US FX
The appetite for risk is limited ahead of the US open after declining sharply for nearly two weeks amid uncertainty in the Eurozone and the fragility of the US economic recovery. The market should remove even more risk from the table following news that JPMorgan s chief investment office incurred trading losses that could reach at least $800 million in the second quarter. This failure is really difficult to process, given the severity of the financial crisis that nearly brought the US economy to its knees only four years ago. JP Morgan was supposed to be the shining star among the US banks.
Most foreign currencies open under pressure after ending little changed on Thursday and falling during the previous two days. However, the euro and franc open off their worst levels after Greek conservative leader Samaras raised expectations that a political deal to form a new Greek government may be reached soon. This is too easy for the Balkan nation, so I expect failure.
The Asian equity indexes fell, the European bourses are slightly down and the US markets are down in pre-open trading. Gold and oil are down as well.
The short-term outlook for the European and commodity currencies is bearish. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies.
Good luck!
www.lucafxta.com
Overnight
Today's economic calendar
EUR – June
Luca Model: Short since May 7
The June euro opens off a 3 ½-month low in the US after falling nearly every day since peaking on May 1. It is holding well below the 21-day moving averages, so it's oversold.
The short-term outlook is slightly bearish. The medium-term outlook is bearish and my model is short.
Initial support is 1.2900. The next floor is 1.2815.
Immediate resistance is at 1.2995. The next cap is 1.3070. The 21-day exponential moving average resists at 1.3105.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
JPY – June
Luca Model: Long since March 21
The June Japanese yen has slipped since Thursday but is still consolidating around the 100-day moving average after stretching to a 2 ½-month high on Wednesday. It remains in a channel rising since March 21.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Immediate support is at 1.2490. The 21-day exponential moving average supports at 1.2433.
The 200-day moving average resists at 1.2597. Distant resistance is at 1.2690.
INDICATORS
Fast stochastics: Bearish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
GBP – June
Luca Model: Long since April 17
The June pound opens softly around the 21-day exponential moving average in the US after ending little changed on Thursday and reaching a 2 1/2-week low on Wednesday. The pound had peaked at an eight-month high last Monday.
The short-term outlook is bearish. The medium-term outlook is slightly bullish and my model is long.
Initial support is at 1.6062. Further support is at 1.6035 and 1.5950.
Immediate resistance is at 1.6200. The top of the uptrend is 1.6298.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CHF – June
Luca Model: Short since May 2
The June Swiss franc opens off a near two-month low in the US after falling in leaps and bounds since peaking on May 1. It is trading well below the 100-day exponential moving average. The franc trades in a symmetrical triangle.
The short-term outlook is slightly bearish. The medium-term outlook is bullish and my model is long again.
A pivot low is 1.0725. Further support is at 1.0655.
Initial resistance is at 1.0830. The next cap is 1.0880. The 21-day exponential moving average resists at 1.0909.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CAD – June
Luca Model: Short since May 7
The June Canadian dollar opens lower in the US after ending lower on Thursday and hitting a 3 ½-month low on Wednesday. It briefly broke the bottom of the channel rising since mid-December. It remains well below the 21-day exponential moving average. The loonie had put in a medium-term peak to on April 27.
The short-term outlook is bearish. The medium-term outlook is sideways and my model is short.
A pivot low is .9928. Further support is at .9807.
The 100-day moving average caps at .9995 and the 21-day moving average at 1.0047.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Slightly bullish
AUD – June
Luca Model: Short since April 30
The June Australian dollar opens lower in the US after advancing on Thursday and sinking to the low of the year on Wednesday. It is trading well below the 200-day exponential moving average. The Aussie had peaked on the last day of February.
The short-term outlook is bearish. The medium-term outlook is sideways and my model is long.
The bottom of the downtrend is .9981. Further support is at .9920.
Initial resistance is at 1.0880. The 200-day moving average resists at 1.0172 and the 21-day exponential moving average caps at 1.0199.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
View All Market Commentary
Most foreign currencies open under pressure after ending little changed on Thursday and falling during the previous two days. However, the euro and franc open off their worst levels after Greek conservative leader Samaras raised expectations that a political deal to form a new Greek government may be reached soon. This is too easy for the Balkan nation, so I expect failure.
