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U.S. Dollar Regains Strength, Pulling Euro And Sterling Down

Dear Traders,

The U.S. dollar strengthened against most of its major peers Tuesday as economic data in the U.S. signal expansion. With the latest data showing that the U.S. economy is picking up steam overall, the greenback enjoys stronger demand among investors whereas other currencies are tumbling. This trend could continue as the Federal Reserve is the only central bank which is on track to raise interest rates while other central banks are ready to ease monetary policy to steer economic growth.

On the back of renewed dollar strength the euro was forced to test the 1.10-support, which still remains intact this morning. With no major economic reports scheduled for release today, the dollar might have difficulty pulling the euro below this important support level. In addition, we see a next lower barrier around the 1.0970-level which may lend an additional support to the euro. Today’s price action could thus be oriented towards the upper and lower bound of the current trend channel. Resistances are currently seen at 1.1080 and 1.1130, whereas a crucial support could be at 1.0970.

Chart_EUR_USD_4Hours_snapshot20.7.16

The British pound broke through 1.3120 and slid towards 1.3060. Unfortunately, we had two stop-losses with yesterday’s short-entry before the pound went down, which is why we missed out on the final downward move.We are now looking for a test of 1.30 before we expect major pullbacks to occur. A current resistance is seen at 1.3150 and if sterling is able to climb above that level it could head for a renewed test of 1.32. However, given the recent dollar strength, gains might be limited in the GBP/USD.

Sterling traders should keep an eye on the U.K. labor market report, scheduled for release at 8:30 UTC. The focus will be on Average Earnings and if wages exceed expectations, the pound could be vulnerable to some upswings within its downward trend.

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FOMC Minutes Could Fail To Be A Big Market Mover

Dear Traders,

Break-out traders who had hoped for larger fluctuations in the EUR/USD have been disappointed by yesterday’s inconsistent performance. In addition, we had a bit bad luck with our short-entry and had to give up some of our previous gains. Sterling traders, however, were able to take advantage of high volatility in the GBP/USD and gain profits in both directions.

All eyes will be on the FOMC minutes today, but it is doubtful whether the Fed meeting minutes will be a big market mover. Given the last monetary policy statement and Yellen’s latest remarks on the economy, the Fed’s stance is anticipated to be neutral to slightly dovish, which would be dollar-negative in the near-term. Looking back on the trading day of the last Federal Reserve meeting, we saw the EUR/USD trending upwards, while the GBP/USD was trending downwards. While we do not expect today’s FOMC minutes to have a major impact on the currencies, we expect the euro trade higher against the greenback ahead of the minutes, whereas the cable could be vulnerable to further losses.

For the British pound, the most important piece of data will be today’s U.K. labor market report scheduled for release at 9:30 GMT. While the unemployment rate is forecast to show a decline, the focus will be on wage growth, which is expected to expand at a slower pace. If Weekly Earnings fall short of expectations, we could see sterling tumbling towards 1.42 and 1.4150.

GBP/USD

The cable broke below its recent trading range and currently tests the lower trend line of its secondary uptrend channel. If the pair breaks below 1.4265 and further 1.4240 next lower targets are seen at 1.4208, 1.4150 and 1.4130. On the upside, the currency pair would need to break significantly above 1.4370 and further 1.4410 in order to rally towards 1.4475 and 1.4550.

Chart_GBP_USD_4Hours_snapshot17.2.16

 

Important economic data for today:

9:30 UK Labor Market Report

13:30 USA Housing Data & PPI

19:00 USA Fed Minutes

(Time zone GMT)

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British Pound Extends Losses

Dear Traders,

The pound sterling dropped like a stone, breaking easily through $1.4230 after Bank of England governor Mark Carney said that “now is not yet the time to raise interest rates”. He highlighted global economic risks weighing on inflation and said that inflation “will likely remain very low for longer”. His comments dashed investors’ hopes for an early rate hike and sent the pound sharply lower toward its next target at 1.41.

