EURUSD approaches the 100 hour MA resistance target

The 1.3409 level  is the 100 hour MA . The 38.2% of the last trend leg down comes in at the 1.3403 level.  The price is testing the 38.2% with the 100 hour MA not far away.  A break above these levels is needed to wrestle some control away from the bears today.

The EURUSD may be influenced by the German vote on the Greek bailout today.  That vote is expected later this morning. The German PM Angela Merkel has expressed her desire to pass the vote.

US Pending Home Sales better at +2%

The YoY rose by 10.3%.

Pending Home Sales are a precursor to Existing Home Sales as they represent contracts signed.  The better employment situation in the US is triggering the better tone in the housing market. Interest rates are low. Prices are down and combined with better employment is the recipe for buying.

The better data has helped push the USDJPY back higher with the pair testing the underside of the broken trendline at the 80.399 currently. Staying below that level keeps the bears in charge. A move above could lead to further buying intraday.

USDJPY moves below 100 hour MA for the 1st time since Feb 3rd

The USDJPY has moved below the 100 hour MA for the first time since February 3rd at the 80.30 level. The price has also moved below a trendline support line at the 80.38 level. These levels will now be eyed as topside resistance today. The 200 hour MA (green line in the chart above) will now be target support for the pair. That level comes in at the 79.688 level. The 38.2% of the rally up from the Feb 1 low comes in at the 79.499 level.

Interim support may come in at the low from last Thursdays trading at the 79.85 area. The 100 hour MA was tested at this level and the level also corresponded with the high from Feb 21.

The USDJPY has moved steadily higher over the month of  February with 13 of 18 trading days moving higher. Today is the largest 1 day decline for the pair over that time period.

Merkel says idea of swift solution to Greek crisis is an illusion

• Road is long and not without risk
• EU commission will boost control measures in Greece
• IMF role is indespensible and is a precondition for Germany
• Greece exit would come with unforeseeable risks
• She urges the lawmakers to pass the second bailout

The German Parliament is debating the bailout of Greece.  A vote is expected in a few hours.

EURUSD tests trendline support

The EURUSD has continued the move lower in  early NY trading and has moved down to test the trendline support at the 1.3370 level.  There should be some intraday buying against the trendline which extends up from the Feb 16th low, with stops on a break below.

A move below this level will target the spike high from last Thursday at the 1.3341 level and below that the 100 hour MA at the 1.3320 level currently (see chart above).

On the topside the market will be eyeing  the 1.34097 which is the 38.2% of the move down from the last leg down (see chart below).  Staying below this level will keep the bears firmly in charge as skepticism from last weeks gains, fades.

The 100 day MA comes in at the 1.3305 level today. Last week the price moved above this MA for the 1st time since October 31st 2011 and moved higher.  A move back below this key moving average will be a failure.  Keep this level in mind as the trading progresses this week.

EURUSD falls on lack of G20 help. JPY moves higher bucking the dollars strength today.

Not much help for the EU from G20. Greece implementation eyed. Yen moves higher, bucking the dollar strength trend today

The G20 over the weekend deferred aid to Europe until the details of the European rescue fund can be decided. That fund, which is looking to combine the funds left in the Europeans Stability Mechanism (or ESM) into the European Facility Stability Fund (or EFSF), would create a 1 trillion dollar pool of resources that would then be combined with an additional 1 trillion from the IMF, to put a ring or firewall around the troubled nations within the EU.  The implementation still requires Germany’s well wishes as well as others coming together including Greece itself. They still need the approval of their proposed debt restructuring with the Private Sector (so called PSI) which calls for a 53% haircut on existing debt. Moody’s chief economist said that implementation risks for reform remain very high.  So although steps were made last week that sent the EURUSD to the highest levels since December 1st on Friday (at 1.3485), the new week is starting with a move lower in the pair. The price is back below the 50% of the move down from the October 2011 high to the January low (at the 1.34344 level).  Staying below that level today, will be eyed by the bears today.  In Australia, PM  Julia Gillard retained her position after soundly defeating former PM Rudd.  The AUDUSD has moved lower on the day but has recovered some of the losses.  The pair remains in consolidation range since the beginning of the month.  The dollar overall moved higher against all the major currencies except the Japanese Yen.  The USDJPY has been moving higher with 13 of 17 days in the month of February moving to the upside.  Today, the price nearly reached the 61.8% Fibonacci retracement of the move down from the 2011 high at the 81.708 level (high reached 80.645), before finding wiling sellers.  The  price decline is the steepest since the beginning of the rally on February 1st and has seen the price move back down to test the 100 hour MA at the 80.30 level currently. This level will be eyed in the NY session today. A move below could lead to some further selling pressure. US Pending Home sales will be released at 8:30 AM today with expectations of a 1% gain vs a 3.5% decline last month.

The Forex Week Ahead webinar will be held at 9:30 AM today. To register please go to: https://www1.gotomeeting.com/register/442410992

The Forex Week Ahead

I will review the key releases and events in “The Forex Week Ahead” webinar, Monday at 9:30 AM ET.

To register, click here: https://www1.gotomeeting.com/register/442410992