ECB Meeting Is The Only Interesting Event This Week

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Welcome to a new trading week everyone.

It will be a notably quiet week in terms of economic data with the only key event being the European Central Bank policy decision on Thursday. ECB President Christine Lagarde said last Sunday that market participants should prepare for new guidance on stimulus but according to officials familiar with the matter, ECB policy makers are split over changes to their language on monetary stimulus.

It is clear that the implementation of the ECB’s new inflation strategy should confirm the central bank’s dovishness and that an exit from its accommodative policy is still very distant.  In short, the ECB is seen as one of the most dovish of the major central banks which should keep the euro under pressure. The question is however, how much of that dovishness has already been priced in to the euro’s exchange rate? For the EUR/USD to fall towards 1.17, the ECB will have to send a strong dovish message while convincing the market that the new strategy is a forceful change in guidance. We will know more on Thursday.

GBP/USD

The pound found some support around 1.3750 amid hawkish comments from Bank of England members. While the possibility of a rate hike in the first half of 2022 could generally keep the pound supported, in short-term time frames, we now look at a break below 1.3730 which could lead to a test of 1.37/1.3690 and possibly even 1.3650. A current resistance is however seen at around 1.3870.

DAX: Breaking below 15400 could see a dip towards 15300 and possibly even 15100. On the upside, the 15800-border has so far proved a difficult hurdle for DAX bulls and we may have to wait some time before we see a sustained upside break.

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EZB Treffen ist das einzige wichtige Event diese Woche

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Willkommen zu einer neuen Handelswoche.

Im Hinblick auf anstehende Wirtschaftsmeldungen wird es eine recht ruhige Woche sein. Das einzig wichtige Event wird die Entscheidung der Europäischen Zentralbank am Donnerstag sein. EZB Präsidentin Christine Lagarde sagte letzten Sonntag, dass sich Marktakteure auf einen neuen Fahrplan hinsichtlich des EZB Stimulus einstellen sollten, doch laut Vertretern, welche mit der Diskussion vertraut sind, herrscht zwischen den EZB Währungshütern derzeit noch Unstimmigkeit über die rhetorischen Veränderungen zum geldpolitischen Stimulus. Klar ist, dass die Implementation der neuen Inflationspolitik der EZB ihre Taubenhaftigkeit bestätigt und dass eine Abkehr von der unterstützenden Geldpolitik noch in weiter Ferne liegt. Kurz gesagt, wird die EZB als eine der am taubenhaftesten Zentralbanken angesehen, was den Euro unter Druck halten sollte.

Die Frage ist vielmehr, wieviel von der taubenhaften Haltung bereits im Wechselkurs des Euros eingepreist ist? Damit der EUR/USD in Richtung von 1.17 abrutscht, müsste die EZB ein stark dovisches Signal setzen und den Markt davon überzeugen, dass die neue Strategie eine kraftvolle Veränderung in der Führung der Zentralbank darstellt. Am Donnerstag werden wir mehr erfahren.

GBP/USD

Das Pfund fand etwas Halt um 1.3750 inmitten falkenhafter Äußerungen von Bank von England Mitgliedern. Während die Möglichkeit auf eine Zinsanhebung in der ersten Hälfte von 2022 gegeben ist, was das Pfund generell stärken könnte, so blicken wir kurzfristig auf einen Bruch unter 1.3730 welcher zu einem Abrutschen bis 1.37/1.3690 und eventuell sogar 1.3650 führen könnte. Ein aktueller Widerstand wird momentan bei 1.3870 gesehen.

DAX: Unterhalb von 15400 könnte es weiter talwärts bis 15300 und eventuell sogar 15100 gehen. Auf der Oberseite hat sich die 15800-Grenze derweil für DAX Bullen als schwierige Hürde erwiesen und wir müssen uns eventuell noch etwas gedulden bis wir einen nachhaltigen Bruch dieser Barriere zu Gesicht bekommen.

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EUR/USD And GBP/USD in Tight Ranges, Focus on U.S. Retail Sales

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The U.S. dollar ended yesterday’s trading day slightly higher against the euro and British pound while Federal Reserve Chair Jerome Powell repeated the central bank’s dovish stance that a decision to taper stimulus is still a ways off. Many market participants expect the Fed to start tapering in December or January. Powell said that policymakers will talk about the possibility of scaling back stimulus at their next gathering on July 27-28.

