AUD/USD Weekly Analysis (May 24-28)

Everything turned against the Aussie, and it closed a terrible week with a loss of about 550 pips. The upcoming week consists of 5 events that will move the Aussie, and an updated technical analysis for AUD/USD, now at lower ground.

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



Indications for a pause in rate hikes, lower inflation expectations, a drop in consumer confidence and the European debt issues (risk aversion), all hurt the Aussie, which needed (rumored) intervention to stabilize. Let’s start:

1. New Motor Vehicle Sales: Published on Monday at 1:30 GMT. The automotive industry is a strong one in Australia and moves the currency, especially as it comes on a rather empty calendar on Monday. Sales fell in the past three months after many months of rises. They’re expected to rise now.


2. MI Leading Index: Published on Wednesday at 00:30 GMT. This composite index from the Melbourne Institute, based on 9 indicators that most of them have already been released, rose by 0.5% last time, similar to previous months. A rise above 1% this time will push the Aussie higher.


3. Construction Work Done: Published on Wednesday at 1:30 GMT. This important quarterly indicator from the housing sector exceeded expectations in the past 3 quarters, with great leaps. Q4’s 2.6% rise will probably be followed by a 4.1% rise this time.


4. CB Leading Index: Published on Thursday at midnight GMT. Contrary to MI’s indicator, the leading index from the Conference Board dropped in the past two months. A rise is predicted this time. Note that this index is based on 7 indicators, rather than 9 in the previous one.


5. Private Capital Expenditure: Published on Thursday at 1:30 GMT. The amount of new capital / investments in Australia is a very important indicator, as it’s a quarterly one. After a drop of 5.2% in Q3, expenditure jumped by 5.5% in Q4. A milder rise of 2.6% is predicted this time.

AUD/USD Technical Analysis

The Aussie began the week by losing the 0.88 support line, that held it in recent weeks. It then lost the all-important 0.8567 line that was the lowest point since October and also the 2010 low, until this week. Trouble continued as the pair broke under the important 0.8240 line, which worked as a resistance and as a support line before AUD/USD went to higher ground. After bottoming out at 0.8071, it closed at 0.8308. A very exciting and awful week for the Aussie.

Many lines have been added on last week’s outlook. The current range for the pair is between the important support line of 0.8240 and the minor resistance line of 0.8477, which worked as a strong resistance line before the pair broke higher.

Lower, 0.8040 is the next line of support, serving as such long ago. Significant support can be found at 0.77, which was the place that the Aussie dropped from in the height of the financial crisis, back in October 2008. It also worked as a support line last summer.

Even lower, 0.7450, the place where the Aussie fell to during the crisis is another significant support line. It’s followed by 0.71.

Looking up, 0.8567 continues to be an important line. A break above this line will mean a strong correction. Above this line, 0.88 is the next resistance line, followed by 0.90, 0.9135 and the almighty 0.9327 resistance line. Note that most lines worked as support lines just a few weeks ago.

I’m neutral on the Aussie.

It’s drop last week was the biggest move since October 2008. On one hand, the loss of 0.8567 means bearish momentum, but on the other hand, it’s in oversold territory. The rate hikes worked so well, that the economy cooled down. It will take at least another week before the pair stabilizes and a new direction will be seen.

AUD/USD Weekly Analysis (May 24-28)

Everything turned against the Aussie, and it closed a terrible week with a loss of about 550 pips. The upcoming week consists of 5 events that will move the Aussie, and an updated technical analysis for AUD/USD, now at lower ground.

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



Indications for a pause in rate hikes, lower inflation expectations, a drop in consumer confidence and the European debt issues (risk aversion), all hurt the Aussie, which needed (rumored) intervention to stabilize. Let’s start:

1. New Motor Vehicle Sales: Published on Monday at 1:30 GMT. The automotive industry is a strong one in Australia and moves the currency, especially as it comes on a rather empty calendar on Monday. Sales fell in the past three months after many months of rises. They’re expected to rise now.


2. MI Leading Index: Published on Wednesday at 00:30 GMT. This composite index from the Melbourne Institute, based on 9 indicators that most of them have already been released, rose by 0.5% last time, similar to previous months. A rise above 1% this time will push the Aussie higher.


3. Construction Work Done: Published on Wednesday at 1:30 GMT. This important quarterly indicator from the housing sector exceeded expectations in the past 3 quarters, with great leaps. Q4’s 2.6% rise will probably be followed by a 4.1% rise this time.


4. CB Leading Index: Published on Thursday at midnight GMT. Contrary to MI’s indicator, the leading index from the Conference Board dropped in the past two months. A rise is predicted this time. Note that this index is based on 7 indicators, rather than 9 in the previous one.