Ahead of Carney’s speech an unexpectedly uptick in core consumer price index has driven GBP to a weekly high at 1.4340, which now marks a faraway resistance for the currency pair. We will now turn our focus to the next lower barrier at 1.41. A sustained break below that level could push sterling towards 1.4050 and 1.40, important price levels where the cable may gain some ground. However, upward movements could currently be limited until 1.42 and 1.4235.

Today we will focus on the next important economic report from U.K. which will be labor market data, due at 9:30 GMT, here in particular Average Weekly Earnings. Wages are forecast to show a decline, which could put further pressure on the currency.

The EUR/USD marked a current support at 1.0859 from where it started a relief rally toward its resistance area at 1.0985. In case of a renewed test of this resistance it should be interesting whether the euro will be able to break above 1.10, pointing towards a higher target at 1.1035. However, the current upward momentum could be deceptive ahead the European Central Bank meeting tomorrow. ECB president Mario Draghi may deliver a more dovish than-expected message to talk down the euro. Euro traders should prefer to turn their focus to a downside break of 1.0830 and 1.08 rather than an upside break of 1.0985.

We have some interesting U.S. data scheduled for release today. U.S. Consumer Prices are due at 13:30 GMT along with the release of U.S. Building Permits. If CPI figures surprise to the upside, the greenback could trade higher against its major peers. 

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UP Or DOWN For The USD?

Dear Traders,

Today is going to be an historic day, as the Federal Reserve is expected to normalize monetary policy and end seven years of near-zero interest rates. The following guidance is expected to be dovish, implementing less than three increases of 0.25 percentage points in 2016. Market participants will turn their focus to the FOMC Press Conference, led by Fed Chair Janet Yellen. It might be a communicative challenge for Ms. Yellen, as the Fed neither want to cause turbulence with any hawkish comments nor want to lose their credibility. Anything can happen today, so traders should prepare for big moves in either side. If Yellen signals a clear guidance regarding the Fed’s tightening cycle, the USD could rally. However, the risk is to the downside for the greenback, as any cautious comments could trigger a sharp selloff.

The U.S. dollar advanced against its major peers going into the Fed’s decision. The British pound dropped like a stone on the Bank of England’s dovish monetary policy outlook. BoE Governor Carney said in an interview that economic conditions for a U.K. rate hike are not yet in place. The U.K. central bank has signaled it is in no rush to follow the Fed which is forecast to begin policy tightening.

The U.K. Employment Report is scheduled for release today at 9:30 GMT and the focus will be on Average Weekly Earnings. If wage growth comes in softer than expected, sterling could be vulnerable to further losses.

Eurozone Consumer Prices are due for release at 10:00 GMT, but as long as data meets expectations, the impact on the euro could be limited.

The Federal Reserve decides on monetary policy at 19:00 GMT, followed by the press conference at 19:30 GMT.

Let’s have a look at the technical side:

EUR/USD

Looking at the daily chart, we see the pair still trading within a downward channel. Depending upon the Fed speak, we see some chances that dollar bulls may drive the EUR/USD to lower levels. Lower targets could be at 1.0840 and 1.08. In case the pair falls significantly below 1.0780, the focus turns to 1.0690 and 1.0635. The support line is at 1.0450 but an unambiguously hawkish statement would be needed in order to send the pair towards such levels.

A bullish scenario could gain attraction with prices above 1.11.A sustained break above this key resistance could lead the EUR/USD towards 1.13.

Chart_EUR_USD_Daily_snapshot16.12.15

GBP/USD

We see an upward channel within a primary downward channel. While the primary trend is downwards, the pound sterling formatted a recent upward channel, which is still intact this morning. If GBP breaks below 1.5020 and further 1.50, we expect the pair to decline towards lower targets at 1.49 and 1.4850. Based on the recent upward channel, it is also possible that sterling rebounds, heading for 1.5130 and 1.5290.

Chart_GBP_USD_Daily_snapshot16.12.15

 

Everything will depend on the Fed. So,we will wait and see. We wish all traders profitable trades for today.

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