EUR/USD Fundamental Analysis Jan. 18, 2012, Forecast
Economic Events:
Jan. 18 04:00 EUR Italian Trade Balance -0.94B -1.08B
The Italian Trade Balance measures the difference in value between imported and exported goods during the reported month.
A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.
08:30 USD Core PPI (MoM) 0.10% 0.10%
08:30 USD PPI (MoM) 0.10% 0.30%
The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
09:15 USD Industrial Production (MoM) 0.50% -0.20%
Industrial Production measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
Analysis and Recommendations:
The pair came to life after China reported that its economy grew at a strong pace. The euro defied all the bad news about an upcoming Greek default and the downgrade of the EFSF. It seems that investors are just in shock, like a deer stairing at headlamps.
China grew at a pace of 8.9% (annually) in Q4 according to its quick figures beating expectations.
The biggest problem facing the euro and the EU is the situation in Greece as it continues to worsened The talks about a 50% private sector writedown for Greek bonds broke down, this is a key element for Greece’s second bailout program. At the same time reports about Greek banks showed a shortfall of 15 billion euros, worse than estimated. Economists are also reviewing the amount of money that Greece will need, at this time, analysts are thinking that the total will far exceed earlier expectations
Theeuro currency strengthened after the ZEW Centre said that its index of German business sentiment recorded its largest ever monthly increase in January, indicating that the euro zone’s largest economy is performing strongly despite the effects of the region’s debt crisis. Germany needed this boost as the EFSF is going to fall on their shoulders.
Surprisingly Spain auctioned EUR4.9 billion of short-term government debt at lower yields, indicating that investor sentiment has not been hit by last week’s sovereign ratings downgrade. Short term debt is fairly safe and the mid terms bonds are what the markets are worried about
Support Levels at S1: 1.2979 1.2857 1.2824
Resistance Levels 1.2723 1.27 1.2627
The pair are currently trading at 1.2749 right between the current levels of support and resistance.
This one is a hold tight.. It looks like the pair will dance up and down between the current levels
Originally posted here
