Mid-Day Report: Euro Remains Pressured, Yen Pares Gain after Solid US Data
Euro remains broadly pressured in early US session as concern on Greece's fiscal health continue to weigh down the common currency. Yen was lifted up earlier today on risk aversion but pares some of its gain after release of stronger than expectation manufacturing data from US. Pound remains relatively steady as supported by buying in EUR/GBP cross. Dollar is a bit firmer against commodity currencies as crude oil and gold weaken mildly.
Data released in US saw Empire State Manufacturing index rose much more than expected to 15.9 in December, suggesting expansion in the manufacturing sector is gaining much momentum. Headline CPI rose less than expected by 0.1% mom, 2.7% yoy in December while core CPI rose 0.1% mom, 1.8% yoy, inline with consensus. Industrial production rose 0.6% in December with capacity utilization up to 72.9%. Eurozone CPI released today show 0.3% mom, 0.9% yoy growth in December. Swiss Combined PPI rose 0.1% mom, -2.5% yoy in December.
Earlier today, Euro weakens broadly as concern on Greece's fiscal health continues while there are rumors that German Chancellor Angela Merkel may resign after being accused by her own Christian Democrats of failing to show enough leadership. Nevertheless, the German government denied the rumors and said they're "just
pulled out of thin air."
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4445; (P) 1.4500; (R1) 1.4554; More
EUR/USD's fall from 1.4578 extends further to as low as 1.4359 today and at this point, intraday bias remains on the downside downside for 1.4266 support. As noted before, correction from 1.4217 has likely completed at 1.4578 after hitting 38.2% retracement of 1.5143 to 1.4217 at 1.4571. Break of 1.4266 will suggest that whole fall from 1.5143 has resumed for 38.2% retracement of 1.2329 to 1.5143 at 1.4068 next. On the upside, above 1.4445 minor resistance will turn intraday bias neutral again. But risk will remain on the downside as long as 1.4578 resistance holds.
In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall from 1.6039 should be resuming for a new low below 1.2329. On the upside, above 1.5143 resistance is needed to invalidate this view. Otherwise, outlook will now remain bearish.
EUR/JPY Mid-Day Outlook
Daily Pivots: (S1) 131.41; (P) 132.53; (R1) 133.35; More.
EUR/JPY's fall extends further to as low as 130.29 so far and at this point, intraday bias remains on the downside for 126.88/127.50 support zone. Rise from 127.50 should have completed at 134.36 already, ahead of 134.54 resistance and recent development suggests that price actions from 126.88 are consolidative in nature and fall from 138.47 is still in progress for another low below 126.88. On the upside, above 131.67 will turn intraday bias neutral and bring consolidations. But risk will remain on the downside as long as 133.62 resistance holds.
In the bigger picture, at this point, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. On the downside, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already and down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend. On the upside, however, break of 134.54 resistance will revive that case that recent price actions are merely consolidations to medium term rise from 112.10 already and another high above 139.21 should be seen before EUR/JPY tops.
EUR/GBP Mid-Day Outlook
Daily Pivots: (S1) 0.8849; (P) 0.8892; (R1) 0.8918; More.
At this point, intraday bias in EUR/GBP remains on the downside with 0.8883 minor resistance intact. Prior break of 0.8833/33 support zone indicates that whole fall from 0.9410 has resumed and should now target 61.8% projection of 0.9410 to 0.8833 from 0.9153 at 0.8786 next. Break there will target next key support level of 0.8704. On the upside, above 0.8883 minor resistance will turn intraday bias neutral and bring recovery. But risk will remain on the downside as long as 0.9027 resistance holds and another fall is still in favor.
In the bigger picture, at this point, we're still favoring the case that medium term correction from 0.9799 has completed with three waves down to 0.8399 already. Rise from 0.8399 is possibly resuming the long term up trend. Hence, fall from 0.9410 is viewed as a correction only and should be contained by 0.8704 support. Break of 0.9027 will suggest that correction from 0.9410 has completed and rise from 0.8399 is resuming for a test on 0.9799 high first and then 61.8% projection of 0.6535 to 0.9799 from 0.8399 at 1.0416.
However, break of 0.8704 support will argue that firstly, rise from 0.8399 has completed at 0.9410 already. Secondly, this will indicate that fall from 0.9410 is likely the third leg of the correction pattern that started at 0.9799 and could extend beyond 0.8399 support before the whole correction concludes.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 90.68; (P) 91.36; (R1) 91.87; More.
USD/JPY's break of 90.74 support indicates that fall from 93.74 has resumed and at this point, intraday bias remains on the downside for 87.36 support next. Break there will also confirm that whole rise from 84.81 has completed. In such case, medium term down trend is possibly resuming for new low below 84.81. On the upside, above 92.03 will delay the bearish case and bring more consolidations first before another fall.
