Forex-Metal Weekly Newsletter


Master Trader
Jul 12, 2010
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1. WEEKLY REVIEW FOR 17 - 21 01, 2011

Previous week saw various factors, which rendered pressure on the greenback. Only on Monday growing concern over the Euro-Zone crises spreading pressured the euro. Therefore, the euro lost its previously reached maximums. Market participants did not expect any support for the euro from the results of the European Finance Ministers in Brussels. Germany was against increasing of the size of the fund assistance to the EU crises victims. As a result, the EUR/USD pair dropped to $1.3240. US financial markets were closed on Monday due to the celebration of the Martin Luther King Day.
The released European data happened to be positive on Tuesday. The Euro-zone ZEW survey (economic sentiment) hit the 25.4 high, when the forecast was at the 16.6 level. And after the minimums of $1,3260, the EUR/USD pair grew to $1.3428 maximum. By the end of the day the EUR/USD managed to hit a new maximum of $1.3465. Sterling showed maximums due to the publication of the positive UK data on Tuesday. The UK data turned out to be even stronger, than forecasted. The consumer price index showed the 3.7% against its expected level of 3.4%. The retail price index turned out to be at the forecasted level of 228.4. In addition, the Nationwide consumer confidence grew to 53 against the expected level of 44. As a result, the GBP/USD pair reached maximums at the level of $1.6050. Expectations for the increase of the principal rate by the Bank of England reinforced.
According to the expectations, the Bank of Canada left the interest rate unchanged at the level of 1.00% on Tuesday. Canadian dollar dropped against the US dollar.
On Wednesday the EUR/USD managed to reach the $1.3537 maximums. According to the forecasts, the US housing starts dropped in December to 529K against the expected 550K, which was a sign of the economical growth rate slow down. Employment data was forecasted to be negative as well. In addition, the greenback was pressured by the Chinese Yuan.
The sterling continued to trade around the reached maximums against the greenback on Wednesday morning. Weakening of the US dollar supported the pound. In addition, the UK jobless claims dropped to 4.1K in December (this decline in jobless claims marked the lowest level in 21 months), the Claimant count rate turned out to be at the forecasted level of 4.5%. The GBP/USD pair grew and hit daily maximums at the $1.6036 mark. Nevertheless, the sterling was lower against other major currencies.
On Thursday the euro rate grew against the yen and the pound after the release of the Euro-zone data. The German annualized producer prices increased for 0.7% when the forecasted level was at the 0.5%. Meanwhile the EUR/USD managed to hit the $1.35 range, but only temporarily.
At the same time the greenback received substantial support, as the released Chinese data pressured the commodity currencies. Concerns over the possibility that China would undertake additional measures aimed to cool down the economic growth, reduced the demand for the raw materials. High-risk assets were pressured. Chinese Gross Domestic Product grew for 9.8% against the expected growth for 9.4%. Consumer price index grew for 4.6% and the Industrial production increased for 15.7%.
The GBP/USD pair managed to grow and reach maximums of $1.6010, but later on the sterling decreased to $1.5850. At the same time the yen rate grew as demand for the save-haven currencies increased. The USD/JPY pair traded in the range of Y82.00 - Y82.30.
By the end of the day on Thursday the EUR/USD pair dropped to as low as $1.34. The US dollar showed additional growth after the publication of the US fundamentals, and consolidated against its competitors. Initial jobless claims dropped to 404K against the forecasted 420K. Existing home sales grew to 5.28M against the expected 4.87M. The leading indicators increased for 1.0%.
After the positive day for greenback on Thursday, Friday demonstrated considerable weakness for the US dollar. Strong Euro-zone fundamentals rendered support to the euro and to the sterling both. The released German IFO business climate indicator turned out to be above expectations. Demand for the high-risk assets increased, and the EUR/USD pair reached the $1.36 maximums.

Happy trading!

The pair has reached Moving Averages (100 and 200) at 1.35270. If the pair stays below this level the pair will decline to 1.33427. If the pair stays above 1.35270 the pair will rise to 1.41130.
Resistance: 1.37441, 1.41130, 1.44835
Support: 1.33427, 1.2800, 1.25667

The pair has reached channel line at 1.60874. If the pair rises above this level the pair will continue rising aiming to reach Fibonacci retracement 38.2% at 1.64274. If the pair stays below1.60874 the pair will decline to 1.56780.
Resistance: 1.59962, 1.64274, 1.68504
Support: 1.52523, 1.48532, 1.43344

If the pair stays below 0.96526 the pair will decline to 0.93770. If the pair breaks 0.96526 the pair will rise to the channel line at 1.00233.
Resistance: 0.96525, 0.99031, 1.01369
Support: 0.93770, 0.91074, 0.88022

The pair is closed in the triangle. Resistance 83.330, support 81.010.
Resistance: 83.330, 86.836, 90.909
Support: 80.244, 76.535, 73.126

The pair needs to break 0.97889 to be able to work out double top figure. If this level is broken the pair may decline to 0.94048.
Resistance: 1.00031, 1.01873, 1.03847
Support: 0.97889, 0.94048, 0.89581