EURUSD: The EURUSD traded in a tight range on Monday. The National Association of Realtors announced that sales of previously owned homes dropped 0.4 percent to an annual rate of 4.89 million units. This was down slightly from an upwardly revised 4.91 million units in December. Expectations were for a fall to 4.84 million units in January. The slightly bullish report controlled the short-term direction of the market for most of the day. The longer-term trend is still reflecting a stronger EUR.
The key this week will be Fed Chairman Bernanke's talk before Congress on Wednesday. He is expected to repeat most of the same rhetoric from a testimony two weeks ago and the January Fed minutes. His testimony should focus on weak housing, market turmoil, tight credit and consumer confidence. He may also address whether monetary policy is working at this time and when the previous cuts should begin to take effect. There may also be questions about inflation especially in the energy and food sectors. The ECB is expected to report on conditions in the Euro zone, particularly about inflation and/or the possibility of any future rate cuts.
Key reports today: Jan PPI 8:30 EST
Jan Core PPI 8:30 EST
Feb Consumer Confidence 10:00 EST
Technical Commentary: The EUR posted an inside day following several days of higher highs and higher bottoms. With the short-term momentum possibly slowing down, the market may have a pullback to a key 50% zone. This break is likely to attract fresh buyers as the next rally is expected to challenge the double top at 1.4937 and 1.4697. The current short-term range is 1.444 to 1.486. Watch for a pull back into 1.465 to 1.460 for the next buying opportunity. Up trending Gann angle support is at 1.4739 and 1.4697. These two prices are also good downside targets today.
GBPUSD: There was no follow through rally in the GBP following last weekâ€™s rally. The focus is whether the UK is entering into a stagnation period. More reports will be needed to determine this, however, talk of 50 basis point cuts have at least gone away for the time being.
Technical Commentary: The inside day today keeps the main trend down. The main range over the short run is 1.996 to 1.936 with a retracement zone at 1.965 to 1.973. The main top at 1.9734 is resistance and a potential breakout price based on the bullish W formation-taking place. A breakout over 1.9734 sets up a further move to 1.996. Despite the strong move, the main trend is still down. The market may still be in a sell the rally mode. It is still too early to tell if this is a major bottom forming. GBP is holding the main bottom from 1/22 at 1.934 and a new higher main bottom at 1.936. Take a wait and see attitude and watch for either a breakout over 1.9734 or a pullback of the rally last week.
USDJPY: With Global stock markets firming on Monday, traders around the world bought higher yielding currencies against the Yen. The USDJPY rallied as the smaller-than-expected fall in existing sales and the possibility of a bank insurer bailout propped up the U.S. equities markets. With the market range bound throughout the month, a firmer stock market may be what it needs to breakout to the upside. On the downside, the 105.00 area seems to be strong stable support.
Technical Commentary: Monday's higher high and higher low makes 106.72 the new minor bottom. The close near the high puts the market in a position to test the recent main top at 108.59. A move through this price turns the main trend up and could continue to 109.81 where it most likely will meet strong resistance and new selling pressure. Down trending Gann angle resistance also comes in at 109.28. On the upside, a key 50% support level has been established at 106.78. Up trending Gann angle support is at 106.45 today. The market looks as if it is ready to launch into new territory as long as 106.78 holds. Look for continued strength with an upside target of 109.28 â€“ 109.81.
USDCHF: The USDCHF was up on Monday based on slightly bullish U.S. economic numbers and a stronger stock market. Traders chased higher yielding assets today because of the strength. With a bailout of a bond insurer imminent, continue to look for upside pressure.
Technical Commentary: Despite the overall main trend being down, the USDCHF was able to post a higher high and higher low making 1.0835 the new minor bottom. Based on the current range of 1.110 to 1.083, look for the 50% price at 1.097 to be the first resistance target. In the bigger picture, the market is currently sitting inside of a major retracement zone at 1.087 to 1.091. We could see trading on both sides of this zone over the near term. Holding above 1.087 will be somewhat bullish, but regaining 1.091 could be a sign of developing strength. Down trending Gann angle resistance is at 1.093. We are looking at some strong resistance at 1.091 to 1.097. Look for selling pressure at this zone if touched. On the downside, up trending Gann angle support is at 1.0820. Counter trend traders may enter the long side inside of 1.0835 to 1.0820.
USDCAD: The CAD shrugged off talk of an interest rate cut on March 4 and surged to the upside on commodity based buying. Instead of focusing on the direction of the CAD based on economic factors, global trades saw the market at a good buying price based on strong commodity exports such as gold and oil. Look for the market to stabilize if it can hold par. Any bad economic news is likely to send this market back down. Watch for a rate cut on March 4 at the BOC's next meeting.
Technical Commentary: The 1.5% rise in the CAD against the USD was its biggest move in close to a month. Demand for commodity overtook the bearishness of a future interest rate cut as the market broke through par and headed sharply lower. The lower high, lower low trading action makes 1.019 the new main top. Downside targets are .9919 and .9872. A move through these two prices turns the main trend to down. Treat par as a short-term pivot for the time being.
AUDUSD: Another rally today as traders seek higher yielding assets. Favorable interest rate spreads (7%AUD vs. 3%USD) and a robust commodity trade continue to be supportive to the AUD over the long run. Stock market stability is also a reason for its attractiveness. March 4 is the key date to watch for the next interest rate hike.
Technical Commentary: The higher high, higher low pattern continued on Monday with no reversal to signal a temporary top. This is keeping the market in a bullish mode. Up trending Gann angle support is at 91.33. The longer-term weekly chart indicates that the AUD has a chance at the 11/9 top at .9399. If the market should meet resistance at current levels and attract selling pressure, then wait for a buying opportunity on a pull back to .9062 to .9017. The long-term fundamentals are still bullish along with the weekly chart.
NZDUSD: The NZD rallied to 23-year highs as the market's appetite turned to strong commodity-linked currencies. With the market tied to commodity strength, monitor the gold market for future direction.
Technical Commentary: The market took out the old July 24, 2007 top at .8108 and rallied to a new 23 year high. There was no profit-taking at the current level, however, with the market nearing an over bought stage on the daily charts, do not be surprised by a closing price reversal today. If there is a profit-taking break, then look to enter on a pull back to a major 50% price at .7951.
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