In the bigger picture, at this point, USD/JPY is still trading below medium term trend line resistance at 95.06 and 55 weeks EMA at 94.21. Hence, there is no clear indication of reversal yet. A break of 87.36 support will indicate that rebound form 84.81 has completed and the whole fall form 124.13 is possibly resuming for 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0153; (P) 1.0193; (R1) 1.0228; More
As noted before, USD/CHF's correction from 1.0506 has likely completed at 1.0130 after drawing support from mentioned 1.0141/0175 (61.8% retracement of 0.9916 to 1.0506 at 1.0141) support zone. Intraday bias remains on the upside for the moment and further rise should be seen to 1.0383 resistance first. Break there will argue that rally from 0.9919 is resuming for 1.0590 medium term support turned resistance. However, note that sustained trading below 1.0141/0175 support zone will dampen our view and bring deeper decline towards 0.9919 low instead.
In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already, on bullish convergence condition in daily MACD. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1032). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.6273; (P) 1.6310; (R1) 1.6369; More
With 4 hours MACD crossed below signal line, intraday bias in GBP/USD is turned neutral for the moment. Break of 1.6193 minor support suggests that choppy recovery from 1.5892 might have completed and will flip intraday bias back to the downside for 1.5829 support. On the upside, above 1.6353 will bring another rise. But after all, rise from 1.5829 is treated as correction to fall from 1.6875 only. Hence, we'd expect further loss of upside momentum on next rise and the whole rebound from 1.5829 should complete below 61.8% retracement of 1.6875 to 1.5829 at 1.6475 and bring resumption of the whole fall from 1.6875.
In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is is treated as a correction to down trend from 2.1161, has completed at 1.7043. Firm break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) will confirm this case and indicate that whole down trend from 2.1161 is likely resuming for a new low below 1.3503.
However, note that sustain break of 61.8% retracement of 1.6875 to 1.5829 at 1.6475. will in turn indicate that whole fall from 1.6875 has completed and recent price actions from 1.7043 are merely consolidations to the larger rise from 1.3503 only. That is, whole medium term rise from 1.3503 might not be finished yet and another rise could still be seen to 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.
Data released in US saw Empire State Manufacturing index rose much more than expected to 15.9 in December, suggesting expansion in the manufacturing sector is gaining much momentum. Headline CPI rose less than expected by 0.1% mom, 2.7% yoy in December while core CPI rose 0.1% mom, 1.8% yoy, inline with consensus. Industrial production rose 0.6% in December with capacity utilization up to 72.9%. Eurozone CPI released today show 0.3% mom, 0.9% yoy growth in December. Swiss Combined PPI rose 0.1% mom, -2.5% yoy in December.
Earlier today, Euro weakens broadly as concern on Greece's fiscal health continues while there are rumors that German Chancellor Angela Merkel may resign after being accused by her own Christian Democrats of failing to show enough leadership. Nevertheless, the German government denied the rumors and said they're "just
pulled out of thin air."
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4445; (P) 1.4500; (R1) 1.4554; More
EUR/USD's fall from 1.4578 extends further to as low as 1.4359 today and at this point, intraday bias remains on the downside downside for 1.4266 support. As noted before, correction from 1.4217 has likely completed at 1.4578 after hitting 38.2% retracement of 1.5143 to 1.4217 at 1.4571. Break of 1.4266 will suggest that whole fall from 1.5143 has resumed for 38.2% retracement of 1.2329 to 1.5143 at 1.4068 next. On the upside, above 1.4445 minor resistance will turn intraday bias neutral again. But risk will remain on the downside as long as 1.4578 resistance holds.
In the bigger picture, medium term rise from 1.2456 has completed at 1.5143 on bearish divergence conditions in daily MACD. Focus now turns to 1.3737 cluster support (50% retracement of 1.2329 to 1.5143 at 1.3736). Decisive break there will also confirm the case that three wave consolidation from 1.2329 has finished at 1.5134 too. In other words, whole medium term term fall from 1.6039 should be resuming for a new low below 1.2329. On the upside, above 1.5143 resistance is needed to invalidate this view. Otherwise, outlook will now remain bearish.
EUR/JPY Mid-Day Outlook
Daily Pivots: (S1) 131.41; (P) 132.53; (R1) 133.35; More.
EUR/JPY's fall extends further to as low as 130.29 so far and at this point, intraday bias remains on the downside for 126.88/127.50 support zone. Rise from 127.50 should have completed at 134.36 already, ahead of 134.54 resistance and recent development suggests that price actions from 126.88 are consolidative in nature and fall from 138.47 is still in progress for another low below 126.88. On the upside, above 131.67 will turn intraday bias neutral and bring consolidations. But risk will remain on the downside as long as 133.62 resistance holds.
