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Fasten Your Seatbelt For The Most Important (Volatile) Week Of The Year

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Dear Traders,

This week is the most important week of the year with Thursday’s U.K. referendum paving the way for new trends in the market. The British pound jumped to a high of 1.4624 on eased concerns about the Brexit vote. The euro benefited from that optimistic tone and rose towards 1.14 on increased risk appetite.

The first poll taken after the murder of UK lawmaker Jo Cox showed the ‘Remain’ camp is gaining ground. The tragic death of pro-EU supporter Cox shifted some support back to ‘Remain’ and helped the pound and euro to recover from their lows. However, traders should be careful ahead of Thursday’s vote as volatility is likely to remain extremely high and large fluctuations in both directions are possible.

Ahead of the U.K. vote, Fed chair Janet Yellen testifies before Congress on Tuesday and Wednesday but no one expects her to reveal anything new about the guidance of future rate hikes. Policymakers are likely to wait for the outcome of the U.K. vote before setting the right course.

Traders should prepare for a volatile week in the Forex market and should bear in mind that anything can happen. We are curious to see how the market reacts and wish all traders many profitable trades.

EUR/USD

The euro rallied towards the upper bound of its recent downtrend channel. Once this barrier is significantly breached to the upside, the next important price level will be the crucial resistance zone at 1.14-1.1450. In search of attractive buying opportunities, the 1.1465- level may serve as a profitable long-entry. Above that level, the euro may head for a test of 1.15. Above 1.1530 it could even rally towards 1.1750. For the time being, we see a current support around the 1.13-level. Below 1.1230 the euro could drop back to 1.1130.

Chart_EUR_USD_Daily_snapshot20.6.16

GBP/USD

Looking at larger time frames, the pound sterling is still trading within its range between 1.4750 and 1.40. We expect high-volatile swings ahead of Thursday’s referendum but as long as the currency pair remains confined to that range, there is no new trend. Let’s wait and see.

Chart_GBP_USD_Daily_snapshot20.6.16

 

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Suspension Of Brexit Campaigns Lift Both British Pound And Euro

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Dear Traders,

While both of our major currency pairs were yesterday still on a downswing the decline came to an abrupt end after the terrible attack on U.K. lawmaker Jo Cox has led to a suspension of all Brexit campaigns. U.K. Labour Party lawmaker Jo Cox was shot dead on Thursday, silencing the Brexit debate. Her death came as a shock to the world as she was a passionate supporter of the EU membership. As a result, both sides suspended their campaigns and put their activities on hold. The suspension of campaigning has therefore lifted the pound and in a countermove, the euro. Nonetheless, the risks continue to exist.

What should traders expect now? 

As the upswing was only triggered due to suspension of campaigns and eased Brexit concerns, it might be short-lived. Consequently, we do not expect the upward move to be sustained amidst all uncertainties surrounding the June 23 referendum. The bias therefore remains bearish as a potential Bexit is not off the table while the reduced bets on U.K. leaving EU are just a snapshot.

What targets to look at?

EUR/USD: The euro rallied towards 1.13 but traders should not get fooled by the latest upswing. As long as the euro remains below 1.1305 there is no reason to believe that the market sentiment has changed. If the euro breaks above 1.1305 we see a next target at 1.1365 but we expect gains to be limited until that level. However, if the euro falls back below 1.1220 the focus shifts to the 1.1185-level. Below that level we expect the euro to drop towards 1.1130 and 1.11.

GBP/USD: The cable reversed from a high at 1.4295 and is pointing downwards. The focus will be on the 1.42-level and on a renewed downside break of that support level. Once it has been significantly breached to the downside, we expect sterling to decline towards 1.4125/05. Below 1.4090 we see chances of an extended downward move until 1.3990. On the other hand, however, in case of an upside break above 1.4315, the pound could rally towards 1.44 and 1.4440 on increased volatility.

U.S. Housing Starts and Building Permits are scheduled for release at 12:30 UTC but the price action will be determined by the Brexit debate. Furthermore, ECB President Mario Draghi is scheduled to speak at 15:00 UTC.

