Wait-And-See Mode

Dear Traders,

The market is still in a wait-and-see mode and larger movements are lacking. While the euro rose on the back of improvements in the European Central Bank’s lending report, the cable failed again to overcome its 1.55-hurdle.

The euro climbed to a high of 1.1387 after an ECB report showed that there is an improvement in the region’s lending conditions, diminishing prospects for additional monetary stimulus. Market participants fear that Draghi could probably sound less dovish at the ECB press conference tomorrow, since the report gives policymakers less cause for more QE.

Moreover, there were no new insights  from the Federal Reserve. Fed chair Yellen did not comment on the outlook for monetary policy when she made a statement yesterday.

There are no major economic reports scheduled for release today, so we shall have to wait until tomorrow when there are catalysts for more volatility. The only second-tier data is coming from the U.K. with public finances due for release at 8:30 GMT. Furthermore, BoE Governor Mark Carney is scheduled to speak today on the U.K.’s membership in the European Union at 17:00 GMT.

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The Market Has Lost Steam

Dear Traders,

Welcome to a new trading week.

Last Friday ended with non-volatile sideways moves. Both of our major currency pairs traded within narrow ranges and failed to offer traders a profitable trading environment. Generally it seems as if the market has lost steam, given the reduced expectations of a Federal Reserve tightening in 2015. In order to restore investor’s confidence, the market would need a clear signal from central bankers what to expect in the near-term. In the meantime, traders must be patient and try to profit from smaller fluctuations.

The week’s focus will be on ECB meeting on Thursday. The European Central Bank is not expected to increase stimulus this month, but expectations generally tend towards an extension of QE in the coming months. Apart from the ECB Rate Decision, the only important piece of eurozone data will be Friday’s PMI report.

There are no major important U.S. data scheduled for release this week. Some housing market reports are due for release but these reports are unlikely to determine the greenback’s further direction.

On Tuesday, traders should pay attention to speeches from Fed-chair Janet Yellen and BoE Governor Carney, which may impact on the currencies.

Finally, U.K. Retail Sales are scheduled for release on Thursday. Retail Sales are forecast to show a higher output in September and increase the chances of a break above 1.55.

We wish you a profitable trading week!

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Obedient Euro And Stubborn Cable

Dear Traders,

The story is always the same: Whenever the euro increased its value too rapidly only because of speculation against the U.S. dollar, someone has to talk down the currency. This is what happened yesterday. European Central Bank member Ewald Nowotny said yesterday in Warsaw, that core inflation in the euro area is “clearly missing the ECB’s target”. He added that “…in my view it is quite obvious that in the current economic situation additional sets of instruments are necessary. These include structural measures”. His comments were perceived as a signal that the ECB could step-up more stimulus in the near-term. In response to the remarks, the euro bounced off the 1.15-level and weakened significantly against the U.S. Dollar.

In the end, the euro was re-balanced, falling back into its recent trading ranges below 1.14.

Moreover, the dollar received support from better than expected U.S. Consumer Prices.

It was not a good day for sterling traders. The British pound refused to trade above 1.55 and there was neither further bullish nor fresh bearish engagement in the GBP/USD. We had therefore to struggle with stop-losses without a profitable ending.

What is important for today?

Eurozone Consumer Prices are scheduled for release at 9:00 GMT today, which could have an impact on the EUR/USD.

Furthermore, traders should have an eye on today’s U.S. data. U.S. Industrial and Manufacturing Production are due for release at 13:15 GMT, followed by Michigan Confidence at 14:00 GMT.

We wish you a profitable trading day and a beautiful weekend.

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GBP’s Sell-Off: Only A Steep Correction?

Dear Traders,

The biggest story yesterday was the sharp sell-off in the British pound. The cable was crushed as UK inflation unexpectedly dropped below zero. Consumer prices fell 0.1 percent in September, which was even worse than economist’s forecast of stagnation. The decline will reinforce the view that the Bank of England is far away from raising interest rates in the near future. Interestingly, the pound already weakened before inflation data was due for release. Traders have therefore reason to believe, that there was a leak and that some market participants were already aware of the weak CPI report.

Today’s focus shifts to the U.K. Labor Market report, scheduled for release at 8:30 GMT. Economists predict that wage growth accelerated in August, which could incite sterling bulls to buy GBP towards 1.54 again. A strong labor market report would have the potential to turn yesterday’s decline into a sharp correction of the recent uptrend.

The EUR/USD has nothing new to report. The German ZEW survey came in even weaker than anticipated, but the euro was unaffected by the deterioration in investor sentiment. The currency remained trading within its narrow range between 1.1410 and 1.1345.

The most important piece of U.S. data will be today’s Retail Sales report, due for release at 12:30 GMT. If data disappoints, we could see a sharp sell-off in the U.S. dollar, pushing its major peers towards fresh highs. Independently of the outcome, this report should have a significant impact on the greenback.

Furthermore, the Federal Reserve releases the Beige Book at 18:00 GMT.

