Euro slipped ahead of German IFO data, up on Yen

Recession concerns could trigger sell-off

German IFO survey due out today will give an indication on Euro zone growth prospects. The Yen meanwhile is lower against the Dollar and Euro.

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Earlier today the Dollar was up against the Euro and the Japanese Yen. The greenback was supported by a rise in U.S. bond yields. Any further signs of weaker Euro zone economic activity should assist the Dollar in sustaining gains against the single currency.

Today, a key German business survey is due for release. Many analysts have been forecasting that the IFO think tank’s business climate index will stay steady. In turn, many traders are readying themselves for a soft number following a weak reading of purchasing managers’ indices (PMIs) across the Euro zone a week ago.

Concerns about a recession could be stoked with weak data, and is expected then to trigger a sell-off in the Euro.

The Euro was off a three-week high of $1.3294, down 0.2% at $1.3245 earlier. It had failed to breach resistance at $1.3302, a level representing a 61.8% retracement of its late February to mid-March fall, of a week ago and the bias seems now to be towards losses.

In the coming days, the Euro is faced with a slew of risk events, which include bond auctions in Italy and a meeting of Euro zone finance ministers. Amid renewed pressure on peripheral Euro Zone debt, Italy is now looking to raise up to 7.5 billion Euros.

The Euro was higher against a broadly weaker Yen, rising 0.3% to 109.60 Yen. It had risen against the Yen on prospects that Europe may agree to combine two rescue funds to halt the spread of its sovereign-debt crisis.

Euro-area policy makers are discussing how to add to bailout funds. They might do so for example, by allowing the temporary European Financial Stability Facility and the permanent 500 billion-Euro ($664 billion) European Stability Mechanism to work concurrently thus making more funding available. European Union finance ministers meet in Copenhagen starting on the 30th of March.

The greenback had also gained ground against the Yen, up 0.5% to 82.73 Yen.

The general consensus amongst traders appears that they would prefer to buy the Dollar and sell the Yen over the medium term, even with repatriation inflows ahead of the Japanese fiscal year-end on the 31st of March.

It appears that many exporters have already completed their currency hedging for the fiscal year to March 31st, and also up to the end of the first quarter of the next financial term.

Another factor in the Dollar’s rise is an anticipated report, due out on Wednesday, which is predicted to show that bookings for long-lasting U.S. factory goods had risen 3% in February.

The U.S. economic data in the next few weeks will be critical for U.S. Dollar prospects.

The Dollar index, which is a gauge of the greenback’s performance against a basket of major currencies, rose from a two-week low last week by 0.1% to 79.425.

The yield on U.S. 10-year notes rose today by almost two basis points to 2.25% and was little changed ahead of a speech by Ben Bernanke, the Federal Reserve Chairman, which is scheduled for 12:00 GMT.

There is a strong correlation with the spread between U.S. and Japanese bond yields and the Dollar/Yen currency pair. A narrowing spread tends to push the Dollar lower, while a wider spread tends to boost the greenback.

The Australian Dollar was steadier today, although lower at $1.0443, having taken a steep fall last week. The Aussie also climbed against the Yen, as prospects of a recovery in the world’s largest economy supported demand for higher-yielding assets.

All the best!
Adrian Jones

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Busy Week Ahead For The Euro

The Euro held its own in early trading in Asia on Monday but the single currency is set to face stern tests this week, in the form of ECB meetings, bond auctions and key data coming out of Germany.

The Japanese Yen has been strong and bullish against all the major curencies, but over the next day or so we could see the single currency run into strong resistance areas.

News Watch For EURJPY

There is just one High Impact news release scheduled for today but look out for more news and reaction out of the Euro Zone:

08:00am GMT EUR German Ifo Business Climate

EURJPY Analysis

The EURJPY currency pair has gotten off to a slow start this week but we could see some action within a few hours once all the major players have made an appearance. Let’s take a look at the current state of play:

Right now we’re in the opening range which means we could see some sideways movement over the course of the next few bars.

I’m keeping an eye out for a breakout above the 109.800 level for entries to the long side. On the other hand, a break down to the lower bullish channel trendline could see price stall or fall further.

My indicators are yet to give any clear indication on direction but you can be sure that we will get a signal as soon as volatility increases over the next few bars.

So, keep an eye on the major Support and Resistance areas as this will serve as excellent confirmation that the market has started to move.

Take care and all the best for the week ahead!

Wesley Govender
Senior Trader for
World Class Trading Stars

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Hi Guys

First of all I would like to thank you everyone who sent me their feedback on which EAs they would like to see on our leaderboard. I already started working on that.

Now – back to our EAs.
A new week – a new start:-)

Forex Sorcerer started its trading activity and already made some trades.
Megadroid and Bulletproof still waking up from weekend – no trades so far there.

Friday I set also another EA in our Basket of EAs and its name is Probability EA. I liked the way it performed last year and hope to see a good activity this year as well. And as I am writing this it already started to place orders. All of the EAs which I place on testing will be configured to risk around 2-3% per trade and will keep them under the 30% Drawdown as the confirmation level of stopping them and re-checking their strategies.

So far this is how our leader board looks like:

Just let me know if you want me to test something new.

Tudor Ceban

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The Cable made a nice pullback overnight only to bounce sharply back up. This created a double bottom with bullish divergence and also bounced off of my moving averages that are providing support for a possible start of an up trend. However, we are continually bouncing off of the major monthly trend line which at this moment is a mere 22 pips away from price.

Because of this our upside may be extremely limited in range and may see more violent up and down action.

In the news today we have Bernanke speaking at 8:00 am – high impact, Pending home sales for Usd at 10:00 am – high impact, and MPC Member Miles speaking for the Gbp at 4:45 pm – medium impact. We could very well see some crazy things happen this morning being so near to this monthly trend line as well as two high impact news releases all in the same area. I’ll be watching and waiting on this one until I get something clear.

Good luck and safe trading!

Joshua Schultz
Senior Trader For
Forex Master Method

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This morning I am looking at the USD/CAD 4 hour chart. The bears have eventually taken over, but just for a while. My system indicates that the bears will move down to the region of 0.99388 and then I would expect a turnaround and a strong movement upwards to the target line of 1.00328, after which I suspect a strong effort from the bears again, but let’s see how it plays out by tomorrow. This could be a nice 90 pips.

Remember, trade with your head and not your “gutfeel”.

Till next time.

Piet Swart
Forex Profit Coach

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