5. Private Capital Expenditure: Published on Thursday at 1:30 GMT. The amount of new capital / investments in Australia is a very important indicator, as it’s a quarterly one. After a drop of 5.2% in Q3, expenditure jumped by 5.5% in Q4. A milder rise of 2.6% is predicted this time.

AUD/USD Technical Analysis

The Aussie began the week by losing the 0.88 support line, that held it in recent weeks. It then lost the all-important 0.8567 line that was the lowest point since October and also the 2010 low, until this week. Trouble continued as the pair broke under the important 0.8240 line, which worked as a resistance and as a support line before AUD/USD went to higher ground. After bottoming out at 0.8071, it closed at 0.8308. A very exciting and awful week for the Aussie.

Many lines have been added on last week’s outlook. The current range for the pair is between the important support line of 0.8240 and the minor resistance line of 0.8477, which worked as a strong resistance line before the pair broke higher.

Lower, 0.8040 is the next line of support, serving as such long ago. Significant support can be found at 0.77, which was the place that the Aussie dropped from in the height of the financial crisis, back in October 2008. It also worked as a support line last summer.

Even lower, 0.7450, the place where the Aussie fell to during the crisis is another significant support line. It’s followed by 0.71.

Looking up, 0.8567 continues to be an important line. A break above this line will mean a strong correction. Above this line, 0.88 is the next resistance line, followed by 0.90, 0.9135 and the almighty 0.9327 resistance line. Note that most lines worked as support lines just a few weeks ago.

I’m neutral on the Aussie.

It’s drop last week was the biggest move since October 2008. On one hand, the loss of 0.8567 means bearish momentum, but on the other hand, it’s in oversold territory. The rate hikes worked so well, that the economy cooled down. It will take at least another week before the pair stabilizes and a new direction will be seen.

GBP/USD Weekly Analysis (May 24-28)

A revised version on the GDP and 5 other events will shake the Pound, now at lower ground. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.

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



While the political uncertainty didn’t stay too long, the Pound’s situation is still dire. It’s fate cannot be detached from the fate of the Euro. Contagion also reached Britain. OK, let’s start:

1. Adam Posen talks: Starts speaking on Monday at 17:30 GMT. External BOE MPC Member Adam Posen already moved the Pound several times in the past, and he’ll have a chance to do so in his speech early in the week. Any hints about future rate hikes or the situation of the economy are likely to impact trading.


2. Revised GDP: Published on Tuesday at 8:30 GMT. Britain’s economy is still struggling. According to the initial release, Britain grew by only 0.2% in Q1. This was half of early expectations. The second release is expected to show a better picture – a growth rate of 0.3%. Any result will rock the Pound.


3. BBA Mortgage Approvals: Published on Tuesday at 8:30 GMT, and overshadowed by the GDP release. The British Bankers Association covers two thirds of all British mortgages, and releases this housing figure quite early. After losing the highs of 46K, the figure fell under 34K. It’s now expected to recover and rise to 38.3K.


4. CBI Realized Sales: Published on Thursday at 10:00 GMT. 160 retailers and wholesalers are surveyed for CBI’s important indicator. In the past three months, this number was positive, indicators higher sales volume. A small rise from 13 to 14 is predicted this time.


5. GfK Consumer Confidence: Published on Thursday at 23:00 GMT (midnight UK). Consumers’ pessimism worsened last month, with an unexpected drop to -16 points. 2,000 consumers are expected to show a bit less pessimism this time, with a rise to -15 points.


6. Nationwide HPI: Publication time unknown at the moment. Two straight months of rises have proved that the drop seen in January was a one time glitch. The UK’s second earliest house price report always rocks the markets. Another small rise of 0.5% is expected this time.

GBP/USD Technical Analysis

The British Pound reached fresh lows very early in the week, breaking the technical level of 1.44 and bottomed out only at 1.4230. It then recovered and closed at 1.4450.

The Pound’s range is now between 1.44, the previous major support line, and 1.45, which proved to be a new line of resistance. Note that some lines were added on last week’s outlook.

Looking up, the next line of resistance is at 1.4780, which held GBP/USD for several months. This is a strong line. Above, 1.4975 is a minor resistance line, followed by 1.5130, which worked as support just a few weeks ago. It’s followed by 1.5350, which worked as both support and resistance, and by 1.5520 which wasn’t broken in three months.

Looking down, the fresh 2010 low of 1.4230 is the next immediate support. Stronger support is found at 1.4130, which was a support line in April 2009. Further below, 1.38 also stopped the pair at the beginning of 2009, and is the next line of support. The ultimate support line is 1.35, which is the lowest level seen in over 20 years.

I remain bearish on the Pound.