Have a wonderful weekend and enjoy life.

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Sterling Traders Benefit From High Volatility Environment

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Dear Traders,

The pound sterling is currently the most volatile currency and traders’ efforts were rewarded once again: As expected in yesterday’s analysis, some of the GBP’s recent losses have been corrected due to an oversold situation. Consequently, our long-entry has proved to be successful, providing traders a nice profit on Monday. The pound rejected the 1.4330-level and dropped back below 1.42. Given the fact that the ‘Leave’ Campaign gains ground against the ‘Remain’ before next week’s referendum, traders should generally expect further losses in the GBP. A next lower target could be at 1.40, whereas corrections might be limited until 1.4260. U.K. Consumer Prices are scheduled for release at 8:30 UTC and even if the report comes in with an uptick in CPI, the pound is likely to remain under pressure.

The euro tested the 1.13-barrier and held steady around that level amidst uncertainties surrounding the Brexit vote and the Federal Reserve’s rate decision. With no major important economic reports scheduled for release from the Eurozone, the euro is expected to fluctuate within smaller trading ranges. The focus will rather be on the U.S. dollar and important U.S. data such as Retail Sales due at 12:30 UTC. Retail Sales are expected to show a slower growth in May and this expectation could weigh on the dollar before the report is due for release.

We currently see a higher likelihood for upcoming bullish momentum, driving the EUR/USD towards 1.1390. A crucial resistance level is seen at 1.1330/40 which must be significantly breached to the upside in order to reinvigorate fresh bullish potential. If the euro is unable to break above 1.1305 we will shift our focus to the 1.1270-level. Below that level we expect the euro to fall towards 1.1240 and 1.1215.

Chart_EUR_USD_Hourly_snapshot14.6.16

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Brexit Polls Dominate The Market

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Dear Traders,

At present, nothing affects the market more than any new Brexit polls and the associated risks and fears determine the price action in both major currency pairs. While any incoming economic data, whether it is good or bad, is currently taking a back seat, the market seems to be only focussed on the recent U.K. referendum polls. Only yesterday, we learned how sensitive market participants are to shifts in opinion polls, whereby an online poll put the Brexit camp ahead, in contrast to a previous poll showing a lead for the ‘Remain’ camp. As stated in yesterday’s analysis, traders should expect more volatility in the run-up to the U.K. vote which is why both currency pairs remain vulnerable to wild swings.

The euro dropped on Brexit risks, but remained confined to a narrow trading range between 1.1173 and 1.1122 on Tuesday. The performance of the EUR/USD was therefore muted and unfortunately did not provide any sustained profit for day traders. However, the recent downward channel is still intact with a current resistance line at 1.1163 and on the other hand, a support line at 1.1073. The German Manufacturing PMI is scheduled for release at 7:55 UTC but we do not expect this report to have a major impact on the euro.

The British pound fell sharply as two ICM opinion polls showed the Brexit camp ahead. Short-trader’s efforts thus paid off and we were able to pocket a nice profit on the last trading day of May. Given that bearish momentum, we will now focus on a break below the recent support at 1.4442 in order to sell the pound towards 1.4405 in a first step. If sterling drops significantly below 1.4385 we see a next support at 1.4340. A current resistance is seen at 1.4522. The U.K. Manufacturing PMI is due at 8:30 UTC and economists forecast an uptick in May. Whatever the case, Brexit concerns will continue to determine the performance in the pound.

From the U.S. the most important piece of economic data will be the ISM Manufacturing Index, scheduled for release at 14:00 UTC. Any unexpected outcomes should affect the dollar accordingly.

Last but not least, the Federal Reserve releases its Beige Book at 18:00 UTC.

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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 2016 Maimar-FX.

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British Pound Rises As Brexit Seems Very Unlikely

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Dear Traders,

The British pound climbed more than 100 pips from our long-entry after latest polls show growing support for the Remain Camp in the June 23 referendum. As a result, the likelihood of a Brexit has significantly diminished and that’s currently helping the pound to regain some strength. We now see a next target at 1.4635 before a correction is becoming more likely. Above 1.4665 however, we see a higher likelihood of further upward swings towards 1.47.

