U.S. Dollar Is In A State Of Limbo On Trump’s Policies

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Dear Traders,

The euro ended the day virtually unchanged against the U.S. dollar after it fell to a low of 1.0620. German inflation came in slightly below forecast, easing pressure on the European Central Bank to unwind its stimulus program. The greenback is however in a state of limbo as Donald Trump’s order on immigration overshadowed his promises to pursue pro-growth policies. Instead, the focus has been recently on trade and immigration. The dollar however, outperformed the pound sterling which fell towards 1.2465, providing a good profit for short traders. As the 1.2470/60-level is considered a major support we shall wait for prices below that support zone in order to sell sterling towards 1.2420. Around 1.2420 we may see some pullback before a potential break below 1.24 could send the pound towards 1.2250. A current resistance is however seen at 1.26.

EUR/USD

Head-Shoulders pattern could still be in play. Based on that pattern we expect a current resistance to be at around 1.0750. Thus, it could be rewarding to buy euros following a sustained break above 1.0750 while on the downside, the 1.0580-level remains in focus. It should be noted, that this pattern becomes void as soon as the euro breaks above 1.0770. Below 1.0580 we expect bearish momentum to accelerate.

Euro traders will watch the Eurozone Consumer Price report scheduled for release at 10:00 UTC, which could have an impact on the euro, provided that it exceeds expectations. Before that report, the German Unemployment report due at 8:55 UTC and ECB president Mario Draghi‘s speech at 8:00 may have a minor impact on the EUR/USD.

From the U.S. we only have Consumer Confidence scheduled for release at 15:00 UTC. Moreover, any action or word from Mr. Trump will dominate the markets.

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Traders Prepare For Volatile Swings This Week

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Dear Traders,

We welcome you to a new trading week. Financial markets are dominated by uncertainty surrounding Donald Trump’s administration, prompting large investors to adopt a wait-and-see stance. The U.S. dollar came under further pressure after Trump’s order halting some immigration, causing geopolitical tensions. Risk aversion has therefore led to a recent sideways trend with both major currency pairs trading in relatively narrow trading ranges. This phase of trendless and uncertain markets makes it difficult for day traders to benefit from limited fluctuations and the lack of price breakouts.

This week’s major event risks might bring some new momentum to the markets and trigger profitable breakouts. The economic calendar is very busy in terms of market moving data and traders await high volatility throughout the entire week. The week starts off with the German Consumer Price report, scheduled for release today at 13:00 UTC which could lend a support to the euro. On Tuesday, the Eurozone Consumer Price report will be important to watch while an upbeat report could lead to speculation that the European Central Bank might start to reduce its asset purchases in the near future. With regard to top-tier U.S. economic data, the FOMC rate decision and the Non-Farm Payrolls report (Friday) will take center stage this week. The FOMC committee will deliver an update on its policy stance on Wednesday and while the FOMC statement is expected to be relatively upbeat, the fiscal policy uncertainty may frustrate the greenback’s recovery.

For sterling traders, the most interesting event will be the Bank of England‘s ‘Super Thursday‘ which may shape expectations for the near-term outlook for sterling. The BoE releases its Quarterly Inflation Report alongside its monthly monetary policy decision. If BoE policymakers show greater willingness to drop their dovish tone and gradually move away from their easing cycle, the pound could be vulnerable to further gains, heading for a test of 1.2780/90.

Important data for today:

13:00 EUR German CPI data

13:30 USA PCE Report

15:00 USA Pending Home Sales

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U.S. Dollar Regains Strength, Focus On GDP Data

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Dear Traders,

The U.S. dollar regained some strength Thursday, leading to downturns in the euro and cable. The pound currently faces its support at 1.2550 and sterling bears may wait for breakouts below 1.2530 and 1.2490 to sell sterling towards 1.2450/1.24. For the pound to rally, it may need to climb through the 1.2610-level again.

The euro dropped significantly below 1.07 and our guess of upcoming bearish momentum following a head-shoulders pattern (stated in Wednesday’s analysis) was finally right. Now the euro will need to break below 1.0650 so that we can focus on lower targets at 1.0620 and 1.0590. Below 1.0580 however, bearish momentum could accelerate towards 1.05. Those who are looking for any further upside momentum should rather wait for prices above 1.0720 in order to buy euros. Above 1.0770 a higher target could be at 1.0815.

