EUR/USD Outlook – 2012/10/11

October 11, 2012 in Forex Analysis

EUR/USD had gone as low as 128.35 but then slight upward jump took place but the price found resistance just below the 22-day EMA resistance. Please check the last price action candle’s high and the yellow EMA line representing 22-day EMA.

EUR/USD Today – Daily Chart

EUR/USD Daily chart - October 11 2012

EUR/USD Economic Releases:

Yesterday’s Releases and Economic News:

1) There were no important economic releases yesterday from either Euro zone or U.S.A.

2) Fed Beige Book Report: The economic reports from businesses and other contacts from 12 Federal Reserve Districts out side Federal Reserve gave mixed economic indication but overall noted a modest economic expansion.

3) The Debt Rating of Spain was cut by S&P (Standard & Poor’s). The lowered rating now stands at one level higher than the Junk rating.

4) As mentioned in yesterday’s outlook that IMF’s (International Monetary Fund) Global Financial Stability Report also did not present a healthy view of economy on global basis as well as for Euro zone. The global economic growth forecasts were cut to 3.3% for 2012 from previous 3.5% and the same for the next year was cut down to 3.6% from 3.9%. IMF’s view about huge outflows in Euro zone and hence the possible need for the European banks to liquidate the assets to meet the cash demands was also not encouraging. IMF’s report mentioned a possible need to liquidate assets worth 4.5 Trillion U.S. Dollars if debt ridden countries could not control the cash outflows.

Today’s Releases

1) Euro Zone: The important releases and events are Conumer Price Index from Germany at 06:00 GMT and ECB’s (European Central Bank) Monthly Report at 08:00 GMT.

2) U.S.: Except Trade Balance report at 12:30 GMT and Monthly Budget Statement at 18:00 GMT there is no important data is scheduled for today.

G7 meeting at 13:00 is another event for today.

EUR/USD – Technical Outlook

1) 5-Day EMA is in the early stage of crossing below the 22-day EMA to give a bearish signal. The crossover has already taken place but need to wait to see if it sustains or not. Please check the green and yellow EMA lines on the daily chart of Euro-Dollar above.

2) Yesterday the price had broken below the upper edge support of the daily Ichimoku cloud. The slight upward jump found resistance near the same level and that indicates that the previous support is now acting as resistance. This also  indicates the bearish sentiments.

EUR/USD Daily Ichimoku Cloud Chart

EUR/USD Daily Ichimoku cloud chart - October 11 2012

3) 6 weeks back the currency pair had broken the 200-day moving average resistance. The break was strong but if we see on a longer time frame basis, the pair has gone into a volatile sideways mode above it. The current 200-day moving average support is near 1.2700. Please check the following weekly chart of EUR/USD where the red line is the 22-day moving average.

EUR/USD 200 day moving average on weekly chart

EUR/USD – What To Expect

Our outlook for EUR/USD remains same as we had mentioned yesterday. We expect further downward consolidation. The next expected support levels are as follows:

1) Support drawn from the previous low and support as well as 55-day EMA support near 1.2800/1.2805.

2) 38.2% retracement of the recent overall upward move: Near 1.2735/1.2739.

3) The support of the lower edge of daily Ichimoku cloud: Near 1.2715. Please note that it is slightly above the 200-day Moving Average support as mentioned above.

The above outlook will remain in place if no decisive break above 1.2920/1.2925 takes place. If such a break takes place then this outlook will start getting neutralized.


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