 1).
US stock indexes closed well in the green yesterday, due to the meeting minutes from the Federal Open Market Committee (FOMC) and signs of additional stimulus measures from European Central Bank (ECB).
Today on the economic calendar we have from the U.S we have the nonfarm payrolls that expected to fall from 321K to 240K and a slight drop in the unemployment rate to 5.7%. The shocker would be if that unemployment rate fell even lower than 5.7%, highlighting an improving labor market.
Usa500 rallied in early trading breaking above the 10 and the 50 day moving averages and closing near the high of the day. The Index made a wide range day but on low volume and the stochastic is starting to show some bullish momentum.
Expecting upward move to a daily resistance at 2,088.50 on a break above previous day high at 2,058.00 (scenario 1).
Usa500 is a CFD written over S&P500 futures.
New data showed that the euro zone’s inflation rate fell into negative territory in December for the first time since September 2009. The figures add more pressure on the European Central Bank (ECB) to boost more stimulus into the economy.
Yesterday the US labor market beat estimates adding 241K jobs in December and the revisions to previous months were net 14K positive. The continued improvement in the labor market should keep the Fed on track to deliver the first-rate hike in June 2015.
EURUSD fell during yesterday session making fresh lows at 1.1801 and close in the red. Stochastic in showing an oversold market but even with the pair well into oversold territory, we should not fight the strong downward trend. We might see the pair in a choppy sideways action between now and nonfarm payroll numbers on Friday.
Expecting downward move to a psychological level at 1.17 on a break below previous day low at 1.18 (scenario 1).