Today, all eyes will be on important U.S. data such as GDP figures and Durable Goods Orders, both reports are scheduled for release at 13:30 UTC. Fourth-quarter GDP numbers are forecast to show slower growth and if that forecast proves to be correct, we may see further weakness in the greenback.

We wish you good trades for today and a relaxing weekend.

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Trendless And Volatile Price Swings Are A Torment For Traders

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Dear Traders,

We can say that yesterday was a black day for day traders with both major currency pairs fluctuating directionless sideways, wiping out monthly profits. The worst performer was the cable, which was on a roller coaster after the highest U.K. court ruled the government needs parliamentary vote to trigger the countdown to Brexit. While that decision soften the government’s Brexit plans, it was not enough to push the pound toward higher price levels. In contrast, the pound responded with a slide towards 1.24 due to the fact that Scotland, Wales and Northern Ireland did not need to have a say before talks are triggered. This should be some comfort to Prime Minister Theresa May. For traders however, yesterday’s price action proved to be anything but profitable and amidst a high volatile trading environment we had to struggle with false breakouts and choppy price swings.

The GBP/USD still faces a hurdle at 1.2545 and once that barrier is breached on the upside we may see further gains towards 1.2590/1.26. If the pound falls however back below 1.2490 we anticipate further losses towards 1.2415 and possibly even 1.2380.

There are no major important economic reports scheduled for release today. Sterling traders may pay attention to a speech of Bank of England Governor Carney which is scheduled for 16:00 UTC.

The EUR/USD traded sideways between 1.0775 and 1.0720. In an already challenging market environment, characterized by uncertainty and volatility we had a bit of bad luck as our long entry was exactly triggered before the price reversed.

Is the euro formatting a head-shoulders pattern? In short-term time frames we see a higher likelihood of an upcoming bearish breakout provided that the euro falls below 1.0720 while it refrains to trade above the resistance area around 1.0765. Below 1.0720 it may fall towards 1.0680. Above 1.0765 the euro may extend its gains towards 1.0785/1.08.

The German Ifo Index is scheduled for release at 9:00 UTC and could have a short-term impact on the euro.

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Is The Pound Poised For Further Price Gains?

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Dear Traders,

The U.S. dollar continued to weaken against the British pound and euro. Investors have been looking for further details on Trump’s plans to boost growth and government spending but there are no specific details given yet. In the long term however, this does not mean that the dollar rally is over. The greenback might continue its weakness on the lack of certainty but if president Trump delivers on his economic promises the dollar could quickly recover. Some economists, however, forecast the strong dollar to continue and even expect the dollar to reach parity with the euro by the end of the year. Let us wait to be surprised.

The euro still remained within its recent uptrend channel, albeit with a slight extension to a high of 1.0773. Yet, there was no bullish breakout and we will focus on prices above 1.0775 in order to buy euros towards 1.08/1.0850. A current support is however seen at 1.0660/50. The German and Eurozone PMI reports are scheduled for release at 8:30 and 9:00 UTC but we do not expect these reports to have a major impact on the euro.

The pound sterling knew only one direction: upwards. The pound headed for a test of its resistance zone around 1.2550 and it will now be interesting whether there is still room for further gains. Above 1.2570 we expect the pound to head for 1.2640 and 1.2690. How sterling will trade today also hinges on the U.K. Supreme Court ruling on the Parliament’s role in Brexit. It is expected that the High Court will vote in favor of Parliament’s approval in triggering Article 50. This decision may send the pound even higher. The ruling will be announced at 9:30 UTC and traders should prepare for volatile swings in the GBP/USD. Whatever the case, if the pound drops back below 1.24, we expect bearish momentum to accelerate.

From the U.S. we have Existing Home Sales due for release at 15:00 UTC but this report is unlikely to have a significant impact on the greenback.

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Risk-Off Mode Before Trump’s Inauguration

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Dear Traders,

Yesterday’s trading was not to our liking and euro traders in particular, had to struggle with loss-making price swings. A trading idea’s success often depends on the details and so we finally had to record losses with our short entry in the EUR/USD mainly because we have set our profit target 5 pips too low. However, although such days are challenging they are part of trading.

