Forex - GBP/USD hits session lows after U.K. GDP data

The pound fell to session lows against the dollar on Wednesday after official data confirmed that the U.K. economy contracted in the fourth quarter, while annualized growth was revised lower.

GBP/USD hit 1.5120 during European morning trade, the pair’s lowest since March 21; the pair subsequently consolidated at 1.5131, shedding 0.19%.

Cable was likely to find support at 1.5072, the low of March 19 and resistance at 1.5206, Tuesday’s high.

The Office for National Statistics said U.K. gross domestic product contracted by 0.3% in the three months to December, in line with preliminary estimates and economists’ forecasts. 

The ONS said fourth quarter growth for 2012 was revised down to 0.2% compared to the same period the previous year, from a preliminary estimate for 0.3% growth.  

The report said a number of unusual factors may have impacted on growth in 2012. 

Bad weather and the loss of a working day due to the Diamond Jubilee may have reduced output during the second quarter. In contrast, the London 2012 Olympic and Paralympic Games in the third quarter supported output, and this may have been partly responsible the contraction in the fourth quarter.

Sterling was higher against the euro, with EUR/GBP down 0.26% to 0.8461.

The euro remained under pressure amid a combination of concerns over the financial stability of the euro zone following Cyprus’s last minute bailout and ongoing political uncertainty in Italy.

Investors remained concerned that the bailout deal for Cyprus could set a precedent for future bailouts in larger euro zone states, with big bank depositors and senior bond holders forced to suffer losses.

Italy was to hold an auction of 10-year government bonds later Wednesday, while the U.S was to release private sector data on pending home sales.

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Forex - GBP/USD turns lower on disappointing U.K. data

The pound turned lower against the U.S. dollar in subdued trade on Tuesday, after the release of positive U.S. economic reports, as disappointing U.K. realized sales data weighed on demand for the pound. 

GBP/USD pulled away from 1.5207, the session high, to hit 1.5150 during European afternoon trade, slipping 0.19%. 

Cable was likely to find support at 1.5093, the low of March 21 and resistance at 1.5258, Monday's high. 

The pound came under pressure after the Confederation of British Industry said earlier that its index of realized sales fell unexpectedly to zero in March, from a reading of 8 the previous month. Analysts had expected the index to rise to 12 this month. 

In the U.S., the Standard & Poor's/Case Shiller composite 20 house price index rose to an annualized rate of 8.1% in January, from 6.8% the previous month, beating expectations for a rise to 7.9%. 

The report came after the Census Bureau said that U.S. core durable goods orders fell 0.5% in February, disappointing expectations for a 0.5% rise, after a 2.9% increase the previous month. 

However, durable goods orders, including transportation items, rose 5.7% last month, more than the expected 3.8% increase, following a 3.8% decline in January. 

The pound was also lower against the euro with EUR/GBP rising 0.25%, to hit 0.8489. 

Sentiment on the euro remained fragile after Eurogroup head, Jeroen Dijsselbloem, said on Monday that the rescue program agreed for Cyprus represents a new model for resolving euro zone banking problems and other countries may have to restructure their banking sectors. 

He later appeared to backtrack, saying Cyprus was a specific case with exceptional challenges.

Later in the day, the U.S. was to release data on consumer confidence. 

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U.S. futures higher ahead of economic reports; Dow Jones up 0.15%

U.S. stock futures pointed to a higher open on Tuesday, as markets eyed the release of U.S. economic reports, while optimism over the announcement of a bailout deal for Cyprus continued to support. 

Ahead of the open, the Dow Jones Industrial Average futures pointed to a 0.15% rise, S&P 500 futures signaled a 0.14% gain, while the Nasdaq 100 futures indicated a 0.21% increase.

Early Monday, euro zone finance ministers approved a EUR10 billion international bailout for Cyprus that will see the closure of the country’s second largest lender Laiki Bank and inflict heavy losses deposits of more than EUR100,000.

Investors remained cautious however, after the head of the Eurogroup, Jeroen Dijsselbloem, said on Monday that the rescue program agreed for Cyprus represents a new model for resolving euro zone banking problems and other countries may have to restructure their banking sectors.

He later appeared to backtrack, saying Cyprus was a specific case with exceptional challenges.

