EUR/USD finds minor support at circa 1.1920, but the sell-off follows-thru to 1.1870 base thereafter
Mr. Greenspan likely to reiterate that the Fed can remain patient in light of slack in the U.S. jobs situation, that it's too early to conclude that the labor market is on a sustainable recovery path.
MARKET RECAP:
- The dollar rose in Asia on speculation Federal Reserve Chairman Alan Greenspan will say he is confident the U.S. economy will extend its expansion without signaling an increase in interest rates before September. Demand for the euro also waned on expectations an industry survey today will show German investor confidence fell for a fourth month in April. By contrast, the Conference Board's U.S. index of leading economic indicators had its greatest year-on- year increase in two decades. Against the euro, the dollar rose to $1.1967 at 1:42 p.m. in Tokyo from $1.2020 late yesterday in New York. It was at 108.51 yen, from 108.45.
A scenario on Chairman Alan Greenspan's testimony today and tomorrow:
A FOMC's decision to raise rates at this juncture depends on two primary considerations -- core inflation and the labor market. Mr. Greenspan is expected to address those issues in this manner: First, the Fed Chairman will likely note that core inflation remains low and existing levels of slack will restrain inflation going forward, but also that inflation appears to have stabilized. Mr Greenspan may also indicate that the risks on inflation have become balanced at this point, that the balance of risks on inflation is completely neutral and will replace “almost equal” with “equal”at the May 4 FOMC meeting. Second, Mr Greenspan will likely acknowledge recent improvement, while at the same time noting that there is still a lot of slack in the labor market. In fact, the Fed Chairman may well emphasize that it is too early to conclude that the labor market is on a sustainable recovery path and that more evidence of brisk job creation is required for such a conclusion. Summary: Greenspan is likely to reiterate that the Fed can remain patient in light of existing slack. Certainly, the Chairman will not provide any signals on the time-frame for tightening. The Fed can provide reasonably unambiguous signals to this effect only once it is virtually certain that a sustainable labor market recovery is under waya few more employment reports, each showing between 150,000 to 200,000 payroll gains, is what is required.
FX Technical Snapshots: Europe - April 20
- EUR/USD - the currency did finally topped out at 1.2080 -- the currency has been lower willy-nilly and may find support only at circa 1.1920 - 1.1910. A small bounce back may then be followed by a probe of 1.1870 base. The currency should eventually take out the 1.1870 base, and extend the sell-off to 1.1825 - 1.1800. Support at 1.1825 - 1.1800 may last longer however. The currency should recover thereafter, probably to 1.1900 - 1.1920, but the downtrend may proceed to 1.1700 - 1.1600 thereafter.
- GBP/USD - the currency finally peaked out at 1.8141 and was lower since then. A small rebound is expected at circa 1.2970 area, then should a go at 1.7850 area. The sell-off should continue at some point, and retest the 1.7765 trough. It should eventually break through, and go on towards 1.7670 area, which may keep intact relatively longer and cause a relatively large pullback. But further out, we now refocus at 1.7600 - 1.7500.
- USD/JPY - the currency did find support at 107.56 and is in the process of confirming it. If the current +test of the low+ leaves the 107.60 area intact, then the rally will likely break through the 109.20 resistance late in the week. We expect the rally to extend 111.00 from there. Further out, we expect to see as high as 114.00 - 115.00.
- USD/CAD -- support stabilized above 1.3414, and the sideways consolidation should break through to the upside soon. The new upmove take out the 1.3500 immediate target, then accelerate and possibly extend gains to 1.3700 much further out.
(The rest of the currency analyses is available through the trading platform, or see the links provided in this page . . . . )
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FX Technical Snapshots: New York - April 19
- EUR/USD - the currency has been to as high as 1.2080 -- in the wake of the assassination of the Hamas leader at the Gaza strip and despite gloomy Germany growth data earlier in the day. But there's no change in the view -- the currency should terminate the upmove soon and be downward bound once more, with the 1.1870 trough as immediate focus. The currency should eventually take out the 1.1870 base, and extend the sell-off to 1.1825 - 1.1800. Support at 1.1825 - 1.1800 may last longer however. The currency should recover thereafter, probably to 1.1900 - 1.1920, but the downtrend may proceed to 1.1700 - 1.1600 thereafter.
- GBP/USD - the currency extended gains to 1.8141 and was lower since then -- the movement did not change the short-term view -- the sell-off should continue at some point in time, and should fall towards a retest of the 1.7765 trough. It should eventually break through, and go on towards 1.7670 area, which may keep intact relatively longer and cause a relatively large pullback. But further out, we now refocus at 1.7600 - 1.7500.
- USD/JPY - the currency probably found new support at 107.56 and is in the process of confirming it. It may still threaten the 109.20 resistance, which should eventually break through. We expect the rally to extend 111.00 from there. Further out, we expect to see as high as 114.00 - 115.00.
- USD/CHF - the currency did make a new corrective low -- support may have been found at 1.2835. The rally should soon resume and should still extend further, which may bring the uptrend finally over the 1.3100 top. That may also provide the wherewithal for further upmove to 1.3500 - 1.3600 much further out.
- USD/CAD -- support stabilized above 1.3414, keeping the sideways mode intact. The new upmove take out the 1.3500 immediate target, then accelerate and possibly extend gains to 1.3700 much further out.
(The rest of the currency analyses is available through the trading platform, or see the links provided in this page . . . . )
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