Market analysis and trade recommendations by FBS

[FBS]

Key currency options (Dec. 23)

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3600, $1.3650, $1.3660, $1.3700, $1.3750;

USD/JPY: 103.00, 104.00, 105.00 (large);

USD/CHF: 0.8900;

AUD/USD: 0.8900 (large) 0.9100 (large);

USD/CAD: 1.0650 1.0675.

 

[FBS]

FX BAZOOKA: technicals (Dec. 23)

EURUSD

EUR/USD managed to rise from support at $1.3625 and test $1.3710.

55-period MA is starting to slope down.

The prices returned inside the Ichimoku Cloud. Tenkan-sen (red line at $1.3667) is providing some support. The Cloud turned bearish, but isn’t widening.

MACD remains in the negative territory, but above the signal line. RSI (14) went from oversold to the neutral state (46).

Above $1.3667 there’s scope for increase to $1.3718/33. Upper Bollinger band is at $1.3760. Below this level we’ll be selling.

Resistance: $1.3690, $1.3705, $1.3740/50, $1.3790

Support: $1.3667, $1.3625, $1.3613, $1.3600 and $1.3575 (200-period MA)

Chart. H4 EUR/USD

Upcoming events:

USD - 13:30 GMT - Core PCE Price Index

USD - 13:30 GMT - Personal Spending

EUR - 14:00 GMT - Belgian NBB Business Climate

USD - 14:55 GMT - Revised UoM Consumer Sentiment

 

[FBS]

FX BAZOOKA: technicals (Dec. 23)

USDJPY

USD/JPY is retracing a little lower from 104.60 (5-year high 104.60). Our next target for the pair lies at 105.55.

USD/JPY holds above the bullish H4 Ichimoku. The Kijun line lies above the Tenkan line, but both lines are flat.
The pair remains supported by the 55-day MA (102.85) and the 100-period MA (102.50);
H4 MACD histogram is declining and is below the signal line (bearish signal);
104.00/103.75 is the key area of support for now.
Support: 104.00/103.90, 103.75, 103.40

Resistance: 104.60, 105.00, 105.55

Chart. H4 USD/JPY

Upcoming events:

USD - 13:30 GMT - Core PCE Price Index

USD - 13:30 GMT - Personal Spending

USD - 14:55 GMT - Revised UoM Consumer Sentiment

 

[FBS]

FX BAZOOKA: technicals (Dec. 23)

USD/CHF

USD/CHF is correcting lower after hitting the 0.9000 mark (38.2% Fibo) on Friday.
We believe the last week’s break above the 0.8975 resistance opened the way to 0.9050.
The pair remains supported by the wide bearish Ichimoku, the 100-period MA and the middle Bollinger (0.8970/45 area);
H4 MACD histogram is declining and is below the signal line.
Support: 0.8930/20, 0.8900/8890
Resistance: 0.9000, 0.9030, 0.9050

Chart. H4 USD/CHF

Upcoming events:
USD - 13:30 GMT - Core PCE Price Index
USD - 13:30 GMT - Personal Spending
USD - 14:55 GMT - Revised UoM Consumer Sentiment

 

[FBS]

FX BAZOOKA: technicals (Dec. 23)

AUD/USD

AUD/USD recovered to $0.8950.

The pair returned to the upper Bollinger band and approached 55-period MA.

All MAs keep declining that indicates that a medium-term downtrend is well in place.

The prices are below the bearish Ichimoku Cloud. However, the Cloud stopped expanding, while Tenkan and Kijun formed a golden cross, weak as it is below the Cloud. Still these lines provide support ($0.8900).

MACD has reached the 0 area on its way up. RSI rose almost to 60.

There will be no news from Australia to help Aussie extend upward correction.
Resistance: $0.8970, $.8990/9000, $0.9040
Support: $0.8900, $0.8820, $0.8800, $0.8755

Chart. H4 AUD/USD

Upcoming events
USD - 13:30 GMT - Core PCE Price Index
USD - 13:30 GMT - Personal Spending
USD - 14:55 GMT - Revised UoM Consumer Sentiment

 

[FBS]

FX BAZOOKA: technicals (Dec. 23)
AUD/USD

As expected, USD/CAD corrected down to 1.0635.

The pair is supported at the current level (100-period MA, Ichimoku Cloud top).

200-period MA is still going up, so the medium-term uptrend continues. 55-period MA is horizontal though and below the 100-period one.

MACD is going down and approaching 0 from. RSI (14) declined to 45.

The bullish Ichimoku Cloud stopped expanding. Tenkan-sen turned down.

The loss of 1.0660 allows downside scope for 1.0600, the lower Bollinger band.

