U.S. Dollar Continues Slide After Trump State Of The Union Speech

Dear Traders,

Turn-around Tuesday lived up to its name and we got what we were looking for: A reversal of the dollar’s short-lived recovery and a very good daily and monthly profit. The U.S. dollar is being sucked into the maelstrom triggered by the ‘America First’ agenda of the Trump administration. As for the depreciation of the greenback and the long-term outlook, we can point out that the protectionism move will negatively influence the world’s largest economy.

The dollar extended its slide after U.S. President Trump’s State of the Union speech. As expected, Trump sought to strike a positive tone and described a “New American Moment” of wealth and opportunity. Trump called on Congress to pass a 1.5 trillion infrastructure-spending plan but this campaign promise was widely expected by the markets. Thus, the dollar’s reaction to his speech was muted.

EUR/USD

The euro recovered some of its losses after the 1.2330-support proved intact. Now that the single currency has stabilized above 1.24 we could see another test of 1.2450, a short-term resistance in the EUR/USD. If the euro finds its way above 1.2460 we expect further gains towards 1.25 and possibly even 1.2650.

The British pound started a relief rally after the psychological support at 1.40 has been tested. If the pound climbs above 1.4210 we may see a rise towards 1.43 but this depends on the risk appetite and demand for dollars ahead of the FOMC decision.

The next upcoming risk event will be the FOMC rate decision at 19:00 UTC but no changes are expected. It will be Janet Yellen’s last FOMC meeting before her term ends in February.

Before coming to the FOMC decision, we will keep an eye on the Eurozone Consumer Price report, due at 10:00 UTC, followed by the ADP report at 13:15 UTC.

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USD Receives Boost But Uptrend In EUR And GBP Remains Intact

Dear Traders,

We finally saw some reversal in the FX market after consecutive days of strength in both euro and pound. The U.S. dollar received a boost from encouraging comments from U.S. President Trump, who used the ‘strong dollar’ language in order to soften previous comments from U.S. Treasury Secretary Mnuchin who seemed to avoid the strong dollar policy. The sharp reversal happened after euro and pound have surged to new highs.

The euro took out the 1.25-barrier and rose to a high of 1.2537 on the back of the Eurozone’s improving outlook. ECB President Draghi declined to say that the euro was too strong while his comments on growth were relatively bullish. He said that the euro’s strength was in part down to the regions improving outlook. In short, Draghi’s commentary was not enough to trigger a reversal in the euro’s uptrend. Thus, euro traders should generally expect further euro strength, anticipating higher targets in the EUR/USD at 1.2560 and 1.27.

The British pound was able to extend its gains towards 1.4350 before a sharp reversal occurred, sending the cable back below 1.42.

Today, traders will pay attention to the U.S. and U.K. 4Q GDP figures, which could affect the price action in both EUR/USD and GBP/USD. We will watch the release of the U.K. GDP at 9:30 UTC. The U.S. GDP is scheduled for release at 13:30 UTC.

We wish you good trades and a nice weekend.

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The Euro’s Fate Is In Draghi’s Hands

Dear Traders,

What a trading day! The U.S. dollar extended its slide against other major currencies on the back of protectionism while the pound’s rally intensified the uptrend in GBP/USD.

Moreover, comments from U.S. Treasury Secretary Steve Mnuchin steepened the dollar’s dive. He said that” obviously a weaker dollar is good for us as it relates to trade and opportunities”, a departure from America’s traditional strong dollar policy.

Our yesterday’s long entry in the GBP/USD has proved highly profitable even though we have been on the lookout for corrections. Despite the cable’s strong uptrend which could persist over the medium-term, we may see some pullback tomorrow when both U.K. and U.S. GDP reports are due for release.

GBP/USD

The pair jumped to the highest level since June 23, 2016 – the day of the Brexit referendum. The reasons for the strong rally lie not only in the weakening dollar but also in good U.K. data and the progress in Brexit talks. On a weekly basis we got a bullish breakout suggesting that there could be accelerated bullish momentum on the way towards 1.46 – the next crucial resistance zone. As long as the pound remains above 1.40, the overall outlook remains constructive.

While the biggest story was the pound’s strong rise, the performance of the euro was not bad either. The euro broke above 1.2350 and headed towards 1.2450 ahead of the ECB meeting. Whether the euro can hold onto its high levels or can even extend its rally, will hinge on the rhetoric of Mr. Draghi at the ECB press conference at 13:30 UTC.