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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 2016 Maimar-FX.

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Traders Await BoE Inflation Report

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Dear Traders,

Today will be a big day for sterling traders with the Bank of England Quarterly Inflation Report, Rate Decision and the speech by BoE Governor Mark Carney. While the BoE is not expected to change its monetary policy, traders will be looking for clues on policy makers’ thinking and await the outcome of the inflation report. As the June 23 referendum draws closer, the British pound is exposed to risk and any Brexit-related concerns remain a main driver in the currency pair. Even though Carney may emphasize that a potential Brexit entails a high risk for the financial stability in the U.K., he will have to avoid taking a position on any campaign.

The focus will mainly be on the inflation report and whether the central bank will raise its inflation forecasts. If inflation and growth forecasts have been revised higher, sterling could soar as a result. From a technical perspective, we still focus on a sustained break above 1.4480 in order to buy GBP towards higher levels. Yesterday’s rise above 1.4480 proved to be only short-lived and sterling traders had to face volatile but unsteady sideways swings without clear trends. We expect larger movements today in the GBP/USD and pay close attention to upside breaks above 1.4490 and 1.4520 and, on the bottom side, a downside break below 1.4390.

The BoE Inflation Report is scheduled for release at 11:00 UTC along with the BoE Rate Decision, while Carney is scheduled to speak 45 minutes later.

EUR/USD

The euro traded higher against the U.S. dollar but the 1.1450-level proved to be a short-term resistance as expected. If the euro climbs back above 1.1440 we see a next hurdle at 1.1470 from where it may reverse. In case the currency pair is able to trade significantly above 1.1470/80, euro bulls may push prices up towards 1.1520/40. However, on the downside the 1.14-barrier will be in focus and once this level is significantly breached to the downside we could see the euro falling towards 1.1335.

Chart_EUR_USD_4Hours_snapshot12.5.16

Eurozone Industrial Production is scheduled for release at 9:00 UTC but this report is not expected to have a major impact on the currency.

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Despite Low Volatility Bulls Still Gain The Upper Hand

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Dear Traders,

Despite worse-than-expected German business-confidence data the euro has held up well against the U.S. dollar Monday. Although prices fluctuated within a confined band of only 40 pips, the euro showed resilience against the greenback ahead of the Federal Reserve meeting. With the euro remaining firmly above 1.1240, we expect another test of the 1.13-barrier, which may result in an upswing towards 1.1335 and 1.1355. However, while we do not expect a shift in sentiment a test of these lower resistances might be likely before the Fed statement.

The British pound tested the 1.45-mark but was unable to sustainably maintain the high price level. Whether we will see an extended upside move remains to be seen and should also hinge on the performance of the U.S. dollar. Above 1.4520 the pound could extend its gains towards 1.4560 and 1.4590. However, below 1.4480 it could fall back towards 1.4450 and 1.4410.

Traders should keep an eye on important economic data from the U.S. such as Durable Goods Orders, scheduled for release at 12:30 UTC and Consumer Confidence due at 14:00 UTC.

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British Pound Advanced On Risk Appetite While The Euro Trades Motionless

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Dear Traders,

The best performer was the British pound which climbed towards 1.43 and provided sterling bulls a good profit. As already assumed in yesterday’s analysis the odds seemed to be in favour of an upswing although there were no fundamental drivers supporting the bullish bias. Speculations about higher inflation could have been a possible reason for the pound’s recent price rice. Inflation accelerated to 0.4 percent annually in March from 0.3 percent in February, forecasts show. U.K. Consumer Price Indices are scheduled for release today at 8:30 GMT and if data are in line with expectations, sterling could begin to give up its gains as a slight uptick has already priced in. Traders should bear in mind that the outlook for the pound remains fragile as long as uncertainty dominates the currency ahead of the EU referendum in June. However, given the recent upward movement the cable may also extend its gains towards 1.4325 and 1.4365, provided GBP is able to break through the 1.43-barrier. On the bottom side we expect the 1.4175-level to lend a short-term support for the currency pair.

