USD/JPY Forecast: U Turn seems to be closer than expected

USDJPY 6th May, 2015

USDJPY Analysis

USD/JPY trend is not that clear during the last 2 weeks with limited tradable range from 118.40 to 120.50 but, this is normal when we are getting closer to important data release. Although, the same inner voice I’ve talked about in this post is still telling me that uptrend will resume soon but, I am still not convinced that this soon is not that close, it is not a near future. My technical overview is highlighting two strong resistance levels: 121.60 or 122.02. The support for USD/JPY can be found above these levels: 116.60 and 117.50. I am expecting short term downtrend by the end of this week, this depends on how the market will react with the NFP data.

Next Friday, Non-farm payroll data will be essential element for the US dollar watchers. I am expecting supportive data above 200K which might raise the expectations about raising the interest rate in June. I am not expecting any real surprises from Yellen’s speech or ADP Nonfarm employment data today.

The USD/JPY has the following major resistance and support levels:

  • RESISTANCE: 124
  • SUPPORT: 117.50

Breaking these levels in any direction will take us higher or lower.

My Daily BUY/SELL advice (50 pips stop loss applied):

  • Sell: at 121.40 – Take profit 120.40 (100 pips profits)
  • Buy: at 117.60 – Take Profit 118.60 (100 pips profits)
  • Buy: at 119.50 – Take Profit 120.10 (60 pips profits)

This review is valid during trading week: 5th-8th April, 2015

US early rate hike is good

isn’t April’s Fool: Early rate hike is good for the US economy!

Why does the Fed want to raise interest rate quickly?

Well, to understand this we have to zoom-out of the details of each economy for a while to see how world countries manage their local economies?

If we take 3 samples from the world economy and let’s pick: Japan, Eurozone and United states

In Japan, Bank of Japan offers (0.10%) interest rate and it maintained a plan to expand the monetary base at an annual pace of 80 trillion yen ($666 billion) from April, 2013

While in Euro Zone, European Central Bank offers (0.05%) interest rate and it announced an expanded stimulus program amounting to €60 billion ($69 billion) a month in asset purchases in an effort to revive the eurozone’s struggling economy till September, 2016

On the other hand, in United states. The Fed. tapered its (QE) stimulus program on October, 2014 and started to prepare the market for first-rate hike after keeping interest rate closer to 0% for years.

Let’s mix all the elements together and keep it very simple ..

Let’s say that these local economies are intersecting in international trade zone. Every economy is boosted by offering new money, low-interest rate and doing its best to keep inflation up to its targets.

In Japan, the inflation started to pick up however, it is not that strong to meet BOJ target till now. The reason behind this is low oil prices which might push BOJ to lower its inflation forecasts or give extra time for its inflation target to be achieved.

While in Europe, ECB just launched its QE program to encourage Eurozone members to revive their economies and between the lines to help Greece to get out its debts without suffering for long time (Read Quote#1). Eurozone still have at least 1 year till we can talk about inflation risk or even discuss whether economy started to pick up or not.

Quote#1: Weakened Euro

Weakened Euro is good for Greece because it implicitly means that Greece’s products and services are much cheaper for the foreigners and for the world. This help Greece to get out its financial problems by boosting up its economic activities. In addition, Liquidation for any foreign assets owned by Greece will get more Euros to Greece (~for example: US dollar saving account, foreign properties and foreign financial instruments owned by Greece worth more Euros than 6 months ago, from EUR/USD: 1.398 to EUR/USD: 1.0480 so, if you’ve 100$ in your pocket, they worth 71.5€ in the past and now they worth 95€)

On the other hand, the US economy is performing better as viewed by the Fed, Employment and home sales are moving forward and thats why they tapered the quantitative easing program. If we look to the US through non-risk taker(s) eyes, they would love to move funds, investments and capital to united states. (Read Quote#2)

Quote#2: Why does Investment move?

Funds, capitals and investments always search for better returns so, the money flows love to go to the higher return zone. In our article, US economy will be attractive economy for the capitals and investments. You’ve higher return on your capital, fund and investments. If you are not a risk taker, your returns in the US might be much higher than any other country.

