Dollar Rally Pauses, GBP In Overbought Territory, What’s Next?

Dear Traders,

The British pound extended its gains versus the U.S. dollar Wednesday. The GBP/USD remained stable around the 1.47-level and we are now looking for an upside break above 1.4730 in order to buy the pound towards 1.4750 and 1.4770. Caution is advised here, however: The GBP/USD is going to trade within overbought territory now and traders should expect some setbacks towards 1.4650 and 1.4610.

U.K. GDP figures are scheduled for release at 8:30 UTC but no changes are expected.

The dollar rally paused yesterday and as a result, the EUR/USD was not moving much. We generally expect the dollar rally to continue and any upside movements in this currency pair could therefore be limited until 1.1230 and 1.1280. Short-traders should rather wait for a renewed break below 1.1145 in order to sell the euro towards lower targets at 1.1120 and 1.1070.

The most important piece of U.S. data will be Durable Goods Orders, due at 12:30 UTC. If data disappoints, the dollar could lose further ground versus its major peers. Last but not least, U.S. Pending Home Sales are scheduled for release at 14:00 UTC. Figures of both reports are expected to be weak, which could weigh on the USD in the short-term.

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British Pound Rises As Brexit Seems Very Unlikely

Dear Traders,

The British pound climbed more than 100 pips from our long-entry after latest polls show growing support for the Remain Camp in the June 23 referendum. As a result, the likelihood of a Brexit has significantly diminished and that’s currently helping the pound to regain some strength. We now see a next target at 1.4635 before a correction is becoming more likely. Above 1.4665 however, we see a higher likelihood of further upward swings towards 1.47.

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Listless Price Development On Growing Risk-Aversion

Dear Traders,

The current market environment leaves much to be desired and given the listless price development it remains difficult for traders to take advantage of the muted market conditions. Even though the market should be repricing the prospects for higher interest rates in the USA, investors became far more risk-averse and showed reluctance to invest. So we will have to wait for an increase in risk appetite among investors in order to benefit from larger market movements and new trends.

Market participants await U.S. data on housing today for clues on the health of the economy. In the meantime, Fed policy makers continue to reinforce the likelihood of imminent rate increases with Fed President Bullard saying that he doesn’t see the U.K.’s vote on EU membership influencing the FOMC meeting that will be held the week before the referendum. Traders are currently pricing in a 30 percent chance of a rate hike in June and a 48 percent chance for a July hike. The focus could thus be on strong economic data, such as U.S. New Home Sales, scheduled for release at 14:00 UTC.If data fails to impress the dollar could weaken.

Before the U.S. data, U.K. Public Finances (8:30 UTC) and the German ZEW Survey (9:00 UTC) are scheduled for release.

Technically, the EUR/USD remains confined to a narrow trading range between 1.1250 and 1.1180. Let’s wait and see whether momentum accelerates after a break above or below this range.

The British pound ended the day unchanged against the U.S. dollar. We see a current resistance at 1.45 whereas a lower bound could currently be at 1.44.

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Price Action Continues To Be Muted But Watch Out For A GBP/USD-Breakout

Dear Traders,

The U.S. dollar failed to trade sustainably higher against the euro and British pound Thursday. While dollar bulls may have hoped for stronger U.S. data to reaffirm the dollar’s strength, expectations have been disappointed – at least yesterday. The Philadelphia Fed index came in softer than expected and thus failed to encourage dollar bulls to push the currency higher. With the Fed’s willingness to raise rates as early as June, the main focus will be on the May Non-Farm Payrolls report due to be released on June 3. The currency market is generally looking to further dollar strength and if incoming U.S. data is surprising on the upside it could be a catalyst for some downside breakouts in both EUR/USD and GBP/USD.

U.S. Existing Home Sales are scheduled for release at 14:00 UTC but this report is unlikely to trigger significant movements.

The British pound initially rose as high as 1.4663 as the price action was boosted by stronger-than-expected U.K. retail sales. However, sterling was unable to hold onto its gains and ended the day unchanged against the greenback. We now see a higher likelihood of an upcoming breakout of the cable’s recent narrow trading range. We will therefore focus on prices above 1.4620 for any bullish and vice versa on prices below 1.4590 for any bearish engagements. Given the recent uptrend channel higher targets could be at 1.4695 whereas a support could be at 1.4490.

Chart_GBP_USD_4Hours_snapshot20.5.16

The price action in the EUR/USD was muted and the currency pair fluctuated within a narrow trading range of 50 pips. Traders should wait for an upside break above 1.1230 or vice versa, a downside break below 1.1180. Above 1.1230, higher targets could be at 1.1260 and 1.1290, whereas below 1.1180, the euro could fall towards 1.1130.

