WASHINGTON—Sales of existing homes fell for a fourth straight month in June as all sections of the country showed weakness. The reported that sales of existing homes dropped by 3.8 percent in June to a seasonally adjusted annual rate of 5.75 million units, the slowest sales pace in 4 1/2 years. The median price of a new home edged up slightly to $230,300 in June, a small 0.1 percent increase from the sales price a year ago. That was the first year-over-year price increase in 11 months...
Daily Report: Dollar Rebounds ahead of Existing Home Sales
July 25th, 2007
Action Insight | Written by ActionForex.com | Jul 25 07 08:53 GMT |
Forex Daily Technical Report Dollar Rebounds ahead of Existing Home Sales
Dollar rebounds against European majors today. A short term correction is at least due for the deeply oversold dollar. And, with the failure to take out some important medium term resistance against Euro and Sterling and break of near term support today, the correction could have just started. But it will depend on the reaction to today’s US Existing Home Sales data, which is expected to show another -1.8% decline to 5.87M annualized rate. Concern on the US housing market is still a major driving force in the financial markets
Released over night, CPI in Australia quickened again from 0.1% qoq to 1.2% qoq in Q2. Though the yoy rate moderated from 2.4% to 2.1%, it was higher than expectation of 1.9%. The data prompted fresh speculation that RBA would increase the overnight cash rate again at its next meeting on Aug 7. The Aussie surged to fresh 18 year high against dollar at 0.8870. EUR/USD
Daily Pivots: (S1) 1.3795; (P) 1.3824; (R1) 1.3850; «www.actionforex.com»
EUR/USD’s break of 1.3792 minor support suggests that a short term top is likely in place, with bearish divergence condition in 4 hours MACD and RSI, and after failing to sustain above 1.3822 projection target. Intraday bias is flipped to the downside and further decline should be seen towards support zone of 1.3567 to 1.3658, with 38.2% retracement of 1.3262 to 1.3851 at 1.3626. On the upside, sustained break of 1.3851 is needed to confirm recent rally has resumed. Otherwise, risk remains on the downside even in case of recovery.
In the bigger picture, the current development dampened the original view that rise from 1.3262 is the last advance in a five wave structure that started at 1.2483. Firstly, the current momentum of the rise from 1.3262 is seen stronger than the prior rally from 1.2865 to 1.3681. Secondly, the falling trend line in both daily MACD and RSI were broken, negating the bearish divergence conditions. In other words, the underlying bullishness in EUR/USD could be much stronger than we originally thought.
Focus remains on 1.3822 resistance. Sustained trading above this level will add much weight to the case that whole medium term rally from 1.1639 is indeed resumption of multi-year up trend from 0.8223 (00 low). That is, further rise should be seen in medium term towards 95 high of 1.4523 with much chance to extend further to 61.8% projection of 0.8223 to 1.3668 from 1.1639 at 1.5004.
On the downside,as long as 1.3481 cluster support (61.8% retracement of 1.3262 to 1.3851 at 1.3487) holds, any pull back will still be treated as correction to rally from 1.3262 only and another rise is still in expected after completion. However, break will put 1.3262 low into focus. And break will indicate that medium term rally from 1.1639 has likely completed after being limited by 1.3822 resistance as originally expected.
GBP/USD
Daily Pivots: (S1) 2.0588; (P) 2.0621; (R1) 2.0658; «www.actionforex.com»
Cable’s rally was limited at 2.0652, slightly below medium term target of 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677. Subsequent retreat and break of 2.0556 minor support suggest a short term top is in place with bearish divergence condition in 4 hours MACD and RSI. Intraday bias is flipped to the downside and further decline is expected to be seen to short term rising trend line (now at 2.0374). On the upside, Sustained break of 2.0677 fibo resistance is needed to confirm recent rally has resumed. Otherwise, risk remains on the downside even in case of recovery.
In the bigger picture, the sustained break of 2.0207 projection target confirms underlying upside momentum is still strong. Also, it added much credence to the case that whole up trend from 1.7047 is resumption of multi-year up trend from 1.3680. In such case, further rally should then be seen to 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 first. Sustained trading above 2.0677 will target 2.1 psychological resistance.
On the downside, in case of a pull back, downside should be contained by support zone between 2.0056 and 2.0206 and bring another rally. Break of 2.0056 will suggest that lengthier consolidation will come first with the prospect of another test the medium term rising trend line (now at 1.9823) But medium term outlook will be neutral at worst at long as 1.9621 support remains intact.
USD/CHF
Daily Pivots: (S1) 1.2001; (P) 1.2038; (R1) 1.2066; «www.actionforex.com».
