Pound With A Tailwind While The Euro’s Downtrend Ran Out Of Steam

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Dear Traders,

Tuesday’s best performer was the British pound which rose towards its next resistance zone at 1.2320/50. The pound was supported by better than expected U.K. CPI data, limiting speculation that the Bank of England will need to ease monetary policy further. After bouncing off the 1.2330-resistance level we recommend sterling bulls to wait for a break above 1.2375 in order to buy GBP towards 1.2425. However, if the pound drops back below 1.2220, we expect increased bearish momentum towards 1.2170/50.

The U.K. Labor Market report is scheduled for release today at 8:30 UTC and any changes in the headline figures could have a significant impact on the GBP/USD.

The EUR/USD however, refrained from trading any lower than 1.0970. On the other hand, the pair was also not able to take the hurdle at 1.1030 which is why the euro remained confined to a narrow sideways trading range. If the euro falls below 1.0940 the bias could change in favor of the bears, driving the pair lower towards 1.0830.

While there are no economic reports from the Euro-zone today the price action could be determined by dollar flows. However, U.S. Housing data (12:30 UTC) and the Fed’s Beige Book (18:00 UTC) might be of secondary importance for traders.

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U.S. Dollar Weakened Ahead Of CPI Data

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Dear Traders,

The U.S. dollar weakened against the euro and British pound ahead of today’s consumer price reports. While Monday’s trading in the EUR/USD was quiet and none of our entries was triggered, sterling traders had to struggle with false breakouts within a tight trading range. Thus we had to record some losses before our last buy attempt proved to be successful. The pound strengthened before the U.K. releases inflation figures today at 8:30 UTC and sterling traders should pay close attention to the CPI report as it could have a major impact on the price action in the GBP/USD.

Technically, the pound broke above a descending trend line, pointing to further upside momentum in the short-term. If the pair is unable to break above 1.2275, the recent upward movement could be on shaky ground.

Bullish scenario: Above 1.2275 we expect further gains towards the next resistance at 1.2320/50. Above 1.2375 the pound may even head towards 1.2430.

Bearish scenario: Below 1.2130 we expect further pound weakness.

chart_gbp_usd_4hours_snapshot18-10-16

Apart from the U.K. CPI report we have U.S. Consumer Prices scheduled for release at 12:30 UTC. Economists predict the report to show inflation is accelerating and if they are right the dollar will strengthen in the wake of Federal Reserve rate hike speculations before year-end.

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Focus Shifts From U.S. Dollar Rally To Non-U.S. Event Risks

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Dear Traders,

We welcome you to a new trading week. While the last week ended with broad based U.S. dollar strength, the greenback could be pushed into the background this week given major event risks such as the European Central Bank meeting on Thursday as well as important economic reports from China and U.K.

Market participants will be closely watching U.K. inflation data on Tuesday. Consumer Price Inflation is forecast to accelerate in September given the fact that sterling’s recent drop boosts inflation. We saw the pound tumbling towards 1.2150 where it found some support for the time being. We anticipate some upward movements towards 1.2225/50 ahead of tomorrow’s report, whereas a break below 1.2130 may boost bearish momentum towards 1.21 and 1.2090.

Euro traders are eagerly awaiting the ECB’s policy decision and the announcement from ECB President Mario Draghi. The market was rocked earlier this month by a report that the central bank could start to taper its bond-buying program of 80 billion euros a month. Draghi could therefore attempt to calm the market by emphasizing that the stimulus would continue. The euro fell below 1.10 and tested the 1.0970-support level on the back of a strong dollar. Whether the EUR/USD could be vulnerable to further losses may hinge on the ECB announcement. If Draghi announces changes to the QE program the euro will react accordingly. For the time being, we consider the 1.0970-50 price area as a support for the pair. On the topside we see a current resistance at 1.1150.

From the U.S. we will have less market moving data this week with the CPI report (Tuesday) being the only interesting piece of economic data. Politically, U.S. presidential candidates Hillary Clinton and Donald Trump will hold their final debate on Wednesday. 

Today, Eurozone Consumer Prices are scheduled for release at 9:00 UTC but this report is not expected to have a major impact on the euro. Furthermore, U.S. Industrial Production figures are due at 13:15 UTC.