If ECB President Mario Draghi joins the chorus of policymakers speaking against the euro’s strength, the euro could quickly give up some of its gains. However, the devil is in the details and if Draghi fails to convince the market of the ECB’s concerns about the currency’s strength, the euro could further rise.

EUR/USD

We prepare for higher volatility today and expect larger market swings. On the topside, we will now focus on the 1.2460-barrier, which could act as a short-term resistance. For bearish momentum to accelerate, it would need a break below 1.23 and further 1.22. As long as the euro remains above 1.23 chances are in favor of the bulls.

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We wish you good trades and many pips!

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Euro And Cable Trend Higher And Higher And Now…Maybe Lower?

Dear Traders,

There was nothing stopping the British pound from further rising against the U.S. dollar. While we still anticipate near-term corrections in the strong performance of the GBP/USD, we need to pay attention to the solid uptrend. The pound was able to stabilize above 1.40 and if it extends its gains above 1.4060 we could possibly see a run for 1.4170. On the bottom side, we expect some fresh support coming in at 1.3950. However, traders should bear in mind that corrections are inevitable following the strong performance of the recent days and weeks. One look at the weekly chart below is enough to realize that the cable approaches overbought territory and thus faces the risk of pullbacks.

Meanwhile, the U.S. dollar suffered another setback against its major counterparts. U.S. President Trump’s decision to put tariffs on imported solar panels and washing machines may stoke protectionism and fears of trade wars.

The euro trended upwards, contrary to expectations, ahead of tomorrow’s ECB meeting. We still see the risk of profit-taking in the EUR/USD given the possibility of dovish comments from ECB President Draghi at tomorrow’s ECB’s press conference. For now, we expect the EUR/USD to trade between 1.2380 and 1.2250.

Important economic data that could have an impact on today’s price action:

8:30 EUR German PMI Report

9:30 UK Labor Market Report

15:00 USA Existing Home Sales

(Time Zone UTC)

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We wish you good trades and many pips!

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Pound Breaks Above 1.40 – What’s Next?

Dear Traders,

The best performer at the beginning of this week was undoubtedly the British pound which took a short glimpse above 1.40 amidst a more upbeat mood among investors regarding Brexit talks. The pound rose to a high of 1.4003 in Asia trading and we are still somewhat skeptical about the potential for further upward movement given an overbought situation. The strong uptrend in the GBP/USD depends not only on the weakness of the U.S. dollar, but also on positive U.K. data.

However, we were able to book a good profit yesterday by trading our long entry.

GBP/USD: Based on the pound’s general strength, we recommend sterling bulls to focus on a price range between 1.4110 and 1.3920. Below 1.3915 we anticipate deeper corrections towards 1.3850.

EUR/USD: The euro traded with a tailwind and rose towards the upper barrier of its current sideways trend channel. If the 1.23-barrier is significantly breached we expect further upside momentum driving the currency towards 1.2365. Current supports are seen at 1.2230, 1.2210 and 1.2165.

The German ZEW Survey is due for release at 10:00 UTC and could have a minor impact on the price action in the euro.

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We wish you good trades and many pips!

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Potential U.S. Government Shutdown And Germany’s Coalition Talks In Focus

Dear Traders,

The U.S. dollar continues to disappoint dollar bulls while being unable to find its footing against other major currencies. Market participants remain focused on the political risk potential around the U.S. government shutdown, which could take effect at the end of today’s trading day if no budget deal is reached. With developments in Washington being the primary focus, the dollar could remain under pressure.

The University of Michigan’s Consumer Sentiment Index is due at 15:00 UTC, but this report might only have a limited impact on the greenback.

The pound sterling gained further ground against the dollar and seems to be well on track to recover its post-Brexit referendum losses. The GBP/USD followed the recent uptrend and climbed back above 1.39 after finding fresh support at 1.38. If the pound holds above 1.3850 we could see a bullish run for 1.40 and possibly 1.4040.

The U.K. Retail Sales report is due at 9:30 UTC today and could have a minor impact on the pound’s price action.

The Euro held above 1.22 but traders should be aware of profit-taking ahead of the upcoming ECB meeting next week. There is increased speculation that ECB President Draghi will seek to talk the Euro lower following its rapid appreciation. Apart from the ECB’s monetary policy, there will be a vote by the Social Democrats in Germany to begin talks regarding a grand coalition this weekend. If the SPD votes against a coalition the euro could suffer a setback.

