Stocks To Break Down And Dollar To Rally?
Posting gains over the week, price action for the Euro was much less dramatic than many of its counterparts. Ending the week at 1.3737, some 40 pips off of it’s highs, the EUR/USD held up well in a week where the key story centered around the strengthening of the US dollar.
While a general ‘risk on tone’ in the markets has so far tempered the current dollar rise, we could see it start to accelerate if Stock markets break down from current levels as the week progresses. Mondays German IFO Business Climate figures and CPI data could ignite this trend early.
A lot of US data is due for release this week. Traders will be watching closely figures for Consumer confidence, New Homes Sales and Durable Goods Orders to look for signs of a faltering recovery. Thursdays GDP figures will perhaps be the most important of the figures released this week, which are quickly followed by the monthly Pending Homes Sales.
The strong start to the year that the British Pound has shown came to an end last week. Falling for five consecutive days Cable now looks vulnerable to a more protracted downturn. Date due for release this week in the form of Quarterly and Year-on-year GDP figures are going to prove pivotal in determining the next move for this pair.
On the commodity markets both Crude and Gold look to have carved out important bottoms for now. Gains in both look likely this week as technical levels in both offer the potential for further gains this week.
Key News This Week
EUR/USD – In choppy price action the pair has moved higher though has failed to close above 1.3768. Former highs around 1.3830 are likely to mark the end of the current rally and precipitate a move lower back below 1.3680.
USD/JPY – With price holding above 101.63 on a closing basis we continue to look higher. Look for a move above 102.65-85 to confirm a bullish stance on the pair. 103.45 is the next level of resistance of note.
USD/CHF – Price has dipped back below the falling trend line which now stands at around 0.8915. A close back above this level is needed to see a break in the current downtrend. 0.8940 is also important resistance. Key support is 0.8797.
GBP/USD – Falling successively over the week, GBP/USD made a key day reversal after testing the 2011 high. 1.6600 provides an important level of resistance. Sentiment in this market looks poor. A break here suggests further falls back below 1.6500.
DOW – The index pulled back from last week’s high. 16000 proved to support with the Index ending the week at 16103. The broader technical outlook for the market remains bullish. However watch out for US fundamental data next week.
NASDAQ – The market pushed higher again over the week closing slightly off highs to end at 4263.3. The outlook remains bullish although we would expect some consolidation. 4200 and 4100 should contain any pullbacks as the Index consolidates.
FTSE – Big gains on the main UK Index see it testing recent highs. The rejection around the 6850 this level previously would lend us to believe that this week could see a pullback if an early break and close of this level is not seen early in the week.
Oil – We mentioned in the previous report that oil would need to close above $101 per barrel to confirm the bullish case. This it did ending the week at $102.13. Despite closing off of highs, the outlook remains constructive and we would look higher against the $100 per barrel level.
Gold – Moving higher over the week the metal failed to break $1340. Price is now pushing against a descending trend line that has controlled action since September 2012. A break of this level would confirm to go long on this market.
Major companies of interest to investors using Binary Options which are due for reporting this week:-
- Tuesday – Home Depot Group, GKN Persimmon
- Wednesday – Direct Line, ITV, Stagecoach, Taylor Wimpey, Weir
- Thursday – British American Tobacco, Kazakhmys, Premier Oil Royal Bank of Scotland, RSA, Salesforce.com, GAP
- Friday – Old Mutual, Pearson Rightmove, William Hill