Support: 1.0635, 1.0615, 1.0600, 1.0560
Resistance: 1.0685, 1.0700, 1.0725, 1.0745

Chart. H4 USD/CAD

Upcoming events
USD - 13:30 GMT - Core PCE Price Index
USD - 13:30 GMT - Personal Spending
CAD - 13:30 GMT - GDP
USD - 14:55 GMT - Revised UoM Consumer Sentiment

 

[FBS]

Dec. 24: Asian session

Asian stocks rose boosted by the gains in the American session as the upbeat US spending data showed that US economic recovery gaining momentum. In addition, China’s central bank moved to ease a cash crunch by making its first market-wide money injection in three weeks.

Japan’s Nikkei went up by about 0.8% to 6-year high above 16,000 after Tokyo markets opened after a holiday.USD/JPY rose to 104.41.

AUD/USD declined to $0.8907 after peaking to $0.8960 yesterday. NZD/USD edged down to $0.8176. Golddipped below the $1,200 level yesterday and is heading for its biggest annual loss in three decades.

EUR/USD slid to $1.3675 after it tested $1.3716 on Monday. GBP/USD is consolidating around $1.6345.

 

[FBS]

Nomura: trajectory for USD/JPY

Analysts at Nomura have outlines a scenario for USD/JPY using Elliott waves. The specialists expect the pair to trade sideways in the 102.50/104.50 during the next month in the wave (4) and then rally to 106.00 in the wave (5).

 

[FBS]

Credit Agricole: Q1 GBP forecasts

GBP/USD
GBP/USD to weaken to $1.6200 in the stronger USD environment. Britain's officials will try to talk the pound down in Q1 2014.

Chart. Weekly GBP/USD

EUR/GBP
As for EUR/GBP, the pair is expected to fall towards 0.8200 by end-March. Pound will gain some ground vs. the euro on a wave of EUR sales.

Chart. Weekly EUR/GBP

 

[FBS]

EUR/USD: how do the banks trade?
There’s a choice among various shorts.

BoA/Merrill: Short at $1.3764 with stop at $1.3834 and take profit at $1.3479

Credit Agricole: Short at $1.3780 with stop at $1.4160 and take profit at $1.3300

Credit Suisse: Short at $1.3800 with stop at $1.3860 and take profit at $1.3415

Commerzbank: Short at $1.3750 with stop at $1.3815 and take profit at $1.3405

Commerzbank: Short at $1.3665 with stop at $1.3815

Morgan Stanley: Short at $1.3600 with stop at $1.3750 and take profit at $1.2700

 

[FBS]

Dec. 24: Asian session

Asian stocks rose boosted by the gains in the American session as the upbeat US spending data showed that US economic recovery gaining momentum. In addition, China’s central bank moved to ease a cash crunch by making its first market-wide money injection in three weeks.

Japan’s Nikkei went up by about 0.8% to 6-year high above 16,000 after Tokyo markets opened after a holiday.USD/JPY rose to 104.41.

AUD/USD declined to $0.8907 after peaking to $0.8960 yesterday. NZD/USD edged down to $0.8176. Golddipped below the $1,200 level yesterday and is heading for its biggest annual loss in three decades.

EUR/USD slid to $1.3675 after it tested $1.3716 on Monday. GBP/USD is consolidating around $1.6345.

 

[FBS]

EUR/USD: how do the banks trade?
There’s a choice among various shorts.

BoA/Merrill: Short at $1.3764 with stop at $1.3834 and take profit at $1.3479

Credit Agricole: Short at $1.3780 with stop at $1.4160 and take profit at $1.3300

Credit Suisse: Short at $1.3800 with stop at $1.3860 and take profit at $1.3415

Commerzbank: Short at $1.3750 with stop at $1.3815 and take profit at $1.3405

Commerzbank: Short at $1.3665 with stop at $1.3815

Morgan Stanley: Short at $1.3600 with stop at $1.3750 and take profit at $1.2700

 

[FBS]

Nomura: trajectory for USD/JPY
Analysts at Nomura have outlines a scenario for USD/JPY using Elliott waves. The specialists expect the pair to trade sideways in the 102.50/104.50 during the next month in the wave (4) and then rally to 106.00 in the wave (5).

 

[FBS]

Credit Agricole: Q1 GBP forecasts
GBP/USD
GBP/USD to weaken to $1.6200 in the stronger USD environment. Britain's officials will try to talk the pound down in Q1 2014.

Chart. Weekly GBP/USD

EUR/GBP
As for EUR/GBP, the pair is expected to fall towards 0.8200 by end-March. Pound will gain some ground vs. the euro on a wave of EUR sales.

Chart. Weekly EUR/GBP

 

[FBS]

Dec. 27: Asian session

Most Asian stocks went up after big gains at Wall Street where Dow Jones made a record high close. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.25%. Chinese shares rose as money rates eased and China set its yuan at an historic high.

