Daily analysis 27.05.2013

More calmness on EUR/USD after a volatile week. Ifo and U.S data were shaping sentiment on Friday. Today both U.K and U.S are off, so the there should be no major moves on the main currency pairs. The zloty is still waiting for a major push

Macro data (CET- Central European Time). Survey is supplied by Bloomberg unless otherwise noted.

• No key macro data which can significantly change the FX situation

Better-then-expected Ifo. Solid data form the States. A day off

We had quite a lot of emotions last week. Investors were mainly focused on statements from Federal Reserve members. Their opinions were shaping up the sentiment on the market with the culmination on Wednesday afternoon during Ben Bernanke testimony before the Congress. The situation in the next day can be seen as a “new opening” for the EUR/USD and a kind of “fresh start”. The “greenback” should be much more focused on the coming data from the U.S. Traders will not only be paying attention to NFP readings or inflation reports, but also to data describing the current and future condition of customers and companies or to some regional readings. All the data (at least form the market perspective) can be an indication of the QE being closer to/further form the tempering.

On Friday global investors were waiting for the Ifo report. The reading was better-then-expected what pushed the EUR/USD to the resistance level around 1.3000. The market didn't have enough steam to go further so it has resume the slide just before durable goods report form the U.S. The dta from the States was really solid (3.3% vs 1.5% expected), so it have more boost the the greenback and finally we ended the day near the opening levels..

Today due to holidays in the U.S and the U.K the volatility should be really low. No major levels are expected to be breached

The EUR/PLN is still on the resistance

Last week was pretty difficult for the Polish currency. I am not concerned about the percentage change (it was not that large) but rather the closeness to the key level – 4.20. The zloty was also under pressure form the weak macroeconomic data (especially the retail sales) which was probably the final argument for the MPC to cut rates again in June.

More dark clouds can come form reducing the QE operation and less demand for the Polish bonds. It can push the yields higher (prices lower) and force some speculators to close their positions. If we take into the account that some of them were not hedged against the currency fluctuations (deliberately to take advantage also form the zloty rise) then if we go north on the yields some of them will be forced to close the positions and exchange the zlotys into euros. In that case the situation can be exploit by “big fish” players on FX and many months of low volatility on EUR/PLN can be ended.

Taking into the account negative issues on the zloty the EUR/PLN rise is pretty possible scenario with the target around 4.3000.

Expected levels of PLN according to the EUR/USD rate:

Expected GBP/PLN levels according to the GBP/PLN rate:

Expected GBP/PLN levels according to the GBP/PLN rate

The technical analysis perfectly predicted EUR/USD move. There is still no changes on the analyzed paris.

Technical analysis EUR/USD: we quickly bounced back from the 1.3000 resistance level. No we should continue the bearish trend and after falling under 1.2800 the slide should accelerate to reach the 1.2700 target.

Technical analysis EUR/PLN: the base scenario is still the range trend (4.12-4.20). Alternatively the breakout above 4.20 should generate fast move toward 4.25-4.30.

Technical analysis USD/PLN: the 3.27 target is still in place with extension to 3.3300. A comeback to the sliding trend is possible after falling below 3.18 (low probability currently).

Technical analysis CHF/PLN: we are again close to generating sell signal on CHF/PLN. Falling under 3.330 should give a sell signal with a target of 3.2700. If 3.33 resistance holds then we chould expect the CHF/PLN to stay in the range trend (3.33-3.40).

Technical analysis GBP/PLN: the short term target for the pair is a move toward 5.0000 and an attempt to change the mid term trend to rising. The breaking above 5.0000 should initiate the move toward 5.1000. The alternative scenario is a move under 4.85 where bears should take the lead.