A serious revision in GDP is necessary for the Pound to recover from the recent blows, but the European troubles will probably continue bringing it down.

GBP/USD Weekly Analysis (May 24-28)

A revised version on the GDP and 5 other events will shake the Pound, now at lower ground. Here’s an outlook for the British events and an updated technical analysis for GBP/USD.

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



While the political uncertainty didn’t stay too long, the Pound’s situation is still dire. It’s fate cannot be detached from the fate of the Euro. Contagion also reached Britain. OK, let’s start:

1. Adam Posen talks: Starts speaking on Monday at 17:30 GMT. External BOE MPC Member Adam Posen already moved the Pound several times in the past, and he’ll have a chance to do so in his speech early in the week. Any hints about future rate hikes or the situation of the economy are likely to impact trading.


2. Revised GDP: Published on Tuesday at 8:30 GMT. Britain’s economy is still struggling. According to the initial release, Britain grew by only 0.2% in Q1. This was half of early expectations. The second release is expected to show a better picture – a growth rate of 0.3%. Any result will rock the Pound.


3. BBA Mortgage Approvals: Published on Tuesday at 8:30 GMT, and overshadowed by the GDP release. The British Bankers Association covers two thirds of all British mortgages, and releases this housing figure quite early. After losing the highs of 46K, the figure fell under 34K. It’s now expected to recover and rise to 38.3K.


4. CBI Realized Sales: Published on Thursday at 10:00 GMT. 160 retailers and wholesalers are surveyed for CBI’s important indicator. In the past three months, this number was positive, indicators higher sales volume. A small rise from 13 to 14 is predicted this time.


5. GfK Consumer Confidence: Published on Thursday at 23:00 GMT (midnight UK). Consumers’ pessimism worsened last month, with an unexpected drop to -16 points. 2,000 consumers are expected to show a bit less pessimism this time, with a rise to -15 points.


6. Nationwide HPI: Publication time unknown at the moment. Two straight months of rises have proved that the drop seen in January was a one time glitch. The UK’s second earliest house price report always rocks the markets. Another small rise of 0.5% is expected this time.

GBP/USD Technical Analysis

The British Pound reached fresh lows very early in the week, breaking the technical level of 1.44 and bottomed out only at 1.4230. It then recovered and closed at 1.4450.

The Pound’s range is now between 1.44, the previous major support line, and 1.45, which proved to be a new line of resistance. Note that some lines were added on last week’s outlook.

Looking up, the next line of resistance is at 1.4780, which held GBP/USD for several months. This is a strong line. Above, 1.4975 is a minor resistance line, followed by 1.5130, which worked as support just a few weeks ago. It’s followed by 1.5350, which worked as both support and resistance, and by 1.5520 which wasn’t broken in three months.

Looking down, the fresh 2010 low of 1.4230 is the next immediate support. Stronger support is found at 1.4130, which was a support line in April 2009. Further below, 1.38 also stopped the pair at the beginning of 2009, and is the next line of support. The ultimate support line is 1.35, which is the lowest level seen in over 20 years.

I remain bearish on the Pound.

A serious revision in GDP is necessary for the Pound to recover from the recent blows, but the European troubles will probably continue bringing it down.

EUR/USD Weekly Analysis (May 24-28)

Another intense week ended with a significant recovery for the common currency. Will the recovery continue? Or was it just a temporary correction? Here’s an outlook for the events that will rock the Euro, and an updated technical analysis for EUR/USD.

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



The contagious debt problems sent the pair to four year lows, but it managed to end the week higher after the German parliament approved the huge bailout package. This week might be more stable… OK, let’s start:

1. Industrial New Orders: Published on Tuesday at 9:00 GMT. European manufacturers sent mixed signals in recent months. After last month’s nice rise in orders, 1.5%, expectations are for another rise, of 2.3% this time. Learning from the past, a drop won’t be a big surprise.


2. German GfK Consumer Climate: Published on Wednesday at 6:00 GMT. 2,000 German consumers are surveyed for this important indicator. After many months of stability, this indicator finally rose to 3.8 points, showing that consumers feel better about the economic situation. A small drop to 3.7 points is predicted this time. A bigger drop will probably be seen next time – representing the impact of the financial crisis.


3. French Consumer Spending: Published on Wednesday at 6:45 GMT. Also in Europe’s second largest economy, consumers showed growing confidence as their spending rose by 1.2% last time. This is expected to change now, with a drop of 0.5%.


4. NBB Business Climate: Published on Wednesday at 13:00 GMT. This wide survey of 6,000 businesses is highly regarded, despite coming from a small country – Belgium. The score improved to from -3.6 to -2.4 and is expected to edge up to -2.1. The improving negative score means that businesses are now less pessimistic. Also here, a negative change will probably seen next time.