.. & Early rate hike is good for the US economy

In the american case, the need for a rate hike seems to be so clear in yellen’s words and even in the fed minutes. However, the fed is still not-so-sure about how strong is the US economy and will it survive in a world of slow growth?

Based on the previously mentioned points, we are able to say that early rate hike is really good for the american economy and for the global economy too.

The only concern that we must concentrate on is how good the US economy performance is?

Solid employment, stable home sales and consumer spending backed with reliable data from industrial activities should be enough for the fed to press the hike button. This does not mean that US economy is moving backward. On contrary, Stronger dollar is rational power for the american economy and it opens the gate for cheaper imports and gives american investors better chances in foreign investments.

In addition, US market is not that weak and recent economic data showed that it is performing on a solid base to maintain economic growth for local industries and businesses.

Last thing, Experts are expecting that once US hits its inflation target, this will gradually export inflation to the other countries and thus, help the world to get out its deflationary period

Remember to keep sharing the useful knowledge

EUR/USD Forecast: Sideline VS. Downtrend

EUR/USD Forecast: 7th April, 2015

EUR/USD jumped directly to 1.1055 level to test it 3 times during March 2015. This was fast for my expectations and it actually changed my thoughts about the bulls of EUR/USD, they are stronger than everyone thought. USD was weaker due to the bad US economic data during the last 2 weeks and this was the main reason for this limited up-trend during the second half of March. I am expecting sideline moves for this pair in the next 2-3 days with a down-trend in the end, I am not recommending to trade EUR/USD really till things become much clear but, if you’ve to do that so, Short (selling) is your only option (~if it does not break 1.1055 level).

The EUR/USD still has a minor support at 1.0459 and it tested it once, I am still expecting another test for this support level. Federal Reserve System (Central bank of America) is still confusing the market about the timing of the first-rate hike, with weaker nonfarm payroll in March, everyone is pushing expectation forward from June 2015 to September 2015. Notice that Greece’s smoke is still there and will increase during the next 2 weeks. Watch out your steps because the EUR is ready to fall again!

The EUR/USD has the following major resistance and support levels:

  • RESISTANCE: 1.1055
  • SUPPORT: 1.0459

Breaking these levels in any direction will take us higher or lower.

My Daily SELL advice (30 pips stop-loss applied):

  • Sell at: 1.0455 – Take Profit 1.0400 (55 pips profits)
  • Sell at: 1.0860 – Take Profit 1.0760 (100 pips profits)
  • Sell at: 1.0800- Take Profit 1.0750 (50 pips profits)

QUICK HINT: EUR/USD is still dangerous pair, I recommend using very low leverage and do not risk more than 2% of your total equity in it. Remember to take profit quickly, I mean it again – QUICKLY!

This signal is valid during trading week(s): 7th-13th April 2015

EUR/USD is waiting the FED. statement tomorrow!

Eur/Usd 17th March, 2015

EUR/USD confirmed our expectations and answered our question in a previous post with a direct fall from 1.1172 to 1.0459 during the first 2 weeks of March, 2015.

ECB started its QE (~to buy a total of €60 billion a month in assets including government bonds, debt securities issued by European institutions and private-sector bonds). This directly means a weaker euro. The EUR/USD found a minor support at 1.0459 few days ago and it tested it once, we are expecting another test for this support level before trying any major resistance level. Federal Reserve System (Central bank of America) will release its monthly statement tomorrow 18th, March 2015 and every one is waiting any clue for the timing dilemma of the american interest rate hike. With all these elements on the table, I am not feeling comfortable to trade this pair the next few hours especially with Greece’s smoke is everywhere in the air.

The EUR/USD has the following major resistance and support levels:

  • RESISTANCE: 1.0755
  • SUPPORT: 1.0459

Breaking these levels in any direction will take us higher or lower.
My Daily SELL advice (30 pips stop loss applied):

  • Sell at: 1.0455 – Take Profit 1.0400 (55 pips profits)
  • Sell at: 1.0755 – Take Profit 1.0725 (30 pips profits)

QUICK HINT: EURUSD is still dangerous pair, I recommend using very low leverage and do not risk more than 2% of your total equity in it.

This signal is valid during trading week: 17th-20th March 2015