News Column

Forex: Euro May Rebound in Quiet Trade, Offering a Short Trade Setup

May 11, 2014

Ilya Spivak

Talking Points:



  • Euro May Lead Amid Correction, Offering a Short Trade Setup
  • Japanese Yen Soft in Asia as Nikkei 225 Futures Gap Upward
  • New Zealand Dollar Rebounds After Last Week's Blood-Letting



    The economic calendar is quiet in European and US trading hours, offering little by way of market-moving event risk. That opens the door for corrective price action as investors digest last week's late surge of activity that took the CVIX index of currency market volatility to an eight-day high.



    The swift pickup in activity followed an unexpectedly dramatic ECB rate decision where central bank President Mario Draghi threatened possible intervention into the Euro exchange rate. Not surprisingly, the single currency came under broad-based pressure, and so may now lead the way upward amid a correction. We are looking for a selling opportunity.



    The Japanese Yen narrowly underperformed in muted overnight trade as Nikkei 225 futures gapped higher to start the trading week, undermining demand for the safe-haven currency. The New Zealand Dollar corrected upward having completed the largest five-day drop in three weeks on Friday.









    Asia Session



    GMT

    CCY

    EVENT

    ACT

    EXP

    PREV

    23:50

    JPY

    Current Account Total () (MAR)

    116.4B

    347.7B

    612.7B

    23:50

    JPY

    Adjusted Current Account Total () (MAR)

    782.9B

    -545.8B

    -36.1B

    23:50

    JPY

    Trade Balance - BOP Basis () (MAR)

    1133.6B

    -1125.4B

    -533.4B

    23:50

    JPY

    Bank Lending incl Trusts (YoY) (APR)

    2.1%

    -

    2.1%

    23:50

    JPY

    Bank Lending Banks ex-Trust (APR)

    2.2%

    -

    2.3%

    1:30

    AUD

    Credit Card Purchases (MAR)

    A$23.0B

    -

    A$21.4B

    1:30

    AUD

    Credit Card Balances (MAR)

    A$49.8B

    -

    A$50.2B

    1:30

    AUD

    NAB Business Confidence (APR)

    6

    -

    4

    1:30

    AUD

    NAB Business Conditions (APR)

    0

    -

    1

    3:00

    NZD

    REINZ House Price Index (MoM) (APR)

    0.1%

    -

    3.4%

    3:00

    NZD

    REINZ House Sales (YoY) (APR)

    -20.2%

    -

    -10.0%

    4:30

    JPY

    Bankruptcies (YoY) (APR)



    -

    -12.37%

    5:00

    JPY

    Eco Watchers Survey: Current (APR)



    45.0

    57.9

    5:00

    JPY

    Eco Watchers Survey: Outlook (APR)



    40.0

    34.7





    European Session



    GMT

    CCY

    EVENT

    EXP

    PREV

    IMPACT

    7:15

    CHF

    Retail Sales (Real) (YoY) (MAR)

    1.9%

    1.0%

    Low

    8:30

    GBP

    Lloyds Employment Confidence (APR)

    -

    -2

    Low





    Critical Levels



    CCY

    Supp 3

    Supp 2

    Supp 1

    Pivot Point

    Res 1

    Res 2

    Res 3

    EUR/USD

    1.3583

    1.3683

    1.3721

    1.3783

    1.3821

    1.3883

    1.3983

    GBP/USD

    1.6662

    1.6768

    1.6809

    1.6874

    1.6915

    1.6980

    1.7086














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    Source: DailyFx