All quiet in the EUR/USD. This has been the motto for euro traders as the euro’s sideways movement provides nothing but losses. The current resistance at 1.1450 proved to be intact while the 1.1372 prevented prices from falling. Amidst the sideways trend, breakout traders searched in vain for any profitable trading chances and struggled with false breakouts. However, we know that a sideways trend with fluctuations confined to a narrow band usually does not last very long. We are therefore looking for upcoming breakouts of that narrow trading range.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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Will Draghi Liberate The Euro From Its Narrow Trading Range?

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Dear Traders,

We can call the latest FOMC minutes a non-event for traders as the minutes revealed nothing fundamentally new. Several Federal Reserve policy makers argued against an April interest rate hike while some favored it. Although the minutes reflect inconsistency in terms of the timing of rate hikes, the Fed’s fundamental stance remains more hawkish than dovish. All Fed officials agreed on the relative health of the U.S. economy amidst persistent global risks. Nonetheless, several officials advocated a cautious approach as they worried that slowing global growth could hurt U.S. exports and reduce corporate investments.

While market participants see no chance of an April hike the odds increase slightly for a June hike but first top 50 percent for a rate increase in December. The market has a difficulty in pricing in rate hikes for 2016 but if future U.S. data show that the economy continues to improve, the dollar will begin to rally.

The British pound confirmed its bearish bias and showed that there is still room for a further decline ahead of the upcoming U.K. referendum in June. The currency pair tested the 1.40-support but was able to recover most of its losses towards the end of the day. For any bullish engagements the 1.4175-level should be of primary interest as a break above that level could send the pound towards 1.4230. However the trend is down and if GBP falls back below 1.4080, we could see another dip lower.

The euro is still captured between 1.1430 and 1.13 and every attempt to break significantly above 1.14 has resulted in a reversal. Once the 1.1440-level has been breached to the upside we might see an attempt to test the 1.1480/1.15 level. However, if the pair remains below 1.14 we will favor a bearish stance and focus again on a break below 1.1335 and further 1.13. A break below 1.1285 could drive the euro as low as 1.1240/20.

Chart_EUR_USD_4Hours_snapshot7.4.16

The most important risk event for the euro will be the speech by ECB President Mario Draghi in a meeting at the Council of State in Lisbon, Portugal. The speech is scheduled for around 14:00 GMT. The risk for the euro is to the downside as Draghi might take the opportunity to put pressure on the common currency.

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Bears Regained Some Control – The Calm Before The Storm?

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Dear Traders,

The British pound has begun to give up some of its gains and dropped below the 1.42-level. Meanwhile, the upcoming U.K. referendum and the Brexit debate have led to new tensions between lawmakers and the Bank of England. In yesterday’s hearing, the central bank was accused of being supportive of the “remain”-campaign, overstating the positives. Uncertainties surrounding a potential Brexit-scenario are weighing on the pound which is why the odds are in favor of further bearish momentum. The closer the June-vote approaches, the more tensions we can expect.

Next lower targets are seen at 1.4155 and 1.4110. If GBP breaks significantly below 1.41 we might see a slide towards 1.4060 and 1.4020. On the upside, gains were capped at 1.4275 and it would require a sustained break above 1.43 in order to revive fresh bullish momentum.

U.K. Industrial and Manufacturing Production figures are scheduled for release at 9:30 GMT, a report which could have a short-term impact on the cable.

The euro reversed just shy of 1.1060 and ended the day lower against the greenback. Our focus now shifts towards the 1.0950-support. A break below 1.0940 could drive the euro towards lower levels at 1.0910 and 1.0870. On the topside, the resistance-zone at 1.1060/70 remains intact.

There are no important economic reports from the Eurozone scheduled for release today but going into tomorrow’s crucial ECB meeting, the euro could be vulnerable to further losses.

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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 2016 Maimar-FX.

www.maimar.co