We wish good trades and a wonderful weekend.

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Inflation Data To Determine Direction

Dear Traders,

Sterling traders had to bite the bullet and watch the cable’s profitable upward swing without being invested in the pound after our second buy attempt failed to provide any profits. Consequently, we are still in the red this month but we are confident that losses will be compensated as we consistently stay on the ball and remain disciplined.

The British pound rose towards 1.45 as Brexit fears are easing. A poll of U.K. voters showed 55 percent were in favor of the remain camp, while a minority of 40 percent wanted to leave the EU. Furthermore, sterling traders await the the U.K. Consumer Prices report, scheduled for release at 8:30 UTC and chances are that the inflation report is more upbeat. In case of better inflation figures, we might see the pound extending its gains towards 1.4520 and 1.4540. Above 1.4570, the currency pair could even head for a test of 1.4630. If U.K. inflation numbers fail to impress, the focus shifts to the U.S. CPI data. Below 1.4380 we expect sterling to drift lower towards 1.4340 and 1.43.

The euro ended the day unchanged against the U.S. dollar and traders must be patient and wait for an increase in volatility in order to benefit sustainably. Today’s price development will be mainly determined by the dollar’s performance and its response to the U.S. Inflation numbers, scheduled for release at 12:30 UTC. An increase in CPI data could revive the dollar’s strength and drive the pair towards 1.1250 and 1.1220. On the upside, we focus on a break above 1.1365, which may result in an upswing towards 1.14 and 1.1435.

Apart from important inflation data, some Fed officials are scheduled to speak today at 16:00 UTC, which could have a short-term impact on the dollar.

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Traders Await BoE Inflation Report

Dear Traders,

Today will be a big day for sterling traders with the Bank of England Quarterly Inflation Report, Rate Decision and the speech by BoE Governor Mark Carney. While the BoE is not expected to change its monetary policy, traders will be looking for clues on policy makers’ thinking and await the outcome of the inflation report. As the June 23 referendum draws closer, the British pound is exposed to risk and any Brexit-related concerns remain a main driver in the currency pair. Even though Carney may emphasize that a potential Brexit entails a high risk for the financial stability in the U.K., he will have to avoid taking a position on any campaign.

The focus will mainly be on the inflation report and whether the central bank will raise its inflation forecasts. If inflation and growth forecasts have been revised higher, sterling could soar as a result. From a technical perspective, we still focus on a sustained break above 1.4480 in order to buy GBP towards higher levels. Yesterday’s rise above 1.4480 proved to be only short-lived and sterling traders had to face volatile but unsteady sideways swings without clear trends. We expect larger movements today in the GBP/USD and pay close attention to upside breaks above 1.4490 and 1.4520 and, on the bottom side, a downside break below 1.4390.

The BoE Inflation Report is scheduled for release at 11:00 UTC along with the BoE Rate Decision, while Carney is scheduled to speak 45 minutes later.

EUR/USD

The euro traded higher against the U.S. dollar but the 1.1450-level proved to be a short-term resistance as expected. If the euro climbs back above 1.1440 we see a next hurdle at 1.1470 from where it may reverse. In case the currency pair is able to trade significantly above 1.1470/80, euro bulls may push prices up towards 1.1520/40. However, on the downside the 1.14-barrier will be in focus and once this level is significantly breached to the downside we could see the euro falling towards 1.1335.

Chart_EUR_USD_4Hours_snapshot12.5.16

Eurozone Industrial Production is scheduled for release at 9:00 UTC but this report is not expected to have a major impact on the currency.

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Euro And Cable Trend Sideways, Time For Breakouts?

Dear Traders,

Yesterday’s price development has proved to be unsuccessful for breakout traders as both major currency pairs traded sideways without any sign of a clear trend. The euro marked a short-term support at 1.1375 and we will now focus on a break below 1.1370 and farther 1.1335.

EUR/USD

We see a higher likelihood of upcoming bearish momentum if the pair is able to break below its next support levels shown in the chart. Below 1.1335 the euro may head for a test of 1.1280. However, euro bulls might keep an eye out for pullbacks close to these support zones, which may result in a rise towards possible resistance levels at 1.1415 and 1.1435.

Chart_EUR_USD_4Hours_snapshot10.5.16

GBP/USD

Monday was not a good day for sterling traders as the currency pair traded choppily sideways, triggering both long and short entries, which were eliminated by the stop-loss shortly afterwards. Nevertheless, we are looking for upcoming breakouts in this pair within the next two days as the Quarterly Inflation Report lies ahead. Technically we see a lower support at 1.4345 and if sterling slips below that level, a next bearish target could be at 1.4315. On the upside we expect the 1.4470-level to act as a short-term resistance. A renewed break above 1.4525 could change the bias in favour of the bulls.