5. German CPI: Published on Thursday. The different German states release their consumer price index throughout the day, building up the preliminary release. Inflation seemed to pick up two months ago, as prices rose by 0.5%, but last month’s drop of 0.1% showed that no big change is coming. A small rise of 0.1% is expected this time.

EUR/USD Technical Analysis

The Euro began the week with a quick deterioration below the “Lehman levels”, 1.2330 and even broke another technical level, 1.22, before making an impressing comeback and closing above 1.2520, at 1.2563.

The current range for the pair is between 1.2520, which held the Euro temporarily before a bigger collapse, and 1.2672, a new line (didn’t appear in last week’s outlook), that was the peak in the past week.

Looking higher, 1.2880 is the next line of resistance, being a significant line of support about one year ago. The next important line of resistance is 1.3114, which held the pair before it fell below 1.30.

Further resistance is found at 1.3267, which also had an important role as a support line. 1.3440 is the next hurdle, but it’s quite far.

Looking down, immediate support can still be found at the 2008 low of 1.2330. This is followed by the round number of 1.22, which worked as a support line back in 2006, and the fresh year-to-date low of 1.2144.

Even lower, the round number of 1.20 provides more support. Stronger support is found at 1.1820, which was a strong support line, and 1.1630, the lowest level since 2003. Low levels indeed.

I remain bearish on EUR/USD.

Despite the fresh optimism from the German approval, the markets are still far from stabilization. The Euro can experience more rounds of downfalls before settling down. Contagious diseases take time to cure.

EUR/USD Weekly Analysis (May 24-28)

Another intense week ended with a significant recovery for the common currency. Will the recovery continue? Or was it just a temporary correction? Here’s an outlook for the events that will rock the Euro, and an updated technical analysis for EUR/USD.

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



The contagious debt problems sent the pair to four year lows, but it managed to end the week higher after the German parliament approved the huge bailout package. This week might be more stable… OK, let’s start:

1. Industrial New Orders: Published on Tuesday at 9:00 GMT. European manufacturers sent mixed signals in recent months. After last month’s nice rise in orders, 1.5%, expectations are for another rise, of 2.3% this time. Learning from the past, a drop won’t be a big surprise.


2. German GfK Consumer Climate: Published on Wednesday at 6:00 GMT. 2,000 German consumers are surveyed for this important indicator. After many months of stability, this indicator finally rose to 3.8 points, showing that consumers feel better about the economic situation. A small drop to 3.7 points is predicted this time. A bigger drop will probably be seen next time – representing the impact of the financial crisis.


3. French Consumer Spending: Published on Wednesday at 6:45 GMT. Also in Europe’s second largest economy, consumers showed growing confidence as their spending rose by 1.2% last time. This is expected to change now, with a drop of 0.5%.


4. NBB Business Climate: Published on Wednesday at 13:00 GMT. This wide survey of 6,000 businesses is highly regarded, despite coming from a small country – Belgium. The score improved to from -3.6 to -2.4 and is expected to edge up to -2.1. The improving negative score means that businesses are now less pessimistic. Also here, a negative change will probably seen next time.


5. German CPI: Published on Thursday. The different German states release their consumer price index throughout the day, building up the preliminary release. Inflation seemed to pick up two months ago, as prices rose by 0.5%, but last month’s drop of 0.1% showed that no big change is coming. A small rise of 0.1% is expected this time.

EUR/USD Technical Analysis

The Euro began the week with a quick deterioration below the “Lehman levels”, 1.2330 and even broke another technical level, 1.22, before making an impressing comeback and closing above 1.2520, at 1.2563.

The current range for the pair is between 1.2520, which held the Euro temporarily before a bigger collapse, and 1.2672, a new line (didn’t appear in last week’s outlook), that was the peak in the past week.

Looking higher, 1.2880 is the next line of resistance, being a significant line of support about one year ago. The next important line of resistance is 1.3114, which held the pair before it fell below 1.30.

Further resistance is found at 1.3267, which also had an important role as a support line. 1.3440 is the next hurdle, but it’s quite far.

Looking down, immediate support can still be found at the 2008 low of 1.2330. This is followed by the round number of 1.22, which worked as a support line back in 2006, and the fresh year-to-date low of 1.2144.

Even lower, the round number of 1.20 provides more support. Stronger support is found at 1.1820, which was a strong support line, and 1.1630, the lowest level since 2003. Low levels indeed.

I remain bearish on EUR/USD.

Despite the fresh optimism from the German approval, the markets are still far from stabilization. The Euro can experience more rounds of downfalls before settling down. Contagious diseases take time to cure.