Bank of England – MaiMarFX

Euro: The Longest Losing Streak Since 1997

September 18, 2023/in General News & Updates /by MaimarFX

The euro confirmed a 9^th consecutive weekly loss, the longest losing streak since 1997.

The common currency dropped like a stone towards 1.0630 after the European Central Bank raised interest rates last Thursday but there were signs that rates had peaked. Recession risk and worsening sentiment indicators in Germany fuel arguments against further hikes.

Looking at the weekly chart we see, that despite the euro’s steep fall, it remains still above the crucial support area around 1.05. Given the recent bearish strength we could imagine that the pair tests the 1.06-level before a pullback towards 1.08 is in the cards. However, the U.S. dollar will play a major role this week, so traders will likely wait for the Fed decision before deciding which way to go.

EUR/USD

This week is again loaded with event risk, including multiple central bank decisions. We will focus on the Federal Reserve rate decision Wednesday and while the Fed is widely expected to leave rates unchanged this month, traders access the prospects of a further hike by the end of this year.

The Bank of England is expected to deliver a 25bp rate hike on Thursday. In case of a dovish hike or more precisely, if the BoE give a hint that rates are near their peak, the pound sterling will fall.

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Will GBP Correct On BoE?

May 11, 2023/in General News & Updates /by MaimarFX

The U.S. CPI report surprised lower, at least the headline inflation gauge which came in at 4.9 percent in April, slightly lower than the 5.0 percent forecast. The core gauge printed 5.5 percent which was in line with expectations. As anticipated, the U.S. dollar further weakened in the aftermath of the slightly better inflation print.

The British pound rose to a high of 1.2680 but was unable to overcome this resistance.

The euro, however, refrained from a sustained break above 1.10 and oscillated sideways around the 1.0970-handle.

Today the Bank of England is expected to raise interest rates to 4.5 from 4.25 percent. The BoE decision is scheduled for 11:00 UTC. What matters is the forward guidance. The market expects more rate hikes later this year with a potential pivot from hawkish to dovish in early 2024. Any signs of earlier rate cuts could lead to a deeper correction in the GBP/USD.

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Our trading ideas for today 11/5/23:

EUR/USD

Long @ 1.1010

Short @ 1.0965

GBP/USD

Long @ 1.2630

Short @ 1.2580

DAX® (GER40)

Long @ 15940

Short @ 15890

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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Focus This Week On U.S. CPI And BoE

May 8, 2023/in General News & Updates /by MaimarFX

Last week was characterized by an U.S. dollar decline on optimism that the Federal Reserve is near the end of its tightening cycle. On Wednesday, U.S. CPI data for April will show whether inflation has eased according the forecast to 5.5 percent in April from 5.6 percent in March, backing the hawkish market assumption.

Friday’s strong U.S. jobs report triggered a scaling back in Fed rate cut speculation for July, down to 36 percent from a 60 percent chance for a rate cut before the data. If CPI comes in higher, the dollar might regain some strength as the market has to reassess its rate cut speculation.

On Thursday, the Bank of England is expected to raise interest rates by another 25bp. With U.K. inflation still high at 10.1 percent, the BoE is likely to remain hawkish.

GBP/USD

The cable has hit the next higher target at 1.2650 while remaining within its recent uptrend channel. If the pair now breaks above 1.2675, we could see an extension towards 1.2720 but caution is advised. The pair entered overbought territory and is due for a correction. A support is seen at around 1.25.

Waiting for breakouts in the EUR/USD and DAX…

EUR/USD: A sustained break above 1.11 or below 1.09 is needed to revive momentum after days of consolidated movement.

In the DAX we still wait for a sustained break above 16000 which could lead to a run for 16300. On the downside, a recent support area remains intact between 15700 and 15600.

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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Price Action Leaves Much To Be Desired

December 15, 2022/in General News & Updates /by MaimarFX

This was definitely not the volatility what would be expected from the last large risk event of the year. The price action in the U.S. dollar was noticeably more constrained and there was no traction following the event.

Overall, yesterday’s outcome was in-line with expectations, even though Fed chair Jerome Powell warned the Fed is not close to ending its anti-inflation campaign of rate hikes while saying “we still have some ways o go”. In terms of terminal rates, policymakers projected rates would end next year at 5.1 percent before being cut to 4.1 percent in 2024 (see dot plot). Even though these are higher levels than previously indicated, the market didn’t see reason for a repricing.

The focus now shifts to the Bank of England and European Central bank decisions.

Both central banks are expected to announce a 50bp rate hike today. The BoE is expected to have further to run before hitting its own terminal in 2023 compared to its US counterpart while as for the ECB, there seems more potential for further tightening into 2023. with recession risks remarkably high for Europe and the rest of the world combatting inflation more aggressively, the Eurozone’s policy authority may find it reasonable to tapering its efforts with a lower terminal rate.

EUR/USD: The euro finds itself within the resistance zone between 1.06 and 1.08. The technical outlook has not noticeably changed which is why we still focus on price breakouts either above 1.08 or below 1.0350.

GBP/USD: The cable’s recent upward channel is still intact, showing a price range between 1.25 and 1.2150.

Given the December liquidity drain around the holiday, we do not expect to see larger movements after traction was all but absent even yesterday.

