The euro traded lower against the dollar Wednesday

Daily Technical Analysis:

EUR/USD has not tested SMA5 and SMA15 yesterday. SMAs are now moving and contracting in bullish sequence, with market is moving below all three SMAs.

RSI is showing decreased bullish strength with 57% reading. RSI is now reverting back from uptrend in downward direction below resistance level (70%).

Upper is straight, while Middle and lower bands are moving upward with squeezing bands. It signals that market is decreasing bullish volatility. Market is moving slightly above middle band.

With Lutfi Magnet theory market is 89% bearish and with adjustments 64% bearish. Lutfi Magnet Theory and Adjustment are showing bearish sentiment.

On the basis of Technical Analysis initial bias remains bearish. Market may attempt yesterday’s low at 1.2838 and break there may extend the bearish move to low at support level 1.2800. While on higher side it may follow consolidation to attempt high at SMA5 1.2909, break there may attempt high at weekly magnet point 1.2946.


Daily Fundamentals:

The euro traded lower against the dollar Wednesday after a Federal Reserve governor blasted the U.S. central bank’s decision for QE3 despite weak new homes sales weighing on the greenback.

In a report, the Census Bureau said that new home sales fell to a seasonally adjusted annual rate of 373K, from 374K in the preceding month whose figure was revised up from 372K.  Analysts had expected new home sales to rise to 380K last month.

 Earlier, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said a decision to roll out a third round of quantitative easing to encourage investing and hiring won’t work in that households and businesses would rather pay down debts than take on new leverage.  Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing.

Elsewhere, the Conference Board, an industry group, reported that its consumer confidence index rose to 70.3 in September from an upwardly revised 61.3 in August.  September’s reading was the highest since February and outpacing analysts’ calls for a 63.0 reading.


Here is schedule for today’s important data:

Italian 10 year bond auction: tentative. Confidence in Italy’s finances will be tested in an auction of benchmark 10 year bonds. The last auction resulted in a yield of 5.82%, lower than the previous one but still too high. Italy needs positive news from Spain in order to enjoy better market conditions.

German Import Prices at 11:00am. German inflation has a strong impact on the ECB’s rate decisions. After a rise of 0.7% last month, a bigger rise of 0.9% is predicted now. A strong rise may delay a potential rate decision.

German Unemployment Change at 12:55pm. After enjoying drops in unemployment throughout most of the crisis, Germany suffered a rise in the past 5 months, showing that the European locomotive is not immune. A similar rise to last month’s 9K is predicted now.

M3 Money Supply at 1:00pm. The amount of money in circulation has been on the rise of late, partly thanks to the ECB’s LTROs. After a rise of 3.8% last month, a slower year over year rise is expected now: 3.3%.

US Core Durable Goods Orders at 05:30pm. US Core Durable Goods, excluding transportation declined unexpectedly in July, dropping 0.4% while predicted to gain 0.5%. This reading followed a 2.2% plunge in the previous month. Meanwhile headline figure showed a 4.1% leap after a 1.6% increase in June driven by civilian aircraft spending. Disregarding the core figure, there is an improvement in US economic activity. A 0.5% gain is anticipated this time.

US Unemployment Claims at 05:30pm. The number of Americans seeking unemployment benefits dropped less than predicted last week with 382,000 claims, down 3,000 from the preceding week. The labor market added only 96,000 jobs last month, below the 141,000 in July suggesting weak hiring. Analysts believe unemployment and sluggish growth will continue to deteriorate in the coming months. Another drop to 377,000 is expected now.

US Pending Home Sales at 07:00pm.  Pending home sales reached a two year high in July jumping 2.4% to 101.7, after a 1.1% decline in June. The reading was above predictions giving further evidence to the upward trend in the housing sector. Home prices also show a consistent rise aided by the boost in sales. The number of homes for sales decreased 24% in the past year. If the current pace of sales continues, the supply of houses will exhaust in 6.4 months. A decline of 0.4% is forecasted now.

EUR/USD Yesterday:

EUR/USD started the day at 1.2929. Euro attempted high at 1.2969 and with a downward move attempted low at 1.2885. Euro closed the day at 1.2896.

Disclaimer:  Content in ISMAR Report is for informational purposes only. Sources believed to be reliable, complete, and accurate. However, no guarantee can be made as to the validity of the believed sources. All statements and expressions in the Report are opinions, and not meant as investment advice or solicitation. Forex Markets can be volatile and opinions may change without notice.

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