By FX Empire.com

EUR/USD Technical Analysis for February 22, 2012

EUR/USD rose initially on Tuesday after the news came out that the EU Finance Ministers voted to bail out the Greeks for the second time in three years. The markets expressed relief in the form of Euro purchasing, and as a result we saw this market rise above the 1.3250 level as the celebrations began. However, at the end of the day – we see something quite different.

The market participants certainly have to have fatigue when it comes to all things Greece, and as sure as the sun rises tomorrow, the Greeks will find a way to be in the headlines. The fact is that the bailout still left the possibility of a default out there, and with this in mind, the markets now have to be able to trust the Greeks going forward. One question that hasn’t been asked is this: Who exactly is willing to lend to the Greeks going forward after taking a 53% haircut on these bonds? Hard to imagine quite frankly, and this will continue to be a problem.

The daily candle turned out to be a shooting star at the 1.3250 area, and this proves yet again that the Euro may be running into significant resistance at this point. The 38.2% retracement is right here, and as a result many technical traders will have stepped into the markets to sell. The trend is still down over the last year, and this shouldn’t be forgotten.

The shooting star doesn’t necessarily suggest a meltdown, rather a return to the consolidation area just below. The 1.30 level should still offer support as those that still believe in the European experiment will buy there, but the fact is that we may be seeing a market that is gradually understanding just how long-term this problem in Europe really is.

The Greeks will have trouble finding anyone beyond the European Central Bank to buy their bonds, and there are other countries that have issues. With all of this in mind, plus a recession on the way – who will want to invest in Europe? It is this undeniable fact that has us bearish overall, and we are willing to sell a break of the Tuesday lows.

EUR/USD Forecast February 22, 2012, Technical Analysis

EUR/USD Fundamental Analysis for February 22, 2012

Economic Events: (GMT)

06:30     EUR        French CPI (MoM)                                                           0.3%                      0.4%

The French Consumer Price Index (CPI) measures the changes in the price of goods and services purchased by consumers.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.                           

08:00     EUR        French Manufacturing PMI                                         48.7                        48.5                       

08:30     EUR       German Manufacturing PMI                                      51.5                        51.0                       

09:00     EUR        Manufacturing PMI                                                       49.4                        48.8

Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.                           

 09:30    GBP      MPC Meeting Minutes                 

The Monetary Policy Meeting Minutes are a detailed record of the Bank of England’s policy setting meeting, containing in-depth insights into the economic conditions that influenced the decision on where to set interest rates. The breakdown of the MPC members’ interest rate votes tends to be the most important part of the minutes.      

10:00     EUR       Industrial New Orders (MoM)                                   0.6%                      -1.2%    

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.            

15:00     USD                      Existing Home Sales                                                     4.67M                     4.61M  

Existing Home Sales measures the change in the annualized number of existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of overall economic strength.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

EUR/USD Fundamental Analysis February 22, 2012, Forecast

The EUR/USD changed hands at $1.3238, down from $1.3259. Euro-zone finance ministers agreed early Tuesday to provide a 130 billion euro ($172 billion) bailout to Greece, the second tranche of a rescue plan for the debt-ridden nation.

Also, a private-sector bond swap is set to be launched this week. Private bondholders will take write downs of 53% on the value of their holdings, up from an earlier proposal for haircuts of around 50% agreed in March. The agreement was announced late Monday evening so markets were still feeling the effects on Tuesday.

February 21, 2012 Economic Reports actual v forecast

Sovereign Bond Auction Schedule

Feb 20-24 n/a  UK  0.375% 2062 I/L Gilt syndication

Feb 20  10:10  Norway  Nok 3bn 4.5% May 2019 DSL

Feb 20  10:10  Slovakia  Eur 0.15bn Apr 2014 & Eur 0.05bn Nov 2016 bonds

Feb 21  09:30  Spain  3 & 6M T-bill auction

Feb 21  15:30  UK  Details gilt auction on Mar 01

Feb 21  18:00  US  Auctions 2Y Notes

Feb 22  10:10  Sweden  Nominal bond auction

Feb 22  10:30  Germany  Eur 5.0bn Mar 2014 Schatz

Feb 22  16:30  Italy   Details CTZ/BTPei on Feb 24 & BOT on Feb 27

Feb 22  18:00  US  Auctions 5Y Notes

Feb 23  10:10  Sweden  Sek 0.75bn I/L bond auction

Feb 23  16:30  Italy   Details BTP/CCTeu on Feb 28

Feb 23  18:00  US  Auctions 7Y Notes

Feb 24  10:10  Italy   Auctions CTZ/BTP

USD/JPY Technical Analysis for February 22, 2012

The USD/JPY continued to grind away just under the all-important 80 level on Tuesday as traders try to challenge one of the most obvious points of resistance on any chart in the Forex markets presently. The move recently has been parabolic, and as a result there needs to at least be a consolidation area, if not a pullback. With this in mind, we are willing to take a small position at this point in order to capitalize on the overall trend resuming. (If it does.) The beauty of this trade is that it can be reversed if we close well above the 80 level for a longer term trade in this pair that could last months if not years. 

USD/JPY Forecast February 22, 2012, Technical Analysis

USD/JPY Fundamental Analysis for February 22, 2012

Economic Events: (GMT)

00:30     AUD                      Wage Price Index (QoQ)                                              0.8%                      0.7%

The Wage Price Index measures the change in the price businesses and the government pay for labor, excluding bonuses. It is a leading indicator of consumer price inflation. 

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.                          

15:00     USD                     Existing Home Sales                                                     4.67M                     4.61M  

Existing Home Sales measures the change in the annualized number of existing residential buildings that were sold during the previous month. This report helps to gauge the strength of the U.S. housing market and is a key indicator of overall economic strength.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

USD/JPY Fundamental Analysis February 22, 2012, Forecast

Analysis and Recommendation: ( close of Asian session )

USD/JPY was trading at 79.78, after moving back into positive territory after the announcement of the Greek bailout package. With Greece behind us now, and maybe a few weeks of recovery for investors, we will return to trading on fundamental and economic data. This middle week of the month will be a slow week on economic data. The US markets were closed yesterday for a national holiday, so US investors will be jumping back with Greece settled behind them and soaring crude oil prices. The USD though should remain strong against the Yen.

On Monday, the Bank of Japan announced the largest trade deficit in history for Japan. Japan’s trade deficit has ballooned to a record high ¥1.48 trillion in January, the biggest in the three decades that such data became available.

Exports declined 9.3 per cent in January from the same month last year, particularly in computer chips and electronic parts. Imports in January grew 9.8 per cent on year.

Monday February 20, 2012 Economic Reports actual v. forecast