Euro: USD/EUR (EUR=X) to take cue from GDP data

Euro: USD/EUR (EUR=X) to take cue from GDP data

Euro: USD/EUR (EUR=X) to take cue from GDP data

The main release in the week ahead for the Euro will be GDP data for the second quarter which is expected to have grown by 0.2% in Q2 and 1.0% compared to a year ago. GDP above inflation, that is.

Such a result would be in line with current ‘barely a pulse’ estimates for Eurozone growth. A lower-than-expected result, however, would further solidify expectations the ECB will use its bazooka in September to reflate. Such a move would be detrimental to the Euro.

Although Manufacturing PMIs have fallen to Eurozone debt crisis levels their Services counterparts have remained relatively resilient.

“The advance release for Eurozone real GDP growth in the second quarter is due out next Wednesday, and the data are likely to show that the European economy continues to sputter. Real GDP in Europe has accelerated modestly over the past few quarters, but the year-over-year pace is still just 1.2%, and our expectation is for the quarterly growth rate to downshift back down to 0.2% in Q2. If this forecast proves correct, year-over-year growth would still be stuck around 1%,” says Wells Fargo.

Other key data prints are Eurozone unemployment, retail sales, and CPI.

July inflation is forecast to moderate to 1.1% from 1.3% in June and if so this is likely to keep the pressure on the Euro.

Although inflation is traditionally seen as a bugbear for the economy, in the current perennially low-growth environment higher inflation is actually positive for a currency, as it is a sign of stronger growth and therefore more likely to attract foreign investor inflows.

The unemployment rate is forecast to remain unchanged at 7.5% in July when it is released at 10.00 on Wednesday.

Retail sales are forecast to show a 0.3% rise in June compared to May when it declined -0.3% when it is released at 10.00 on Friday.

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 1.12.

The projected upper bound is: 1.12.

The projected lower bound is: 1.10.

The projected closing price is: 1.11.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 23.3734. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 35.83. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 247 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -115.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 13 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 19 period(s) ago.

Rex Takasugi – TD Profile

FOREX EUR= closed up 0.000 at 1.113. Volume was 100% below average (consolidating) and Bollinger Bands were 4% wider than normal.

Open     High      Low     Close     Volume___
1.113 1.113 1.112 1.113 173
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.12 1.12 1.13
Volatility: 6 6 7
Volume: 68,369 77,742 122,666

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX EUR= is currently 1.6% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume out of EUR= (mildly bearish). Our trend forecasting oscillators are currently bearish on EUR= and have had this outlook for the last 14 periods.

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