Credit Suisse cuts UK growth forecast from 2.0% to 1.5%.

GBP/USD moves 3o points lower on the release.

Japanese machine tool orders 53.3% vs. 34.0% expected.

The market had a limited reaction to the release.

Japanese household confidence 35.3; worse than expected.

7-11 Calender

The Forex Week Ahead from FXDD

A look at the major releases and events for the current week.

To supplement the FXDD Webinar at 9:30 AM ET with Greg Michalowski.  To register please go to:

https://www1.gotomeeting.com/register/676215864

Euro Under Pressure as EU Meets

The European Council President Heman Van Rompuy has called a meeting to ‘coordinate’ what seems to be the continued contagion of the European Sovereign Debt issue as the regions third largest economy in Italy could be in trouble, after a sharp sell off in Italian assets on Friday. The spread on German Bunds to Italian 10yrs bonds continues to widen as the price of Italian paper decreases, thus raising yields through 5.25% toward a perilous area where financing at higher yields could put a lot more pressure on the Italian economy. It is important to note that Italy has the 2nd largest Sovereign Debt ratio in the region (behind only Greece.)

On the chart below we see the EURUSD pair is comfortably below the 100 day mavg and a break below the 1.4150 area where we see the trendline support and the 38.2% retracement brings the 1.39 handle, 200 day mavg and 50% retracement into play immediately.

Aussie Home Loans

Australian Home Loans expected to be up 4.5% in May fell below expectations, coming in at 4.4% (+4.8% prior.) The release won’t help the AUD as it continues to be under pressure to start the week, already softer on European Sovereign Debt concerns. Investment Lending picked up in May up 4.4% (-1.6% prior.)

Gold Strength Caps Off Steeply Bullish Week

Gold (daily chart) as of Friday (7/08/2011) has strengthened substantially for yet another day to cap off an entire week of bullish days. This significant strengthening occurs after price bounced off a strong confluence of support around 1475, which is a prior support/resistance level, a key 38.2% Fibonacci retracement of the last major bullish trend run, as well as the 100-period simple moving average. Currently, price action is approaching key resistance around 1550. In the event of a breakout above 1550, the most important resistance target immediately to the upside resides around the 1575-area all-time high. Downside support within the context of the current bullishness resides around the 1512 price region.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

Forex Wrap up Webinar Rebroadcast July 8th 2011

Forex Wrap up webinar takes place TODAY at 12:30pm.Watch the rebroadcast now

EURUSD 100 day MA approached at 1.4269

USD/JPY Drop Traverses Bullish Channel

USD/JPY (4-hour chart) as of Friday (7/08/2011) has been moving in a general consolidation framed by a slightly bullish channel. On the heels of the Non-Farm Payrolls report, price action dropped from the very top of this channel down to approach the very bottom before making a slight bounce. This drop occurs after price action was unable to sustain an upside breakout above a key bearish resistance trendline. In the event that bearish price action resumes with a breakdown below the current channel, a key downside target resides around the 79.50 price region, which represents the area of the significant low hit in early May.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

Moody’s questions if Italy can implement its austerity.

Italy has joined the fray in the EU problems today.

EURUSD continues fall in volatile trade as London looks to exit

The EURUSD has continued the fall after moving through the 1.4269 level (100 day MA a second time). The first time through bottomed at the 1.4256 level – rebounded to 1.4284 then fell again. The break below the 1.4269 level a second time was not met with dip buyers but found selling intensify.  The price continued through the 1.4246 level which is the 61.8% of the move up from the May low to the June high. A move above this level is now needed to change the bias.  The low for the day at 1.4204 is the next target on the downside.  Conditions are volatile as London and Europe look to exit for the weekend.