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Market Remained Unimpressed By FOMC Statement

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Dear Traders,

The market reaction to the FOMC statement was muted with the U.S. dollar ending the trading day virtually unchanged against the euro and British pound. While the Fed minutes confirmed that the central bank is moving toward tightening it also shows continuing disagreement among policy makers. Last month’s decision to hold interest rates at their current level was a close call with three FOMC members dissenting for a rate rise, the minutes showed. Market participants expect the Fed to move in December and while the market is pricing in the probability of year-end hike, the Fed may consider that move to be inevitable to preserve the central bank’s credibility.

Overall, the dollar remains bid on corrections and investors will be looking for dollar dips to buy the currency and participate on the dollar rally. Consequently, we expect further dollar gains in the medium-term but we will pay attention to potential pullbacks in the short-term.

There are no major economic reports scheduled for release today so trading could be quiet.

Here is where we see current resistance and support levels for both currency pairs:

  Resistances Supports
EUR/USD 1.1050/60

1.11

 

 1.10

1.0970

 

 

  Resistances Supports
GBP/USD 1.2230

1.2320

 1.2150

1.21

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U.S. Dollar Gains Momentum But Watch Out For Potential Corrections

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Dear Traders,

Despite the lack of market moving economic data on Monday the U.S. dollar continued to strengthen against the euro and British pound. Short traders, therefore, continue to profit but we should remain vigilant as to potential corrections in both major currency pairs.

EUR/USD

The euro trades under pressure and is currently hovering around the 1.11-mark. Short-traders are already preparing for a break of that crucial support level. Below 1.1090 we see next support levels at 1.1050 and 1.10 while on the upside, potential pullbacks could be limited until 1.12. Only a break above 1.1250 would change the bias in favor of the bulls.

chart_eur_usd_daily_snapshot11-10-16

The Eurozone ZEW Survey is scheduled for release at 9:00 UTC today but whether this report will have a significant impact on the euro remains to be seen.

The pound sterling tested its new support at 1.23. A renewed break below that level may send the pound tumbling towards 1.22 whereas any pullbacks might be currently limited until 1.2350/70. Above 1.24 however, we anticipate that the market will gain some bullish momentum towards 1.25.

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U.S. Dollar Consolidates Within Quiet Trading Environment

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Dear Traders,

While Friday’s payrolls data came in below the market’s expectations it had only little impact on the performance of the U.S. dollar. Non-farm payrolls rose by 156K last month while the jobless rate ticked up to 5.0 but the small slowdown was not expected to prevent the Federal Reserve from raising rates in December. The dollar slightly weakened against its counterparts after Friday’s data but the short-term correction does not change the overall picture.

The economic calendar this week is very light in terms of market moving data. From the U.S. we only get the FOMC minutes (Wednesday) and the Retail Sales report (Friday). Moreover, the focus will be on Fed speak, here in particular on Fed chair Yellen who is scheduled to speak on Friday.

EUR/USD

The euro remained firmly above 1.11 but gains were capped at 1.12. With no market moving data we expect the currency pair to remain confined to a trading range between 1.1250 and 1.11. Below 1.1090, however, we expect the euro to fall towards lower targets at 1.1050 and 1.0950.

GBP/USD

The cable formatted a current trading range between 1.2450 and 1.2350. Above 1.2480 we see chances of a move towards 1.26 while a renewed break below 1.23 may invigorate further bearish momentum.

Trading could be quiet on Monday so we recommend taking profits even at smaller levels if possible.

We wish you a good start to the new week and good trades!

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Risk-Off Ahead Of U.S. Payrolls Number

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Dear Traders,

There is not much news to report in the Forex market on Wednesday with both of our major currency pairs moving sideways. Despite stronger than-expected U.S. economic data, the dollar ended the day unchanged against the euro and British pound.

The euro continued to trade sideways within a tight price range of merely 50 pips. None of our entries was triggered yesterday and we will have to wait for price breakouts above 1.1270 or vice versa, below 1.1120.

The pound sterling took a breather and traded consolidated. As long as it remains firmly above 1.27 we shift our focus to the 1.2775-resistance which needs to be breached on the upside in order to invigorate bullish momentum. Below 1.2680 however, we expect the pound to extend its losses towards 1.2640.

