Economic Events: (GMT)

Please review the individual daily forecast for explanations and expected results

Jan. 30  13:30                    USD                                                      Core PCE Price Index (MoM)                                                                                                      

                Tent                      EUR                                                       German CPI (MoM)                                                                                                        

                13:30                    USD                                                      Personal Spending (MoM)                                                                                                           

Jan. 31  07:45                    EUR                                                       French Consumer Spending (MoM)                                                                                                        

                08:55                    EUR                                                       German Unemployment Rate                                                                                                    

                08:55                    EUR                                                       German Unemployment Change                                                                                                              

                10:00                    EUR                                                       Unemployment Rate                                                                                                     

                13:30                    USD                                                      Employment Cost Index (QoQ)                                                                                                 

                14:45                    USD                                                      Chicago PMI                                                                                                      

                15:00                    USD                                                      CB Consumer Confidence                                                                                                            

Feb. 01 08:30                    CHF                                                       SVME PMI                                                                                                          

                09:00                    EUR                                                       Manufacturing PMI                                                                                                         

                09:30                    GBP                                                      Manufacturing PMI                                                                                                         

                10:00                    EUR                                                       CPI (YoY)                                                                                                             

                13:15                    USD                                                      ADP Nonfarm Employment Change                                                                                                         

                15:00                    USD                                                      ISM Manufacturing Index                                                                                                            

Feb. 02 13:30                    USD                                                      Nonfarm Productivity (QoQ)                                                                                                       

                13:30                    USD                                                      Initial Jobless Claims                                                                                                       

                13:30                    USD                                                      Unit Labor Costs (QoQ)                                                                                                                 

                13:30                    USD                                                      Continuing Jobless Claims                                                                                                            

Feb. 03 09:30                    GBP                                                      Services PMI                                                                                                     

                10:00                    EUR                                                       Retail Sales (MoM)                                                                                                          

                13:30                    USD                                                      Average Hourly Earnings (MoM)                                                                                                               

                13:30                    USD                                                      Nonfarm Payrolls                                                                                                             

                13:30                    USD                                                      Unemployment Rate                                                                                                     

                13:30                    USD                                                      Private Nonfarm Payrolls                                                                                                              

                15:00                    USD                                                      ISM Non-Manufacturing Index

 

EUR/USD

EUR/USD Weekly Fundamental Analysis Jan. 30- Feb. 3, 2012, Forecast

Historical:

Highest: 1.5091 USD on 03 Dec 2009.

Average: 1.3709 USD over this period.

Lowest: 1.19 USD on 07 Jun 2010.

Rules:

Out of the major currency pairs the most popular and easy to trade currency pair is the EUR/USD. It has become so popular with traders these days that even when there is no visible trade to be had it is yet traded as a matter of habit. This is of course something that should be avoided and any investor who trades this currency pair wisely can do so successfully with sizable profits at the end of the day.

The first thing with trading currencies is to realize that the EUR/USD is made up of two separate currencies although considered to be one unit when taken as a pair. The weaknesses and strengths of each currency have to be taken into consideration when trading the unit as it influences the final outcome. Another factor that is often overlooked by traders or investors is that the weakening of one currency along with the strengthening of the other currency in the pair results in the generation of pips. It is according to this that entry and exit from the Forex market has to be done in order to maintain profitability.

Trading comprises of careful market studying, strategizing, planning and executing the plan in a timely manner. This is entirely different to scalping which is resorted to by many a trader on a regular basis. These traders are often clueless as to the market situation and just use this as a type of defense mechanism to compensate for the general lack of information and knowledge. The EUR/USD is a currency pair that certainly offers a lot of currencies trading opportunities if handled correctly.

Characteristics

Average broker spread: 2-3 pips  Daily range average: 90-100 pips  Best time to trade: Euro Session (0700 GMT - 1700 GMT)  some factors affecting the EUR/USD rate: 

  • The interest rate differential between the European Bank(ECB) and the Federal Reserve(FED)
  • Dollar strength drives EUR/USD lower
  • FED intervention to weaken the dollar the sends EUR/USD higher

Trading the EUR/USD 

Trading Experience: New and Advanced currency traders  Trading Style: Day trading and Swing trading 

1) Applying Technical Analysis and/or Analyzing Fundamental News from the Euro and US zone to make EUR/USD trading decisions. Breaking strong psychological levels (1.3000, 1.2000,..) and/or surprising economic news releases can make the EUR/USD move a lot in one direction without much retracements. 

