The USD fails to strengthen despite high inflation figures. US CPI on tap today- might save the dollar.
Economical News
USD
The economic data that was released yesterday showed mixed sentiment yet caused the USD almost no price movement. The Empire State Business Conditions Index which measures the general business conditions of manufacturers in New York State came in extremely low at 1.9 after coming at 24.4 last month and was widely expected to come in at 16.0. The US Producer Price Index (PPI) also came out yesterday at a much higher than expected rate of 1.3 after coming in at -0.6% last month and beating the consensus of 0.4%. The core PPI came in at 0.4% after expectations of 0.2%. As for today we are expecting the US Consumer Price Index (CPI), at 12:30 GMT as it is expected to rise a bit from last month's 0.2% to 0.3%. The core CPI however is expected to fall a bit from 0.3% to 0.2%. The Consumer Sentiment is also expected to be released at 16:00 GMT a bit lower than last month's 91.3 at 90 flat. Today's news events are expected to generate moderate price movement very similar to yesterday's scenario, as all of the events are not expected to cause a break of extreme barriers. Range trading might be a good strategy for today.
EUR
It was a relatively light day regarding news events in Europe yesterday, as the only significant bits of information were the Euro-Zone CPI and the Swiss Rate decision.
The Euro-Zone CPI rose from last month's -0.5, but inline with expectations of 0.3, causing no mentionable volatility. The Swiss interest rate was hiked yesterday by 0.25% to 2.25% as expected, and caused the CHF to strengthen all across the board. The Swiss economy is consistently proving to be stronger than ever, with stable inflationary pressure. No major news is expected to come from Europe today.
JPY
Yesterday, the JPY seemed to have finally taken a day off from the excessive volatility that has characterized its trade in recent weeks, as it traded in a relatively narrow range against the majors. The JPY slipped lower against the majors, but later during the Asian session gained back some of these losses.
Earlier this morning the Tertiary Industry Activity Index beat expectations of a 1% increase and printed an actual 1.6% increase. Although no significant price action has been produced, the JPY continued strengthening following the release. The rest of the JPY's trade this week will be determined by its US counterpart, as the only significant data on the tap today is to arrive from the US. A dollar positive inflationary data might send the USDJPY higher, a reaction that might reflect on the JPY's value against other counterparts as well.
Technical Analysis
EUR/USD
The pair is hovering around the 1.33 level, its 3 month and 2007 high. The negative divergence that we saw during the last few days on the intraday charts seems to have been a false signal and is no longer valid. The break above 1.33 exposes 1.3360 as the next resistance level that is likely to be retested.
GBP/USD
The pair is trading near it month's high, at the higher boundary of the range it traded in for the last 3 weeks. A break above 1.9450 clears the way to test the 1.95level, where the 4H 200 MA serves as resistance.
USD/JPY
Intraday studies are quite neutral, and provide no evidence of a clear direction. Price action converges into a triangle that might suggest a continuation of the downtrend. We prefer, however, a "wait and see" approach as risk reward ratio is too high.
USD/CHF
The breech below 1.21 signals a resumption of the downtrend, consistent with the 50% correction of the 1.2573-1.2100 move that took the pair back to 1.2350. A continuation to the 123.6% extension of this move, at 1.20 is likely, but heavy resistance will emerge in this area.
Wild Card
AUDUSD
This forex pair has been ranging in the 0.7930-0.7690 range for over 2 months, and it is now at the range's highs. Although a continuation of the uptrend is possible, this a good opportunity to short the top with a stop loss not far behind and a take profit at the lows of the range.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
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| Weekly Trend | |
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| Resistance | 1.3400 | 1.9650 | 119.27 | 1.2255 | 0.8000 | 0.6888 |
| 1.3367 | 1.9550 | 118.40 | 1.2200 | 0.7980 | 0.6869 | |
| 1.3340 | 1.9500 | 117.78 | 1.2156 | 0.7940 | 0.6850 | |
| Support | 1.3260 | 1.9380 | 116.20 | 1.2000 | 0.7880 | 0.6815 |
| 1.3214 | 1.9300 | 115.80 | 1.1900 | 0.7815 | 0.6770 | |
| 1.3150 | 1.9210 | 115.10 | 1.1741 | 0.7785 | 0.6726 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 16/03/2007 | 12:30 | US | Consumer Price Index (YoY) | Feb | 2.1% | 2.3% |  |
| 16/03/2007 | 12:30 | US | Consumer Price Index Ex Food & Energy (YoY) | Feb | 2.7% | 2.7% | |
| 16/03/2007 | 12:30 | US | University of Michigan Confidence | Mar | 91.3 | 90 | |