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Daily Report: Euro Dipped Against Sterling, But Risk Rebound Limited Dollar and YenThe forex markets remained generally steady in Asian session today. Euro received some support ahead of near term support levels against dollar and yen and attempted to recover. But strength has been very weak so far. An indeed, selloff was seen against Sterling. Dollar's rebound was limited by stabilization in the stock markets where DOW closed slightly higher by 32 pts. That's followed by recovery in Asian indices. Indeed, the greenback is also showing some sign of weakness against Sterling and Canadian. US Durable goods orders will be a major focus today but might not provide much inspirations. Markets' mind will stay on the EU summit on Thursday and Friday even though expectation for anything concrete from the summit is low. |
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| Featured Technical Report | |
EUR/GBP Daily OutlookDaily Pivots: (S1) 0.7969; (P) 0.8003; (R1) 0.8023; More. The break of 0.8010 minor support affirms the case that consolidation from 0.7949 is already finished at 0.8156. Intraday bias in EUR/GBP is back to the downside for 0.7949 support first. Break there will confirm resumption of whole decline from 0.9083 and should target next key fibonacci level at 0.7782. On the upside, above the 0.8038 minor resistance will delay the bearish case and bring more consolidative trading. But any upside attempt should be limited by 38.2% retracement of 0.8505 to 0.7949 at 0.8161 and bring downside breakout eventually. |
| Special Reports |
Japan Passes Consumption Tax Hike, More Political Than Economic Meaning In The Near-TermThe lower house of the Japanese parliament passed the bill to double the consumption tax in three years by a vote of 363-96. The bill will then be voted by the upper house to become law and it's very likely to be approved. The consumption tax hike was a means to ease the fiscal deficit of the Japanese economy. However, the impact is expected to be small. While the government anticipates it would help soothe the fiscal problems, opposition parties believed this would weaken demand for domestic goods, further hurting the nation's economy. Some analysts viewed that the hike would weaken that outlook of Japanese yen. On the political front, opponents of the tax hike may submit a no-confidence motion regarding the bill. The worst scenario would be resignation of the Noda Cabinet or dissolution of the lower house and elections. EURUSD to Break Below 1.20 by Year EndWe are bearish on the euro's outlook in the second half of the year. Likely delay of the ESM due to Germany's Federal Constitutional Court's examination of the mechanism, expectation of rate cut as it tends to focus more on growth and capital outflow from the Eurozone to small economies such as Switzerland are the key reasons behind our anticipation for further weakness in the single currency. The recovery of EUR/USD since the beginning of June has probably ended and the decline might have resumed. We forecast the currency pair to fall to as low as 1.19 by the year end. |
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Orders and Options Watch | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
European Session: Orders and Options WatchEUR: Although the single currency dropped again yesterday from 1.2530 to as low as 1.2442, short-covering ahead of the 2-day EU summit lifted the back in late New York, however, selling interests are still noted above 1.2500 level and offers from funds remain at 1.2510-20 with some stops placed above 1.2530 but fresh sell orders are tipped at 1.2550 (large) as well as 1.2570-80 with bigger stops building up above 1.2590-00. On the downside, bids from Asian and Middle East names are expected at 1.2440-50 with stops still seen below 1.2435-40, followed by combination of bids and stops located further out at 1.2400-10. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forex Trade Ideas | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trade Idea: EUR/USD – Sell at 1.2580Despite yesterday’s brief fall to 1.2442, the subsequent rebound from there after holding above indicated support at 1.2441 suggests consolidation would be seen and test of 1.2527-30 (current level of the upper Kumo and yesterday’s high) cannot be ruled out, however, renewed selling interests should emerge around 1.2583 (last Friday’s high), bring another decline later. A break of said support would extend recent selloff towards 1.2400-10 but reckon 1.2370-75 would hold from here. Trade Idea: USD/JPY – Buy at 79.05Although the greenback has rebounded after falling to as low as 79.23 yesterday, reckon resistance at 79.79 would limit upside and risk remains for the fall from 80.63 to extend marginal weakness, however, 79.00-05 would attract renewed buying interests and bring another rebound later. Only above said resistance (this would also penetrate the Ichimoku cloud bottom at 79.75) would suggest low is possibly formed and bring stronger rebound to the upper Kumo Candlesticks Intraday Trade Ideas Update Schedule (GMT): Elliott Wave Daily Trade Ideas Update Schedule (GMT): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fundamental Highlights
Technical Highlights
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