Dell was expected to remain in the spotlight, following reports Blackstone Group and billionaire Carl Icahn are offering to buy the tech company without retaining Michael Dell as CEO.

Dell edged down 0.07% in pre-market trade.

In the same sector, Intel was said to be making progress in talks with Time Warner, NBC Universal and Viacom to obtain TV shows and films for a first-of-its kind online pay-TV service, sending the company's shares up 0.09% in early trading.

Among Internet-related stocks, Yahoo! Inc. was reportedly preparing to pay about USD30 million to buy Summly, a mobile startup run by a 17-year-old. Summly is a mobile application that summarizes news articles for small-screen devices. 

Following the news, Yahoo shares were up 0.43% pre-market.

Elsewhere, Boeing aircraft manufacturer said it was planning a final 787 test flight in the coming days, after taking the grounded Dreamliner aloft on Monday to evaluate fixes to lithium-ion batteries that overheated on two aircraft earlier this year. 

Across the Atlantic, European stock markets were mixed to higher. The EURO STOXX 50 fell 0.22%, France’s CAC 40 advanced 0.45%, Germany's DAX added 0.13%, while Britain's FTSE 100 dipped 0.01%.

During the Asian trading session, Hong Kong's Hang Seng Index added 0.27%, while Japan’s Nikkei 225 Index dropped 0.6%.

Later in the day, the U.S. was to release government reports on durable goods orders and new home sales as well as a report on consumer confidence.

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EURUSD – Euro/dollar continues to weaken after gap down

The EURUSD opened this week with a large gap down of over 160 pips, this came on the back of some news over the weekend regarding Cyprus debt problems and how it might affect the euro-zone economy. Regardless of why the gap formed, the important thing to note is that the EURUSD downtrend is still intact and this market is looking increasingly weak lately. Note that the market did try to fill the week-opening gap but only managed to fill it about 50% of the way before reversing lower again. As of this writing, into the early-Asian trading session, the market is already threatening to break below key support near 1.2875 again, and if this bearish momentum continues we could see a larger move lower. The next key support is not seen until about 1.2660, traders can continue to watch for price action signals to sell and trade in-line with the downtrend in this market.

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Weekly Price Action Trading Outlook for March 25th to March 29th 2013

EURUSD – Euro/dollar remains a potential sell below 1.3135 resistance

The EURUSD managed to hold above key support at 1.2875 last week, moving higher into Friday’s close after chopping sideways earlier in the week. This week, as long as the market is contained below 1.3135 key resistance on a closing basis, we are looking to sell the market on an obvious 4 hour or daily chart price action sell signal. Traders can watch the resistance from current levels to up around 1.3135 for a nice 4 hour or daily chart pin bar sell signal for fakey signal to trade back in-line with downtrend. A close above 1.3135 would neutralize our current bearish bias.

GBPUSD – Sterling/dollar pushing up toward weekly resistance

The GBPUSD has regained some of its recently lost ground over the last two weeks as we can see in the weekly chart below. We should note that the long-term trend is still down and this current up move is simply a counter-trend retracement within that broader downtrend. Still, the daily chart has shown some strength over the last two weeks and we have to respect that strength until the price action shows us it might be ending. We would note that in the weekly chart below the market is approaching a key zone of resistance from about 1.5250 up to 1.5450, and any obvious 4 hour or daily chart sell signal forming within that resistance area could be a potential trigger for the downtrend to resume. A nice daily chart long-tailed pin bar reversal showing rejection of that resistance would be an ideal sell signal to watch for in the coming days.

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Forex - EUR/USD falls as Cypriot bailout optimism wanes

The euro fell against the dollar on Monday after investors grew wary of the impacts a European bailout will have on Cyprus even though the country will remain in the eurozone.

Earlier Monday, eurozone finance ministers and the International Monetary Fund approved a EUR10 billion rescue package for Cyprus provided the country close up its second-largest lender, Laiki Bank.

In U.S. trading on Monday, EUR/USD was down 0.85% at 1.2880, up from a session low of 1.2866 and off from a high of 1.3048.

The pair was likely to find support at 1.2844, Tuesday's low, and resistance at 1.3048, the earlier high.