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U.S. Data will determine the market’s appetite for USD

Dear Traders,

Welcome to a new trading week.

Last Friday was characterized by a steady uptrend in the EUR/USD, providing traders a nice profit. The GBP/USD, however, played a spoiling rule and tortured traders with choppy moves and losing trades within a narrow 80-pip range.

New week, new chances

There are plenty of economic data reports this week which should be worthwhile to pay special attention to. On Tuesday, U.K. Consumer Prices are scheduled for release, followed by the German ZEW survey, which will be the only market-moving eurozone data this week.

On Wednesday the focus will be on U.K. labor market dataU.S. Retail Sales and the Fed Beige Book.

U.S. Consumer Prices are scheduled for release on Thursday. Market participants are likely to pay close attention to this report, as the Federal Reserve’s main concern is inflation and a further decline may increase concerns about the timing for a liftoff.

Technical perspective:

EUR/USD

We got what we were looking for last week – a breakout of the euro’s narrow trading range. The euro now faces a next resistance area at 1.1435 – 1.1460. Fresh bullish momentum should only be considered with a break above 1.1470. Remaining below 1.14, current supports could be at 1.1320, 1.1290 and 1.1220.

Chart_EUR_USD_Daily_snapshot12.10.15

GBP/USD

The British Pound corrected its recent uptrend, marking a current resistance at 1.5370-80. Chances are that a significant break above 1.5340 drives the pair towards a test of 1.54 and 1.5430. A current support is seen at around 1.5250. Below 1.5240, GBP is likely to drop towards 1.5150.

Chart_GBP_USD_4Hours_snapshot12.10.15

Have a good start to the week.

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Another day without Big Moves

Dear Traders,

And once again it was a trading day without huge market moves and there were no significant break-outs. The cable marked a new resistance at 1.5370, but generally followed its recent upward trend. The euro, on the other hand, remained firmly within its narrow trading range. Nevertheless, traders were able to gain a small profit with our long-entry, even though gains were not as huge as we had hoped for.

Why did the minutes fail to trigger bigger moves?

The Bank of England’s MPC minutes came in less hawkish than expected. BoE policy makers voted 8-1 to keep the benchmark rate at 0.5 percent and signaled to keep rates steady as long as inflation weakness persists. According to the minutes, price growth will probably stay below 1 percent until spring 2016, which is longer than anticipated. Investors had hoped for any signals with regard to an earlier rate hike.

The overall tone of the FOMC minutes was not sufficient enough to spur the U.S. dollar’s momentum. Federal Reserve policy makers delayed an interest rate increase last month because of downside risks to inflation and a further strengthening of the dollar, which could be caused by growing risks from China. However, officials continued to say that they were on track to raise rates later this year. Projections showed that 13 of 17 FOMC members forecast a rate hike by year’s end. Market participants anticipated a more hawkish tone and given the recent slack in the labor market, investors saw little reason in the minutes to expect a Fed rate hike soon.

Today there are no important economic reports scheduled for release. U.K. Trade Balance, scheduled for release at 8:30 GMT and U.S. Wholesale Trade Sales, due at 14:00 GMT are second-tier reports, which could have a limited impact on the currencies.

We wish you a wonderful weekend!

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No big market moves

Dear Traders,

Yesterday’s price action remained relatively moderate. The highly anticipated U.S. ISM index fell short of the forecast but failed to trigger big market moves. The British pound tested the area slightly above 1.5240 but sold off sharply in response to weaker U.K. PMI reports. The support zone around 1.5130/10 still remains intact for the time being. A break below 1.51 could drive the cable towards 1.5010.

The euro, however, offered some gains for both sides. After a test of 1.1290, the currency pair turned into an intraday downtrend. A current support can be found at 1.1170. Below that level we will turn our focus to the 1.11-mark again.

Today, there are only second-tier economic reports scheduled for release, which could have a limited impact on the currencies.

7:30 EUR Germany Construction PMI

12:30 USA Trade Balance

17:00 EUR ECB president Draghi speaks

21:30 USA Fed’s Williams speaks

(timezone: GMT)

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Dollar Strength Ahead of NFP-Report

Dear Traders,

We welcome you to the trading month of October.

The euro declined against the greenback after consumer prices in the Eurozone turned negative for the first time in six months. The drop in the region’s inflation rate fuel arguments that the European Central Bank could step-up monetary stimulus.

Meanwhile, the U.S. dollar received support from a stronger than anticipated ADP employment report. The improving outlook for the labor market is among the Federal Reserves’s reasons to raise interest rates.

The pound sterling took a brief look above 1.5210 but was not able to maintain that level and headed for a test of 1.5110. As anticipated in yesterday’s analysis, the level around 1.5110 – 1.5090 may lend a support for the currency pair. We will wait and see.

Sterling traders should keep an eye on the U.K. PMI Manufacturing report, scheduled for release at 8:30 GMT. If data surprises to the upside, GBP could gain ground.

Furthermore, we will watch the release of the U.S. ISM Manufacturing index, due at 14:00 GMT.

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We wish you good trades and many pips!

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