The Asian equity indexes fell, the European bourses are slightly down and the US markets are down in pre-open trading. Gold and oil are down as well.
The short-term outlook for the European and commodity currencies is bearish. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on most foreign currencies.
Good luck!
www.lucafxta.com
Overnight
- China: Consumer Price Index slipped to 3.4% in April y-o-y from 3.6% in March.
- China: Producer Price Index fell 0.7% in April from -0.3% in March.
- China: Industrial production grew 9.3% from a year earlier in April, slower than 11.9% in March.
- China: Retail sales increased 14.1% year-on-year in April, slower than 15.2% increase in March.
- Germany: The final HICP slipped to 0.1% in April from the preliminary estimate of +0.2%.
- UK: Output price inflation slowed to 3.3% in April from an upwardly revised 3.7% in March. Input price inflation eased to 1.2% in April from a downwardly revised 5.6% in March.
- UK: Nationwide consumer confidence index fell to 44 in April from 53 in March.
Today's economic calendar
- United States: Producer Price Index for April
- United States: Reuters/Michigan consumer sentiment index for May
- Canada: Unemployment rate for April
EUR – June
Luca Model: Short since May 7
The June euro opens off a 3 ½-month low in the US after falling nearly every day since peaking on May 1. It is holding well below the 21-day moving averages, so it's oversold.
The short-term outlook is slightly bearish. The medium-term outlook is bearish and my model is short.
Initial support is 1.2900. The next floor is 1.2815.
Immediate resistance is at 1.2995. The next cap is 1.3070. The 21-day exponential moving average resists at 1.3105.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
JPY – June
Luca Model: Long since March 21
The June Japanese yen has slipped since Thursday but is still consolidating around the 100-day moving average after stretching to a 2 ½-month high on Wednesday. It remains in a channel rising since March 21.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Immediate support is at 1.2490. The 21-day exponential moving average supports at 1.2433.
The 200-day moving average resists at 1.2597. Distant resistance is at 1.2690.
INDICATORS
Fast stochastics: Bearish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
GBP – June
Luca Model: Long since April 17
The June pound opens softly around the 21-day exponential moving average in the US after ending little changed on Thursday and reaching a 2 1/2-week low on Wednesday. The pound had peaked at an eight-month high last Monday.
The short-term outlook is bearish. The medium-term outlook is slightly bullish and my model is long.
Initial support is at 1.6062. Further support is at 1.6035 and 1.5950.
Immediate resistance is at 1.6200. The top of the uptrend is 1.6298.
INDICATORS
Fast stochastics: Bearish
MACD: Slightly bearish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CHF – June
Luca Model: Short since May 2
The June Swiss franc opens off a near two-month low in the US after falling in leaps and bounds since peaking on May 1. It is trading well below the 100-day exponential moving average. The franc trades in a symmetrical triangle.
The short-term outlook is slightly bearish. The medium-term outlook is bullish and my model is long again.
A pivot low is 1.0725. Further support is at 1.0655.
Initial resistance is at 1.0830. The next cap is 1.0880. The 21-day exponential moving average resists at 1.0909.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
CAD – June
Luca Model: Short since May 7
The June Canadian dollar opens lower in the US after ending lower on Thursday and hitting a 3 ½-month low on Wednesday. It briefly broke the bottom of the channel rising since mid-December. It remains well below the 21-day exponential moving average. The loonie had put in a medium-term peak to on April 27.
The short-term outlook is bearish. The medium-term outlook is sideways and my model is short.
A pivot low is .9928. Further support is at .9807.
The 100-day moving average caps at .9995 and the 21-day moving average at 1.0047.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bullish
LONG-TERM: Slightly bullish
AUD – June
Luca Model: Short since April 30
The June Australian dollar opens lower in the US after advancing on Thursday and sinking to the low of the year on Wednesday. It is trading well below the 200-day exponential moving average. The Aussie had peaked on the last day of February.
The short-term outlook is bearish. The medium-term outlook is sideways and my model is long.
The bottom of the downtrend is .9981. Further support is at .9920.
Initial resistance is at 1.0880. The 200-day moving average resists at 1.0172 and the 21-day exponential moving average caps at 1.0199.
INDICATORS
Fast stochastics: Bearish
MACD: Bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Sideways
View All Market Commentary
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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