The bailout deal guaranteed that accounts holding EUR100,000 or less will continue to be insured and likely shifted to another financial institution, though larger depositors and bondholders in the bank will take a haircut, which sent the euro wiping out earlier gains. 

Eurogroup head Jeroen Dijsselbloem said earlier terms of the rescue package may serve as a template for other European bailouts, which rattled nerves on expectations that future financial lifelines may require banking-sector restructurings.

Markets were eagerly awaiting Federal Reserve Chairman Ben Bernanke to speak later in the day and provide insight into U.S. monetary policy, which the U.S. central bank left unchanged last week.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.49% at 0.8488, and EUR/JPYtrading down 0.88% at 121.67.

On Tuesday, Germany is to produce official data on retail sales, a key indicator of overall economic health.

Later Tuesday, the U.S. is to release a flurry of economic data with government reports on durable goods orders and new home sales as well as a report on consumer confidence.

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Forex - EUR/USD weekly outlook: March 25 - 29

The euro gained ground against the dollar on Friday as sentiment on the single currency was boosted by hopes for a resolution on an alternative bailout deal for Cyprus.

EUR/USD hit a session high of 1.3009 on Friday before settling at 1.2991, up 0.71% for the day and 0.36% higher for the week.

The pair is likely to find support at 1.2878, Thursday’s low and resistance at 1.3076, the high of March 12.

The euro found support after Greece’s third largest lender Piraeus Bank agreed to acquire the Greek branches of Cyprus's banks to protect them from the crisis in Cyprus.

Meanwhile, political leaders in Cyprus prepared to pass legislation to needed to secure a EUR10 billion euro bailout from the European Union and the International Monetary Fund ahead of a Monday deadline.

A previous agreement that included a levy on deposits in Cypriot banks was rejected by the country's parliament on Tuesday.

Meanwhile, concerns over the deteriorating economic outlook for the euro zone weighed after the Ifo Institute said Friday that its German business climate index slipped to 106.7 in March from 107.4 a month earlier. 

The data came one day after a report showed an unexpected contraction in the German manufacturing sector in March.

The Federal Reserve announced Wednesday that it will leave monetary policy unchanged in spite of recent signs that the U.S. recovery is gaining traction, citing concerns over high unemployment levels and risks from  tax increases and federal government spending cuts.

Speaking at the end of the bank’s two-day policy meeting, Fed Chairman Ben Bernanke said the central bank may gradually wind down the pace of its bond buying, but only after the labor market shows signs of being on a more stable footing.

The euro was higher against the pound on Friday, with EUR/GBP rising to session highs of 0.8546 before settling at 0.8530, up 0.33% for the day, trimming the week’s losses to 0.53%.

Elsewhere, EUR/JPY rose to session highs of 123.46, before settling at 122.75, up 0.27% for the day and 0.55% lower for the week.

In the week ahead investors will be closely monitoring developments in Cyprus as a failure to reach a deal could see the country exit the euro zone.

Market participants will also be watching German data on retail sales on Tuesday amid concerns over the economic outlook for the euro zone and an Italian government debt auction on Thursday.

The U.S. is to release a flurry of data including reports on durable goods orders, home sales and consumer confidence.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, March 25

Federal Reserve Chairman Ben Bernanke is to speak at an event in London; his comments will be closely watched for any indication of the possible future direction of monetary policy.

Tuesday, March 26

In the euro zone, Germany is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Later Tuesday, the U.S. is to release a flurry of economic data with government reports on durable goods orders and new home sales as well as a report on consumer confidence. 

Wednesday, March 27

The euro zone is to release preliminary data on consumer inflation, which accounts for a majority of overall inflation. In addition, Italy is to hold an auction of 10-year government bonds.

The U.S. is to produce industry data in pending home sales and a government report on crude oil stockpiles.

Thursday, March 28

In the euro zone, Germany is to publish official data on the change in the number of people employed.

The U.S. is to release the weekly government report on initial jobless claims and revised data on fourth quarter economic growth.  

Friday, March 29

Markets in Germany are to remain closed in observance of Good Friday.

The U.S. is to round up the week with official data on personal spending and expenditure and revised data form the University of Michigan on consumer sentiment and inflation expectations.