From a technical perspective we keep tabs on the 1.2350-level which could serve as a short-term resistance in the EUR/USD. Euro bears should however wait for prices below 1.2190 in order to expect accelerating bearish momentum.

We wish you good trades and a beautiful weekend.

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We wish you good trades and many pips!

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Profitable Trading Day For Sterling Bulls

Dear Traders,

The euro came under pressure Wednesday after ECB officials addressed the pace of the euro’s rise, which is only natural after the single currency’s rapid appreciation. Governing Council member Ewald Nowotny argued that the appreciation in the single currency ‘is not helping’ the ECB in terms of price stability. The euro dropped below 1.22 after rejecting the 1.23-resistance. Ahead of the ECB’s policy meeting next week, we might see more profit-taking and consolidation in the EUR/USD.

The British pound, on the other side, took out the 1.3850-hurdle on hawkish comments from MPC member Michael Saunders. He said that interest rates will likely have to rise faster than the markets are currently anticipating in 2018. His assumption spurred bullish momentum in the GBP/USD, sending the currency pair to a high of 1.3943. However, with a potential BoE rate hike still several months away, the pound was not able to hold onto its high level and corrected some of its gains. For day-traders, it was a very profitable trading day with both of our yesterday’s long entries hitting their final profit targets.

EUR/USD

Most recently, the euro traded with a downward tilt and we will thus focus on a trading range between 1.2250 and 1.21. A break above 1.2260 could spur further bullish momentum whereas a break below 1.21 could lead to further losses.

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We wish you good trades and many pips!

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EUR And GBP: Bearish Reversal Ahead?

Dear Traders,

We saw some profit taking Tuesday with both euro and pound giving up some of their recent gains versus the U.S. dollar. We were thus able to pocket some profit with our short entries. The modest rebound happened before both currency pairs were poised for another bullish run towards higher highs. In thin Asia trading the euro took a short glimpse above 1.23 but was unable to hold above that level. The pound sterling climbed to a high of 1.3836 before it dropped back below the 1.38-barrier.

Whether we will see further gains in the EUR/USD and GBP/USD depends on the market’s risk appetite for euros and pounds. The euro recently received a boost from speculation, the ECB could end its bond-buying program earlier than the market currently expects but we bear in mind that it is a sensitive time for the ECB. A strengthening euro could damp prices, giving ECB policy makers an excuse to keep monetary policy steady, at least until after the end of QE, which is set to expire in September.

Apart from fundamental drivers, we keep tabs on technical barriers. On a daily basis, both pairs are still overbought, increasing the chances of steeper corrections. For the time being we expect the EUR/USD to trade between 1.2350 and 1.21.

Traders should keep an eye on the Eurozone Consumer Price Report today at 10:00 UTC.

The British pound remained below 1.3850 and as long as that barrier holds, we see chances in favor of a bearish reversal, provided that the cable drops below 1.3730. Lower targets could be around 1.3690 and 1.3610.

Daily Forex Signals:

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We wish you good trades and many pips!

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No Signal Service On Friday And Monday

Out Of Office Notice:

We will be out of office 12th of January until 15th. Therefore, we will be unable to provide our signal service on Friday and Monday.

The MaiMarFX Team 

 

Roller-Coaster Day

Dear Traders,

Yesterday can be described as a roller-coaster day in the markets which was not to our liking. News that officials in Beijing, China, have recommended slowing or halting purchases of U.S. bonds have sent the U.S. dollar sharply lower, at least in a short-term. However, the news was not enough to change the current sentiment and thus, the dollar ended the trading pretty much unchanged against the euro and pound.

The price development in the EUR/USD was as expected. We saw a pullback sending the euro toward 1.2020.

We now expect the EUR/USD to trade between 1.20 and 1.1860. Current chances are still in favor of the bears, provided that the euro remains below 1.20. An important support zone is seen around 1.1850 that could be tested before the euro is primed for another leg up.

From the Eurozone we have the German GDP scheduled for release at 9:00 UTC, followed by the ECB meeting minutes at 12:30 UTC.

Trading the GBP/USD has recently proved difficult. From a technical perspective we expect slightly more bearish momentum to come. The pound could fall towards 1.3470 and 1.3450 before buyers are swooping in. A current resistance is however seen at 1.3540-50.

Daily Forex Signals:

Additional daily and long-term entries are available for subscribers.

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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 2018 Maimar-FX.

www.maimar.co