USD/JPY tested briefly levels 105.00 today and EUR/JPY – 144.00. Yen hit 5-year lows versus the greenback and euro. Japanese data showed that the nation’s manufacturing activity is expanding at the fastest clip in more than 7 years, while Japanese firms added workers at the quickest pace in over 6 years. Japan’s core consumer price inflation in November rose to a 5-year high. This means that the country’s making progress in its fight against deflation.

Australian and New Zealand dollars have both strengthened in the late Asian session. AUD/USD has recovered above the $0.8900 mark. However, the Monday bearish gap still remains open. NZD/USD rose to $0.8170. The pair is supported by the 200-day moving average.

EUR/USD rose to $1.3745. GBP/USD went up to $1.6447.

 

[FBS]

EUR/USD: Ichimoku analysis (Dec. 27)

Daily. In the week ahead the New Year the US dollar is losing ground versus almost all major world currencies. EUR/USD recovered to 1.3740 by the end of the week. Bullish sentiment strengthened: prices have gone through resistance of the Tenkan-sen, and will soon be fixing above it. The Ichimoku Cloud also points to the strengthening of the bulls, but in the longer term.

Chart. Daily EUR/USD

H4. Here EUR/USD is leaving the Cloud. The pair’s supported by the short-term Golden Cross (C). The Cloud itself looks positive. It started widening up due to the growth of Tenkan-sen. The position of the bulls is strengthening. Note though that there’s a serious resistance at $1.3755. In addition Chinkou Span shows that the market is overbought. So, when the market reaches the level mentioned above, the market can either begin consolidation or make a corrective decline to the lower edge of the Cloud.

Chart. H4 EUR/USD

 

[FBS]

GBP/USD: Ichimoku analysis (Dec. 27)
Daily. During the past week the pair has settled above Tenkan-sen (TS). This allowed the bulls to resume rebound. However, growth is only in the short term. All lines of the Indicator are horizontal, so there’s no dominating trend. At the same time, the pair’s once again approaching the yearly highs as it’s trading in the $1.64460 area. In the coming days the bulls may attempt to break the December range to the upside. This will open the way towards $1.6600.

Chart. Daily GBP/USD

H4. At H4 the pair was consolidating just below the lines Tenkan and Kijun which have formed the Dead Cross. However, in the second half of the weeks the buyers re-appeared and resumed rebound. The pair formed a Golden Cross (С), and both lines are rising now. Senkou Span A and B are going up as well. Bullish sentiment is strengthening, so the odds that the uptrend will continue are high.

Chart. H4 GBP/USD

 

[FBS]

USD/CHF: Ichimoku analysis (Dec. 27)
Daily. During the past week the currency pair has been trading inside the Tenkan-Kijun channel. The prices were mostly drifting to the lower border of this range. All lines of the Indicator remain horizontal, so the sideways move may continue. Note that the odds that the downtrend will resume are high as the Cloud remains bearish and the Dead Cross (С) is still in place.

Chart. Daily USD/CHF

H4. Here the trend is sideways as well. Here the pair has also been trading inside Tenkan-Kijun channel which itself is inside the Ichimoku Cloud. However, on Friday the sellers livened up and the pair fell to the lower border of the Cloud. As Chinkou Span went below the price chart, we expect downtrend to develop in the near term.

Chart. H4 USD/CHF

 

[FBS]

USD/JPY: Ichimoku analysis (Dec. 27)
Daily. USD/JPY is setting new highs. The pair has reached 105.00. So, the bullish rally continues supported by all lines of the Indicator at the daily timeframe. The Golden Cross (С) and the bullish Cloud confirm the positive sentiment. But after the prices test resistance at 105.20, the pair may start corrective decline to Tenkan-sen.

Chart. Daily USD/JPY

H4. At H4 there are yet no problems for further rebounding. All lines of the Indicator are rising as well. The Cloud is bullish. Tenkan and Kijun have once again formed the Golden Cross (С). If the pair managed to hold above support at 104.65 in the coming days, the pair will start the year by testing 105.20 and maybe even 106.00.

Chart. H4 USD/JPY

 

[FBS]

ANZ: EUR/USD will continue uptrend
Analysts at ANZ point out that EUR gained 6% versus its main counterparts this year. This happened despite the fact that the ECB lowered interest rates to the record low, the euro zone’s economic recovery isn’t very convincing and the region’s unemployment remains extremely high.

ANZ concludes that the EUR depends not on comparative growth dynamics, but on a large current account surplus, improving fiscal position and the union’s progress in resolving the crisis and deepening economic integration. According to the specialists, this situation is unlikely to change in 2014. In their view, the uptrend will remain in place, especially against AUD and NZD. ANZ expects EUR/USD to trade in the $1.40/45 range.