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Wednesday May 17, 2006 - 09:06:10 GMT
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ACM - www.ac-markets.com
Euro has potential to continue correcting
By Marc Spaelti - ACM Senior Trader
Yesterdays News and Events:
The Euro held remarkably well yesterday after German Economic Sentiment Index ZEW slipped 17points to 50, its lowest level since November. The pressure on European currencies was only short-lived, Cable briefly scratched its medium-term support and the Euro traded to a low of 1.2760 before trading slowed to small range near 1.2800. It was up to the US data to ignite the next move in the forex markets and it came in the form of a larger fall in US Housing Starts in April, down 7.4% to 1.85m units, the lowest level in 18months. US PPI was slightly stronger with a 0.9% rise. The slowdown in the Housing market drove the Dollar lower, Cable had a strong come-back, rising to 1.8885 and breaking this level for additional gains overnight, the Euro spiked to 1.2860 first before it resulted to a much slower and measured rise towards 1.2895, while underneath, it remains bearish in the short-term.
The Euro area will be joined by Slovenia at the beginning of next year, first time the 12-country Euro-zone is increased since its inception in 2002. Lithuania, who also applied for membership, must be a little bit more patient. The EU commissions decision not to grant entry on the basis of current inflation being just a whisker above the ECB reference rate of 2.6% is very harsh, but if applied for equally to all potential new members in the future, such measures will assure, that the Euro will continue to develop positively, undermining the Dollars reign as world currency further.
Todays Key Issues:
UK April Unemployment at 8.30am is expected to stand at 5.1%, unchanged from March. At 10am Euroland CPI should increase by 0.6% again, the YoY change stands at 2.4%.
US April CPI ought to increase by a slightly higher 0.5%, it is up 3.5% YoY. At 3pmGMT US Treasury Secretary Snow will testify on the international financial system.
The Risk Today:
EURUSD: We stand at 1.2895, this is the key resistance for the day. As a short-term play we suggest selling for a mini dip to 1.2840 that can develop into a 2-day move down to as low as 1.2655 key support. Keep a tight stop, a move through 1.2900 will lead to 1.2970, a high daily close leaves the pair bullish to move into the 1.30 handle for a new high weekly close.
1H USDJPY: The 109.35 low of last week has been bypassed, currently we are trading at the 109.20 key support, a daily close underneath keeps the pair bearish for much lower levels. Short-term falling resistance at 109.50, stronger at 109.85, a close above 110 ends the current bear move. For now stay bearish, we have good prospects to move to 108.60 in the short-term.
4H USDCHF: The Dollar is under pressure this morning, but a look at the chart below reveals that the pair has come a long way and while it is not impossible to further accelerate this bearish move and continue going towards 1.16, we would argue that while 1.2000 holds, the risk of a correction towards 1.23 is far greater. Take the current dip as opportunity for a short-term counter move over the next 2-3 days, stop upon a breech of the 1.1950 level.
Resistance and Support:
|EURUSD ||GBPUSD ||USDJPY ||USDCHF |
|1.3000 S ||1.9130 S ||110.60 M ||1.2330 T |
|1.2960 M ||1.9000 K ||110.00 K ||1.2260 K |
|1.2895 K ||1.8960 M ||109.85 S ||1.2130 S |
|1.2885 ||1.8950 ||109.20 ||1.2030 |
|1.2830 M ||1.8900 M ||109.20 K ||1.2000 K |
|1.2760 M ||1.8885 S ||108.60 M ||1.1960 S |
|1.2655 K ||1.8825 T ||108.20 S ||1.1850 S |
|S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot |
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Amazing Trader EVENT RISK Calendar:
Wed 18 Oct /ul>
12:30 US- Housing Starts & Permits
14:30 US- EIA Crude
Thu 19 Oct
01:30 AU- Employment
08:30 GB- Retail Sales
12:30 US- Weekly Jobless
Fri 20 Oct
12:30 CA- Retail Sales & CPI
14:00 US- Existing Homes Sales
John M. Bland, MBA
- POTENTIAL PRICE RISK: HIGH Tue-- 08:30 GMT GB- CPI top tier confirmation of Inflation.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT DE- ZEW Survey second most important German monthly Survey.
- POTENTIAL PRICE RISK: Medium Tue-- 09:00 GMT EZ- final HICP revision to flash report. Revisions are usually minor.
- POTENTIAL PRICE RISK: Medium Tue-- 13:15 GMT US- Industrial Production. Top output indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 12:30 GMT US- Housing Starts and Permits revision to flash report. Useful housing leading indicator.
- POTENTIAL PRICE RISK: Medium Wed-- 14:30 GMT US- EIA Crude. Top WTI inventory measure.
- POTENTIAL PRICE RISK: Medium Thu-- 01:30 GMT AU- Employment. Top economic indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 02:00 GMT CN- GDP. Top economic indicator.
- POTENTIAL PRICE RISK: HIGH Thu-- 08:30 GMT GB- Retail Sales. Top consumption indicator.
- POTENTIAL PRICE RISK: Medium Thu-- 12:30 GMT US- Weekly Jobless. Employment Indicator.
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