Market momentum has faded amid the summer doldrums, making it difficult for traders to profit from small fluctuations within narrow price ranges. We continue to recommend a low-risk approach when trading in low volatile markets or staying on the sidelines.

EUR/USD: We expect the pair to remain within a trading range between 1.1880 and 1.1750. Breaking below 1.1740 could see accelerated bearish momentum towards 1.17. Euro bulls on the other side, should pay attention to a break above 1.19 with a higher target at 1.20.

GBP/USD: The cable traded sideways between 1.39 and 1.38. Above 1.3910 we see a next hurdle at 1.3940 followed by 1.3990. Below 1.3770 we will favor the downtrend with a lower target at 1.3650.

Traders will watch the U.S. retail sales report scheduled for release today at 12:30 UTC that could have an impact on dollar crosses.

Have a good weekend.

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We wish you good trades!

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No Big Movements As Powell Reiterates Dovish Stance

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Federal Reserve Chair Jerome Powell told the House Financial Services Committee Wednesday that it was still too soon to scale back asset purchases while acknowledging that recent inflation readings had been “higher than expected”. On the other hand, he said that if high inflation persisted “we would absolutely change our policy as appropriate”.

In short, Powell reiterated his dovish stance and signaled that the Fed will be patient in tightening monetary stimulus since ‘substantial further progress’ is still a ‘ways off’.

The U.S. dollar slightly weakened after Powell’s speech but there were no significant market movements.

Powell will face more questions from the Senate banking panel today.

Summer is in the markets and given a lower-liquidity backdrop across many markets during the summer months the potential for range-bound conditions is high. We therefore recommend traders staying on the sidelines during these low-liquidity periods, taking a break from the markets and adjusting risk exposure. The next major risk event will be later in the summer with the Jackson Hole Economic Symposium August 26-28.

We will take our annual summer trading break from August 2 to August 20 but will adjust risk exposure even in the month of July.

We wish you good trades!

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U.S. Dollar Jumps On Surprise CPI Data

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U.S. dollar bulls rushed in after the surprise U.S. inflation jump, showing the highest inflation since 2008, stirred the debate on how long the Federal Reserve can keep monetary policy ultra-loose. The CPI report topped all forecasts and traders saw the data as putting more pressure on the Fed. The greenback advanced sharply, pushing EUR/USD and GBP/USD towards lower targets.

Traders will now be scrutinizing the testimony from Fed Chair Jerome Powell tomorrow.

EUR/USD

Dollar bulls have pushed the pair lower towards the descending trendline at around 1.1750, the lower barrier of a current downtrend channel. Whether this channel holds, remains to be seen. Falling below 1.1740 could increase bearish momentum towards 1.17 and 1.16. A current resistance is however seen at around 1.19.

DAX: There was nothing to gain for day traders on Tuesday as momentum came to a halt after the index reached a new high slightly above 15800. If the index remains above 15600, we could see an extension of gains towards 15900 and 16000.

Summer is in the markets and given a lower-liquidity backdrop across many markets during the summer months the potential for range-bound conditions is high. We therefore recommend traders staying on the sidelines during these low-liquidity periods, taking a break from the markets and adjusting risk exposure. The next major risk event will be later in the summer with the Jackson Hole Economic Symposium August 26-28.

We will take our annual summer trading break from August 2 to August 20 but will adjust risk exposure even in the month of July.

We wish you good trades!

Any and all liability of the author is excluded.

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U.S. Dollar Vulnerable To Further Losses Ahead Of CPI

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The U.S. dollar weakened against most major peers ahead of today’s closely-watched inflation report.

The CPI report is scheduled for release today at 12:30 UTC. For Federal Reserve taper risk to intensify we will need to see an unambiguously upward surprise to CPI data with headline inflation topping 5 percent YoY. If inflation figures are in line or below forecasts, the dollar could be vulnerable to further losses.

GBP/USD: Above 1.3925, it will be interesting whether sterling bulls are able to clear the 1.3950-barrier, the last hurdle before 1.40. The psychological level at 1.40 could serve as a crucial resistance for bulls in the short-term. Remaining however below 1.3920, our focus shifts to a lower target at 1.3770.

EUR/USD: As long as the pair remains trading above 1.1850, chances are in favor of the bulls with higher targets seen at 1.19 and 1.1950.

Elsewhere, the DAX reached a fresh record high at 15817 this morning and as long as the index holds firmly above 15500, there is nothing in the way of a run for 16000.