In the bigger picture, at this point, EUR/JPY is still bounded in medium term range between 126.88 and 139.21 and outlook remains neutral for the moment. On the downside, a break of 126.88 support will revive that case that medium term rebound from 112.10 has completed at 139.21 already and down trend from 169.96 is resuming. In such case, we'd expect deeper fall to 112.10 and beyond to resume the long term down trend. On the upside, however, break of 134.54 resistance will revive that case that recent price actions are merely consolidations to medium term rise from 112.10 already and another high above 139.21 should be seen before EUR/JPY tops.
EUR/GBP Mid-Day Outlook
Daily Pivots: (S1) 0.8849; (P) 0.8892; (R1) 0.8918; More.
At this point, intraday bias in EUR/GBP remains on the downside with 0.8883 minor resistance intact. Prior break of 0.8833/33 support zone indicates that whole fall from 0.9410 has resumed and should now target 61.8% projection of 0.9410 to 0.8833 from 0.9153 at 0.8786 next. Break there will target next key support level of 0.8704. On the upside, above 0.8883 minor resistance will turn intraday bias neutral and bring recovery. But risk will remain on the downside as long as 0.9027 resistance holds and another fall is still in favor.
In the bigger picture, at this point, we're still favoring the case that medium term correction from 0.9799 has completed with three waves down to 0.8399 already. Rise from 0.8399 is possibly resuming the long term up trend. Hence, fall from 0.9410 is viewed as a correction only and should be contained by 0.8704 support. Break of 0.9027 will suggest that correction from 0.9410 has completed and rise from 0.8399 is resuming for a test on 0.9799 high first and then 61.8% projection of 0.6535 to 0.9799 from 0.8399 at 1.0416.
However, break of 0.8704 support will argue that firstly, rise from 0.8399 has completed at 0.9410 already. Secondly, this will indicate that fall from 0.9410 is likely the third leg of the correction pattern that started at 0.9799 and could extend beyond 0.8399 support before the whole correction concludes.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 90.68; (P) 91.36; (R1) 91.87; More.
USD/JPY's break of 90.74 support indicates that fall from 93.74 has resumed and at this point, intraday bias remains on the downside for 87.36 support next. Break there will also confirm that whole rise from 84.81 has completed. In such case, medium term down trend is possibly resuming for new low below 84.81. On the upside, above 92.03 will delay the bearish case and bring more consolidations first before another fall.
In the bigger picture, at this point, USD/JPY is still trading below medium term trend line resistance at 95.06 and 55 weeks EMA at 94.21. Hence, there is no clear indication of reversal yet. A break of 87.36 support will indicate that rebound form 84.81 has completed and the whole fall form 124.13 is possibly resuming for 1995 low of 79.75. However, note bullish convergence condition is seen in weekly MACD. Sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 1.0153; (P) 1.0193; (R1) 1.0228; More
As noted before, USD/CHF's correction from 1.0506 has likely completed at 1.0130 after drawing support from mentioned 1.0141/0175 (61.8% retracement of 0.9916 to 1.0506 at 1.0141) support zone. Intraday bias remains on the upside for the moment and further rise should be seen to 1.0383 resistance first. Break there will argue that rally from 0.9919 is resuming for 1.0590 medium term support turned resistance. However, note that sustained trading below 1.0141/0175 support zone will dampen our view and bring deeper decline towards 0.9919 low instead.
In the bigger picture, medium term fall from 1.1963 has completed with five waves down to 0.9916 already, on bullish convergence condition in daily MACD. Also, the three wave consolidation from 1.2296 should also be finished too. Current rise from 0.9916 is expected to extend further to medium term trend line resistance first (now at 1.1032). Sustained trading above the trend line will affirm the case that long term rise from 2008 low of 0.9634 is resuming for another high above 1.2296. On the downside however, a break of 0.9959 support will invalidate this bullish view and argue that medium term down trend in USD/CHF is still in progress for 0.9634 low.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.6273; (P) 1.6310; (R1) 1.6369; More
With 4 hours MACD crossed below signal line, intraday bias in GBP/USD is turned neutral for the moment. Break of 1.6193 minor support suggests that choppy recovery from 1.5892 might have completed and will flip intraday bias back to the downside for 1.5829 support. On the upside, above 1.6353 will bring another rise. But after all, rise from 1.5829 is treated as correction to fall from 1.6875 only. Hence, we'd expect further loss of upside momentum on next rise and the whole rebound from 1.5829 should complete below 61.8% retracement of 1.6875 to 1.5829 at 1.6475 and bring resumption of the whole fall from 1.6875.
In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is is treated as a correction to down trend from 2.1161, has completed at 1.7043. Firm break of 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) will confirm this case and indicate that whole down trend from 2.1161 is likely resuming for a new low below 1.3503.
However, note that sustain break of 61.8% retracement of 1.6875 to 1.5829 at 1.6475. will in turn indicate that whole fall from 1.6875 has completed and recent price actions from 1.7043 are merely consolidations to the larger rise from 1.3503 only. That is, whole medium term rise from 1.3503 might not be finished yet and another rise could still be seen to 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.
