Archive for month: September, 2017
GBP/USD Trends Lower But Prepare For Pullbacks
Dear Traders,
U.S. President Donald Trump’s tax-plan announcement had little impact on the market as it foreshadows an uphill battle in U.S. Congress. While Trump said the tax-cut plan was aimed at helping working people and making the tax code fairer, there is concern about the budget deficit. The plan contained only few details on how to pay for the tax cuts without expanding the budget deficit and adding to the nation’s amount of debt. The plan must be turned into legislation and investors are still skeptical that Congress could approve a tax bill in the near future.
The U.S. dollar slightly extended its climb against the euro and British pound as market participants raised their expectations for one more Federal Reserve rate hike this year. The priced-in probability of a December rate hike is now 70 percent.
Traders should keep an eye on the U.S. GDP figures, due for release at 12:30 UTC. In case of a surprise we will see more volatile fluctuations in the USD crosses.
GBP/USD
The British pound extended its slide and fell below 1.3380. However, the dip below that support level was not sufficient to increase bearish momentum and we now expect the pair to find some support around 1.3350. Looking at the 4-hour chart we see the Relative Strength Index (RSI) approaching oversold territory. This situation may encourage buyers to take long positions above 1.3340. If the pound climbs back above 1.3430 we could see a run for 1.35.
Traders await a speech of Bank of England Governor Mark Carney at the BoE Independence conference at 8:15 UTC. If Carney raises rate hike expectations the pound could quickly recover from its lows.
The euro continued its short-term downtrend and fell towards 1.17. As stated in yesterday’s analysis we expect a stronger support coming in between 1.1710 and 1.1680. Buyers of the EUR/USD should now wait for prices above 1.1825 in order to buy euros towards 1.19.
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U.S. Dollar Strengthens, Trump Tax Plan Back In Focus
Dear Traders,
The U.S. dollar strengthened against its major counterparts as comments from Federal Reserve Chair Yellen and President Trump bode well for some renewed upward momentum in the greenback. Yellen boosted expectations for a rate hike in December, saying the Fed “should be wary of moving too gradually” in its rate hike cycle. The Fed does not want to surprise markets when raising rates earlier than expected and while the probability of what the market is currently pricing in is still a little bit too low, Yellen seeks to prepare markets for another rate increase this year.
Moreover, the greenback received some boost from Trump’s comments on the long-awaited tax plan. Recent comments included lowering the corporate tax rate to 20 percent from 35 percent while the individual tax rate should be lowered to 35 percent. However, full details of the tax plan have yet to be revealed. Trump is expected to announce his tax overhaul plan today during a speech in Indiana.
Furthermore, U.S. Durable Goods Orders are scheduled for release at 12:30 UTC but this report is not expected to have a major impact on the USD.
From a fundamental perspective, the dollar trade might be preferable now but traders should also pay attention to the technical picture in order to confirm the current forecast.
EUR/USD
The euro dropped below an important support area at 1.1830-1.18. As long as the pair remains well below 1.1830, we expect further losses towards 1.1730 and possibly even 1.1680. For the euro to regain some strength it would need a renewed break above 1.1865 and further 1.19. A resistance is seen at around 1.1970.
The British pound was able to hold above 1.34. If GBP/USD breaks below 1.3380 we anticipate further losses. A current resistance is however seen at 1.3550.
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Euro Drops Below $1.18
Dear Traders,
The euro weakened against the U.S. dollar in the aftermath of the German election results while the important support area around 1.1830-1.18 remained unbroken until this morning. As mentioned in our yesterday’s analysis, for the bullish bias to diminish the euro must break below 1.1830/20, the neckline of a head-shoulders pattern that was formatted since late August. Below 1.1820 we will focus on a lower target at 1.1775, from where potential pullbacks may occur. A current resistance is however seen at 1.1990.
Today’s focus shifts to comments from central bank policy makers with most attention being paid to Fed Chair Yellen who is scheduled to speak on inflation, uncertainty and monetary policy at 16:45 UTC.
Elsewhere, the war of words between the U.S. and North Korea continues to pose a threat to the markets. While the market shrugs off escalating tensions between America and North Korea, the recent escalation in rhetoric raises risk of tactical missteps.