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U.K. Inflation Hits Highest Level In 41 Years

November 17, 2022/in General News & Updates /by MaimarFX

U.K. inflation rose to 11.1 percent from a year ago while this result increases the chances the Bank of England will raise interest rates again next month.

From a technical perspective, there could be room for a bullish extension towards 1.2060 but sterling bulls should be careful since the pound remains slightly overbought. The current support area is seen at around 1.17.

Our trading ideas for today 17/11/22:

EUR/USD

Long @ 1.0410

Short @ 1.0340

GBP/USD

Long @ 1.1925

Short @ 1.1885

DAX® (GER40)

Long @ 14340

Short @ 14290

Settings for all trades today: Entries from 8:00 am UTC, SL 25

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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Bullish Breakout

June 17, 2022/in General News & Updates /by MaimarFX

The British pound experienced a bullish breakout despite the Bank of England which disappointed with a 25bp rate hike move. U.K. inflation is expected to hit as high as 11% later this year. The BoE however signaled that it is prepared to unleash larger moves if needed. Trading the cable was messy yesterday, with an initial bearish move towards 1.2040 that quickly reversed and now the pair is trading above 1.23. In other words, we weren’t able to catch the big gain we were looking for.

GBP/USD tested the 1.24-resistance from where it bounced off. If the pair holds above 1.2250/1.22, sterling bulls may try to push for a test of 1.25. Below 1.2140 however, we expect the pair to head south with lower targets seen at 1.1950 and 1.19.

The EUR/USD rose on more hawkish ECB expectations and tested the 1.06-level. As long as the 1.0350-support holds, gains could be extended towards 1.07 and 1.08.

Have a good weekend.

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U.S. Dollar Retreats As Fed Goes Predictable Route

March 17, 2022/in General News & Updates /by MaimarFX

The U.S. dollar retreated following the Federal Reserves’ statement as the central bank went the predictable route. Policy makers have finally realized they have a serious inflation problem and need to act. While they are willing to hike rates faster and higher than previously expected, Fed Chair Jerome Powell played down the risk of recession for the U.S. economy. However, the 25bps rate hike and the projection of six more increases this year were already priced in, which is why the greenback retreated.

While waiting for bigger moves, we have tried two buy attempts in the EUR/USD that finally ended with a net loss of -10 pips as gains were capped at 1.1040.

GBP/USD – All eyes on the Bank of England rate decision today at 12:00 UTC

The BoE is expected to hike 25bps today, the third rate increase in row.

Technically, we will pay attention to a significant break above 1.3210 in order to anticipate further gains towards 1.3350. Bears on the other side will watch out for prices below 1.3080 in order to shift their focus to lower targets at 1.2950 and 1.29.

Our short-term trading idea for 17/3/22

GBP/USD

Long @ 1.3210

Short @ 1.3140*

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Fed Delivers Dovish Taper, All Eyes on BoE Now

November 4, 2021/in General News & Updates /by MaimarFX

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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Try out our new signals for cryptocurrencies:

ETH/USD

Long @ 4590

Short @ 4520

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A profitable Trading Week

September 24, 2021/in General News & Updates /by MaimarFX

Signal performance in September: +479 pips so far.

A profitable trading week is drawing to a close. As for our daily signals this week’s best performer was the GBP/USD, that provided a net gain of +115 pips in only two days of trading. The largest profit was generated by yesterday’s buy position which was opened at 1.3660 and closed at 1.3745.

The reason for the pound rally was the Bank of England which raised the prospect of hiking interest rates as soon as November to contain a surge in inflation. Yesterday’s decision puts the BoE in the more hawkish camp of global central banks, which is now expected being first for a hike, well ahead of the Federal Reserve.

GBP/USD: Remaining above 1.3620, we expect the pair to test the 1.3880-level.

EUR/USD: Chances are currently in favor of the bulls. We pencil in higher targets at 1.1770 and 1.1820.

DAX: If 15800 remains unbroken to the upside, we expect the index to drop back towards 15500. Above 15820, we will shift our focus again to the 16000-level.

Today we will save our weekly profits and wish everyone a beautiful weekend!

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U.S. Dollar Remains On Solid Footing After Fed Decision

September 23, 2021/in General News & Updates /by MaimarFX

To sum up, yesterday’s FOMC announcement was hawkish enough to keep the U.S. dollar on a strong footing, even though big market movements were lacking. In terms of a first rate hike, Federal Reserve officials are now evenly split on whether or not it will be appropriate to begin raising rates as soon as next year. The market continued to price in a first hike around the start of 2023, an assumption that can be considered less hawkish and which has led to a very small sell-off in the greenback at the time when projections were released.

The dollar gained back ground around the time of the press conference with Fed Chair Jerome Powell saying the central bank could begin scaling back asset purchases in November and complete the process by mid-2022. This was the hint on tapering the market has expected.

As for fears over an economic collapse in China, Powell spoke on the Evergrande situation during his press conference but he does not expect any spillover into global markets. Market participants will now be looking to see if Evergrande makes its next debt payment which totals $83.5 million.

The next central bank decision is around the corner with the Bank of England monetary policy announcement due at 11:00 UTC today.

While risks are tilted for a hawkish outcome for the BoE meeting, there is a concern that markets may be overly optimistic amid the recent increase in rate hike calls by analysts. A rate increase is seen by May 22.

In the GBP/USD we continue to look at a price range between 1.39 and 1.3550 and bear in mind that the pair is still oversold making it vulnerable for corrections.