The appetite for risk rose on Tuesday after Germany's Constitutional Court said that it would not postpone its long-awaited ruling on the legality of the Eurozone's bailout fund. The foreign currencies advanced across the board after most of the European and commodity currencies slipped on Monday. This strength should persist on Wednesday as well, as German politicians will play ball. The US stock markets advanced. Gold and oil closed slightly higher.
The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is slightly bullish. The LGR short-term model is long on all foreign currencies. Good luck!
www.lucafxta.com
Overnight
- US: The trade deficit expanded slightly to $42.0 billion in July from $41.9 billion in June.
- Canada: Housing starts rose to 224.9K in August from 208.0 in July.
- Canada: International merchandise trade showed a deficit of C$2.34 billion in July, wider than -C$1.93 billion in June.
Today's economic calendar
- Japan: Domestic corporate goods price index for August
- Japan: Machinery orders for July
- Japan: Tertiary industry index for July
- Australia: Westpac consumer confidence index for September
EUR – December
Luca Model: Long since August 3
The overbought December surged to a four-month high on Tuesday and should march higher on Wednesday as well. It is overbought. The euro is trading above the 100-day exponential moving average. The euro had bottomed an over two-year low in late July and remains in a rising channel.
The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.
Initial resistance is at 1.2930. Further resistance is at 1.2977.
Immediate support is at 1.2755. The next floor is 1.2670. The 21-day exponential moving average supports at a distant 1.2576.
INDICATORS
Fast stochastics: Bullish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
JPY – December
Luca Model: Long since August 22
The December
Japanese yen exploded to a five-week high and above the top of a symmetrical triangle. It is trading above the 21-day exponential moving average. The yen had bottomed at a five-week low on August 17.
The short-term outlook is sideways. The medium-term outlook is sideways and my model is long.
Immediate resistance is at 1.2870. A pivot high is at 1.2920.
The 21-day exponentially smoothed moving average supports at 1.2745 and the 100-day exponential moving average at 1.2676. The next resistance levels are 1.2800 and 1.2854.
INDICATORS
Fast stochastics: Bullish
MACD: Bullish
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
GBP – December
Luca Model: Long since July 19
The overbought December pound resumed gains on Tuesday and hit a four-month high. The pound had formed a medium-term peak at an eight-month high on April 30 and a bottom at a 4 1/2-month low on June 1.
The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.
Initial resistance is at 1.6130. A pivot high is at 1.6276.
Immediate support is at 1.6025. The next floor is 1.5905. The 21-day exponential moving average supports at a distant 1.5842.
INDICATORS
Fast stochastics: Bullish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CHF – December
Luca Model: Long since August 3
The December
Swiss franc rallied to a three-month high. The franc is trading above the 100-day exponential moving average. It had marked a near two-month high on August 31 and bottomed at a 19-month low on July 24. The franc has been trading a rising channel since then.
The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.
Initial resistance is at 1.0685. The 200-day exponentially smoothed moving average resists at 1.0755.
Immediate support is at 1.0600. The next floor is 1.0525. The 21-day exponential moving average follows at a distant 1.0460.
INDICATORS
Fast stochastics: Bullish
MACD: Bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Bearish
CAD – December
Luca Model: Long since June 29
The overbought December
Canadian dollar advanced to a new high for the uptrend on Tuesday. The Canadian dollar has been trading in a channel rising since late July. It bottomed at a 5 1/2-month low on June 1.
The short-term outlook is sideways. The medium-term outlook is bullish and my model is long.
Immediate resistance is at 1.0305. Further resistance is at 1.0400.
Initial support is at 1.0230. The next floor is 1.0170. The 21-day exponential moving average supports at a distant 1.1001.
INDICATORS
Fast stochastics: Bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
AUD – December
Luca Model: Long since September 7
The December
Australian dollar rallied above the 21-day exponential moving average on Tuesday. The Aussie, which has been advancing since June 4, peaked at a new high for the uptrend on August 9.
The short-term outlook is sideways. The medium-term outlook is slightly bullish and my model went long.
Immediate resistance is at 1.0450. Further resistance is at 1.0525.
The 21-day exponential moving average supports at 1.0380. A further floor is at 1.0320. A pivot low is at 1.0077.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Sideways
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Slightly bullish
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.