Euro And Cable Test Crucial Support Levels On USD Strength

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Dear Traders,

Sellers in the EUR/USD and GBP/USD profited from a stronger U.S. dollar on Tuesday. The current strength in the greenback is of a more technical nature since market participants are tending to take profit on long positions when currency pairs approach overbought territory. Hence, a pullback was the logical consequence. Moreover, the Federal Reserve’s tightening cycle is keeping the demand for U.S. dollars at higher levels. While the euro dropped towards 1.0860 on a strengthening greenback, the pound sterling remained relatively stable ahead of tomorrow’s ‘Super Thursday’. While the Bank of England is unlikely to change its policy anytime soon, officials may raise their inflation forecasts in the central bank’s quarterly inflation report which should have a positive impact on the pound.

Based on the overall resilience of the pound, it can be seen that investors prepare for a positive outcome of tomorrow’s inflation report. Technically, we believe that there could be some room for further gains in the GBP/USD. If the pound makes it through 1.2965, we could possibly see a run for 1.30/1.3020.

EUR/USD

Is the euro’s recent downward move only a correction within its uptrend or a trend reversal? As long as the price remains above 1.0820, the recent downward movement can be considered a normal correction. If the euro falls below 1.0820, filling up the gap until 1.0740 it could be considered a steeper correction but still, bullish sentiment could be intact. Only a break below 1.0650 would change the bias in favor of the bears. On the topside, we will pay attention to the 1.10 and 1.1050-resistance levels.

From a fundamental perspective, there are no major economic reports scheduled for release today so the price action could be oriented towards technical barriers.

ECB President Mario Draghi is due to speak in Dutch Parliament at 11:00 UTC. Any comments on the ECB’s monetary policy could have an impact on the euro.

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Forex Market Is Fairly Quiet In The Absence Of Market Movers

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Dear Traders,

While concerns over French elections have disappeared after the market-favorable Macron victory, the euro’s response was anything but enthusiastic. Rather, the single currency favored lower price targets near 1.0915 after having rejected the 1.10-resistance. Euro traders should now pay attention to the 1.0890-support level which may prove to be the new lower bound of the euro’s current upward trend channel. If the 1.0890-support gives way to bearish pressure, the focus shifts to a break of 1.0850 and further 1.0820. On the topside we will pay attention to a potential re-test of 1.10 which could result in a sustained bullish breakout. In the absence of catalyst to spur further momentum we expect the EUR/USD to trade between 1.10 and 1.0895.

The GBP/USD did not move much and traded within a narrow 55-pips trading range. Ahead of the BoE’s quarterly inflation report on Thursday sterling traders may refrain from taking any risks, which is why we anticipate sideways movements between 1.30 and 1.2860. In short-term time frames we expect a next support at around 1.29, whereas a lower resistance could be at 1.2975.

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Will NFP Help Or Hurt U.S. Dollar?

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Dear Traders,

The biggest story on Thursday was the rise of the euro which has surged to a high of 1.0987. The euro is currently supported by expectations of a Macron win in the final round of French elections this Sunday. While we bear in mind that if Le Pen surprises on Sunday, the market’s reaction would be far greater, the most likely scenario is however a victory of the pro-euro candidate Emmanuel Macron. Markets are therefore unlikely to budge much if Macron wins.

Apart from the French election, great attention will be paid to the Non-Farm Payrolls report which appears to be the market-moving event for this week. The U.S. Jobs report is forecast to show a job growth of 190K jobs last month but the focus will also be on Average Hourly earnings. A large miss in this key figure or a disappointment in payrolls growth may raise doubts about a Fed June rate hike. In other words, a disappointment would have a greater impact on the market than a strong report. In case of a weaker jobs report the U.S. dollar could come under strong selling pressure.

The NFP report is due at 12:30 UTC today.

We wish you good trades and a nice weekend!

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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.

www.maimar.co