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FX Daily Hotline 
5 September 2014     By C Dichio, Analyst

Chart of the day: Euro renews downtrend v Rand

 

In a surprise move, the ECB cut its benchmark interest rate from 0.15% to 0.05%, as well as new measures to stimulate the economy.  One result was a sharp fall in the Euro.

The single European currency recorded a 1.2% loss against the South African Rand.  The chart shows the rate breaking support at the sideways area along R14.0000 to renew the downtrend from the year's early peak.  The pattern is top heavy and appears capable of forcing further slippage towards the R13.5000 region, and possibly R13.0000 area after that.  A short is opened with the stop inserted at R14.5250.

 

Daily Comment:

 

The Euro also appears on the 'Losers' board against the Mexican Peso, Australian, Canadian and US Dollars.  We would point out that the RSI momentum indicators for all is in oversold territory.

The graph for the single European unit versus Greenback is printed here.  The September low at US$1.3105 collapsed under the selling onslaught.  The rate points to next important chart support along US$1.2800.

Against the British Pound, the Euro has dropped back to support at the July floor again.  This brings into question the basing hypothesis.  In the event of a breach (under E0.7874), next chart support is at the summer 2012 lows at E0.7813-0.7755.

Sterling has also bounced against the weaker Swiss Franc.  Here, the 'Trough' Key Day Reversal from SF1.5101 questions the top theory.

In contrast, the British currency continued its dive versus the Australian and Canadian Dollars.  In view of oversold indicators, the stops on the shorts held in these rates are tightened, to A$1.7560 and C$1.7880.

The profitable stop is also upped again on the long held in the Aussie versus Japanese Yen, to Y98.10.  The rate continues to advance strongly towards potential resistance at the psychological Y100 level.

Returning to the Euro and Swiss Franc, these retrace their recovery rallies v Yen.  The former is potentially reasserting the downtrend and tests support at last month's low at Y135.73; while the latter, shown here, points back to the February-August floor area near Y112.

 

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
CADEURCanadian Dollar/Euro0.7104+1.7%
AUDEURAustralian Dollar/Euro0.7223+1.6%
AUDCHFAustralian Dollar/Swiss Franc0.8712+1.6%
DKKUS$/Danish Krone5.7516+1.6%
USDEURUS$/Euro0.7726+1.6%
Top 5 Losses.
SymbolStockClose% Change
EURCADEuro/Canadian Dollar1.4077-1.7%
EURAUDEuro/Australian Dollar1.3846-1.6%
EUREuro/US Dollar1.2944-1.6%
EURMXNEuro/Mexican Peso17.0197-1.2%
EURZAREuro/South African Rand13.8896-1.2%
    
The FX Model Portfolio
Foreign Exchange Model Portfolio Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
21 Aug 2014 Australian Dollar/Japanese Yen AUDJPY Long 96.515 98.409 +1.96% 98.1
Foreign Exchange Model Portfolio Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
3 Sep 2014 GBP/Canadian Dollar GBPCAD Short 1.8 1.7761 +1.33% 1.788
3 Sep 2014 GBP/Australian Dollar GBPAUD Short 1.77 1.7468 +1.31% 1.756
4 Sep 2014 Euro/South African Rand EURZAR Short 13.8896 13.8896 0.00% 14.525
  • A short is opened in Euro v Rand (Chart of the Day).
  • Stops are adjusted on all the other trades.

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexOverbought rally shoots up.83.82+1.2% 81.188/82.31584.753
EUREuro/US DollarThe oversold decline dives under the Sept 2013 low (1.3105).1.2944-1.6% 1.27551.37/1.3445
GBPUSDBritish Pound/US DollarOversold decline continues towards the Feb floor.1.6335-0.8% 1.622/1.62521.6844/1.6644
CADUS$/Canadian DollarRanging below the late-Apr/Aug barrier.1.0875-0.1% 1.0621/1.08111.1279/1.1053/1.0998
JPYUS$/Japanese YenRenews the overbought rally to the late-2013/early-2014 peak.105.27+0.5% 100.76/103.5110.66/108.03/105.44
ZARUS$/South African RandExtends the June-Sept range forming between 10.5-10.85, approx.10.7311+0.4% 10.2728/10.465810.9779/10.8626
KRWSouth Korean Won per 1 US DollarPauses the s-t fall above the early-July floor.1018.95-0.1% 1008.55/1011.95?1041.25/1024.68
CHFUS$/Swiss FrancShoots past the Nov ceiling. RSI overbought.0.9319+1.5% 0.9024/0.91260.9456
EURGBPEuro/Pounds SterlingDrops back to support at the Jul floor. Once again, the base theory is under scrutiny.0.7926-0.8% 0.7813/0.78740.8153/0.8036
EURJPYEuro/Japanese YenPotentially reasserting the downtrend.136.26-1.1% 134.11/135.73139.28/138.28
EURCHFEuro/Swiss FrancReasserts the decline. RSI remains near oversold levels.1.2062-0.0% 1.19995/1.203021.2116/1.209
GBPJPYGBP/Japanese YenRanging rally towards the July highs struggles.171.913-0.3% 169.506/170.436181.4/175.37
GBPCHFGBP/Swiss Franc'Trough' KDR questions top theory.1.522+0.8% 1.4969/1.50571.5488/1.5287
CHFJPYSfr/Japanese YenFinds stiff resistance at the Jul high. Retraces the recovery from the Feb-Aug floor.112.955-1.1% 111.7/113.176114.959/114.69
AUDJPYAustralian Dollar/Japanese YenExtends the overbought s-t rally from the Apr/mid-Aug trading band.98.409+0.5% 93.043/93.929102.94/100?
AUDNZDAustralian Dollar/New Zealand DollarRenews the advance from the multi-month base. RSI overbought again.1.1254+0.3% 1.0925/1.11221.1313
AUDAustralian Dollar/US DollarRangebound between 0.95-0.92, approx.0.9341-0.1% 0.92030.9505


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