Forex Technical & Market Analysis: February 07 2013

MARKET OVERVIEW

2013-02-07 06:11 GMT

Euro bloc faces acute challenges from rival central banks
Much is at stake in the Eurozone should the fabled 'currency war' be ultimately waged as the price will be paid in both growth and jobs amidst fresh tensions about the future of the bloc itself. Few would doubt the euro area has been routed in the latest monetary battles between countries printing reserves and depressing home currencies in part to retain an acute trade advantage in a world sapped of growth. In Asia, Japan's plan to aggressively weaken the yen has been the proverbial warning salvo, however that merely counters the open-ended bond buying and dollar creation by the U.S. Federal Reserve, sterling printing in Britain or even Swiss intervention to cap the franc. It leaves the European Central Bank (ECB) as the last remaining constituent of the "Big Four" reserve currencies still unable or unwilling to generate new cash and sequester its exchange rate over time.

This point was underlined last month by early paybacks on what had been the ECB's proxy printing plan of cheap long-term loans to euro banks (or LTROs) – repayments, which have lead to an untimely shrinkage of the ECB balance sheet as its economy shrinks, creeping short-term interest rates and a rising euro. In just three short months, the euro has now soared a staggering +20% against Japan's yen, +8% on sterling and +7% on the US dollar – the latter compounding gains against a host of dollar-pegged, emerging currencies. Last month, ECB chief Mario Draghi pointed out that the euro's trade-weighted index (TWI) has been better behaved and is still down more than +10% from its 2009 peaks. However, this euro index too has jumped +6% since November and is up almost +9% since Draghi's "whatever it takes" speech in July consequently defused the bloc's sovereign debt crisis. -FXstreet.com

Forex Economic Calendar

2013-02-07 10:00 GMT | E.M.U. European Commission Releases Economic Growth Forecasts
2013-02-07 12:00 GMT | United Kingdom. BoE Interest Rate Decision
2013-02-07 12:45 GMT | E.M.U. ECB Monetary policy statement and press conference
2013-02-07 15:00 GMT | United Kingdom. NIESR GDP Estimate (3M) (Jan)

Forex News

2013-02-07 05:34 GMT | Will Draghi encourage EUR/USD run to 1.40?
2013-02-07 05:16 GMT | GBP/USD holds above 1.5630 ahead a busy day
2013-02-07 02:35 GMT | AUD/JPY unchanged around 96.40
2013-02-07 01:10 GMT | Aussie heaviness as worrying as Aus full-time jobs lost

TECHNICAL ANALYSIS

EURUSD

HIGH: 1.35313 | LOW: 1.35033 | BID: 1.35293 | ASK: 1.35299 | CHANGE: 0.06% | TIME: 08:06:41

OUTLOOK SUMMARY: Up
TREND CONDITION: Upward penetration
TRADERS SENTIMENT: Bullish
IMPLIED VOLATILITY: High

MARKET ANALYSIS – Intraday Analysis
Upwards scenario: We expect busy session ahead due to the many important macroeconomic data releases. Upwards extension above the resistance at 1.3545 (R1) level would keep the bullish structure intact and validate our next intraday targets at 1.3564 (R2) and 1.3584 (R3). Downwards scenario: A failure to clear next resistance barrier would open the way towards the initial support level at 1.3517 (S1). Loss here might take the pair towards to eventual targets, located at 1.3497 (S2) and 1.3478 (S3) in potential.

Resistance Levels: 1.3545, 1.3564, 1.3584
Support Levels: 1.3517, 1.3497, 1.3478

GBPUSD

HIGH: 1.56705 | LOW: 1.56452 | BID: 1.56687 | ASK: 1.56696 | CHANGE: 0.07% | TIME: 08:06:42

OUTLOOK SUMMARY: Up
TREND CONDITION: Upward penetration
TRADERS SENTIMENT: Bullish
IMPLIED VOLATILITY: High

Upwards scenario: Neutral hourly studies point towards further consolidation, with a break required to spark stronger upside action. Our next resistance level is placed at 1.5679 (R1). Break above it would suggest our next initial targets at 1.5699 (R2) and 1.5718 (R3). Downwards scenario: Current market structure might lose its power if the price manages to overcome key support level at 1.5644 (S1). Any penetration below this level might determine medium-term negative bias and expose our targets at 1.5625 (S2) and 1.5606 (S3) on the way.

Resistance Levels: 1.5679, 1.5699, 1.5718
Support Levels: 1.5644, 1.5625, 1.5606

USDJPY

HIGH: 93.648 | LOW: 93.294 | BID: 93.603 | ASK: 93.607 | CHANGE: -0.01% | TIME: 08:06:43

OUTLOOK SUMMARY: Up
TREND CONDITION: Up Trend
TRADERS SENTIMENT: Bearish
IMPLIED VOLATILITY: Low

Upwards scenario: Price action is looking for topside momentum on the medium-term perspective to resume initial upwards formation. Yesterday high offers a key resistive bastion at 94.06 (R1). If the pair manages to overcome it we expect further progress towards to initial targets at 94.37 (R2) and 94.67 (R3) in potential. Downwards scenario: Signal of instrument depreciation would be created if USDJPY depreciates below the next support level at 93.24 (S1). We would suggest next interim targets at 92.95 (S2) and then aim at 92.64 (S3) for the possible corrective action ahead.

Resistance Levels: 94.06, 94.37, 94.67
Support Levels: 93.24, 92.95, 92.64

Prepared/Published By FXCC Forex Trading Blog.