Mr. Euro has been under a lot of pressure. Greek fears, French terror attack, lower Euro fundamentals and stronger than expected NFP figures were among the main reasons for the last week’s EUR/USD bear rush. Although bigger picture remains bearish with clear targets beyond 1.1760 levels, looking at the price action developments we can say that there is some profit taking activity taking place for the pair.
The risk aversion in Europe, aside from the tragic events in Paris, is being spurred by fears over the Greek elections in two weeks’ time. Reports over the weekend are circulating, saying that Greek banks have dusted off their future plans for a single currency exit; also called the “Grexit.”
A Greek exit from the Eurozone would certainly come at a cost to Europe. Greece will need to get some direction soon after the elections though, as government funding in March is going to require external investment, through bond purchases. If Greece isn’t able to sort things out in February, then we could well see a Grexit by default.
Mario Draghi is pushing hard for QE to be agreed and implemented this month. According to Handelsblatt newspaper the head of the ECB is doing all that he can to get other members on side for action this month, but key members (notably the German members) are still of the belief that the risks far outweigh any potential benefits.
On another QE related note: In the US, the Federal Reserve has paid the US Treasury a record $98 billion Dollars, which is the interest it has earned from holding it’s $4.5trillion of US government debt. The debt was almost entirely accumulated from the efforts of QE1,2 and 3 over the last six years. The government can’t strictly treat this as a windfall, as much as it would probably like to.
Looking ahead to what’s in store this week; data is actually quite thin on the ground, with the main items of note being retail sales in the UK and US, inflation data, also from the UK and US and also Bank of England governor Mark Carney testifying to the Treasury Select Committee in the middle of the week.
With a light data calendar, we’re probably likely to see more sentiment driven activity and positions might start to be built towards the back end of the week ahead of any ECB action that might occur next week. Equity futures are starting the week pretty flat, following on from Asia’s slow start to the week. We’ll keep you posted
Intraday Forex Technical Levels
EUR/USD 4-hour: Teasing the key support level.
Invest Diva positioning: Short positions below 1.1782 with targets at 1.1663 and 1.1536 in extension.
Technical reasons why: The pair rebounded from the key support level at 1.1782 and is teasing the level again below the Ichimoku’s cloud. The RSI is below the neutrality area.
Alternative Scenario: Above 1.1782 look for further upside toward 1.18750 and 1.9700.
Where I’m setting my stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 1.1663 | 1.1782 | 1.1875 |
| 1.1536 | 1.1970 |
NZD/USD 4-hour: Rebounding.
Invest Diva positioning: Long positions above 0.7694 with targets at 0.7747 and 0.7834 in extension.
Technical reasons why: The pair failed to break above the 61% Fibonacci level at 0.7834 and dropped to our pivot level at 0.7694 above the Ichimoku’s cloud. The RSI is below the neutrality area.
Alternative Scenario: Below 0.7694 look for further downside towards 0.7607 and 0.7487.
Where I’m setting my stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 0.7607 | 0.7694 | 0.7834 |
| 0.7487 | 0.7747 |
USD/CHF 4-hour: Consolidating.
Invest Diva positioning: Long positions above 1.0162 with targets at 1.0307 and 1.0426 in extension.
Technical reasons why: The pair is consolidating at our pivot level at 1.0162 above the ichimoku’s cloud. The RSI is above the neutrality area.
Alternative Scenario: Below 1.0162 look for further downside towards 1.0052 and 0.9963.
Where I’m setting my stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 1.0052 | 1.0162 | 1.0426 |
| 0.9963 | 1.0307 |
USD/CAD 4-hour: Broke above the key resistance level.
Invest Diva positioning: Long positions above 1.1880 with targets at 1.1996 and 1.2090 in extension.
Technical reasons why: The pair is on an overall uptrend and surpassed our pivot level at 1.1880 above the Ichimoku’s cloud. The RSI is above the neutrality area.
Alternative Scenario: Below 1.1880 look for further downside towards 1.1795 and 1.1665.
Where I’m setting my stops and limits:
Support Levels Turning Point Resistance Levels
1.1795 1.1880 1.2090
1.1665 1.1996
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 1.1795 | 1.1880 | 1.2090 |
| 1.1665 | 1.1996 |
AUD/USD 4-hour: Broke above the Ichimoku’s cloud.
Invest Diva positioning: Long positions above 0.8145 with targets at 0.8250 and 0.8322 in extension.
Technical reasons why: The pair is supported by our pivot level at 0.8145 above the Ichimoku’s cloud. The RSI is above the neutrality area.
Alternative Scenario: Below 0.8145 look for further downside towards 0.8036 and 0.7879.
Where I’m setting my stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 0.8036 | 0.8145 | 0.8322 |
| 0.7879 | 0.8250 |
USD/JPY 4-hour: Testing the key support level.
Invest Diva positioning: Short positions below 117.98 with targets at 115.59 and 113.66 in extension.
Technical reasons why: The pair is testing the key support level at 117.98 below the Ichimoku’s cloud. A break below this level would give a further drop. The RSI is below the neutrality area.
Alternative Scenario: Above 117.98 look for further upside toward 120.63 and 121.83.
Where I’m setting my stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 115.59 | 117.98 | 120.63 |
| 113.66 | 121.83 |
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