2013.01.04: The big fall begins
EUR/USD
Yesterday we experienced a text book break of the lower boundary of the horizontal channel that contained the pair for the last period. After the break, price re-tested the support turned resistance and then continued lower, exhibiting clear seller control over the market.
Technical Outlook
Our bias on the pair is bearish at the moment and we base this on the recent break of the support formed at 1.3170 and also the decisive break of the 1.3140 support. Both are now resistance once again, confirmed by the re-test seen after the break. The next important support level is located at 1.3020 and although we don’t expect it to be hit today, we consider that to be the next short term target for the EUR/USD pair. As always, we must be aware of surprise moves above 1.3170 which would be indicative of indecision in the market, not necessarily an uptrend.
Fundamental Outlook
The attention today is focused on the United States as we expect the always important release of the Non – Farm Employment Change numbers at 1:30 pm GMT. Actual numbers higher than the expected ones are indicative of economic stability and even growth which usually translates into a strong currency for the country. Today’s expected number is 150K from a previous of 146K. At the same time, the US Unemployment Rate is released, but no change is expected: 7.7% from previous 7.7%. If the value will drop, that will be positively reflected in the currency. The final release of the day concerning the US Dollar is the ISM Non Manufacturing PMI (3:00 pm GMT) and a small decrease is expected: 54.2 from the previous of 54.7. Higher numbers than 54.2 can strengthen the US Dollar and drive the pair lower.
GBP/USD
The pair had a downward trajectory, just like its sister pair, EUR/USD. The support at 1.6175 crumbled under the pressure of the sellers and at the moment price is sitting on the support formed at 1.6140.
Technical Outlook
The bulls seem to have no answer at the moment and we expect lower prices for the pair. The level to watch is 1.6175 because it was not re-tested and another small move up to touch it is possible. In the event that price does not move up to touch the broken support turned resistance, the 200 Simple Moving Average could provide some support for the pair.
Fundamental Outlook
Our analyzed pair will be affected today by the UK Services PMI released at 09:30 am GMT. The value is expected to increase slightly (50.4 from a previous of 50.2) but the Pound will probably strengthen only if the value will be higher than 50.4. The important US events mentioned above will have a hefty impact on our pair as well.
Written by: Bogdan Giulvezan
The article above is based on the writer’s 4 year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view on the market.