Today we get Initial and Continuing Jobless Claims at 12:30 UTC ahead of tomorrow’s big payrolls number, but we don’t expect this report to spark any major movement before the highly anticipated U.S. jobs data release.

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Euro On A Rollercoaster While Pound Continues To Weaken

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Dear Traders,

The broad-based strength of the U.S. dollar drove the activities in the currency market and allowed for adequate profits for sterling and euro bears. The British pound was hit hard by Brexit concerns on the one hand and dollar strength on the other. As a result, the cable fell to a 31-year low against the greenback and traders prepare for further losses in the GBP/USD. While the pound is expected to depreciate further ahead of Britain’s planned exit from the EU, investors believe that a weaker currency will help to boost British exports, making larger U.K. companies more competitive.

Technically, we expect the 1.27-level to lend a short-term support to the pound before we may see further losses. In case that the 1.27-mark withstands the downward pressure, we anticipate a correction toward the 1.28-level.

The euro was accompanied by higher volatility on Tuesday and losses in the EUR/USD were soon erased after a report said that the European Central Bank will probably taper bond purchases before the conclusion of quantitative easing. The euro overreacted on that hawkish statement and jumped towards 1.1250. Nevertheless, the technical picture has not changed materially as the euro is still confined to its tight trading range between 1.1240 and 1.1140. Above 1.1240 we may see a renewed test of 1.1270 while a current support is still seen around the 1.1130-level.

Today, we have some interesting economic data scheduled for release, influencing the price development of both major currency pairs:

8:30 UK Services PMI

9:00 EUR Euro-zone Retail Sales

12:15 USA ADP Employment Change

14:00 USA ISM Non-Manufacturing Composite

(Time Zone UTC)

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Pound Near Post-Brexit Low as U.K. Sets EU-Exit Date

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Dear Traders,

The British pound came under huge pressure after U.K. Prime Minister Theresa May set a March 2017 date to trigger Article 50 and begin exiting from the European Union. The pound subsequently went into a tailspin as market participants now prepare for a “hard Brexit“.

GBP/USD

The cable may face a next support around its post-Brexit low at 1.2798. Technically, we see an oversold situation in the 4- hour chart, which could increase the probability of some corrections toward the 1.29-level in the near-term. In case of a break below 1.2790 however, sterling could fall towards 1.2720.

chart_gbp_usd_4hours_snapshot4-10-16

From the U.K. we have the Construction PMI scheduled for release at 8:30 UTC, which could have a minor impact on the pound.

The euro traded slightly lower against the U.S. dollar Monday. With no major market moving data we expect the 1.1160/50- area to lend a short-term support to the EUR/USD while a current resistance is still intact at 1.1250.

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Investors’ Appetite For U.S. Dollars Will Determine This Week’s Price Action

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Dear Traders,

We welcome you the trading month of October. Even though, the last trading month has proved to be non-profitable for day traders, it was a great month for swing traders while our swing signal trades generated an overall profit of 357 pips in September. Also this month we will again provide swing- and long-term entries for subscribers to get the best out of the current market conditions.

The British pound declined gapped lower at the open of the trading week after U.K. Prime Minister Theresa May said she will start pulling the Brexit trigger in the first quarter of 2017. May made a clear statement when she said on Sunday that they “will invoke Article 50 no later than the end of March next year.” From a technical perspective the support at 1.2915 is still intact and sterling bears may wait for a break below 1.29 in order to send the pound lower towards 1.2850. A current resistance is however seen around the 1.30-level.

The euro is still trading sideways within its recent trading range between 1.1250 and 1.1150. As long as the EUR/USD remains confined to a price range between 1.1280 and 1.1130 there is nothing new to report.

The focus this week will again shift to the U.S. Payrolls report on Friday while the report is expected to show steady labor-market improvement. An upbeat result may boost the U.S. dollar as it would bolster Federal Reserve rate hike speculation before year-end.

Today’s ISM Manufacturing Survey, scheduled for release at 14:00 UTC will be important to watch. Supportive ISM data may push the dollar higher versus its counterparts.

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

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We wish you good trades and many pips!

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