GBP/USD:The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy. A close back under 1.5750 will also suggest that the market has peaked out for now in favor of bearish resumption.

— Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Article source: http://www.dailyfx.com/forex/technical/home/analysis/gbp-usd/2012/02/06/gbp_techs.html

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and a daily close back above 77.00 will do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. Inability to establish back above 77.00 will however keep the focus on the downside and on a retest of the record lows.

— Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Article source: http://www.dailyfx.com/forex/technical/home/analysis/usd-jpy/2012/02/06/yen_techs.html

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3340, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months. A daily close back under 1.3025 would suggest that a lower top is now in place and open a more immediate bearish resumption.

— Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Article source: http://www.dailyfx.com/forex/technical/home/analysis/eur-usd/2012/02/06/eur_techs.html

• Euro remain relative underperformer and posts record lows on commodity crosses
• Yen finding offers against buck to avoid direct retest of record levels from October
• BOJ Shirakawa warns of the severity of deflation and Yen strength
• Aussie comes under a bit of pressure on softer retail sales data
• RBA set to meet early Tuesday and additional rate cut expected
• Moody’s warns of contagion to Asia as Eurozone crisis lingers on
• Key deadline for Greece on Monday which will have market moving influence

The market response to the solid US employment data on Friday was impressive, with risk correlated assets very well bid, led by gains in the commodity bloc currencies. The Euro however came under some intense pressure against the buck and was the standout underperformer on the day due to the ongoing crisis in the Eurozone and inability for officials to come up with a formal agreement on Greece. This resulted in a break to fresh record lows in some of the Euro/commodity crosses, with EUR/AUD and EUR/NZD coming under some intense pressure.

Elsewhere, the Yen has managed to find some offers ahead of its record highs against the buck, and it will be interesting to see if this trend reversal can persist. Clearly broader flows have forced the Yen to fresh record highs in recent months despite attempts by local Japanese officials to intervene on behalf of the currency. Most recently, BOJ Shirakawa has been on the wires saying that current deflation and the Yen strength are very “severe” and that steady policy needs to be implemented by investigating economic conditions.

Moving on, the Australian Dollar has come under some pressure on Monday along with most currencies, but has added reason for relative underperformance following the softer than expected retail sales data. The RBA is slated to meet on Tuesday and another rate cut of 25bps can be expected. A combination of the ongoing Eurozone crisis and some deteriorating local fundamentals are seen as the primary drivers for the additional accommodation. Moody’s has also been out on Monday warning that the sovereign debt crisis in the Eurozone has increased the threat of contagion to Asia which would expose the Australian economy.

Overall, we remain skeptical with the rally in risk correlated assets and see currencies and equities at risk for significant declines in the days ahead. We remain somewhat confounded with the performance in the US equity markets, with equities nearly back to the record highs from 2007 despite the global recession. For now, the FX market will be watching the developments out of the Eurozone, with Greek leaders needing to respond to Troika and international creditors today on the country’s austerity and structural reforms. Failure to do so will increase the probability for a default, which could come as soon as March according to the latest from EU Juncker.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3340, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months. A daily close back under 1.3025 would suggest that a lower top is now in place and open a more immediate bearish resumption.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and a daily close back above 77.00 will do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. Inability to establish back above 77.00 will however keep the focus on the downside and on a retest of the record lows.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy. A close back under 1.5750 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

— Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Article source: http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/opening_comment/2012/02/06/Eurozone_Needs_Greece_Resolution_to_Avoid_Real_Possibility_of_Default.html

• US Dollar Pushes Broadly Higher on EU Crisis Jitters, Unwinding QE3 Bets
• Euro Underperforms as Greece Comes Closest Yet to an Outright Default
• SP Futures Signal Risk Aversion, Merkel/Sarkozy Press Conference on Tap

The US Dollar (ticker: USDollar) soared in overnight trade, adding as much as 0.5 percent against its leading counterparts, as Greece struggled to come to an agreement that would pave for additional EU/IMF aid. The greenback found additional support as investors pared back expectations for additional Federal Reserve stimulus after last week’s rosy US employment report. The Euro underperformed, down as much as 0.8 percent.