U.K. Trade Balance numbers are scheduled for release today at 8:30 UTC and could have a minor impact on the GBP.

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Rate-Rise Expectations Unchanged After Disappointing Payrolls

Dear Traders,

Market participants were left relatively unimpressed by Friday’s weaker-than-expected U.S. jobs report, which showed the smallest jobs gain in seven months. Although earnings growth came in with an uptick it was not enough to change investors’ expectations of gradual monetary policy tightening. The market’s rate-rise expectations therefore remained unchanged and traders see an even chance of a Fed rate hike this year and only an eight perecent probability of a June hike.

As expected, the euro’s price action remained confined within a narrow trading range between 1.1480 and 1.1380 on the back of an unspectacular payrolls report. The British pound finally decided to drift lower after touching a high of 1.4546 on Friday. We still expect GBP/USD to test the 1.4330/15-level, before we may see a pullback towards 1.4550. A short-term resistance is seen at 1.4465, whereas sterling must now break below 1.44 in order to revive fresh bearish momentum.

This week’s calendar is relatively light in terms of market moving data. Only towards the end of the week we have major important reports scheduled for release. The most important event for sterling traders will be the Quarterly Inflation Report, scheduled for release on Thursday. The Bank of England will publish new forecasts in its inflation report, alongside its interest-rate decision. BoE governor Mark Carney is set to give a press conference on the economic outlook following the release of the inflation report.

The most important piece of economic data from the Eurozone will be GDP reports scheduled for release on Friday. From the U.S., Advance Retail Sales, also due on Friday will be important to watch.

We wish you a good start to the new week and many profitable trades.

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U.S. Jobs Report To Determine Direction

Dear Traders,

The euro traded lower ahead of today’s highly anticipated U.S. jobs report, which may shed light on U.S. growth and whether the economy is strong enough for higher interest rates. The payrolls report is forecast to show a 200k jobs-increase for April but it would require an upside surprise in the headline figures of the report. We can speak of a strong jobs report if the unemployment rate shows a decline, average hourly earnings are on the rise and payrolls growth exceeds at least 220k. If there will be no upside surprise, supporting the case for tighter monetary policy in the near-term, the dollar could give up some of its recent gains.

The Non-Farm Payrolls report is scheduled for release at 12:30 UTC.

EUR/USD

It all depends on today’s key employment data, but from a technical perspective traders should focus on the overall picture. In the medium-term the euro is still trading within an upward-channel. Given the recent downward move we will now focus on the lower bound of that channel which is currently around 1.1360/40. If the euro breaks below 1.1335 we see chances of further losses towards 1.12 and 1.1150. If, on the other hand, the euro is able to climb again above 1.15 and farther 1.1530, it could even head for a test of 1.1630. However, if NFP data fails to impress, the EUR/USD could remain confined to a trading range between 1.15 and 1.1350.

Chart_EUR_USD_Daily_snapshot6.5.16

The British pound, however, refrained from trading lower than 1.4443. After a break below 1.4440, sterling could be vulnerable to further losses and we will shift our focus to lower targets at 1.4330. A current resistance is seen at 1.4520.

We wish all traders a profitable trading day but bear in mind that the trading on payrolls day is highly risky and is therefore not for the faint-hearted. Personally, we will not invest our weekly profits and take it easy today.

Have a beautiful weekend.

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Euro And Cable: Muted Price Development

Dear Traders,

There is nothing new to report as yesterday’s price development was anything but spectacular.

The euro hovered around the 1.15-level while gains were capped at 1.1530. Consequently, euro bulls’ efforts didn’t pay off and we suffered some losses with our long-entry. As expected, the 1.1510-1.1540 zone proved to be a short-term resistance for the EUR/USD and we will now wait for prices above 1.1540 or even better for a break above 1.1565 in order to buy euros. On the bottom side, the 1.1450-level remains in focus and euro bears might have to wait for prices below 1.1440 and 1.1430 before downward momentum may intensifies.

There are no important economic reports from the eurozone scheduled for release today. The only second-tier report from the U.S. will be Continuing and Initial Jobless Claims due at 12:30 UTC.

The British pound initially dropped towards 1.4460 but the downward move was not sustained and so GBP ended the day more or less unchanged against the U.S. dollar. The U.K. Services PMI is scheduled for release at 8:30 UTC and if data disappoints, sterling could fall towards 1.4430.

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