We wish you good trades!

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Eventful Week For The Greenback

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The best performer last Friday was the British pound which headed for a test of 1.39 against the U.S. dollar. Much of the GBP/USD’s recent upward move can be attributed to a weakening U.S. dollar on the back of declining Federal Reserve rate hike expectations and collapsing U.S. Treasury yields.

As for the greenback, this week will be an eventful one with the June U.S. inflation report (Tuesday) and Fed Chair Jerome Powell’s semi-annual Congressional testimony (Thursday) being potential catalysts for bigger market movements. There is a risk that market participants may shrug off an even hot inflation report and a corresponding rise in yields since the Fed continues to insists that inflation is largely transitory. This could limit dollar gains even if Tuesday’s inflation report surprises to the upside.

The latest FOMC minutes, on the other side, showed the committee had a lot of questions about how soon labor shortages and supply bottlenecks contributing to inflation would resolve. Chair Jerome Powell may shed more light on the outlook on Thursday when he appears before the Senate Banking Committee to deliver the Semi-Annual Monetary Policy Report to Congress. The hearing is scheduled to start at 9:30 a.m. in Washington.

GBP/USD

The cable’s rebound was limited to a high of 1.3910 and we will wait for a break above 1.3920 in order to expect a test of 1.3940-50 and maybe even a run for the crucial resistance at 1.40. For bearish momentum to gain traction, we would need to see a renewed break below 1.3760 on the downside or a test of 1.40 on the upside.

EUR/USD: The euro rebounded towards 1.19 after the 1.1780-level proved to hold. We now pay attention to an upside break of 1.1910 which could spur bullish momentum towards 1.1970. On the downside, the 1.18-level could serve as a current support but if it breaks, we see a next target at around 1.1760.

Looking ahead to the next week, the European Central Bank decision on July 22, which was previously expected to be relatively uneventful amid the summer markets, will now have “some interesting variations and changes”. “It’s going to be an important meeting” and investors should prepare for new guidance in 10 days, ECB President Christine Lagarde told Bloomberg Television in Venice on Sunday. So, there might be some volatility in store for euro traders next week.

DAX

The index refrained from a fall below 15300 and thus extended the lower bound of its previous sideways trading range to 15300. A break below the ascending trendline at 15350 could however result in a break of the sideways range with a next lower target seen at 15100. Bulls will keep an eye on an upside break of 15800.

We wish you good trades!

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Ereignisreiche Woche für den Greenback

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Der beste Performer vom letzten Freitag war das Britische Pfund welches die 1.39-Marke gegenüber dem U.S. Dollar testete. Viel der jüngsten Aufwärtsbewegung im GBP/USD kann dem schwächelnden Dollar geschuldet werden, welcher aktuell aufgrund nachlassender Erwartungen bezüglich Federal Reserve Zinsanhebungen und kollabierenden U.S. Treasury Renditen nachgibt.

Was den Greenback anbetrifft, so wird diese Woche eine Ereignisreiche sein, denn es stehen der U.S. Inflationsbericht (Dienstag), sowie die halbjährliche Anhörung von Fed Präsident Jerome Powell vor dem Kongressausschuss (Donnerstag) an. Beide Events könnten als Impulsgeber für größere Bewegungen am Markt dienen. Es besteht das Risiko, dass Marktakteure selbst eine höhere Inflation und einen entsprechenden Renditenanstieg abtun werden, seitdem die Fed weiterhin auf einem lediglich temporären Inflationsanstieg beharrt. Dies könnte Gewinne im Dollar möglicherweise begrenzen, auch wenn der Bericht mit einer höheren Lesung überrascht.

Das letzte Protokoll des FOMC Treffens auf der anderen Seite, zeigte, dass innerhalb des Komitees noch eine Menge an Fragen offen seien bezüglich des Zeitraumes wann die Knappheiten am Arbeitsmarkt und Lieferengpässe, welche zum Anstieg der Inflation geführt haben, überwunden seien. Jerome Powell könnte auf seiner Anhörung vor dem Kongress den Ausblick eventuell näher beleuchten. Die Anhörung ist am Donnerstag für 9:30 Uhr Ortszeit in Washington angesetzt.