Bad news began to pour out of Greece on Friday amid reports amid reports that all three of the parties in Greece’s ruling coalition have rejected deeper austerity measures required to receive the next tranche of EU/IMF funding before €14.5 billion in maturing debt comes due on March 20.Needless to say, this lays the groundwork for a Greek default.

In practice, that is not nearly as ominous of a prospect as it was even 2 months ago. The ECB has funneled close to half a trillion euro into the banks via its 3-year LTRO and has been dutifully buying other countries’ bonds, so the firewall against a massive credit crunch (especially given small the size of Greece’s economy) is arguably in place. That has not kept markets from entering panic mode amid rising uncertainty however, and more of the same seems likely as traders extrapolate the Greek scenario to other, larger countries.

Looking ahead, a decisive moment appears at hand, with Greek Prime Minister Lucas Papademos setting a 10:00 GMT deadline for party leaders to make a decision on the second bailout’s terms. German Chancellor Angela Merkel and French President Nicolas Sarkozy are scheduled to hold a joint press conference at 11:45 GMT, with traders on the edge of their seat in the meantime. SP 500 stock index futures are trading sharply lower in late Asian hours, hinting safe-haven demand will keep the US Dollar well-supported heading into European hours.

Asia Session: What Happened

Euro Session: What to Expect

Critical Levels

— Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

To be added to Ilya‘s e-mail distribution list, send a note with subject line “Distribution List” to ispivak@dailyfx.com

Article source: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2012/02/06/FOREX_Euro_Slumps_US_Dollar_Gains_as_Greece_Flirts_with_Default.html

• Euro remain relative underperformer and posts record lows on commodity crosses
• Yen finding offers against buck to avoid direct retest of record levels from October
• BOJ Shirakawa warns of the severity of deflation and Yen strength
• Aussie comes under a bit of pressure on softer retail sales data
• RBA set to meet early Tuesday and additional rate cut expected
• Moody’s warns of contagion to Asia as Eurozone crisis lingers on
• Key deadline for Greece on Monday which will have market moving influence

The market response to the solid US employment data on Friday was impressive, with risk correlated assets very well bid, led by gains in the commodity bloc currencies. The Euro however came under some intense pressure against the buck and was the standout underperformer on the day due to the ongoing crisis in the Eurozone and inability for officials to come up with a formal agreement on Greece. This resulted in a break to fresh record lows in some of the Euro/commodity crosses, with EUR/AUD and EUR/NZD coming under some intense pressure.

Relative performance versus the USD Monday (as of 11:55GMT)

1. JPY -0.05%
2. CAD -0.41%
3. GBP -0.42%
4. NZD -0.63%
5. AUD -0.64%
6. CHF -0.76%
7. EUR -0.90%

Elsewhere, the Yen has managed to find some offers ahead of its record highs against the buck, and it will be interesting to see if this trend reversal can persist. Clearly broader flows have forced the Yen to fresh record highs in recent months despite attempts by local Japanese officials to intervene on behalf of the currency. Most recently, BOJ Shirakawa has been on the wires saying that current deflation and the Yen strength are very “severe” and that steady policy needs to be implemented by investigating economic conditions.

Moving on, the Australian Dollar has come under some pressure on Monday along with most currencies, but has added reason for relative underperformance following the softer than expected retail sales data. The RBA is slated to meet on Tuesday and another rate cut of 25bps can be expected. A combination of the ongoing Eurozone crisis and some deteriorating local fundamentals are seen as the primary drivers for the additional accommodation. Moody’s has also been out on Monday warning that the sovereign debt crisis in the Eurozone has increased the threat of contagion to Asia which would expose the Australian economy.

