Forex Market Updates & Commentary

EURUSD off lows but approaches intraday resistance area
GBPJPY tests 38.2% retracement. Moves above 100 hour MA today.
SNB declines to comment on meeting and announcement on repegging
BOE Weale says there is appreciable risk of another recession
Unrealistic to expect EFSF to leverage up to 1 trillion.
Chatter in the market that the SNB is looking to raise EURCHF peg to 1.2500 at Dec meeting
EU Officials: Considering dropping private sector involvement in a new EU treaty revision
EURUSD makes new lows
Bank of America says that the breakup of the Euro is possible.
ECB’ Vicso says macro measures alone are not enough to turn the Italian economy around, must make structural reforms.
Italian retail sales (Sep) -0.4% vs. -0.2% expected (0.0% prior).
USD index rises to 79.39, highest level in 7 weeks.
The German federal gov’t and the country’s 16 states have agreed to balance their budget by 2014.
Chinese gov’t researcher sees 2012 GDP growth at about 8.5%, and CPI to rise 4.5%.
Spanish producer prices (Oct) 0.0% vs 0.2% expected.

EURUSD off lows but approaches intraday resistance area

Posted: 25 Nov 2011 06:35 AM PST

The EURUSD is off the lows reached at 1.32118 but is up testing the intraday resistance area at the 1.3257 to 1.3267 area. The 1.3257 was an earlier high. The 1.3264 level is the 38.2% of the days range and the 1.3267 is the 100 bar MA on the 5 minute chart (blue line in the chart above). There should be sellers against the level, with the potential for more upside momentum on a break.

The EURUSD has issues with the debt problems. Next week there are scheduled a number of debt auctions. There is an apprehension for investors to invest in Euro debt. The failure of the German auction earlier this week highlights that idea.

On the other side is the EU, ECB, IMF who know of the issues and are there to solve the problems. The EURCHF chatter may also provide some support (buying of that pair may come via the EURUSD). Weekends provide time to regroup and the weekend is here. The next upside targets would be the 1.3280 which is the midpoint of the days range.

So far, the fundamental solutions that are talked about turn out to be not doable (or have problems at least). The EFSF was going to leverage to over a trillion, then a trillion, now much less. There is chatter about privatization not working and/or a reworking via a change in the EU treaty. There is once again talk of selling of hard assets in Italy and Greece as a way to lower debt levels. Who is going to buy? I guess that is the theme. Who is going to buy whether it be debt or assets.

GBPJPY tests 38.2% retracement. Moves above 100 hour MA today.

Posted: 25 Nov 2011 06:24 AM PST

The GBPJPY is at a key level. The pair is testing the 38.2% of the move down from the most recent consolidation high from November 18th. That level comes in at the 120.261 level. The pair earlier moved above the 100 hour MA (blue line) at the 120.056 level. This level was tested in the last hour of trading and held.The last time the price closed above the 100 hour MA was back on November 9th. The break should be significant for the pair.

So the buyers above the 100 hour MA are nice to see. However, momentum needs to be developed above the next key resistance at the 120.26 level. If momentum cannot be found, the bears are likely to re-emerge. Other targets above include the 50% at 120.543, and the 200 hour MA at the 120.73 level (green line).

SNB declines to comment on meeting and announcement on repegging

Posted: 25 Nov 2011 06:11 AM PST

The SNB declines to comment on emergency meeting and announcement on a repegging the EURCHF at 1.2500. The move higher on the chatter, sent the pair up to the 38.2% of the last move lower. This level also corresponds with the 100 hour MA (blue line) and near the high area from yesterday. I am not surprised to see the sellers there as risk can be defined with a tight stop. Do not fade a move above this level however, with the next target being the 1.2330 and then 1.2350 area where the 200 hour and the 61.8% are found.

On the downside, I will be watching the 38.2% of the surge higher today. That level comes in at the 1.2288 level currently. The dip from the high came down to 1.2286 but found buyers.

BOE Weale says there is appreciable risk of another recession

Posted: 25 Nov 2011 06:08 AM PST

There is a limit to the rate in which the BOE can buy gilts (i.e. QE)

Unrealistic to expect EFSF to leverage up to 1 trillion.

Posted: 25 Nov 2011 05:59 AM PST

The report is Asia (read China) is very reluctant to invest in the EFSF Special Investment Vehicle. A more realistic number would be double according to sources.The EURUSD is moving back and forth as EURCHF talk and the reluctance to buy the EURO has the pair trading violently.

Chatter in the market that the SNB is looking to raise EURCHF peg to 1.2500 at Dec meeting

Posted: 25 Nov 2011 05:50 AM PST

This has sent the EURCHF to the upside. The price moved from 1.2248 to a high so far of 1.2296. The next key target will be the 38.2% of the move down from the November 21st high at the 1.2414. That level comes in at the 1.23115 price. Just above that is the 100 hour MA at the 1.2313.

On the downside, I will be watching the 1.22778 level (38.2% of the move up).

EU Officials: Considering dropping private sector involvement in a new EU treaty revision

Posted: 25 Nov 2011 05:41 AM PST

The private sector involvement included taking a 50% haircut on Greek bond holdings. I am thinking the EU would guarantee the payment instead.

The EURUSD is under pressure today as worries continue to hurt debt markets. Problems don’t disappear as there is a full slate of bill/bond auctions next week with Italy, Spain, France the highlights