2) Since the EUR/USD pair tends to be negatively correlated to the USD/CHF, it is always a good idea to compare both EUR/USD and USD/CHF charts in order to predict future moves, if USD/CHF breaks above an important resistance level and EUR/USD didn't break support level yet, the EUR/USD is very likely to break below support level. 

Analysis and Recommendation:

The EUR/USD soared midweek and continued to maintain strength against the USD on weak economic reports and the Federal Reserve Statements on interest. The euro ended the week trading at 1.3220 +0.0111 (+0.85%)

 Around the world this week:

Italian and Spanish bond yields continue lower, 10 yr in Italy below 6%, Spain's below 5%

German IFO business confidence rises to 8 month high German consumer confidence at best since April

Euro zone manufacturing and services composite index unexpectedly moves back above 50, led by Germany

US Durable Goods orders in Dec surprise to upside but how much was pulled forward from 2012 due to 12/31 expiration of full depreciation expensing?

Jan US confidence rises to best since Feb '11

Richmond and KC manufacturing survey's both rise

Bank of Thailand cuts rates, Reserve Bank of India cuts reserve requirements

Greek Creditors announce agreement, deal to be finalized beginning of the week

Portuguese yields spike, 5 yr CDS up 150 bps on week to new high and CDS insurance skyrockets

Spanish unemployment for Q4 rises to 22.9%

Italian consumer confidence holds at lowest since at least '96 when survey began

Q4 US GDP rises 2.8%, a touch below expectations but nominal GDP gains just 3.2%, the weakest since Q3 '09. If deflator was in line with expectations, Real GDP would have been up just 1.3%. Real final sales up just .8% vs. 3.2% in Q3

Initial Jobless Claims normalize at 377k after holiday distorted 356k last week

Inflation expectations within UoM rise to 3.3%, the most since Sept and remains above the 20 yr avg of 3.0%. Expectations also rise to multi month highs in TIPS market

New Home Sales remain weak, prices fall 12.8% y/o/y

FOMC stretches out zero rates until late 2014, US$ resumes downward trend against everything. Fed destroying the price mechanism as if interest rates are artificially priced, what are assets really worth? If we don't know what assets are really worth, how can capital be efficiently allocated?

Japan's economy would have boomed over the past 10 yrs.

Fitch rating service downgrades, Belgium, Cyprus, Italy, Slovenia and Spain

This has been a busy week, for both the Euro and the USD, compounded by the World Economic Forum in Davos, giving a global platform for many government and business leaders to speak their minds.

As Greece seems to be resolved, Portugal will come to the forefront without giving the markets a minute to breath. Will we see a domino effect or not, can the EU and IMF raise enough money to ringfence these countries.

The euro should remain positive in the beginning of the week as the markets celebrate a settlement, although it has already been factored into the markets, just knowing that it has been put to bed will be a good thing. The euro should hold its own this week but not increase against the USD.

Upcoming Sovereign Bond Sales Dates

Jan 30  10:10  Italy   BTP/CCTeu auction

Jan 30  10:10  Norway  Nok 4.0bn 5.0% May 2015 bond

Jan 30  11:00  Belgium  OLO Auction

Jan 30  12:00  Norway  Details bond auction on Feb 06

Jan 31  10:30  Belgium  Auctions 3 & 6M T-bills

Jan 31  15:30  UK  Details gilt auction on Feb 07

Feb 01  10:10  Sweden  Auctions T-bills

Feb 01  10:30  Germany  Eur 5.0bn 2.0% Jan 2022 Bund

Feb 01  10:30  Portugal  Eur 0.75-1.0bn 3M T-bill

Feb 01  10.30  UK  Auctions 5.0% 2025 conventional Gilt

Feb 01  15:30  Sweden  Details nominal bond auction on Feb 08

Feb 01  16:00  US

Announces details of 3Y Notes on Feb 07, 10Y Notes on Feb

08 & 30Y Bonds on Feb 09

Feb 02  09:50  France  OAT Auction

Feb 02  10.30  UK  Auctions 0.125% 2029 I/L Gil

EUR/USD Pivot Points (Time Frame: 1 Day)
 

Name S3 S2 S1 Pivot R1 R2 R3

Classic
1.3025
1.3080
1.3119
1.3174
1.3213
1.3268
1.3307

Fibonacci
1.3080
1.3116
1.3138
1.3174
1.3210
1.3232
1.3268

Camarilla
1.3131
1.3140
1.3148
1.3174
1.3166
1.3174
1.3183

Woodie's
-
1.3076
1.3110
1.3170
1.3204
1.3264
-

DeMark's
-
-
1.3194
1.3165
1.3099
-
-