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Presented by: Nick Nasad, Chief Market Analyst and Fan Yang CMT, Chief Technical Strategist

Start Time: Thursday, May 17, 8AM ET (12:00GMT, 13:00 GMT)

Overview: Join Nick Nasad, Chief Market Analyst and Fan Yang, Chief Technical Strategist and CMT, as we examine the pre-NY market action as well as digest the overnight news, fundamental releases and key price action. We will also discuss some trade planning strategies and assess reward to risk profiles for these setups during the session…

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Growth focused assets and riskier currencies are struggling to consolidate as we continue to have Euro-zone angst, which was highlighted by a decision by the ECB to cut off some Greek banks from regular liquidity operations. Since the Greek election, Greeks have withdrawn 1.2 billion euros from Greek banks, around 0.75% of deposits. At the same time, Spain’s PM Rajoy warns that Spain might be shut out of funding markets and there was news that the rescued Spanish bank – Bankia – saw a billion euros worth of deposits withdrawn last week. Overall the European session saw further risk aversion and gains for the USD and JPY.

ECB Cuts Off Several Greek Banks

The ECB stopped offering liquidity to some Greek banks it does not consider solvent.

• “As recapitalization wasn’t in place, the ECB stopped monetary policy operations,” a euro zone central bank source told Reuters.
• That meant the affected banks can no longer offer assets to the ECB as collateral for loans, and would have to seek costlier emergency financing from the Bank of Greece.
• For the time being they can borrow from ELA (emergency liquidity assistance).
• “Once the recapitalization process is finalized, and we expect this to be finalized soon, the banks will regain access to standard Eurosystem refinancing operations,” the ECB said in an emailed statement.

Spain and Italy Sees Yields Rising

The important thing here is that this goes beyond Greece and focuses on Spain then Italy.

• Spanish yields near 6.40%.
• Spreads on Spanish 10-year bonds over Bunds also briefly hit a euro-era high, climbing above 500 basis points at one point in the day.
• This is an important level as it could mean the imposition of higher margin requirements to trade these instruments. Such a decision could see margin calls and further dumping of Spanish debt.
• Italian yields heading towards 6%.

Nick Nasad is a macro economist, market analyst, and educator; and one of the main contributors to FXTimes.com – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis,

Previous: EUR/USD – Reward to Risk Assessment for Buying Near the 1.2625 Support (5/16)

The EUR/USD broke into new lows for the week, coming down to the 1.2660 level at the beginning of the 5/17 US trading session. The 1.2625-1.2660 support area has been documented at FXTimes on the daily chart. On the 4H chart, we see that the market could be already developing a bullish divergence with the RSI (lower price low, higher RSI low), as well as a bullish divergence with the Bollinger Band (lower price low, but second price low failing to break across the band after the previous low did).
*The bollinger band here is 3 standard deviations from the 200SMA.

The daily chart shows that the free fall might be slowing. For counter-trend traders this offers a better scenario to go long here than trying to catch a falling knife. The buy-EUR/USD-trade-plan here should have a stop below 1.26 and a conservative target to 1.28, with an aggressive target to 1.29.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for EUR/USD, and other currency pairs.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

5/17 – Banks are closed for European nations observing Day of Ascension, a Catholic holiday that commemorates the rise of Jesus into heaven after being crucified. US banks however are open.

During the European session, there was certainly a continuing ascension of the safe haven currencies – USD and JPY as the market continues to unwind risk.

EUR/USD saw another corrective rally attempt before that stalled in the 5/17 Asian session, and then fell sharply again in the European session. Gearing up for the US session, the market is trading it at about 1.2680. The 1.2625 support is still in sight .

EUR/JPY broke down new lows and continues its March at least toward the 100 psychological level.

The sterling (GBP), which was resilient before the Bank of England inflation report during the 5/16 session, is now catching up to the slide against USD and JPY. GBP/USD broke into new lows trading near 1.5850 ahead of the US session. The 1.5780-1.58 area is full of support pivots and the 200-day SMA.

GBP/JPY also broke into new lows, 126.50-126.60 will be a support area to be tested in the US session.

