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Analyst Speak July,2015 Reports By: SSFX Knowledge Center
MARKET RESEARCH
Global Currency Market – A Technical Perspective for Traders & Hedgers
“Euro Economy Parasites Can Effect Currency Trading: Says The Seven Star FX Analyst”
Foreign Markets
Europe’s economies are benefitting from many supporting factors at once. Oil prices
remain relatively low, global growth is steady except the Eurozone crisis, the euro has continued
to depreciate, and economic policies in the EU are supportive.
On the Contrary side, quantitative easing by the European Central Bank(ECB) is highly a
significant impact on global capital markets, contributing to lower interest rates and expectations
of improving credit conditions. With the overall fiscal stance in the EU broadly neutral – neither
tightening nor loosening – fiscal policy is also accommodating growth. Over time, the pursuit of
structural reforms and the Investment Plan for Europe should also bear fruit
Outlook
The GBP/USD pair skid almost 200 pips to hit an intraday low of 1.5413 on Tuesday as
the markets turned risk averse due to the stock market rout in China and increased probability of
Grexit. The spot began its downward journey after it was rejected at 1.5606 in the early
European session. The better-than-expected Industrial production failed to provide any strength
to the GBP bulls. The selling pressure intensified after the EUR/USD pair broke below the 1.10
handle.
With no major European data available for release today, the cementry remains at the
top due to the overall market sentiment. The rout in the Shanghai Composite Market index
continues as sentiment worsened further with more than 40% of the companies suspended from
currency trading. Meanwhile, Greece has a 1 week deadline to submit a detail Forecast of
reforms to international creditors in return for a bailout or risk the "bankruptcy" of both the country
and its financial system. The risk aversion is likely to maintain its grip on the markets as we head
towards the Fed minutes due for release in the American session. The September rate hike
expectations in the US could drop if the Fed policy makers put more emphasis on the turmoil in
the global markets, although it could result in a minor correction in the GBP/USD to 1.5520.
On the 4-hour chart, the spot breached the falling channel and extended losses to hit a low of
1.5413, before closing just above 1.5463 (61.8% Fib R of June rally). The pair could drop agin
back to lower than 1.5413 (29.7% Fib R of Apr-June rally) in the early European session.
However, the RSI on the hourly and 4-hour time frame has hit the oversold regions.
Consequently, the pair may sustain above 1.5408-1.54, thereby opening doors for a re-test of
1.5460. A break above 1.5460 would be a double bottom breakout, which could see the pair
Analyst Speak July,2015 Reports By: SSFX Knowledge Center
MARKET RESEARCH
target 1.5520. On the other hand, a a failure to sustain above 1.548-1.54 would open doors for
1.5348 (76.4% Fib of June rally).
EUR/USD: Another attempt at 1.0973
The EUR/USD pair fell to an intraday low of 1.0917 on Tuesday which has gripped a fear
among the Traders with Issues in Greek Economy and rout in the Chinese equity markets, before
rebounding strongly to trade above 1.10 handle after Greece received a five day deadline to
meet creditor nod. The recovery in the Dow Jones index also helped the EUR/USD pair sustain
above 1.10 levels.
With no major data due out of the Eurozone, the Greek issue is likely to remain at the center
stage ahead of the Fed minutes release. As per the Greek government official PM Tsipras will
address the European parliament today. Meanwhile, European Council President Donald Tusk
and Commission President Jean-Claude Juncker warned Tuesday that “Failure to find an
agreement will lead to the bankruptcy of Greece and the insolvency of its banking system."
Consequently, a hard stance from Greeks/PM Tispras is likely to put the EUR under pressure.
On the hourly charts, the spot is struggling to rise above the hourly 50-MA located at 1.1018. The
recovery witnessed in the previous session was halted at the hourly 100-MA. Since then, the
hourly 50-MA has acted as a strong resistance. Consequently, a failure to take out 1.1018 could
push the pair back to 1.0994 (50% Fib of Apr-May rally). A break below the same could push the
pair back to 1.0955. On the other hand, a break above 1.1018 could open doors for 1.1050
(hourly 100-MA).
The outlook stays bearish so long as the pair trades below hourly 100-MA, which
has acted as a strong resistance since June. As per The Analyst Perspective Currency
May hit A new Low if Greece Exits the Eurozone…
Analyst: Dhruv Williams (dhruv@sevenstarfx.com)
Disclaimer:
This document has been prepared by Seven Star FX Ltd and is meant for sole use by the recipient and not for circulation.
This document is not to be reported or copied or made available to others. The information contained herein is from
sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We
may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to
time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This
report is intended for non- Institutional Clients only
This report has been prepared by the Retail Research team of Seven Star FX Ltd. The views, opinions, estimates, ratings, target price, entry
prices and/or other parameters mentioned in this document may or may not match or may be contrary with those of the other Research
teams (Institutional, PCG) of Seven Star FX Ltd
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