Forex Outlook for the week

Salam Friends,

Some minor changes to my blog. I have added several new information on candlestick patterns and stock market news. I have also added non-forex info such as prayer time and qiblat finder for my easy reference and I hope that you all will find it useful as well. If you guys have any comments or suggestion on the additional info or layout of my blog, please do so. I would really appreciate it!

Ok, now let’s go on and take a look at what’s the Fundamental and Technical outlook for this week:

Fundamental
Last week USD saw little movement against other major pairs such as EUR, GBP and AUD. Altough the first 3 days saw USD gain momentum as investors seek more reason to buy into the rally that is becoming exhaustive, on Thursday we saw that USD gave back some of its gain. And on Friday, market seems incline towards more USD bull.

In the G8 meeting, leaders agreed that there were early signs of economic stabilization and they are not ready yet to pull back their stimulus plan.

Cable – CPI is expected to decline to 1.8% y/y vs. 2.2% last mth while Claimant Count Change is expected to rise from a mth ago. Both shows the state of consumer in UK are still weak but is slowly recovering.

Fibre - Look out for the German ZEW Economic Sentiment and Eurozone Industrial Production figures. Both are expected to be announced on Tuesday and expected to show improvement. Failure to do so could potentially see the Fibre go south further.

Aussie – RBA maintained its rate at 3% but they did see a scope for further easing if conditions deteriorated which is a scenario that traders are starting to gravitate toward. Although Credit Suisse overnight index swaps are still pricing in 39 bps of a rate increase, it has actually fallen from 78 in early May and 58 a week ago.

Technical

Cable – I can see a chart pattern known as Three Line Strike Pattern - three long black candlesticks with consecutively lower closes followed by a long candlestick on the 4th day which closes above the open of the pattern’s 1st day. This indicates a continuation of downtrend.

I’ve already placed a short position near the top of the 4th candlestick and have since move my SL to a slight profit. Now let’s see if the journey to the south materializes.

Fibre – No clear indication to where the pair is heading to.

Aussie – Still trading within the downtrend channel (purple lines). Price could bounced back up supported by the trendline and indicators such as RSI,Stoch and Demarker are more inclined towards the uptrend. However Aussie could break that channel to the downside if carry trade unwinds.