USD/JPY Outlook –April 18-22

Tertiary Industry Activity and Trade Balance are the main events this week. Here’s a review of the major market-movers ahead and an updated technical analysis for USD/JPY, that is on lower ground.
Last week, Japan’s government lowered its assessment of the economy for the first time in many months in line with Bank of Japan following the horrific earthquake and tsunami last month. Japan also downgraded its assessment on exports; industrial production and private consumption, after the disaster and subsequent nuclear catastrophe disrupted supply chains and triggered power shortages. This signals that the economy is heading downwards after stalling for many months.
USD/JPY daily chart with support and resistance lines marked. Click to enlarge:

   1.
      Household Confidence: Tuesday, 6:00. Japanese consumer sentiment survey for general households including views on incomes and jobs, dropped in February to 40.7 from 41.1 in the previous month below 41.6 expected.  A further decrease to 39.9 is expected now.
   2.
      Tertiary Industry Activity: Wednesday, 0:50. Japan’s tertiary industry activity surged 2.1% in January following a decline of 0.9% in December 2010. Analysts expected activities to increase by 1.5% in the first month of this year. Industries that contributed to the increase included wholesale and retail trade, information and communications, financial services and technical services. Industries that finished lower included accommodations, personal services and real estate. A small gain of  0.2% is predicted.
   3.
      Trade Balance: Wednesday, 0:50. Japanese adjusted merchandise trade balance surplus widened reaching a value of 556.0 billion JPY compared to the previous reading of 191.8 billion JPY revised to be 268.8 billion JPY. Analysts forecasted a rise to 676.8 billion JPY. However Japan’s export figures in March will be weakened due to the declines in production resulting from the March 11 earthquake taking a toll on GDP growth in the first quarter. Economists expect exports to recover by May. Japan’s merchandise trade balance surplus is expected to narrow to 330.0 billion JPY.

*All times are GMT

USD/JPY Technical Analysis:

Dollar/yen erased a lot of the gains it made recently. After losing the 84.50 line (mentioned last week), it continued lower and found support only at the 82.87 line, closing just above 83.

Looking down, immediate support is found at 82.87. This is exactly where the BOJ intervened in September to weaken the yen. It’s follwoed by the 81.80 – 82 region which is a strong area of support. It worked as a distinctive line in both directions in recent months, before and after the disaster.

Moving lower, we find  80.90. This line had a role as a pivotal line is now only minor support. It’s followed by the November’s lows of 80.40, which also worked two weeks ago.

A very strong line is 79.75 – this was the previous historic low of 1995 and briefly worked as resistance before the big intervention, provides further support. Below this line, 78.27 is very minor support.

Looking up, 83.40 now turns into resistance – the same role it had before the March 11 catastrophe. It also worked now. It’s followed by 84, which was a peak a few months ago.

Stronger resistance is at 85.50, which was a recent and very stubborn peak. Above, 85.93, which was the peak after the yen intervention in September, is the next, close, line of resistance. Further, there’s a bigger gap until the next line –  87  isn’t only a round number – it was also support back in July 2010.

Higher above, 88.12, which capped the pair back in August and previously worked as support is the next stronghold. It’s followed by 89.10, which worked in both directions before July 2010. The last line for now is the round number of 90.

I remain bullish on USD/JPY.

Despite the weakness of the US dollar, the fragile situation in Japan weighs against the yen.

Another opinion: FX Tech Strategy sees Dollar/yen facing more downside pressure.

Further reading:

EUR/USD Outlook for April 18-22

Euro/Dollar marked a range in the past week, as opposing forces kept it tight. The upcoming week features important surveys and more important data. Here’s an outlook for the events that will rock the Euro, and an updated technical analysis for EUR/USD.

The Euro enjoyed the rate hike and the dollar’s weakness, but now the debt crisis came in through the front door and held the pair steady, despite more dollar weakness. Which force will win this week?

EUR/USD daily chart with support and resistance lines marked. Click to enlarge:

EUR USD Chart April 18-22

   1. Consumer Confidence: Monday, 14:00. This official survey from Eurostat is considered a realistic barometer of the mood all over the continent. It has shown a negative score for a long time, reflecting worries. It’s expected to remain tick up from -11 to -10 this time.
   2. Flash PMI: Tuesday – begins in France at 7:00, continues in Germany at 7:30 and ends in the figures for the whole continent at 8:00. All the indicators, for both manufacturing and services sectors in both regions, are above the critical 50 point mark separating economic growth and squeeze. All of them are expected to make minor changes up or down. Of special note are the French manufacturing PMI which is lower than all the rest, at 55.4 (55.6 exp.) and the German services PMI which is likely to dip under the 60 point mark.
   3. Current Account: Tuesday, 8:00. Germany had a smaller surplus than expected, and this will likely push the figure for the whole continent lower, from a deficit of 0.7 to 2.3 billion. A surplus will boost the Euro.
   4. German PPI: Wednesday, 6:00. This important measure of inflation is moving higher at a faster pace during 2011, justifying the rate hike. A rise of 0.8% is predicted in producer prices, more than last month’s 0.7% that was inline with expectations.
   5. German Ifo Business Climate: Thursday, 8:00. This wide survey is highly regarded and almost always helps the Euro as it usually exceeds the average expectations and advanced higher. For a change, it’s predicted to dip this time from 111.1 to 110.9 points. A rise to 112 cannot be ruled out. Note that contrary to its business climate reports, the head of the Ifo think tank isn’t too optimistic when it comes to the debt crisis.
   6. NBB Business Climate: Thursday, 14:00. Last but not least, the small,yet important country of Belgium (2012 debt crisis?) reports its business climate figure. After advancing nicely, it’s now predicted to dip from 6.2 to 5.9, similar to the previous indicator.