Commodity currencies are also sliding sharply against our safe havens. USD/CAD had opened up 1.03 after a break above 1.0055. It is making new highs since the break, now trading around 1.0140 going into the US session. AUD/USD failed to push above the 5/16 high during the 5/16 Asian session, and fell to 0.9910 during the European session.

AUD/JPY continues to consolidate with resistance near 80.00 and support near 79.40. It basically fell from resistance to support during the 5/16 Asian-European session. Bearish continuation has room toward 77.00 handle and support pivot from Dec. 2011.

CAD/JPY has been consolidating, and fell to the consolidation low/support near 79.00. 78.00 is the next short-term target.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for the USD, JPY and other currencies.

Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

The preliminary reading of 1.0% Q1 growth was pretty much in line with the 0.9% expectation. This y/y number is 4.1%. Reuters notes that this data should not concern Bank of Japan into considering further stimulus. This means, in risk aversion JPY will continue to be safe haven (especially if there is a slowdown in Asia, like one in China).

With the current stance of FOMC vs. BoJ, the USD/JPY should probably be in a range bound market. If it has found a bottom at 79.40, that might be support while the 2012 high at 84.16 might be resistance. The middle of this range is 81.78. If we consider the middle of a range to be “fair price” then there should be a tendency for the market to return toward this level as it trades toward range resistance or support.

This range bound scenario is shelved however if the market fails to push above the May high at 80.55, and continue below 79.40, which opens up the next key support in the 78.30-78.50 area.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for USd/JPYand other currency pairs.

Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: Next Possible Support Levels for a Free-Falling NZD/USD (5/8)

In Q1 of 2012, New Zealand’s producer price index (input)  gained 0.3% beating forecast of a flat reading. This is slightly down from 0.5% in Q4 of 2011. PPI (output) however came in -0.1% as forecast was for 0.1% and the Q4 reading was 0.1%. This data means raw material going in the beginning of the manufacturing process got more expensive, while goods sold by manufacturers slid.

NZD/USD daily chart 5/16/2012 10:30PM EDT

The market is probably not using this data to trade the Kiwi, but the NZD/USD is nonetheless trying to find some bottom after the free falling for13 sessions where 11 were down, 1 was slightly up, and 1 was flat. The pair is trading at a support pivot of 0.7645 seen 12/29/2011. It already broke it, but is now stalling around this level.

NZD/USD daily chart 5/16/2012 10:35PM EDT

The consolidation could be seen as a double bottom if it breaks above 0.7685. This attempt failed during the May 14 session. Even if we do break from a double bottom, the market is still very bearish. The daily chart shows that there is still room toward the 0.7450 area after a break below this week’s low so far at 0.7620. It should be noted that in the 1H chart, the market has been respecting the 55SMA(red) and 100SMA (blue).

If we do get a rally from a double bottom and extends beyond the 55SMA, a correction might meet the 100SMA near 0.7750. 61.8% retracement of the most recent downswing is at 0.7729 and 78.6% is at 0.7758. Monitor these levels for selling again. Also, if the RSI nears 60, it is another sign that the bullish correction cycle should be over IF the downtrend is to continue. (It has behaved like this so far in the bear run in May).

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for NZD/USD and other currency pairs.

Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

The dollar was able to benefit yet again from risk aversion in the marketplace today, as worries about the Greek political situation caused investors to abandon higher yielding assets. The EUR/USD dropped to a fresh four-month low during the morning session, reaching 1.2679 before staging an upward correction. The pair eventually peaked at 1.2758. The greenback also saw gains against the Australian dollar. The AUD/USD fell as low as 0.9868 before moving upward during mid-day trading.

Turning to tomorrow, dollar traders will want to pay attention to the US Unemployment Claims figure at 12:30 GMT, followed by the Philly Fed Manufacturing Index at 14:00. Despite a lack of overall growth in the US labor market in recent months, the number of people claiming unemployment insurance in the US has remained relatively steady. Should tomorrow’s news come in below the forecasted 368K, the greenback could see gains vs. its main rivals. With regards to the manufacturing index, analysts are predicting the news to come in at 10.3, well above last month’s figure. If true, the USD/JPY could turn bullish as a result.

Read more forex news on our forex blog

5/16/2012 2:00PM EDT - The FOMC Minutes was released. As far as stimulus goes:

“Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough”. This is just rhetoric, and actually not as strong as we saw in the previous minutes where stimulus was suggested.

