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Busy Week Ahead

We entered the last week of January which is traditionally very busy and this year is no different with a packed economic calendar of key central bank decisions and big data releases.

The Federal Reserve policy meeting on Wednesday will be the highlight in the days ahead and while market participants remain convinced that a dovish pivot is drawing closer, prominent Fed managers warned that expectations around future rate cuts were too optimistic and that the Fed does not intend to cut rates as quickly as the markets expect. With no change in monetary policy and no dot plot release this week, traders will be looking for fresh hints on the timing of the first rate cut by Fed Chair Jerome Powell in his press conference. If Powell leaves the door open to a possible rate cut in the first half of the year, the U.S. dollar could weaken.

Furthermore, the greenback’s direction will also hinge on the latest U.S. jobs numbers which will be release on Friday. The jobs market is forecast to have cooled in January. An upside surprise in the payrolls report would diminish hopes for an early rate cut and the dollar could thus experience a short squeeze.

On Thursday, the Bank of England meets to set its monetary policy. Like the ECB and Fed, the BoE is expected to keep rates unchanged. There are no expectations for any rate cuts soon, but the BoE may make its first dovish tilt in its February meeting, a move that would be negative for the pound.

The overall price development remained very sluggish for traders and even a better-than-expected U.S. Core PCE report from last Friday could not really boost the U.S. dollar. However, the tight ranges are likely to be tested due to an anticipated lift in volatility in the days ahead.

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USD Weaker After Fed

It came as expected: The Federal Reserve left interest rates unchanged but kept the door open to further tightening if needed to curb inflation. However, Chair Jerome Powell failed to steer market pricing toward another hike (hawkish scenario), a sign that the tightening cycle may have already ended. With the absence of a more aggressive hawkish stance, the U.S. dollar weakened in the aftermath of the FOMC decision.

Attention will now be on the U.S. labor market report tomorrow.

Our yesterday’s short signal in the EUR/USD at 1.0565 has proved to be very profitable with two entries and a take profit of 40 pips each trade.

Sterling traders will shift their focus today to the Bank of England rate decision at 12:00 UTC. The BoE is expected to keep rates unchanged as price pressures ease somewhat. We see a next resistance at around 1.2230 in the GBP/USD. Attention should be paid to breakouts above 1.23 with a higher target seen at 1.24 or, on the other side, below 1.2070.

Daily Forex and DAX Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

Our trading ideas for today 2/11/23:

 

GBP/USD

Long @ 1.2210

Short @ 1.2140

 

Settings for all trades today: Entries from 8:00 am UTC, SL 25, TP 40

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.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2023 MaiMarFX.

www.maimar.co

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GBP/USD: Hope For The Bulls?

Even though Federal Reserve Chair Jerome Powell maintained his hawkish stance that the inflation fight ‘has a long way to go’ and that more rate hikes are expected, the U.S. dollar failed to move higher. Instead, the euro flirted with the 1.10-area against the greenback and traders thus, brace for a next leg higher towards the resistance zone at 1.11.

Yesterday’s correction in the cable stopped at 1.2690. We still expect a short-term support to lie at 1.2660. The Bank of England is expected to raise rates today at 11:00 UTC by 25bp. For a chance of a profitable bullish breakout, however, we would wait for the price to exceed the 1.2860-area.

Daily Forex and DAX Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

Our trading ideas for today 22/6/23:

 

GBP/USD

Long @ 1.2775

Short @ 1.2735

 

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.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2023 MaiMarFX.

www.maimar.co

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Eventful Week Gives Hope For New Momentum

After several weeks of lackluster momentum, market participants are now bracing for a heavy loaded week of event risk with not only three crucial Central Bank meetings on tap but also the U.S. nonfarm payrolls at the end of this week.