The British pound extended its recent slide against the greenback and fell to a low near 1.3430. The latest weakness phase of the pound can still be considered as consolidation within the overall uptrend but if GBP/USD falls below 1.3380 we anticipate further losses towards 1.3330 and possibly even 1.32. On the topside, we will wait for a break above 1.36 in order to focus on higher targets at 1.37.
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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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All Eyes On Theresa May Speech
Dear Traders,
The U.S. dollar’s recovery turned out to be only short-lived with the British pound and euro regaining some ground against the greenback Thursday. The British pound has proven to be the best performing currency in September so far but storm clouds could gather over the currency. The pound’s recent strength has been based on the hawkish shift in the Bank of England’s monetary policy stance. Consequently, the market has begun to price in a potential BoE rate hike later this year. However, even if a change in monetary policy is an important driver in the market, there is also another fundamental driver that can change everything: Brexit. The U.K.’s divorce from the EU could cloud the outlook for the country’s economy and its currency. In a nutshell, future monetary policy decisions will depend on the Brexit theme which still represents the biggest uncertainty factor for the United Kingdom.
U.K. Prime Minister Theresa May is scheduled to provide an update on the Brexit theme in her speech in Florence today at 19:00 UTC. So far, no breakthrough was reached after three rounds of negotiations between the UK and EU. May’s speech is, however, expected to strike a positive tone and this optimism is reflected in the pound’s upward movement. Theresa May is expected to offer up to 20 billion pounds to retain access to the single market. Should her speech reinforce confidence that Brexit will brighten for the UK, the pound will benefit and could further rise. If May, however, confirms that the troubles remain, the pound could crash.
We currently see GBP/USD trading within an upward trend channel between 1.3690 and 1.3470. While today’s price development could be oriented toward these barriers, the pound’s direction will depend on May’s speech. We expect higher volatility around that speech.
Investors may also keep an eye on speeches by Federal Reserve officials and ECB President Draghi today. While Draghi refrained from touching on the ECB’s monetary policy in his speech yesterday he may offer further clues about tapering today.
The EUR/USD traded with a tailwind and we now focus on higher targets at 1.20 and 1.2050. A current support is however seen at 1.1870.
On Sunday September 24, Germans go the polls and this German election could also matter for the rest of Europe and thus the euro. If big chances are taking place, the euro will respond on Monday morning when markets open. Let’s be surprised.
We wish good trades and a wonderful weekend!
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Additional daily and long-term entries are available for subscribers.
View our daily signal alerts https://www.maimar.co/category/daily-signals/
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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.
British Pound Takes Breather On Carney Comments
Dear Traders,
Monday has been a quite challenging trading day for traders of the EUR/USD and GBP/USD. While the British pound declined against the U.S. dollar after Bank of England Governor Carney’s comments were interpreted as more dovish following last week’s MPC statement, we have shot all our powder and finally missed out on the profitable bearish movement in the GBP/USD.
Carney reinforced the BoE’s view that the rate hike cycle in the U.K. will be “limited and gradual” and acknowledged that there was still clear concern over the health of the economy amid Brexit. His comments weakened the pound in the short term. GBP/USD traded consolidated and fell towards 1.3460. We now see a lower support at 1.34/1.3380 and if the pound drops below that level we may see a correction towards 1.33. On the topside, the 1.3620-level remains unbroken and sterling bulls may focus on a bullish break of that resistance level in order to buy pounds towards 1.38.
The euro traded sideways between 1.1970 and 1.1915. We now focus on price breakouts either above 1.1990 or below 1.1935. The German and Eurozone ZEW Survey are both scheduled for release at 9:00 UTC today and may have a slight impact on the euro.
Daily Forex signals:
Additional daily and long-term entries are available for subscribers.
View our daily signal alerts https://www.maimar.co/category/daily-signals/
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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.
We are Maite & Marios Krausse, both born in Germany and trade full time in the Foreign Exchange Market (Forex) as independent traders.
Our teamwork began in 1998, when we got to know and love each other. 20 years later after having built our careers, our son was born, making us a happy family. Continue reading...