GBP/USD

Die Erholung im Cable war bis zu einem Hoch bei 1.3910 begrenzt und wir werden nun auf einen Bruch oberhalb von 1.3920 warten um von einem Test der 1.3940-50 Region und eventuell sogar einem Lauf bis zum gewichtigen 1.40-Widerstand auszugehen. Damit die Bärendynamik wieder an Fahrt gewinnt, müssten wir wohl entweder einen Rutsch unter 1.3760 auf der Unterseite oder einen Test von 1.40 auf der Oberseite sehen.

EUR/USD: Der Euro erholte sich in Richtung von 1.19 nachdem der 1.1780-Level vorerst seinen Halt bewiesen hat. Wir werden jetzt auf einen Ausbruch über 1.1910 achten, welcher die Bullendynamik bis 1.1970 anheizen könnte. Auf der Unterseite könnte der 1.18-Level als Unterstützung dienen, doch sollte diese brechen, läge ein nächstes Ziel bei rund 1.1760.

Schauen wir bereits voraus auf die nächste Woche, so könnte die Entscheidung der Europäischen Zentralbank am 22. Juli doch noch einige interessante Ausführungen und Veränderungen bereithalten. Das nächste EZB Treffen galt am Markt noch bis vor kurzem als relativ ereignislos inmitten der Sommerflaute. „Es wird ein wichtiges Treffen sein“ und Investoren sollten sich auf eine neue Leitlinie in zehn Tagen einstellen, sagte EZB Präsidentin Christine Lagarde in einem Interview für Bloomberg Television in Venedig am Sonntag. Es könnte also für Euro Trader doch noch etwas Volatilität nächste Woche drin sein.

DAX

Der Index stoppte seinen Fall kurz vor 15300 und erweiterte damit die untere Grenze seiner jüngsten Seitwärtsspanne bis 15300. Ein Bruch der steigenden Trendlinie bei 15350 könnte jedoch in einem Bruch der Seitwärtsspanne münden mit einem nächsten tieferen Ziel bei 15100. Bullen werden auf der Oberseite ein Auge auf einen Ausbruch über 15800 haben.

 

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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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Euro Gains Despite Dovish ECB

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While the GBP/USD ended yesterday’s trading day virtually unchanged, leaving us without any sustained profit, the EUR/USD climbed towards 1.1870 and provided some profit for euro bulls.

The European Central Bank’s new strategy of allowing inflation to overshoot the ECB’s  2 percent target for a while points to a more expansionary bias for monetary policy. The new formulation of “2 percent inflation target is not a ceiling” gives the central bank room to run accommodative monetary policy for longer. While the new symmetric inflation target can be perceived as a dovish disposition, the euro gained after the announcement.

Elsewhere, the DAX experienced a sharp drop towards 15300. We saw the index breaking below the ascending trendline at 15450, as well as below the recent sideways trading range.

The next support is seen at 15280 and if the DAX is unable to overcome the 15500-Level, we may see a drop below that support with a next lower target at 15100.

Beautiful weekend everyone.

 

Summer is in the markets and given a lower-liquidity backdrop across many markets during the summer months the potential for range-bound conditions is high. We therefore recommend traders staying on the sidelines during these low-liquidity periods, taking a break from the markets and adjusting risk exposure. The next major risk event will be later in the summer with the Jackson Hole Economic Symposium August 26-28.

We will take our annual summer trading break from August 2 to August 20 but will adjust risk exposure even in the month of July.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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Euro And Cable Draw Closer To Support Levels Amid Low Volatility

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The FOMC minutes showed that conditions of substantial further progress have not been met for the Federal Reserve to start tapering. The minutes contained some degree of uncertainty among policy makers which is why the U.S. dollar initially slipped on the release. However, large price swings are lacking since market volatility remains subdued.

Generally speaking, the Fed tapering prospects will lead to a stronger greenback in the medium-term but now doesn’t appear to be the right time to expect too much from the hawks.

EUR/USD: If 1.1780 breaks, we will watch out for falling prices towards 1.1730/1.17. Resistances are seen at 1.1850, 1.19 and 1.20.

GBP/USD: We still see a crucial support at 1.37 from where we could see some rebound but if bears are strong enough to push the pair significantly below 1.3670, traders should expect steeper losses towards 1.35. Resistances are seen at 1.3850, 1.39 and 1.40.

DAX: We have already reached our weekly profit target while we were able to book good profits in three consecutive trading days. The index’s price range remains sideways between 15750 and 15450. Any break above or below this area should be considered as a potential chance for larger moves.

Daily Forex Signals:

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We wish you good trades!

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