Euro And Pound Remain In Narrow Trading Ranges

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Dear Traders,

Both euro and British pound ended the trading day slightly lower against the greenback but there is still no trace of any breakouts of the narrow trading ranges. The U.S. dollar received a boost from U.S. President Donald Trump’s pledge to announce a “phenomenal” plan on taxes within the next “two or three weeks”, but these comments were not enough to trigger a lasting bearish trend, at least not in the EUR/USD and GBP/USD. Rather, the price action in both currency pairs remained restricted to current support and resistance zones.

Amidst a thin-liquidity environment, the euro is still caught between 1.0715 and 1.0640 so there is nothing new to report.

The cable refrained from a direct test of 1.26 and reversed shy of 1.2585. With the 1.2475-support zone still being intact we focus now on a potential head-shoulders formation in short-term time frames. The pound may head for another test of 1.2550 before it is poised for a significant break below 1.2475/70. Let us be surprised.

And once again there are no major economic reports scheduled for release today. The only interesting reports, which may have a minor impact on the currencies, will be U.K.’s Industrial and Manufacturing Production at 9:30 UTC and University of Michigan Consumer Confidence at 15:00 UTC.

This week was characterized by low volatility and thus little chances for profitable moves. We hope for better trading opportunities and more profitable movements next week. Have a nice weekend.

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Quiet Trading Environment

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Dear Traders,

Not much has happened in the market on Wednesday and trading can be described as very quiet. Market-moving economic data was still lacking and thus the price action in both major currency pairs was constricted to tight trading ranges. The technical picture has therefore not changed.

While none of our daily entries was triggered in the EUR/USD, the cable showed a slight upward trend towards 1.2550. The 1.2550-barrier is considered an important resistance and if the pound rises above that level we may see a continuation of the recent upward trend, driving sterling towards 1.26 and possibly even 1.2660. On the bottom side we will pay attention to a potential break of 1.2440. Lower targets could be at 1.2420 and 1.2320.

Bank of England Governor Mark Carney is scheduled to speak in London today at 18:30 UTC. This speech might be worth watching given accelerating inflation and recent hawkish comments. If Carney highlights a hawkish outlook despite the risks surrounding the U.K.’s exit from the EU, the pound could extend its gains. If he however, takes a neutral stance on monetary policy, sterling could fall back towards 1.24.

The euro traded between 1.0715 and 1.0640. As long as there is no fresh price breakout above or below this range, there is nothing new to report.

From the U.S. we have Continuing and Initial Jobless Claims scheduled for release at 13:30 UTC but these reports are of secondary importance to the greenback.

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Euro Drops On Fears The EU Could Collapse

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Dear Traders,

The euro weakened against the U.S. dollar after investors have been reminded that the French election is one of the biggest risks this year with the prospect of a victory of Marine Le Pen fueling concern that the European Union will collapse. France’s far-right leader Le Pen unveiled a manifesto pledge on Monday in which she said that she would take the country out of the EU should she win. Within this climate of increasing anti-globalism there is not much that is positive and currencies become victims of these policies. The euro fell towards 1.07 and we will now wait for a sustained break below that support-level. If the euro falls below 1.0680 we expect further losses towards 1.0620. On the upside we see a current resistance around 1.0780.

The British pound’s downward movement came to a short-term halt near 1.2425. We are anticipating further losses in the cable and thus focus on a significant break below 1.24. A short-term resistance is however seen around 1.2550.

With no major economic data on the docket, the price action will be determined by political developments and global risk appetite.

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Bearish Momentum To Continue? All Eyes On NFP Numbers

/in /by

Dear Traders,

Yesterday’s Super Thursday disappointed the market’s expectations with the Bank of England’s moderate inflation expectations making a potential rate hike this year less likely. Sterling bulls have hoped for a change in the central bank’s policy stance as well as higher inflation forecasts. However, the opposite turned out to be the case: While growth forecasts were raised slightly higher, inflation forecasts for 2017 were lowered down to 2.7% from 2.8%. Furthermore there was no change in the BoE’s monetary policy stance as Brexit and Trump lead to uncertainty, making it difficult for the BoE to consider higher rates anytime soon.

The pound dropped in response to the ‘less-hawkish’ statement and is currently hovering just above the 1.25 level. From a technical perspective, we now expect further near-term losses in the GBP/USD and still focus on a break below 1.24. Lower targets could be at 1.23 and 1.2270.

The euro traded confined to a narrow 80-pips trading range. While a break above 1.0810 failed to provide any sustained profit, bearish momentum appears to be not yet enough to push the euro significantly lower. We recommend waiting for a break below 1.0730 in order to sell euros towards 1.0680.

Today’s price action will however mainly hinge on the outcome of the U.S. Non-Farm Payrolls report scheduled for release at 13:30 UTC. Economists expect a 175,000 increase in payrolls for January with unemployment likely to remain relatively stable. The focus will also be on wage pressures.

We wish you good trades and a beautiful weekend.

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Can The Pound Hold Onto Its Gains? Carney Will Decide

/in /by

Dear Traders,

At the end of the day, the FOMC meeting has proved to be a non-event for traders with the Federal Reserve holding interest rates flat and providing no new insights on the pace of future rate hikes. As expected, there were no surprises and so the U.S. dollar resumed its decline against its major peers. The Fed reiterated its intention to raise rates gradually as the labor market tightens and market participants will now shift their focus to Friday’s jobs report. Due to the fact, that the FOMC statement did not appear overly hawkish, an imminent rate hike in March is increasingly unlikely.

The euro rose again towards 1.08 after marking a short-term support around 1.0730. Traders are eagerly waiting for the euro to break through the 1.0810-barrier and once that level is breached we may see the euro further rising towards 1.0870. Current supports are seen at 1.0715 and 1.0660. From the Eurozone, there will be no major economic reports scheduled for release today so we expect the price action to depend on the demand for dollars.

ECB president Mario Draghi is scheduled to speak at 12:15 UTC but today’s speech is not expected to have a major impact on the euro.

Today will be a big day for sterling traders with the Bank of England publishing its quarterly inflation report alongside the MPC statement and rate decision. Moreover, BoE governor Mark Carney will hold a press conference following the announcement. While the BoE is expected to stand pat, policymakers may revise up its growth and inflation forecasts. Inflation is on the rise and for Carney it could be a communicative challenge to keep monetary policy unchanged in the face of accelerating price growth. Investors suspect that the central bank might shift its bias from neutral to slightly hawkish while traders are pricing in a higher likelihood of a hike than a cut. This assumption is expressed in the pound’s recent rise.

The BoE will release its Quarterly Inflation Report and rate decision at 12:00 UTC, followed by a press conference 30 minutes later.

GBP/USD

The pound is facing its resistance zone at 1.2730-75. Whether this barrier could give way hinges on the BoE statement. Above 1.2685 a test of 1.2720/30 becomes increasingly likely. On the downside, the 1.26 support is intact. Below that level we may see the pound tumbling towards 1.2550/20.

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

/in /by

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

/in /by

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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We wish you good trades and many pips!

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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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We wish you good trades and many pips!

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Is The Pound Poised For Further Price Gains?

/in /by

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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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