Greenback Holds Rally, EUR/USD And GBP/USD Approach Oversold Territory

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The greenback held its rally in the wake of high inflation and tensions between Russia and Ukraine. The GBP/USD trended lower toward 1.3350 and as long as the cable remains below 1.35, a test of the lower target at 1.33 is likely.

EUR/USD – Technical view:

We got what we have been looking for. A fresh leg down targeting at 1.14. However, the pair remains oversold and we anticipate near-term corrections, provided that 1.14 holds. A resistance is now seen at 1.15.

Elsewhere, the DAX was able to generate fresh highs beyond 16100 bringing the focus back to a potential run for 16400. Bulls will have hopes for near-term upward movements as long as the index remains above the crucial 16000-support.

Have a good weekend.

 

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U.S. Dollar Resumes Rally After Highest Inflation Print in 20 Years

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The U.S. dollar rose to fresh highs against the euro and British pound after the U.S. inflation print showed the highest annual rate of inflation in over 20 years at 6.2 percent. Rate hike bets surged as investors began to price in tighter monetary policy from the Federal Reserve in order to curb inflation. The market is now pricing in a full 25bp rate hike by July 2022.

Both EUR/USD and GBP/USD slipped below crucial support zones and bears are eyeing next lower targets.

GBP/USD: If 1.3390 breaks, we see a next important target at 1.33 from where bulls could try to start a countermove. A current resistance is seen at 1.3520.

EUR/USD: Remaining below 1.15, next lower targets are seen at 1.1450 and 1.14 but traders should be careful. The pair is oversold in short-term time frames which is making corrective moves more likely. Short-term resistances are seen at 1.1540 and 1.1580.

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Will U.S. Inflation Spur The U.S. Dollar Rally?

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For now, the Federal Reserve is not worried about inflation but could they be at some point? Traders are awaiting today’s U.S. consumer price report at 13:30 UTC and should brace for an upside surprise amid persistent supply chain bottlenecks and elevated energy prices. Higher-than-expected CPI numbers bring forward interest rate hike bets, which is positive for the U.S. dollar, while lower-than expected inflation figures could lift risk-assets across the board.

EUR/USD technical view:

Euro bulls weren’t able to push the pair back above 1.16, at least not until now. As long as the 1.1620-30 price area remains a hurdle, we favor a test of the crucial 1.15-support with a potential break of that support-mark. A next lower target would be at 1.14. Above 1.1630, however, bulls could push the pair for a test of 1.17.

GBP/USD technical view:

After testing the lower bound of the cable’s support-zone around 1.34 we saw the pound recovering some of its losses, testing the 1.36-hurdle. If 1.36 was the limit, traders should brace for steeper losses towards 1.3350 and 1.33. Only a significant break above 1.3650 could change the sentiment in favor of the bulls with a higher target seen at 1.38.

 

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Fresh Highs in Cryptocurrencies While U.S. Dollar Consolidates

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Monday’s best performer was the British pound which rose towards 1.3580 amid a weakening U.S. dollar. Our long entry at 1.3520 has thus proved profitable. We continue to see a short-term resistance at around 1.3615 in the GBP/USD.

EUR/USD: Buyers were able to take some profits yesterday but the upward move was limited to a high of 1.1595. We may see a renewed test of 1.1615 today. A current support is however seen at 1.15.

In the crypto world we saw fresh record highs with Bitcoin jumping above 68,000 and ETH/USD testing the 4800-price-area. Tests of 70,000 in BTC/USD and 5,000 in ETH/USD wouldn’t come as a surprise before a pronounced correction is due.

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

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U.S. Dollar Rally Stalls, Focus Turns to U.S. CPI

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The U.S. dollar ended Friday’s trading day virtually unchanged against the euro and British pound even after a larger-than forecast U.S. payrolls gain and a jump in average hourly earnings.

This week is from a fundamental perspective much quieter than the previous one but market participants will closely watch the U.S. consumer price report on Wednesday. U.S. consumer prices are expected to show inflation running at the hottest pace in three decades amid supply-chain bottlenecks and higher energy. This expectation could bolster dollar bets ahead of the release.

Let’s take a brief look at the technical picture:

EUR/USD: As long as the euro remains below 1.1580, chances are in favor of bearish moves within the current downtrend channel with the focus remaining on a potential test of 1.15. A significant break above 1.1620 could, however, shift sentiment in favor of the bulls.