There is also expressed concern in the fallout from further euro area crisis:

“Participants identified several downside risks to the projected pace of economic expansion, including the fiscal and financial strains in the euro area and the possibility of an abrupt fiscal consolidation in the United States.”

Inflation is balanced, and growth projection has not changed from the last time. Therefore, it is maybe slightly less dovish than the previous.

A more dovish tone would have been a catalyst for the market to retreat from the current USD-onslaught. Instead, this release provides no such trigger, and the USD has a chance to advance further in this risk averse environment we have so far in May.

USD Index daily chart 5/16 2:30PM EDT

The USD Index continues to trade higher, (12 out of the last 13 sessions have been bullish). There is still room to rally before we hit the 2012 high just above 82.00. A break above that opens up the 83.40-83.70 area, resistance in August-September of 2010. A corrective drop should be monitored for buying again near 80.75-81.00

Join the Market Intelligence Briefings to get fundamental analysis technical setups, trade plan assessments for USD/JPY, and other currency pairs.

Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

XAG/USD (Silver) Daily Chart 5/16/2012  1:55PM EDT

Silver has been persistently bearish. Commodity prices, gold and silver have all been in a downtrend as the USD surges in the risk aversion environment in May. The moving averages are in bearish orientation, and the RSI is below 30. This means the market is bearish, but maybe in the short-term is a bit stretched to the downside. Can we expect a pullback?

Note in the weekly chart that as the market approaches 26.10, it is trading near the 2011 low, and an established support pivot during this year and almost half of consolidation (triangle?). However, a break below 26.00 should suggest that the market is in a declining channel. The first target for this break should be 23.00, the 200-week SMA.

FOMC Minutes are out as I wrap up this article. the FOMC minutes came out

- inflation is controlled
- “Participants identified several downside risks to the projected pace of economic expansion, including the fiscal and financial strains in the euro area and the possibility of an abrupt fiscal consolidation in the United States.”.
- no mention of stimulus.

Seems like a non-event at the moment. It is less dovish than the last minutes as well as the BoE inflation report, so the market may need to find another reason to hold off USD-strength, meanwhile, risk aversion should continue to boost the greenback and pressure commodities.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for silver and other commodities as well as currencies.

Fan Yang CMT is a trader, analyst, educator and the Chief Technical Strategist FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

by forexcycle.com

EURUSD Analysis.
EURUSD’s downward movement from 1.3283 extends to as low as 1.2722. Further decline could be seen after a minor consolidation, and next target would  be at 1.2650 area. Resistance is at 1.2800, followed by the downward trend line on 4-hour chart, only a clear break above the trend line resistance could signal completion of the downtrend.

USDJPY Analysis.
USDJPY breaks above the upper line of the price channel on 4-hour chart, suggesting that lengthier consolidation of the downtrend from 84.17 (Mar 15 high) is underway. Further rally would likely be seen in a couple of days, and the target would be at 81.00 area.

GBPUSD Analysis.
GBPUSD’s downward movement from 1.6301 extends to as low as 1.5979. Further decline could be expected in a couple of days, and next target would be at 1.5900 area. Initial resistance is at 1.6050, followed by the downward trend line on 4-hour chart, as long as the trend line resistance holds, downtrend will continue.

AUDUSD Analysis.
AUDUSD continues its downward movement from 1.0474, and the fall extends to as low as 0.9920. Further decline could be seen after a minor consolidation, and next target would be at 0.9850 area. Resistance remains at the downtrend line on 4-hour chart, only a clear break above the trend line could signal completion of the downtrend.

USDCAD Analysis.
USDCAD breaks above 1.0062 resistance, and reaches as high as 1.0073. Further rise could be seen, and next target would be at 1.0150 area. Support is at now at the upward trend line on 4-hour chart, as long as the trend line support holds, uptrend will continue.

USDCHF Analysis.
USDCHF continues its upward movement from 0.9043, and the rise extends to as high as 0.9440. Further rise could be seen after a minor consolidation, and next target would be at 0.9500 area. Support is at 0.9350, followed by the upward trend line on 4-hour chart, as long as the trend line support holds, uptrend will continue.

The above analysis was provided by www.forexcycle.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.