EURUSD Calm Before The Storm

Wednesday 6th of February 2014

News&Rumours

• MoF flow data week-ended Feb 1 – Japanese sell net Y107.1 bln foreign stocks, Y1.8158 trln bonds, buy Y49.3 bln bills; foreign investors sell net Y751.9 bln Japanese stocks, buy Y155.8 bln bonds, Y104.9 bln bills..
• Australia Q1 NAB business confidence index +3 pts to +8, highest in 2 ½ years, double long-run average, business conditions index +4 pts to -3.
• Australia Dec retail sales +0.5% m/m, Q4 CV sales +0.9% q/q, +0.4%/+1.2% eyed. Australia Dec trade bal A$468 mln sur, A$300 mln def eyed, exp +4%, imp +2%

Economic Data &Events 

07:45 France Ind investment (CurYear) 08:00 Czech Ftrade bal NRA 08:00 Hungary Industrial output yy 08:00 Czech Foreign trd balance mm 08:00 Czech Industrial output y/y 08:00 Czech Construction output y/y 11:00 Germany Industrial orders mm 12:00 UK BOE Bank Rate 12:00 Czech CNB monetary policy meeting 12:00 UK BOE QE total GBP 12:30 Brazil Auto output mm 12:30 US Challenger layoffs 12:30 Brazil Auto sales mm 12:45 EZ ECB deposit rate 12:45 EZ ECB refinancing rate

Markets Today

EONIAvs EUR Source :Reuters

Macro calendar will be relaitively light   in Europe on Wednesday .Market will pay particular attention to  publication of Germany industrial orders .Markets are in wait and see mode,taking a breather  ahead of key risk events at the end of the week  .Expect ECB rate verdict and M.Draghi press conference to bring some volatility

Technical Overview 

EURUSD -Unwiding oversold conditions .Bumpy road ahead 
Short term outlook is a bit confusing .As long as 1,3480 remains intact there is a scope for a retest of 1,3570/80 where decent supply should reemerge .Rallies are seen as an opportunity to re -short EUR at better levels .Shorts should target 1,3460 initially and 1,3415/3380 (Fibo support &200D SMA )in extension .Sustained break above 1,36 invalidates bearish scenario.Big picture turned bearish on a daily close below 1,3520.Rallies are seen as an opportunity to reinstate shorts with stops above 1,3720.

USDJPY-Correcting .... 
Short term picture turned mildly positive .While above 100,90/80 there is a scope for corrective gains twds 101,70(already met ) and 102,10/30 in extenstion .Rallies should be seen as corrective in nature and opportunity to reinstate shorts .Sustained break above 102,30 invalidates immediate bearish scenario.Big picture turned bearish on daily close below 102,50.Rallies should be seen as an opportunity to re-short at better levels .

GBPUSD -Consolidating above key support 
Short term outlook is negative below 1,6340 .Bears struggle to push rate below key support at 1,6250 (double bottom).As long as 1,6250  remains  intact shorts are vulnerable to a squeeze twds 1,6330 (met)initially and 1,6400 in extension . Correction would be healthy and natural ,clearing the path for another leg lower.Sustained gains above 1,6410 invalidate immediate bearish scenario.Big picture remains positive above 1,6280(daily close). We feel that after period of sideways activity in 1,6250-1,64 this support will finally give way  

AUD-Bullish .Approaching key resistance  

Short term outlook is positive above 0,8900 .Technical outlook improved significantly on sustained break above 0,8820.Rate is approaching key resistance at 0,90 where decent supply should reemerge .Expect heavy battle between short term & medium players in this area.Reconsider booking profits from long positions set on pullbacks below 0,88.Big picture remains bearish while 0,90 remains intact (daily close) .Sustained break above opens 0,9080/9130 as the potential targets 

NZD-Bullish .Limited upside 

Short term outlook is positive above distant 0,8170 .Technical picture  improved significantly on a sharp rebound off 0,8070 area(engulfing bullish candle on dailies) .Rate is approaching resistance in  0,8270/90 area where decent supply may reemerge 
Pullbacks should be seen as buying opportunity for a retest of 0,8270 initially and 8340 in extension .Big picture remains bearish while below 0,8380  (daily close)


EURGBP-Bullish limited upside 

Short term picture is positive above 0,8260 for a retest of 0,8330/40 initially and 0,8380 in extension .Rate is trading in choppy fashion in 0,8250-0,8330 range .Rate formed inverted H&S pattern on daily charts with necline already broken.Measured move tareget 0,8380) Rate is trading in very choppy fashion and there is a huge risk of whipsaws and sudden reversals within existing range .

EURCHF-Unwinding oversold conditions 

Short term picture is mixed to negative .Rate found decent base around 1,2180 and while it holds there is a risk of move twds 1,2250 where supply should reemerge .Rate formed inverted H&S pattern on 4hr charts with measured move twds 1,2280/1,2300.
We feel that potential pullbacks off 1,2250 should represent an opportunity to go long Big picture remains negative  below 1,2300/2320.Sideways action to dominate in coming days 


USDPLN-Negative .Limited downside 

Short term outlook turned negative .Sharp reversal off 3,16 deteriorated technical picture opening road for a deeper retracement of recent rally .We expect rate to trade in 3,06-3,14 range in coming days At this stage rallies should be seen as an opportunity to reinstate shorts . 

EURPLN-Negative Limited downside 

Short term outlook turned negative .Sharp reversal off 4,25  deteriorated technical picture opening road for a deeper retracement of recent rally .We expect rate to trade in 4,16-4,23 range in coming days.USe strenght to reinstate shorts 

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