Overall, we remain skeptical with the rally in risk correlated assets and see currencies and equities at risk for significant declines in the days ahead. We remain somewhat confounded with the performance in the US equity markets, with equities nearly back to the record highs from 2007 despite the global recession. For now, the FX market will be watching the developments out of the Eurozone, with Greek leaders needing to respond to Troika and international creditors today on the country’s austerity and structural reforms. Failure to do so will increase the probability for a default, which could come as soon as March according to the latest from EU Juncker.

ECONOMIC CALENDAR

TECHNICAL OUTLOOK

EUR/USD: Although gains in this market have been quite impressive in recent days, the price action is still classified as corrective with the market locked in a broader underlying downtrend. From here we would still leave the door open for additional upside to test the 100-Day SMA by 1.3340, but any additional gains should be well capped below 1.3500 on a daily close basis in favor of the formation of the next major lower top ahead of bearish resumption. Ultimately we see risks for a move back below the 2012 lows at 1.2620 and towards the 1.2000 area over the coming months. A daily close back under 1.3025 would suggest that a lower top is now in place and open a more immediate bearish resumption.

USD/JPY:The market could once again be looking to carve an interim base after setbacks stalled shy of the record lows from October by 75.55. A bullish reversal day from last Friday has shown some decent follow through and a daily close back above 77.00 will do a good job of alleviating immediate downside pressures and reintroducing longer-term basing prospects. Inability to establish back above 77.00 will however keep the focus on the downside and on a retest of the record lows.

GBP/USD: The latest break back above 1.5800 now compromises a multi-week consolidation, with the pair now looking to break towards next key resistance by 1.6000. However, despite the upside move, we see any additional gains from here as limited and would look for a topside failure somewhere ahead of 1.6000 in favor of a bearish resumption. Daily studies confirm and look stretched and selling rallies above 1.5900 over the coming sessions is the preferred strategy. A close back under 1.5750 will also suggest that the market has peaked out for now in favor of bearish resumption.

USD/CHF: Although our overall outlook remains intensely bullish, the market is in the process of some interday consolidation before the next major upside extension beyond 0.9600 and towards parity. However, with the latest consolidative declines now finally testing the 100-Day SMA, any additional downside should be limited in favor of a fresh upside extension. Ultimately, only a daily close back below 0.9000 would give reason for concern. Alternatively, a close back above 0.9250 would alleviate immediate downside pressures and reaffirm outlook.

— Written by Joel Kruger, Technical Currency Strategist

To contact Joel Kruger, email jskruger@dailyfx.com. Follow me on Twitter @JoelKruger

To be added to Joel Kruger’s distribution list, send an email with subject line “Distribution List” to jskruger@dailyfx.com

Article source: http://www.dailyfx.com/forex/technical/article/morning_slices/2012/02/06/Investors_Still_Waiting_on_Greece.html

Forex trading crowds continue to buy into US Dollar (ticker: USDOLLAR) losses against the Euro, British Pound, Japanese Yen, Swiss Franc, and Canadian Dollar. We continue to call for fresh lows as our own Dow Jones FXCM Dollar Index trades near its lowest since November and remains at risk of further losses.

The pace of USD buying has somewhat slowed, which suggests that the rate of US Dollar declines could likewise moderate. Yet we see little risk of imminent reversal, and consistent crowd sentiment leaves us in favor of further weakness.

We will keep a close eye on the Dow Jones FXCM Dollar Index for any signs of potential reversal. Yet the Dollar’s break below important support suggests that we could see fresh Greenback losses before any real chance of reversal.

View an FXCM Expo presentation on the Speculative Sentiment Index for better understanding on how we use it in our trading.

How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

— Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to drodriguez@dailyfx.com

Contact David via Twitter at http://www.twitter.com/DRodriguezFX

Article source: http://www.dailyfx.com/forex/technical/ssi/table/2012/02/02/ssi_table_story.html

EURUSD – Trading crowds turned aggressively short the Euro against the US Dollar as the pair broke above 1.2700, and fairly consistent selling suggests that the EURUSD could yet trade to further highs. The pair has recently consolidated and has yet to break convincingly above the psychologically significant $1.3200 mark. Yet the trend favors further short-term gains and trading crowd sentiment leaves us in favor of further highs.