GBP/USD: The cable has touched the lower bound of its support area around 1.3415. We now see a lower resistance at around 1.3610. Buyers should keep tabs on a break above 1.3650 whereas sellers aim at 1.3350.

DAX: The index holds above 16000 and bulls have already the 16350-level in sight. However, we also brace for some pullbacks with a current support seen at 15800.

We wish you all a good start to the new week.

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ETH/USD

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Pound Vulnerable to Further Losses After BoE Shock

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The Bank of England shocked the market yesterday by keeping interest on hold, disappointing hawkish rate hike bets. The pound dropped almost two percent from our short entry, providing sellers a very good gain. BoE officials voted 7-2 to keep the benchmark interest rate at a record low of 0.1 percent. Defending the BoE’s decision, Governor Andrew Baily said that policy makers will focus on jobs and the risks to economic growth instead of inflation.

Bets on the first 15-bp BoE rate hike are now pushed back to February.

GBP/USD: As traders digest the shock, the pound may be vulnerable to further losses. A next lower target comes in at 1.3415, followed by 1.3330. A lower resistance is currently seen at 1.3650.

All eyes now turn to the U.S. nonfarm payrolls report today at 12:30 UTC.

Analysts expect the NFP report to cross the wires at 450k for October. That is more than double the 194k September print. A better-than-expected figure will strengthen the Fed’s basis for more tightening and will benefit the U.S. dollar. Alternatively, a poor print is likely to do the opposite with the greenback vulnerable to losses.

We wish you all a beautiful weekend!

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ETH/USD

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Fed Delivers Dovish Taper, All Eyes on BoE Now

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Wednesday’s trading was dominated by U.S. dollar weakness as the Federal Reserve delivered a dovish tapering. The market’s rate hike bets remained virtually unchanged after Fed Chair Jerome Powell said officials can be patient on raising interest rates. “We don’t think it is a good time to raise interest rates because we want to see the labor market heal further,” he said. Investors continue to see two quarter-point hikes in 2022 starting around mid-year. Attention will now be paid to Friday’s NFP report which could bolster rate hike bets if the headline figure impresses.

The taper announcement was delivered as expected with the committee saying it would scale back by $15 billion a month starting in November. In terms of the pace of tapering Powell said that officials are on track to wrap the process up by mid-2022 but can speed it up or slow it down depending on the economic outlook.

As for the inflation outlook, Fed officials retained their ‘dovish’ inflation-rhetoric. “Inflation is elevated, largely reflecting factors that are expected to be transitory,” officials said in the statement. “Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors.” Also here, we got a dovish statement.

With the FOMC decision behind us, the focus now turns to the Bank of England decision today at 12:00 UTC noon.

A rate rise in the U.K. would be the first since the pandemic from a central bank in the world’s leading economies. It would mark a far quicker move toward normalization than in the aftermath of the global financial crisis more than a decade ago. Economists see today’s decision as a very close call, with a Bloomberg survey showing 51% forecast a hold and 49% a hike. In case a lift-off will be delayed to December, investors could question the BoE’s credibility. Thus, the central bank will struggle to meet the already very hawkish market expectations.

GBP/USD technical view: Chances are in favor of the bulls. A higher resistance comes in around 1.3750 but a rise above 1.3780 could encourage sterling bulls for a test of 1.3820. Bears on the other side will wait for a significant break below 1.3550 in order to anticipate steeper losses.

DAX – Test of 16000 done

As expected in previous analysis the DAX hit a fresh high above 16000. We now see higher price targets around 16300. A current support zone is seen at 15700.

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Fed Taper a Foregone Conclusion, Focus Instead on Taper Pace

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It’s FOMC decision day and a taper announcement seems a forgone conclusion. The question among investors is rather when the FOMC will complete its asset purchases (speed of tapering) and when they will start to raise interest rates.

Most economists expect the Federal Reserve to reduce bond purchases by $15 billion every month and complete the taper by mid-2022 (eight months).

As Fed policy makers have said that they want to end the taper before moving to possible rate hikes, most attention will be paid to the taper pace. In case of a quicker end to the tapering, the U.S. dollar will rise.

The focus will also be on the Fed’s language regarding inflation. If the committee retains the language that elevated inflation is “largely reflecting transitory factors”, the dollar will weaken. If today’s FOMC statement is however more hawkish, stating that inflation is lasting longer than expected, the dollar will strengthen as the market speculates on earlier rate hikes.

