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GBP/USD: Upcoming Breakout?

Dear Traders,

The U.K.’s formal triggering of Brexit has proved to be a non-event for traders. The market showed little reaction to the Article 50-trigger with the pound trading consolidated between 1.2480 and 1.2385. However, the GBP/USD remains a sell on rallies against the background of uncertain prospects for the U.K. economy and, in a countermove, the Federal Reserve’s tightening path.

GBP/USD

In short-term time frames, chances are in favor of upcoming breakouts given the symmetrical triangle. A break above 1.2465 could push the pound towards higher targets at 1.25 and 1.2560, whereas a break below 1.2420 may reinvigorate bearish momentum towards 1.2340.

The U.S. dollar received some support from fresh hawkish Fed comments particularly from Fed President Eric Rosengren who was in favor of a total of four rate hikes this year. The latest round of hawkish comments should serve as a reminder that the Fed is still the only central bank which sees the possibility for additional rate hikes in 2017 amidst a healthy economy growth.

The U.S. GDP report is scheduled for release today at 12:30 UTC and could have an impact on the dollar’s price action.

The EUR/USD traded lower following the Brexit trigger. After dropping below 1.0775 the bearish move came to a temporary halt at 1.0740. Whether we will see further losses in this pair could depend on the German Consumer Price Index, scheduled for release today at 12:00 UTC. CPI data is expected to show a slowdown and this could increase pressure on the European Central Bank to maintain its accommodative monetary policy. If the euro falls below 1.0740 it could extend its losses towards 1.07 and 1.0650. On the upper side, euro bulls may wait for a renewed break above 1.0825 in order to buy euros towards 1.0920.

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Pound Depreciates Ahead Of Brexit Trigger

Dear Traders,

The biggest story on Tuesday was the trend reversal of the British pound. Sterling reversed shy of 1.26 and dropped sharply towards 1.2350. The sharp sell-off was due to the much-anticipated Brexit trigger which will happen today. The formal Brexit process starts around 13:30 local time when a letter personally signed by U.K. Prime Minister Theresa May will arrive in Brussels. May signed the historical document on Tuesday evening and it will be handed to EU President Donald Tusk today. Tusk will read out a statement at 13:45 (GMT+2) while May will address the U.K. Parliament about the same time. The uncertainty over terms of Brexit could weigh on the pound in the medium-term, so traders should generally prepare for further losses as long as the prospects of U.K. monetary policy tightening remain far off.

From a technical perspective, sterling bears should wait for a bearish break below 1.2340 in order to sell the pound towards 1.21. Nonetheless, there is also a risk of a short squeeze in short-term time frames which could occur through profit taking. We see a crucial resistance zone between 1.2530 – 1.2570 and it would require a renewed break above that area to shift the bias in favor of the bulls.

EUR/USD

The shared currency was unable to break above 1.0875 and therefore fell back towards 1.08. For the time being, the euro is holding above the 1.08-mark but this may change quickly as the Brexit trigger poses a risk to the euro.

Bearish scenario: If the euro falls below 1.0780 it may heads for a test of the lower support-zones at 1.0760 and 1.07. A significant break below 1.0680 could lead to further losses towards 1.06.

Bullish scenario: A fresh break above 1.0875 may prompt euro bulls to buy euros towards 1.0920/50.

The risk is however to the downside.

 

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Can Euro And Pound Hold Onto Their High Levels?

Dear Traders,

The U.S. dollar fell to its lowest level since November as investors assessed the U.S. administration’s ability to push through promised tax cuts and infrastructure spending. That, in turn, raises doubts as to whether the Federal Reserve can raise interest rates as aggressively as had been priced in. Fed chair Janet Yellen will speak today at 16:50 UTC and dollar bulls fear that fiscal uncertainty may discourage Fed officials from taking an aggressive stance towards higher rates. In case Yellen’s tone is more cautious, the dollar could tend to fall.

Apart from Yellen’s speech, U.S. Advance Goods Trade Balance (12:30 UTC) and Consumer Confidence (14:00 UTC) are scheduled for release.

The euro broke above 1.0870 and extended its gains to a high of 1.0906. In case of a renewed break above 1.0875 we expect further bullish momentum, sending the euro higher towards 1.0920/50. A current support is however seen at around 1.0820.

The pound sterling marked a fresh high at 1.2615 while sterling traders have shrugged off tomorrow’s Brexit trigger. On Wednesday, U.K. Prime Minister Theresa May will formally trigger the start of two years Brexit negotiations and while this event poses a risk to the currency the British pound remained stable around 1.2550. Nonetheless, we expect the upward movement to be limited to 1.2650 in short-term time frames. The pound may tend to test that resistance area before we will see any major pullback.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

www.maimar.co

 

 

Pound Consolidates – Focus Now On CPI Data

Dear Traders,

Those who had been looking for sustained breakouts or extended gains on Monday had been disappointed by the market’s consolidation phase. The pound sterling traded sideways within a 100-pip trading range between 1.2435 and 1.2335. Given the fact that the pound was unable to hold above the 1.24-level, we expect upcoming bearish momentum in the GBP/USD. As long as sterling remains below 1.2430 we see a higher likelihood of a downside break below 1.23 which could accelerate bearish momentum towards 1.22 and possibly even 1.2050.

How the cable will trade within the next days will mainly hinge on the Brexit trigger, which will happen on March 29. Prime Minister Theresa May plans to invoke Article 50 of the Lisbon Treaty next Wednesday, starting two years of exit talks. A hard Brexit will be negative for the currency, so traders should prepare for downward movements. However, before Article 50 is triggered, the pound could retest the 1.24-mark and possibly even the 1.2470-level on stronger inflation figures. U.K. Consumer Prices are scheduled for release at 9:30 UTC and a rise in inflation could help pushing the pound higher in the short term.

The euro traded consolidated between 1.0775 and 1.0720. A renewed break above 1.0770 may prompt euro bulls to buy the single currency toward 1.0815. A break below 1.0720 however, could lead to further losses towards 1.0680. With no market-moving economic reports from the Eurozone, we expect the price action to be limited to a range of 1.0820 – 1.0680.

Towards the end of the North American trading session some Fed officials are scheduled to speak. Any hawkish comments could have a positive impact on the U.S. dollar.

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts http://www.maimar.co/category/daily-signals/

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

www.maimar.co