Our SSI ratio of long to short positions in the EURUSD stands at -1.67 as nearly 63% of traders are short. Although past performance is no guarantee of future results, such one-sided extremes can often come at major turning points.

Near-term resistance remains at recent multi-month peaks of $1.3220, while support is at 2/1 lows of $1.3025. The next move may be pivotal, and we expect that a break to further highs remains more likely.

How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

— Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to drodriguez@dailyfx.com

Contact David via Twitter at http://www.twitter.com/DRodriguezFX

Article source: http://www.dailyfx.com/forex/technical/ssi/eur-usd/2012/02/02/ssi_eur-usd.html

GBPUSD – Forex trading crowds have turned aggressively short the British Pound against the US Dollar since it traded above $1.5400, giving us consistent contrarian signal that the GBPUSD may in fact continue onto fresh highs.

Our SSI ratio of long to short positions in the GBPUSD stands at -2.37 as nearly 70% of traders are short. It is worth noting that short interest is down an important 38% since last week, while long interest fell a lesser 11% through the same stretch. The significant week-over-week slowdown in selling warns that the pace of gains may slow.

Yet trading crowds remain aggressively net-short, and we see few signs of imminent reversal. Our bias remains bullish until further notice.

How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

— Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to drodriguez@dailyfx.com

Contact David via Twitter at http://www.twitter.com/DRodriguezFX

Article source: http://www.dailyfx.com/forex/technical/ssi/gbp-usd/2012/02/02/ssi_gbp-usd.html

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is 0.15 percent lower from the open after moving 63 percent of its average true range, and the greenback may continue to push lower ahead of the highly anticipated Non-Farm Payrolls report as it continues to trade within the downward trending channel carried over from the previous month. However, as the world’s largest economy is expected to add another 145K jobs in January, the ongoing improvement in the labor market should help to increase the appeal of the USD, and index could be putting in a short-term bottom around 9,700 as there appears to be a bullish divergence in the 30-minute relative strength index.

Indeed, Fed Chairman Ben Bernanke maintained a cautious outlook for the world’s largest economy amid tight credit conditions paired with the protracted recovery in the labor market, while the central bank head expectations inflation to stay subdued in light of the ongoing slack within the private sector. Nevertheless, U.S. policy makers spoke out against the zero interest rate policy, stating that the very accommodative stance curbs incentives to save while raising the risk for another asset bubble, and the central bank may come under increased scrutiny should the FOMC look to expand its balance sheet further. In light of the recent developments, it looks as though the Fed will maintain a wait-and-see approach throughout 2012, and we should see the central bank soften its dovish tone for monetary policy as the more robust recovery dampens the risk of a double-dip recession. Nevertheless, we expect to see a rebound in the USD as long as the relative strength index holds above 30, and the non-farm payrolls report on tap for Friday could serve as a catalyst to strengthen the dollar as it raises the outlook for growth and inflation.

The U.S. dollar continued to weaken against its major counterparts, led by a 0.21 percent in the Australian dollar, while the Japanese Yen continued to gain ground despite speculation for a currency intervention. Indeed, the DailyFX Speculative Sentiment index for the USD/JPY advanced to 16.89 as the retail trading crowd sees Japanese policy makers increasing their effort to stem the recent appreciation in the local currency, but it seems as though the Bank of Japan will continue to sit on the sidelines as the central bank wants more time to assess the potential impact to the real economy. As the USD/JPY fails to break below 76.00, the risk of seeing an intervention has certainly diminish, and we should see a near-term correction in the exchange rate as the relative strength index holds above oversold territory.

— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong

To be added to David’s e-mail distribution list, send an e-mail with subject line “Distribution List” to dsong@dailyfx.com.

Join us to discuss the outlook for the major currencies on the DailyFX Forums

Article source: http://www.dailyfx.com/forex/fundamental/us_dollar_index/daily_dollar/2012/02/02/USD_Heavy_Ahead_Of_Non-Farm_Payrolls_Intervention_Threats_Subside.html