Euro hot helped by drop in German Ifo
German July Ifo Business Confidence index dropped from 106.8, a 15 year high, to 105.6, below consensus of 106.0. Euro has been dropping against dollar since edging higher to 1.2706 on Monday and continues to trade with an undertone. While it’s receiving no boost from the Ifo confidence index, further weakness cold be seen to retest last week’s low of 1.2457.
On the other hand, the Japanese yen was boosted higher today on widening trade surplus. Both exports and imports climbed to third highest on record. Meanwhile, domestic demand remains firm. Despite missing forecast of 833.2b yen, trade surplus still managed to widen to 807.9b yen. Exports gained 14.4%, with imports rose 18.2%. Also, yen is lifted by hawkish comments from BoJ board member Miyako Suda that it’s wrong “to determine there won’t be any rate increases” by year-end.
Australian Q2 Consumer Prices came in much higher than expected, increasing 1.6% QoQ and 4.0% YoY, comparing to expectation of 1.0% QoQ and 3.4% YoY. Speculation increases for further 25bp hike next week to 6%. Aussie rises strongly to as high as 0.7580 so far.
EUR/USD
Daily Pivots: (S1) 1.2537; (P) 1.2604; (R1) 1.2644
EUR/USD’s break of mentioned 1.2584 cluster support indicates the rebound from 1.2457 has made a top at 1.2706 after testing 1.2707 fibo resistance (61.8% retracement of 1.2861 to 1.2457). At this point, bias will remain on the downside as long as EUR/USD stays below 1.2671 resistance and further weakness is expected to follow to retest 1.2457 low.
In a bigger picture, since weekly MACD’s turn below signal line is slightly favoring the case that corrective fall from 1.2978 represents consolidation to the whole medium term rally from 1.1639. A fall below 1.2457 will strongly suggest that price actions from 1.2978 is developing into larger consolidation and further weakness could be seen. But still, medium term bullishness will remain as long as downside is contained by key cluster support of 1.2322 (50% retracement of 1.1639 to 1.2978 at 1.2309).
On the upside, above 1.2671 will indicate the fall from 1.2706 has completed. Break of 1.2707 (61.8% retracement of 1.2861 to 1.2457) will start to argue that the whole corrective fall from 1.2978 has completed with three waves down to 1.2457 and bring short term falling trend line (from 1.2978 to 1.2861, now at 1.2798) into focus.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui (Shing) is the founder and CEO of www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.