Obedient Euro And Stubborn Cable

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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?

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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

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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 data, U.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

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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

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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

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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.

Daily Forex signals:

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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Difficult Market Environment

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Dear Traders,

The market environment is difficult for traders since global growth concerns and uncertainties about diverging monetary policies cloud the overall outlook. This uncertainty leads to risk-aversion,which can be seen in volatile but unsteady market swings. Both of our major pairs were lacking a clear direction yesterday and ended the trading day unchanged against the U.S. dollar. This meant that traders had to struggle with fake-outs and still have to be patient and wait for better market conditions.

Let’s have a look at the technical side:

EUR/USD

The euro was the worst performing currency recently and failed to provide profitable chances. On a monthly basis we see that the pair peaked at a high of 1.1460, but most of the period, it remained trading sideways between 1.1330 and 1.11. Those who are looking for long-term entries, should focus on the area above 1.1460/65 for buy orders and on the area below 1.10 for sell orders. For short-term investments, we still consider the 1.1280 level as an opportunity to buy the euro towards 1.1320/50. Short-entries, however, could be interesting below 1.1190 and below 1.1080. Remember that there is a key support at 1.1020.

Chart_EUR_USD_Daily_snapshot30.9.15

Today traders should watch the German Unemployment numbers, due for release at 7:55 GMT and the Eurozone CPI report, scheduled for release at 9:00 GMT.

GBP/USD

The British pound weakened eight consecutive trading days but found a slight support around 1.5130. The trend is our friend and we should bear in mind, that GBP may be vulnerable to further losses, but there could be a lower support area at around 1.5110 – 1.5090. If sterling declines significantly below 1.5130, we will focus on the 1.51-level, which could prompt the currency for a recovery. However, above 1.5210, chances are that sterling bulls drive the cable towards 1.5250 and 1.5285.

U.K. Gross Domestic Product is scheduled for release at 8:30 GMT today.

Chart_GBP_USD_4Hours_snapshot30.9.15

The most important piece of economic U.S. data will be the release of ADP’s employment change report (12:15 GMT). Market participants pay close attention to this report as it is considered to be a leading indicator for nonfarm payrolls.

Furthermore, FOMC members Yellen and Bullard are scheduled to speak on Community Banking today at 19:00 GMT.

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We wish you good trades and many pips!

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Euro with tailwind, sterling may have bottomed out

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Dear Traders,

Yesterday’s trading has been relatively quiet. After the euro refrained from taking any dips below 1.1145, euro bulls finally got their chance to gain some pips after EUR/USD broke above 1.1215. The British pound, however, followed its downward trend against the U.S. dollar and fell toward its recent support at 1.5155.

Today, traders should focus on eurozone data, such as German Consumer Prices, due for release at 12:00 GMT and important U.S. data, scheduled for release at 14:00 GMT – Consumer Confidence. Furthermore, Bank of England Governor Carney is scheduled to speak in London at 19:40 GMT, which could impact the pound sterling.

EUR/USD

While we generally expect the euro to trade lower in the long-run, the pair is currently heading upwards because of less-dovish comments of ECB policymakers, downplaying the possibility of further QE. Nonetheless, today’s inflation data will be interesting to watch, as the report could have a significant impact on the currency. If the German CPI indicates further weakness, the euro could come under increasing pressure.

Next resistances are seen at 1.1275, 1.1320 and 1.1360.

Supports could be at 1.1220, 1.1185 and 1.1120.

GBP/USD

The pound showed further weakness versus the greenback despite expectations that the BoE will not be far behind the Federal Reserve in relation of raising interest rates. Speculations are that the BoE could start tightening by February 2016.

If GBP breaks below 1.5135 a next support could be at 1.51 and 1.5080.

We see a current resistance at 1.5210. Above 1.5220, GBP may head for another test of 1.5260 and 1.5285.

U.K. Mortgage Approvals and Net Consumer Credit are scheduled for release at 8:30 GMT, reports which could have only a limited impact on the currency.

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Focus on NFP report

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Dear Traders,

Last Friday was characterized by an ongoing demand for U.S. dollars. The pound sterling stopped its fall at 1.5135, from where it recovered slightly. Given the oversold situation in the GBP/USD, chances are that GBP may head for another test of 1.5260 and 1.5285. The EUR/USD has found a support at around 1.1125/10. In order to revive fresh bearish momentum, the pair would need to break below 1.1080. Above 1.1220, euro bulls could drive the pair towards 1.1270 and 1.1315, but traders should be careful with any buy-attempts, as the focus is on Friday’s Non-farm Payrolls report and profit taking is likely to occur ahead of the report before investors could jump back into dollar long positions.

After Yellen’s hawkish comments last Thursday, market participants will watch the NFP report closely. The market is pricing in a rate increase by the end of the year, so depending on the details of the payrolls report, an October tightening could be the case. On the other hand, if the report falls short of expectations, we could see a short rally in the EUR and GBP.

This week starts off with interesting U.S. data such as PCE indices, scheduled for release at 12:30 GMT followed by Pending Home Sales due for release at 14:00 GMT.

Important economic reports this week:

Tuesday – German Consumer Prices and U.S. Consumer Confidence

Wednesday – German Unemployment and Eurozone Consumer Price Index

Thursday – U.S. ISM Manufacturing Index

Friday – Non-Farm Payrolls

Moreover, central bank officials are scheduled to speak this week, including Yellen, Williams, Dudley and BoE governor Carney.

We wish you a good start to this week.

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Yellen sends clear signal

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Dear Traders,

While the British Pound tortured traders with fake-outs and choppy moves, the euro was heading for a test of the 1.13-area. The short recovery in the EUR/USD was still driven by Mario Draghi’s comments, who said on Wednesday that ECB policy makers will wait before discussing on a QE extension. After failing at $ 1.13, dollar bulls took control and drove the pair back below $ 1.12.

The U.S. dollar received support from Federal Reserve Chair Janet Yellen saying that the Fed is on track to raise rates this year. During her speech in Amherst, Massachusetts, she sent a clear signal, that Fed policy makers believe that a rate hike is appropriate this year, followed by a gradual pace of tightening thereafter.

What is important for today?

Revisions to second-quarter U.S. GDP (12:30 GMT), the U.S. PMI reports (13:45 GMT) and the University of Michigan Consumer Sentiment index (14:00 GMT) are the only second-tier data scheduled for release today.

If GDP figures meet the expectations, the impact on the dollar could be limited.

Given the hawkish outlook for the U.S. dollar in the near-term, we are generally looking for further gains in the USD.

Have a nice weekend.

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We wish you good trades and many pips!

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