Markets Are Expected To Be Quiet

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Dear Traders,

The euro fell to the weakest level in seven months on speculations the European Central Bank could be more aggressive in stepping up additional measures to stimulate the economy. While the market expects the ECB to expand stimulus when it meets next week, the central bank may surprise the market with an even more aggressive move. Some analysts expect the ECB to cut the deposit rate by more than the market expects next Thursday. In any case, the EUR/USD is likely to remain under pressure. A next bearish target could be at 1.0555.

The British pound however, failed to show a sustained trend yesterday, trading sideways between 1.5136 and 1.5055. Next important resistances could be at 1.5155 and 1.5180, whereas sterling bears should keep an eye on a break of the 1.5050-level, targeting the 1.5030- and 1.50 level.

GBP/USD – 4 Hour Chart

Chart_GBP_USD_4Hours_snapshot26.11.15

U.S. financial markets are closed today for Thanksgiving, so the trading environment is expected to be very quiet. Nonetheless, we know from others years, that on Thanksgiving Thursday a clear trend has frequently been established. Moreover, the Friday after Thanksgiving tended to show even bigger moves, so it could be worthwhile for investors to remain engaged.

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Euro Appeared Unaffected By Geopolitical Tensions

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Dear Traders,

The euro remained resilient amidst heightened tensions between Turkey and Russia. The European currency was capped at 1.0670/75, resulting in a barrier for any bullish engagements. While other currencies such as the JPY benefitted from safe haven flows after geopolitical tensions overshadowed financial markets, the U.S. dollar received less attraction as a safe haven. Political analysts consider a major escalation unlikely given the risks associated with any conflict between Russia and Turkey as a NATO member.

The British pound traded lower on dovish comments from Bank of England officials. BoE Governor Mark Carney said in testimony to lawmakers that interest rates are likely to remain low for some time. BoE Chief Economist Andrew Haldane sounded even more dovish saying risks to the inflation outlook were to the downside. So all in all, given the bleak outlook, sterling could be vulnerable to further losses in the near-term. The currency pair marked a recent support at around 1.5050. Next target is 1.50.

Yesterday’s U.S. data came in mixed and failed to trigger a big reaction in the USD. The focus will now shift to Personal Consumption Expenditure and Durable Goods Orders, scheduled for release at 13:30 GMT. U.S. New Home Sales are due for release along with Michigan Confidence at 15:00 GMT.

EUR/USD

The euro is trending downwards. A current resistance can be found at 1.0690/1.07. Any bullish breakouts above 1.07 are likely to be limited until 1.0760-75. A lower support could currently be at 1.0575, from where some pullback may occur.

Chart_EUR_USD_4Hours_snapshot25.11.15

 

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How Low Can Euro And Sterling Go?

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Dear Traders,

The U.S. dollar advanced to new highs against the euro and British pound. The greenback resumed its uptrend in expectation the Fed will hike next month while other central banks are biased to ease. The euro weakened toward a fresh low of 1.06 after European Central Bank President Mario Draghi encouraged speculation the ECB will increase stimulus next week. Draghi said Friday the central bank will do what it must to raise inflation “as quickly as possible”. The euro could thus be vulnerable to further losses ahead of the ECB’s next policy decision on December 3.

Nonetheless, traders should be cautious with short positions as central bank actions are mostly priced in. The downtrend in the EUR/USD may come to a temporary halt at 1.0585, 1.0560 or 1.0520.

This week is a shortened holiday-trading week as U.S. markets will remain closed for Thanksgiving holiday on Thursday and Friday. Important economic reports are scheduled for release on Tuesday and Wednesday with U.S. Gross Domestic Product, Personal Consumption, Consumer Confidence and Durable Goods Orders.

Important eurozone reports are due for release today with the Eurozone’s PMI reports and Tuesday with the German IFO Business Climate.

Sterling traders should watch the U.K. GDP figures, scheduled for release on Friday. While GBP may find a short-term support at 1.5150, key support levels could only be at 1.51 and 1.5030. Resistances are seen at 1.52 and 1.5240.

This week starts off with important data releases such as German Services and Manufacturing PMI reports at 8:30 GMT, Eurozone’s PMI reports at 9:00 GMT and U.S. Existing Home Sales at 15:00 GMT.

We wish you a good start to the new week!

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Downward Pressure

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Dear Traders,

Yesterday’s price action was relatively muted after Paris attacks had only a small impact on the currency market. The overall sentiment is bearish as investors remain focused on expectations for a Federal Reserve liftoff as soon as next month, while the U.S. dollar also benefited from safe haven flows.

The euro broke below its low at 1.0674 and the trend is heading downward.

Here is where we see current resistances and supports:

  Resistances Supports
EUR/USD 1.0705

1.0750

1.0805

 

 1.0635-20

1.0575

1.0550

 

The most important piece of data from the eurozone will be the German and Eurozone ZEW Survey, due for release at 10:00 GMT. Even if data surprises to the upside, the market’s reaction could be muted as the recent attacks might have a negative impact on economic confidence.