The first risk event will be Wednesday’s FOMC rate decision. The Federal Reserve is expected to slow the pace of tightening to 25 basis points. The problem is that the markets are ahead of themselves, appearing more dovish than the Fed. Rate cuts are already priced in looking two years out while inflation is still far above target. In other words, while the Fed may keep the focus on near-term tightening, the market is already speculating on an end of the tightening cycle instead of the possibility of keeping rates restrictive for some time. This sets the stage for disappointment rather than for confirmation of the speculation.

On Thursday, the Bank of England and European Central Bank rate decisions are due.

The BoE has hinted at yet another 50bp rate hike which is largely priced into GBP crosses. What could be bearish for the pound would be an additional vote split between 50bp and 25bp among BoE policy makers.

GBP/USD: The current bias is still bullish, provided the pair remains above 1.2250. A break below 1.2240 would possibly result in a quick sell-off towards 1.2170/1.21 and possibly even 1.20. On the top side, sterling bulls were still unable to push through the resistance zone at 1.2450 but this week’s fundamental drivers could provide a catalyst for a leg higher – or lower.

EUR/USD: The euro’s uptrend is still intact even though overbought conditions and the solid resistance around 1.09 raise the odds for a correction. If the ECB hints at a more aggressive approach in hiking rates to fight inflation while the Fed remains comfortable with slowing the pace of hikes, we could see a test of 1.10 and possibly even 1.11. On the downside, we keep tabs on the 1.0650-area as a potential support zone.

Daily Forex and DAX Signals:

If you are keen to know where we put Take-Profit and Stop-Loss, if we trade on a specific day or not and how we manage open positions, subscribe to our signals.

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.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2023 MaiMarFX.

www.maimar.co

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Fasten Your Seat-belt For a Volatile Week

The U.S. dollar broadly outperformed its major peers in recent days as the market started to price in five Federal Reserve rate hikes this year. This week we will get more central bank monetary policy announcements from the European Central Bank and the Bank of England (both decisions are due on Thursday) that will help shape the market mood in the days ahead.

If the ECB and BoE follow in the footsteps of the Fed, offering increasingly hawkish shifts, we could see the euro and British pound strengthening. Traders will brace for elevated volatility in both EUR/USD and GBP/USD in the coming days.

Last but not least, traders’ eyes will be on the non-farm payrolls report on Friday. Here, most attention will be paid to average hourly earnings which are anticipated at 5.2 percent y/y from 4.7 percent prior. A solid earnings reading could boost the U.S. dollar.

ECB decision – “Very different situations”

Following the Fed’s fast tightening path on the one hand and the Bank of England that is gearing up for its second consecutive rate increase this week on the other hand, investors have pulled forward bets for an ECB rate hike as early as this year. ECB President Christine Lagarde, however, has pushed back against those hawkish expectations, highlighting the “very different situations” the three economies face. The ECB will try to reach a reasonable balance between its readiness to change course if inflation pressures prove more persistent and its prudence not to tighten prematurely. Economic growth slowed sharply at the end of last year, and the International Monetary Fund already slashed its 2022 outlook for the euro zone while intensifying tensions at the Russia-Ukraine border have emerged as a new risk.

The ECB is thus expected to maintain its dovish stance over the medium term. Lagarde will probably reiterate that the central bank is unlikely to hike in 2022, but refrain from pushing back on market expectations for tightening in 2023. A failure to push back on market pricing for 2022 would be a sign that the ECB is shifting to a more hawkish stance.

Our technical forecast for EUR/USD ahead of the ECB decision: Slightly bullish with a next target seen at 1.1220-30.

BoE decision – More aggressive path of interest rate hikes?

The Bank of England is expected to raise interest rates to 0.5 percent on Thursday. This move could also open the door for the BoE to start shrinking its balance sheet by stopping the reinvestment of expired bonds. After this February meeting traders bet the BoE will raise rates to 1 percent in June. However, with traders calling the central bank increasingly unpredictable, anything can happen and traders will prepare for both hawkish and less hawkish outcomes.

Our technical forecast for GBP/USD ahead of the BoE decision: Bullish above 1.3450, next target then seen at 1.35.

 

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.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

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