The euro tested the 1.06-support which proved able to withstand yesterday’s downward pressure. For the euro to ignite fresh bearish momentum traders should now wait for prices below 1.0580. On the upside, the 1.0750-level remains interesting and may limit potential gains in the EUR/USD. A break above 1.0760 however, could prompt bulls to buy euros towards 1.08 and 1.0850.

Meanwhile, the ECB announcement proved to be a non-event for traders as Mario Draghi refrained from commenting on interesting topics such as tapering, Trump or Brexit. With no changes to the ECB’s monetary policy course and the lack of new statements the meeting was of minor importance.

The pound sterling traded firmly above 1.2280 while gains have been capped at 1.2340. Only during the Asian session the pound was finally able to overcome the 1.2350-level. We will now focus on a break above 1.2370 which may drive the pound towards 1.2440. Above 1.2460 we see a next hurdle at 1.25. Sterling bears shall however focus on important support levels at 1.22 and 1.2150. If the pound drops below these levels we expect accelerated bearish momentum.

Traders should keep an eye on the U.K. Retail Sales report due at 9:30 UTC which could have a short-term impact on the pound.

Risk-off mode in the market before Trump’s inauguration 

Investors stayed on the sidelines in view of the market uncertainties. The dollar rally faded as market participants remember that there is a high degree of uncertainty surrounding the unpredictable Trump administration. Only time will tell what the new U.S. president has to offer.

Traders will look to Trump’s inauguration speech for further details that may shape the dollar’s outlook over the coming months. We expect high volatility in the markets when the speech is due at around 17:00 UTC. Let’s be surprised.

We wish you good trades and a beautiful weekend.

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Profitable Trading In A Politically Driven Market

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Dear Traders,

In summary, we can say that it has been a very profitable trading day in a politically driven market. While the Brexit and Trump themes are market-dominating there is only one thing that matters to traders: The profit at the end of the trading day and yesterday’s profit was quite good. Sterling traders were able to generate a profit of 100 pips by our long entry and also euro traders did not go home empty-handed, pocketing a good gain by trading twice yesterday’s long entry.

What happened in the market? Two things came together. Firstly, the U.S. dollar has lost some of its strength after Donald Trump said that the dollar is already ‘too strong’, posing a challenge to the economy. This prompted investors to take profits on their long dollar positions.  Secondly, U.K. Prime Minister Theresa May has calmed the markets as a ‘hard’ Brexit may not be as hard as expected. While she said that the U.K. “cannot possibly” remain within the European single market, pursuing a hard Brexit, May confirmed that the final deal would be put to the vote in Parliament. The fact that the parliament will approve the final Brexit deal is positive for sterling due to hopes that the deal must be good in order for the parliament to approve it.

GBP/USD

The pound climbed to a high of 1.2415 following May’s speech. True to the motto “The trend is your friend”, there are chances that the pound may extend its recent gains to 1.25 provided that sterling is able to take the hurdle at 1.2430. However, after such a strong price movement we also anticipate corrections. A next support is now seen at 1.23. If the pound falls back below 1.2270 we expect a lower support to be at 1.22.

The U.K Labor Market report is scheduled for release today at 9:30 UTC and if wages confirm a steady growth, sterling bulls might push the cable to higher levels.

EUR/USD

The euro formatted a recent uptrend channel and based on that channel, further gains may be limited to the upper trend line at 1.0730. We expect a next resistance area to be at 1.0750 whereas a current support is seen at 1.06.

Eurozone Consumer Prices are scheduled for release at 10:00 UTC today but we do not expect this report to have a significant impact on the euro.

The most important piece of economic data will be the U.S. Consumer Price report due for release at 13:30 UTC. In case the report comes in with an upside surprise the dollar will regain some strength.

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We wish you good trades and many pips!

