China’s PMI Manufacturing
China’s PMI Manufacturing and HSBC’s reading both came in weaker from the prior month, with PMI also coming in below forecast at 52 versus the 55.2 expectation and 55.8 reading the prior month. After having the market grid higher following the better housing number out of the UK, the Euro has moved lower across the board. The EUR/USD pair broke the 1.36 handle and is now trading at that figure. On the chart below we see the pair used the 61.8% retracement as support last week and a clear break below could bring the March ’09 lows into play.
UK Hometrack Housing Survey
The UK Hometrack Housing Survey came out significantly better for February than the prior month, helping cable move north as the Nikkei opens marginally higher and US equity futures are maintaining their bid. The month over month survey came out +0.3% (0.1% prior) and the year over year was +0.4% (-0.8% prior.) The GBP/USD gapped lower on the open, but even with this positive release was unable to break above the 1.52 handle.
RBA Governor Speaks in Melbourne / Infaltion Report
RBA Governor Stevens had the following comments in a speech in Melbourne Australia, the markets has had a limited reaction to this comments:
- Wouldn’t hurt Australia Banks to have more capital.
- Australian Banks have weathered the global crisis well.
- ‘Foolish’ to think everything in Australia is peachy.
- Australia can come out of the crisis better than most.
- Australia’s action during the crisis worked.
Also, released was the TD Securities February inflation index rose 1.9% year over year and 0.1% month over month, both lower than the prior reading.
AIG Performance of Manufacturing Index
The AIG Performance of Manufacturing Index for February came in stronger than the prior month at 53.8 versus 51 in January. The market has had a limited reaction to this release as a quiet start to the trading week has the risk and commodity pairs lightly better bid.
The FXDD Weekend Forex Commentary is available for viewing
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Forex Midday Report – Feb 26
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….and EURUSD falls sharply
I guess it is Friday and it is snowing and staffs might be light and London is gone, but the EURUSD just took a nose dive to the downside. The price action fell through our support level at the 1.3625/27 level and all the way down to the 100 bar MA on the 5 minute chart That level comes in at 1.3601 and the price bottomed at 1.3603. At least dip buyers against are key moving average are still in the office.
The bounce has moved up off the support level, but now has the 1.3627 level as topside resistance. The holding of the 100 bar MA is positive, the breaking and sharp fall below 1.3627 is not. A move back above this level is needed to confirm the skittish bullish bias (we are still above the 100 bar moving averages on the 5 minute and hourly charts) but of course, no one likes to see the choppy conditions.
Good news for the bears (sort of). Bad news for the corrective bulls.
EURUSD squeezes higher.
The EURUSD continues the squeeze higher as some of the worry about the Greek situation permeates into the market. There is a rumor of a German owned back providing relief. This, coupled with Friday squaring, has the EURUSD the currency of choice – to the upside.
With the market now above the 100 and 200 hour MA, where can the pair go? If the price is able to hold above support levels like the 1.3627 level and the 200 hour MA at the 1.3588 level, the price does have the potential to extend toward the 1.3800 level and then the 1.3878 level. The 1.3800 level is the 50% midpoint of the 2009 trading range (see chart below). The 1.5878 level is the 38.2% retracement of the move down from the 2010 high of 1.4579 (see chart above).
When the market turns the potential can take traders by surprise. However, the EURUSD has moved down over 1100 pips since January and a simple correction of 300-400 pips is not out of the question. It is important to follow the technicals as nothing is guaranteed. So the price and key levels like moving averages will tell the story. That story started yesterday when the price showed signs of bottoming and today, the stories chapters are unwinding further (see prior post from yesterday and watch the Rebroadcast of the webinar).
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