Speaking of rate hikes and even though the market speculates on a faster rate hike path, diverging from the forecast of Fed policy makers, economists expect the Fed to suggest a liftoff when the unemployment rate falls to 4 percent.

Traders prepare for heightened volatility around the time of the FOMC statement today at 18:00 UTC.

EUR/USD technical view: If the euro falls again below 1.1540, chances of a bearish 1.15-breakout increase with lower targets seen at 1.1480 ad 1.1450. On the upside, price breaks above 1.1640 and 1.1670 will spur bullish momentum towards 1.1720.

GBP/USD technical view: Below 1.3580 we will turn our focus to lower targets at 1.3550 and 1.3450. On the upside, the 1.3750-area could serve as a resistance whereas a break above 1.3780 could attract more buyers towards a higher a target at 1.3820. However, larger fluctuations will be expected tomorrow, which is why the cable could be reluctant to big price movements today.

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Fed Taper ist ausgemachte Sache, Fokus liegt nun auf Tempo des Tapers

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Es ist der Tag der FOMC-Entscheidung und eine Taper-Verkündigung scheint ausgemachte Sache zu sein. Die Frage unter den Anlegern ist eher, wann das Komitee seine Anleihekäufe abschließen wird (Tempo des Taperings) und wann sie damit beginnen werden, die Zinsen anzuheben.

Die meisten Ökonomen gehen davon aus, dass die Federal Reserve die Anleihekäufe jeden Monat um 15 Milliarden U.S. Dollar reduzieren und den Taper bis Mitte 2022 (acht Monate) abschließen wird.

Da die Fed Währungshüter gesagt haben, dass sie den Taper beenden wollen, bevor sie zu möglichen Zinserhöhungen übergehen, wird dem Taper-Tempo die meiste Aufmerksamkeit gewidmet. Bei einem schnelleren Ende des Taperings wird der U.S. Dollar steigen.

Der Fokus wird auch auf der Sprache der Fed in Bezug auf die Inflation liegen. Wenn der Ausschuss an der Sprache festhält, dass die erhöhte Inflation „weitgehend vorübergehende Faktoren widerspiegelt“, wird der Dollar schwächer. Wenn die heutige FOMC-Erklärung jedoch hawkischer ist und besagt, dass die Inflation länger anhält als erwartet, wird der Dollar stärker werden, da der Markt über frühere Zinserhöhungen spekuliert.

Stichwort Zinserhöhungen: Obwohl der Markt auf einen schnelleren Zinserhöhungspfad spekuliert, der aktuell von den Aussichten der Fed-Politiker abweicht, erwarten Ökonomen, dass die Fed eine erste Zinserhöhung vorschlagen wird sobald die Arbeitslosenquote auf 4 Prozent sinkt.

Trader bereiten sich auf gesteigerte Volatilität rund um das FOMC Statement um 19:00 Uhr vor.

EUR/USD technischer Ausblick: Fällt der Euro wieder unter 1.1540, so erhöhen sich die Chancen auf einen bärischen 1.15-Ausbruch mit tieferen Zielen bei 1.1480 und 1.1450. Auf der Oberseite könnten Kursausbrüche über 1.1640 und 1.1670 die Bullendynamik in Richtung von 1.1720 anheizen.

GBP/USD technischer Ausblick: Unterhalb von 1.3580 richten wir unseren Fokus auf tiefere Ziele bei 1.3550 und 1.3450. Auf der Oberseite könnte die 1.3750-Region als Widerstand fungieren, wohingegen ein Ausbruch über 1.3780 vermehrt Käufer bis zu einem höheren Ziel von 1.3820 anlocken könnte. Nichtsdestotrotz wird am morgigen Tag zur Bank von England Zinsentscheidung mit größeren Bewegungen gerechnet, weshalb sich der Cable heute eventuell noch mit großen Bewegungen zurückhalten könnte.

Der Inhalt des Beitrags spiegelt die persönliche Meinung des Autors wider. Dieser übernimmt für die Richtigkeit und Vollständigkeit keine Verantwortung und schließt jegliche Regressansprüche aus. Dieser Beitrag stellt keine Kauf- oder Verkaufsempfehlung dar.

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DAX: Primed For New 16000-Test?

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For traders in the DAX, it has been a profitable start to the new week. The index touched an almost two-month high on Monday with our buy position reaching its profit target. If the DAX is now able to hold above 15570, we could see a continuation of the upward trend with a potential renewed test of 16000.

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ETH/USD

Long @ 4380

Short @ 4290

We wish you good trades!

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