USD/CHF’s rebound extends further to 1.2102 so far today. At this point, further rise is expected to be seen towards 61.8% retracement of 1.2232 to 1.1960 at 1.2128 or higher. Below 1.2021 will indicate that recovery from 1.1960 has possibly completed and bring retest of this low. But still, since a short term bottom is in place at 1.1960 with bullish convergence conditions in 4 hours MACD and RSI, firm break of 1.1960 is needed to confirm fall from 1.2467 has resumed. Otherwise, consolidation could still extend further.
In the bigger picture, USD/CHF has likely completed a medium term triangle consolidation already, which started at 1.1919 with five waves to 1.2467. Firm break of 1.1993 will confirm this case. 1.1878 (06 low) will be the initial target. And since, in such case, fall from 1.2467 is viewed as resumption of medium term down trend from 1.3283, further weakness should be seen to 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404, with much chance to extend to retest 1.1288 (04 low).
On the upside, break of 1.2232 resistance will mess up the short term picture a little bit. In such case, chance is swung to the case that the triangle consolidation indeed started at 1.1878. In other words, the overall outlook didn’t change and just that another rally should be seen before completion. Hence, even in such case, upside should be limited below 1.2467 high and bring another medium term decline.
USD/JPY
Daily Pivots: (S1) 119.81; (P) 120.47; (R1) 120.91; «www.actionforex.com»
USD/JPY’s fall extended further to as low as 119.76 before turning sideway. At this point, further decline is expected as long as 120.95 resistance holds. Next downside target will be 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57). On the upside, above 120.95 will indicate a short term bottom is formed and turn into consolidation. But a break above 120.60 resistance is still needed to indicate fall from 124.13 has completed. Otherwise, risk remains on the downside.
In the bigger picture, rise from 115.13 has made a top at 124.13 and turned into consolidation since then. But still, rally from 108.99, which is treated as resumption of whole up trend from 101.66, is in progress. Even in case of a deeper correction, downside is expected to be contained by 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57) and bring rally resumption. Next medium term upside target will be resistance zone of 100% projection of 101.65 to 121.38 from 108.99 at 128.72 and 100% projection of 108.99 to 122.17 from 115.13 at 128.31.
However, break of 118.35/57 cluster support argue that rise from 108.99 has possibly completed and put 115.13 low into focus.
EUR/JPY
Daily Pivots: (S1) 165.60; (P) 166.47; (R1) 167.09; «www.actionforex.com»
EUR/JPY’s correction from 168.95 continues today, reaching as low as 165.24 so far. At this point, intraday bias remains on the downside as long as 166.18 minor resistance holds. Next downside target will be 164.24 cluster support (61.8% retracement of 161.49 to 168.95 at 164.34). On the upside, above 166.18 will indicate a temporary low is formed and bring consolidation. But break of 167.32 resistance is needed to indicate fall from 168.93 has completed. Otherwise, risk remains on the downside even in case of recovery.
In the bigger picture, break of the short term rising trend line suggest that rally from 150.75 has possibly completed with bearish divergence condition in daily MACD and RSI. Deeper correction could not be seen to 161.49 support first. And break will confirm that a medium term top is in place at 168.93 and bring deeper correction, possibly with a retest of medium term trend line support (now at 155.67
However, with medium term trend line remains intact, whole medium term rally from 130.60 is still treated as in progress and the interpretation remains unchanged. First wave up ended at 143.60, subsequent correction ended at 137.167. The third wave up ended at 159.63 while fourth wave correction has ended at 150.75. Rise from there represents the final advance in this structure. With 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 taken out decisively, next medium term upside target will be 100% projection of 137.16 to 159.63 from 150.75 at 173.22.
Forex News Digest
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Wed, 25 Jul 2007 05:58:00 GMT from Reuters UK
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Wed, 25 Jul 2007 05:58:00 GMT from Bloomberg
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Wed, 25 Jul 2007 05:23:00 GMT from Bloomberg
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Wed, 25 Jul 2007 05:06:00 GMT from Bloomberg
«www.actionforex.com» Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Trade balance (jpy) Jun 1227B 955.0B 389.5 B
23:50 JPY Japan Trade balance Y/Y Jun 2.80% N/A 9.30%
23:50 JPY Japan Exports Y/Y Jun 16.20% N/A 15.10%
23:50 JPY Japan Imports Y/Y Jun 10.70% N/A 15.50%
1:30 AUD Australia Consumer prices Q/Q Q2 0.90% 1.00% 0.10%
1:30 AUD Australia Consumer prices Y/Y Q2 2.10% 1.90% 2.40%
14:00 USD U.S. Existing home sales Jun 5.87 M 5.99 M
14:00 USD U.S. Existing home sales M/M Jun -1.80% -0.30%
18:00 USD Fed’s Beige Book
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