* All times are GMT.

EUR/USD Technical Analysis

Euro/Dollar started the week with a drop to 1.4375, and marked a new line (didn’t appear last week). It then traded in a range between 1.4375 and 1.4520. All in all, it is little changed from last week.

Looking down, 1.4375 serves as immediate support, working as such several times just now. It’s followed by the previous one year high of 1.4282, that was a very tough resistance line, and now switches to support. Together with 1.4250, they form a region of support.

Lower, 1.4160 was pivotal when the pair traded in the previous lower range. It’s followed by the distinctive and tough 1.4030 line, which separated the different the different ranges Euro/Dollar traded in.

Further below, 1.3860, which was a peak early in the year and later worked as support is the next level. Next down the road, we encounter 1.3750, which worked as support last summer and also recently – working as a stepping stone.

There are many lines below, with 1.3440 being significant, but they’re quite far now.

Looking up, the pair is capped by 1.4520, which is the top border of the current range. Higher, 1.47 is a rather minor line of resistance, after working as support back in October 2009.

More serious resistance appears at 1.48 – this line provided support for many days at the end of 2009, and is of high importance if the pair reaches these levels. Just above the round number of 1.5020, resistance is found at 1.5020 – this line had the same role back then.

The ultimate line of resistance is the December 2009 peak of 1.5144. Beyond this line, we’re back to the highs of the summer of 2008, when oil was even higher than now, when the Euro passed the 1.60 mark.

I turn bearish on EUR/USD.

USD/CHF Outlook for April 18-22

After USD/CHF made a deep dive lower, the upcoming week doesn’t feature any important Swiss events, so this week’s outlook will focus on technicals. Here’s an updated technical analysis for USD/CHF.

The Swiss franc enjoyed a solid report by ZEW, showing strength in the economy, as well as a weaker US dollar. Will this continue?

USD/CHF daily chart with support and resistance lines marked. Click to enlarge:

USD CHF Chart April 18-22

USD/CHF Technical Analysis

USD/CHF began the week with a fall below the 0.9125 line (discussed last week), and couldn’t climb back above it afterwards. After the failed attempt, it continued falling, breaking below 0.90 and even dipping below 0.89 in a failed break.

Looking down, there aren’t too many lines. 0.89, that was tested again just now, is the historic low and provides very strong support. Below, this line, it’s unchartered territory.

Initial resistance is found at the round number of 0.90. This line quickly switched sides and worked as resistance just now. It is eyed by many.

Above 0.90, the piar finds resistance at 0.9125. This is a minor line that provided support twice in recent weeks, but was broken just now. It’s followed by 0.92 that held the pair at the beginning of March and at the end of February.

Moving higher, 0.93 was a bottom early in the year and is another round number. It works as  minor resistance. More significant resistance appears at 0.9370, which capped recovery attempts for quite a few days at the beginning of March.

Higher above we find 0.95 – it worked twice –  in October and December and now works as minor resistance. It’s followed by 0.96, which provided support at the beginning of the year.

Even higher, 0.9780 is a serious line of resistance – the highest level in 2011, challenged twice without success.

I am bullish on USD/CHF.

Despite recent drops on a recovery in oil prices, the Swiss franc is overvalued, and when the dollar will find a bottom, this is one of the first pairs to feel it.

Another opinion: FX Tech Strategy sees the USD/CHF resuming its long term downtrend.

Further reading:

NZD/USD Outlook –April 18-22

Inflation rate is the main event this wee. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD that manged to sneak to a three year high at the end of the week.

The New Zealand government’s Debt Management Office announced it plans to raise its borrowing by NZ$1.5 billion for the fiscal year to June 30 to NZ$16.5 billion ($12.9 billion). This is the second increase in borrowing in two weeks. The announcement raised strong investor demand.

NZD/USD daily chart with support and resistance lines on it. Click to enlarge:

NZD USD Chart April 18-22

   1. Inflation rate: Sunday, 23:45. New Zealand’s consumer price index rose 2.3% in the fourth quarter of 2010 from the previous quarter and gained 4 % from a year earlier. The reading was in line with expectations. The increase was attributed to a rise in goods and services tax (GST). A more modest rise of 1.0% is predicted.
   2. Credit Card Spending: Thursday, 4:00. New Zealand credit card spending rose 5.3% in February on a yearly base from 5.5% in the previous month. This increase was driven by the durables industry which gained 2.5 % and in retail increased 1.3 % during the month. The household sector purchases continue to be weak. A similar rise is expected now.

* All times are GMT.

NZD/USD Technical Analysis

The kiwi began the week quite easily, struggling with the 0.7824 line (discussed last week). It then made a move higher and gradually drifted above resistance lines, eventually breaking the 0.7974 line and closing just under the round number of 0.80.

Looking down, there are many lines now. The first and most prominent line was just broken – 0.7975, which was the peak in November. IT’s followed by 0.7875 which provided temporary support and later resistance, when the kiwi was trading higher at the beginning of November, and is a minor line of support now.

Lower, we meet the area of struggle – 0.7825, which held the pair twice in recent months and now has a more minor role.

Moving lower, we meet 0.7750. This was a peak resistance earlier in the year, remains a minor support line on the way down. It’s followed by 0.7655, which is a stronger line, after capping the pair in October and also a few months ago.

Moving lower, the next line of support is only at 0.7523, which is now only a minor line, after being shattered two weeks ago

Looking up, the lines are 3 years old –  81 was a peak back in 2007 and is the first high line. It’s followed by the all time high of 82.15 recorded in February and March 2008. This is the ultimate line of resistance.

I an bullish on NZD/USD.

The current rise of the kiwi is quite healthy. This rally began after New Zealand escaped a recession and as food prices rise. The break above 0.7975 is significant.

Further reading: