Will EUR/USD Penetrate Resistance?

Despite a downgrade of Ireland's credit rating, the EUR/USD rose on speculation the release of European bank stress-test results this Friday will show strength in the region's banking sector. Moody's Investors Service cut Ireland's credit ranking by one notch to Aa2 from Aa1, citing the government's gradual but significant loss of financial strength; Ireland's weakened growth prospects; and the crystallization of contingent liabilities from the banking system. Having risen since its low in early-June, the EUR/USD is currently overbought; thus, requiring some consolidation before moving higher. If the 1.30-area resistance is broken, the pair may rally to 1.35. Support is in the 1.25 area.

Financial and Economic News and Comments

US & Canada

The National Association of Home Builders/Wells Fargo housing market index decreased to a lower-than-anticipated 14 in July from a downwardly revised 16 in June, suggesting US homebuilder confidence fell for a second successive month to the lowest level since April 2009, an NAHB report showed. A reading below 50 means most respondents view conditions as poor. The measure of current single-family home sales declined to 15 from June's 17. The gauge of buyer traffic slid to 10 in July from 13 in June. The measure of sales expectations for the next six months slipped to 21, the lowest level since March 2009, from 22.

Foreigners bought a record net C$23.156 billion ($21.94 billion) of Canadian securities in May, led by federal government debt instruments, after a C$12.361 billion purchase in April, according to figures from Statistics Canada. Meanwhile, Canadian investors sold a net C$2.898 billion of foreign securities in May, the biggest repatriation of funds from abroad since January, after a C$194 million purchase a month earlier.

Europe 

The euro-area seasonally adjusted current account recorded a fifth consecutive monthly shortfall in May, with a €5.8 billion ($7.5 billion) deficit (corresponding to a €16.7 billion deficit nsa), widening from a revised €5.6 billion deficit in April (corresponding to a revised €7.5 billion deficit nsa), a report from European Central Bank showed.

Eurozone seasonally adjusted construction output was down 1.0% m/m in May, the four decrease in five months, after a 0.3% m/m decline in April, Eurostat reported. Construction output fell 6.3% y/y wda, a 27th straight year-on-year slide, following April's revised 5.7% y/y decrease.

< UK house prices fell 0.6% m/m July, the first fall in seven months, to an average of £236,332 ($359,815), after a 0.3% m/m increase in June, Rightmove Plc reported. House prices rose 3.7% y/y, a 10th straight year-on-year gain, following June's 5.0% y/y advance. London's house prices decreased 1.7% m/m to £422,248 in July, but grew 4.8% y/y.

< 

Asia-Pacific The People's Bank of China and the Hong Kong Monetary Authority signed agreements to ease restrictions on yuan transfers between banks and companies in the city.

The Bank of Japan may use monetary policy easing measures if the yen stays around 85 to the USD, Dow Jones Newswires reported.

FX Strategy Update

 
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
AUD/USD
EUR/JPY

Primary Trend
Negative
Neutral
Negative
Positive
Negative
Neutral
Negative

Secondary Trend
Neutral
Negative
Positive
Negative
Neutral
Neutral
Negative

Outlook
Neutral
Neutral
Positive
Negative
Positive
Neutral
Neutral

Action
None
Buy
None
None
Long
None
None

Current
1.2933
87.39
1.5448
1.0415
1.0390
0.8839
113.03

Start Position
N/A
87.75
N/A
N/A
1.0247
N/A
N/A

Objective
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Stop
N/A
85.75
N/A
N/A
1.0075
N/A
N/A

Support
1.2550
86.50
1.5200
1.0300
1.0200
0.8600
107.50

1.2150
85.00
1.5000
1.0100
1.0000
0.8300
106.00

Resistance
1.2950
90.00
1.5500
1.0500
1.0450
0.8850
113.50

1.3200
92.00
1.5700
1.0750
1.0750
0.9050
120.00

 
EUR/USD
USD/JPY
GBP/USD
USD/CHF
USD/CAD
AUD/USD
EUR/JPY

Primary Trend
Negative
Neutral
Negative
Positive
Negative
Neutral
Negative

Secondary Trend
Neutral
Negative
Positive
Negative
Neutral
Neutral
Negative

Outlook
Neutral
Positive
Neutral
Negative
Positive
Neutral
Neutral

Action
None
Long
None
None
Long
None
None

Current
1.2937
86.75
1.5222
1.0549
1.0546
0.8677
112.31

Start Position
N/A
87.75
N/A
N/A
1.0247
N/A
N/A

Objective
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Stop
N/A
85.75
N/A
N/A
1.0075
N/A
N/A

Support
1.2550
86.50
1.5200
1.0300
1.0200
0.8600
107.50

1.2150
85.00
1.5000
1.0100
1.0000
0.8300
106.00

Resistance
1.2950
90.00
1.5500
1.0500
1.0450
0.8850
113.50

1.3200
92.00
1.5700
1.0750
1.0750
0.9050
120.00

Expert Market Commentaries, charts and information are provided by Hans Nilsson of Globicus International, Inc., a registered third party CTA, are intended for educational purposes only and do not constitute trading recommendations.

Past performance is not indicative of future results. Trading OTC Forex on margin carries a high level of risk, and may not be suitable for all investors. Please contact a registered trading advisor if you have any questions.

This report is intended solely for distribution to customers of Capital Market Services, LLC. Any information in this report is based on data obtained from sources considered to be reliable, but no representations or guarantees are made by Capital Market Services, LLC with regard to the accuracy of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Capital Market Services, LLC accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this report. No part of this report may be reproduced or distributed in any manner without the permission of Globicus International, Inc.

©2004-2010 Globicus International, Inc. and Capital Market Services, LLC.