The British Pound traded sideways, unimpressed by geopolitical developments. We expect volatility to increase with the release of U.K. Consumer Prices today at 9:30 GMT. If data is in line with expectations, the impact on the pound could be limited, but given the latest dovishness of the Bank of England, traders should generally favor a bearish bias. A next important support could be at 1.5135-25. Below 1.5125, a sustained break of 1.51 is needed to reinforce fresh bearish potential. Short-term resistances are seen at 1.5215 and 1.5245.

Furthermore, U.S. Consumer Prices are scheduled for release at 13:30 GMT today. Any major surprises should have a significant impact on the greenback.

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Sterling Trades Higher, Euro Remains Consolidated

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Dear Traders,

The British pound knew only one direction yesterday: Upwards. U.K. employment data came in mixed, whereby wage growth slightly missed the market’s expectations, but sterling continued its recent recovery against the greenback and traded significantly above 1.52.

It was not a good day for euro traders. The euro traded consolidated between 1.0775 and 1.0705 and failed to show any profitable momentum. As long as there is no catalyst pushing the pair into a clear direction, the EUR/USD could be trading in a sideways range. If  the currency pair is able to break above 1.0790 we see next resistances at 1.0810 and 1.0830. Current supports are seen at 1.0705 and 1.0680.

EUR/USD

With prices above the current trading range, the euro may head for a test of the resistance line at around 1.0820/30, from where reversals may become more likely. Fresh bearish momentum is likely to increase with a break below 1.0680/70.

Chart_EUR_USD_4Hours_snapshot12.11.15

There are no major important reports due for release today. U.S. Initial Jobless Claims, scheduled for release at 13:30 GMT could only have a limited impact on the U.S. dollar. Furthermore, Fed presidents Bullard, Evans and Dudley are due to speak on economy and monetary policy.

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Quiet trading

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Dear Traders,

Markets remained quiet on the back of a light calendar with no important news scheduled for release. Our attempt to buy the euro on its small recovery failed to provide a sustained gain. The British pound however, recovered some losses and traded higher against the U.S. dollar.

Trading may continue to be very quiet as there is no major data scheduled for release today. Traders may have to wait until Wednesday to take advantage of more significant moves. Until then, it might be worthwhile to pocket also some smaller pip-gains.

EUR/USD

The euro is formatting a symmetrical triangle in the hourly chart, suggesting breakouts above or below this pattern. The 1.07-mark remains an important support for the euro and once this level is significantly breached to the downside, we might see the euro sinking toward 1.0650 in a next step. However, small relief rallies could prompt the pair for a test of the resistance line at 1.0815, from where dollar bulls might jump in again.

Chart_EUR_USD_Hourly_snapshot10.11.15

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Will Payrolls Confirm The Fed’s Hawkish View?

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Dear Traders,

As expected, the U.K. inflation report has been the catalyst for the the big downward move in the British pound yesterday. The pound dropped like a stone and provided short-traders a nice profit. The Bank of England indicated it remains cautious about raising rates and lowered its growth and inflation forecasts. The MPC minutes showed that only one member voted for a rate hike this month, with the majority saying underlying price pressures were not strong enough to warrant a rate increase. Despite the dovish report, BoE governor Mark Carney signaled in a later interview that investors should be ready for tightening in 2016. “At some point, rates are going to move. It’s not today, unfortunately”, he said.

The euro took a breather and traded directionless sideways. Traders had to struggle with fake-outs, eliminating previous gains in the EUR/USD.

Today all eyes will be on the Non-Farm Payrolls report, scheduled for release at 13:30 GMT. The majority of economists expect payrolls to rise by a larger amount than the previous month. Investors are waiting for a confirmation of a healthy U.S. growth, justifying an imminent rate increase. Dollar bulls would get a strong signal when payrolls exceed 200k, average hourly earnings increase and the unemployment rate remains either steady or shows a decline. On the other side, if the market will be caught by surprise and labor market data disappoints, the USD could fall quickly and forcefully.

Before payrolls are due for release,  U.K. data such as Manufacturing Production and Trade Balance (9:30 GMT) could impact on the pound sterling.

We wish you a wonderful weekend and a profitable trading day!

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Euro Trades Sideways, Cable Lacks Direction

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Dear Traders,

There was only little consistency in the currencies’ performances yesterday. While the euro preferred to trade sideways, the cable has been torn between better than expected U.K. PMI data and the neutral outcome in U.S. Manufacturing. GBP/USD still remains below 1.55 and traders are wondering if the Inflation report, scheduled for release on Thursday, could help the pound for a break through its key resistance.

Let’s wait and see. Before “Super Thursday” we will keep an eye on the U.K. PMI reports. The U.K. Construction PMI is due for release at 9:30 GMT today. Furthermore U.S. Factory Orders are scheduled for release today at 15:00 GMT but this report is unlikely to have a significant impact on the USD.

ECB president Draghi will speak at the opening of the European Cultural Days today at 19:00 GMT.

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Wait-And-See Mode

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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

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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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We wish you good trades and many pips!

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