Currency markets – Finally reacting on different factors

EUR/USD (1,3550): This weeks “Hot Topic” is EUR/USD but the conclusion is here.

Short term the US housing data Monday to Wednesday might help the greenback and even the personal income (exp. -0,1%) and personal spending (exp. +0,2) could support. Funny enough, I have the feeling that if the PPIP news are well received it’s also dollar supportive. It explains the entry level at 1,3300 if I should take a position. As it is too early with the big investor depression about the huge US debt, the position will not be the fundamental one. Therefore I would choose a stop loss at 1,3000 and very likely an exit at 1,4000, maybe even a turnaround at that level.

The reason is, that when reality comes back to the market, then the Euro negative factors will dominate for a period. These are the CEE problems, Euro Zone growth deteriorating and the collapse of the Euro. The sell off will be 10%, starting just after Easter.

Target: Entry level 1,3300 with stop loss 1,3000 and target 1,4000 (possible turnaround level).

  
EUR/GBP (0,9360) – GBP/USD (1,4470): Last weeks unemployment data once more confirmed that the deterioration of the UK economy continues with no end in sight. Basically the target in EUR/GBP at 0,9500 was reached but I have the feeling, at that level are many sluggish news priced in. We will reach 0,9500 again but currently is Sterling lifted by the positive sentiment in stock markets. When 0,9500 is reached again it will be the median for some time.

One important figure is released on Thursday, the February retail sales (exp. -0,2%). I think it could be better than expected and also supportive for GBP.

GBP/USD will be supported by the downwards pressure on Dollar meaning the range will be moved upwards to trade around 1,4500.

Targets: EUR/GBP  0,9500     GBP/USD range 1,4250 – 1,4750 .

EUR/JPY (131,60) – USD/JPY (97,15): The Fed move last week hit my target of 100 to 102 in USD/JPY before the financial year end at 31^st March – it won’t happen now. I expect that some year end realisation of foreign assets (from a Japanese perspective) will be executed within the next week. It leads to a cap in USD/JPY combined with the general bearish USD sentiment.

Friday is the data day in Japan with the Tokyo March CPI (exp. +0,3%) and the February retail trade (exp.    -0,6%). Particularly the retail trade will be more than interesting, I would go for an even lower number.

EUR/JPY is supported by higher risk appetite. As some in Far East say, some of the riskier currencies are favoured like the Euro. That view will probably please Mr. Trichet, but it shows how investors are seeking towards the large currencies of the different regions, like Yen in Far East. With EUR/USD trading higher but USD/JPY lower, then EUR/JPY will trade around 130,50.

Targets: EUR/JPY range 128,00 – 133,00  USD/JPY 93,00 

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