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All Eyes On May’s Speech

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Dear Traders,

Those who traded yesterday’s consolidation in the GBP/USD had to struggle with volatile but choppy price swings, generating only losses ahead of today’s key event risk. Sterling traders are in the starting blocks for high volatility when U.K. Prime Minister Theresa May is scheduled to give a speech on the Brexit approach and we hope for more profitable trading opportunities today. May’s speech will be closely watched as it is designed to set out the government’s position and goals over the upcoming Brexit negotiations. Traders will look for any hints as to whether the U.K. will pursue a ‘hard’ or ‘soft’ Brexit. The market is currently pricing in a higher likelihood of a hard Brexit approach with the U.K. being likely to pull out of the European Union’s single market for goods and services. May will use her speech to explicitly say she expects the U.K. to leave the single market (hard Brexit), according to a person familiar with the matter. Given the fact that May is expected to be aiming for full separation from the EU, we expect the pound to remain under pressure. Pullbacks may therefore be an attractive opportunity to sell the pound at higher levels. However, we bear in mind that when market’s expectations are very high, there is a greater potential for disappointment and thus there is also a small chance of a short squeeze in the pound. In short, anything can happen today and we recommend traders to prepare for both bullish and bearish scenario even if the risk is to the downside.

PM May’s speech is scheduled for 11:45 UTC.

Until this morning, the pound traded sideways between 1.2085 and 1.1985 and the focus has therefore shifted to breakouts above or below this range. Bearing in mind that Monday’s gap was not yet closed, the pound might tend to test the 1.2170 area before falling back towards 1.1965. A significant break above 1.22 however, could send the pound toward 1.23. On the downside, the 1.1960-level needs to be broken in order to reinvigorate fresh bearish momentum.

Before May’s important speech we have the U.K. Consumer Price report scheduled for release at 9:30 UTC. Analysts are looking for an uptick in inflation while this report alone could help the pound strengthening in short-term time frames. With inflation being on the rise, the Bank of England could intend to raise interest rates in a next move, unless Brexit developments undermine the economy.

Trading in the EUR/USD was very quiet and none of our yesterday’s entries was triggered. Today, euro traders will watch the German ZEW Survey at 10:00 UTC, which could have a impact on the euro. The 1.0685-resistance area remains in focus and if the single currency climbs above that level we may see an extended upward move toward 1.07/1.0715.

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We wish you good trades and many pips!

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U.S. Dollars Recovers On Hawkish Fed Rhetoric

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Dear Traders,

The U.S. dollar regained some strength following a slew of hawkish Fed rhetoric. Federal Reserve Chair Janet Yellen reiterated in a town hall meeting that the U.S. economy is doing quite well. She was optimistic on the labor market and inflation and wage growth, saying that inflation is close to the Fed’s 2 percent goal.

These hawkish remarks helped the greenback to recover from its recent lows. The euro peaked at 1.0684 before falling back toward the 1.06-support level. Below 1.0570 we may see further losses towards 1.0480.

The British pound took a brief glimpse above 1.23 but was not able to stabilize above that high level. The 1.21-level will now be back in focus and if the pound drops below that mark, we expect a next lower target to be at 1.20. The beginning of next week is going to be interesting for sterling traders as U.K. Prime Minister Theresa May will set out her Brexit vision in a speech on Tuesday. Recent speculation about a so-called ‘hard Brexit’ has increased the pressure on the pound.

Today we will watch important economic data releases such as U.S. Retail Sales, scheduled for release at 13:30 UTC and University of Michigan Confidence due at 15:00 UTC. The Retail Sales report is expected to show an uptick in December and should this be confirmed, the dollar could recover even more quickly.

Have a nice weekend.

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We wish you good trades and many pips!

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Euro And Pound Trade Near Crucial Price Levels

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Dear Traders,

The biggest story in the market was the sharp decline of the British pound on Monday. Sterling touched its lowest level since October on hardening Brexit talk and we are curious to see whether the 1.21-level will be able to withstand the downward pressure. In case of a dip below 1.21 a next lower target could be at 1.2080 but this should be the lower bound of a short-lived downward trend. Those who bet on a pullback now, should focus on prices above 1.2080 to evaluate their positions. If the pound drops below that level we expect accelerated bearish momentum, driving the pound towards 1.19. In case of pullback in the GBP/USD, we expect the 1.2230-level to act as a short-term resistance. Anyway, yesterday was a profitable trading day for sterling traders with our short entry providing a good gain.

The euro rose towards the upper bound of its current trading range and we will now focus on the 1.0640/60-resistance area. There is a risk that the single currency may overshoot the 1.0670-level and head for 1.0850 following a stronger upward correction. On the downside, the 1.0480-level remains in focus.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

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