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Market Still Seems To Be In Its State of Summer Lethargy

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Dear Traders,

Friday’s non-farm payrolls report failed to put an end to the market’s summer lethargy and instead of giving direction, most major currency pairs remained virtually unchanged after some short-term fluctuations during payrolls release. While the August jobs report came in weaker than-expected, tempering speculation of an imminent Federal Reserve interest rate hike in September, the market’s reaction to the report was restrained with both euro and cable rising only marginally. The market environment therefore became somewhat unattractive for traders since large market movements have become a rarity.

In terms of economic market moving data, there is not much going on this week. From the U.S., the only important pieces of economic data are the ISM Non-Manufacturing Index (Tuesday) and the Fed’s Beige Book (Wednesday). The most important event this week will be the European Central Bank’s monetary policy announcement on Thursday. The ECB meeting could trigger some market moves as the central bank is expected to lengthen quantitative easing for a second time. Although the ECB is not expected to cut interest rates, Thursday’s meeting is the most likely opportunity to announce more stimulus or change the QE program. We therefore expect the euro to come under pressure ahead of the announcement. Technically, we will focus on a break of the 1.1120-level in order to sell euros towards 1.1080 and 1.1050. On the upside, a break above 1.1330 could change the bias in favor of the bulls.

The British pound was able to maintain its price level around the 1.33-mark. Above 1.3350 we see chances of a test of 1.3370 and 1.34. However, any further gains could be limited until the pound’s current key resistance at 1.3480. Sterling traders should keep an eye on the Industrial and Manufacturing Production figures (Wednesday) as well as on the Services PMI report, due for release today at 8:30 UTC.

The U.S. market will remain closed for a public holiday on Monday, so we expect volatility to be low and recommend traders to take profits at lower targets given the calm market.

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Payrolls Report To Determine Direction

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Dear Traders,

The U.S. dollar suffered a significant correction after the ISM Manufacturing index showed an unexpected contraction in August, raising doubts about global growth optimism. The British pound started to rise against the greenback in the wake of an unexpected strong U.K. manufacturing PMI, showing signs of expansion in the U.K. after the Brexit vote. Even though our buy order in the GBP/USD was triggered slightly later due to high slippage around the release time of the U.K. data, we were able to get a piece of the pie and secure some profit.

The euro flirted with the 1.12-level on the back of a weakening dollar and it will be interesting to see whether the euro is able to hold onto its higher price level going into the highly anticipated U.S. jobs report. Economists predict job growth will slow to 180k in August from 255k in July. While traders are waiting for the payrolls to determine the direction in the market, there is a risk that the outcome could disappoint the market’s high expectations. However, we will prepare for both bullish and bearish scenarios but advise traders to trade the payrolls report with caution.

The U.S. Jobs Report is scheduled for release at 12:30 UTC. Sterling traders should also keep an eye on the U.K. Construction PMI due at 8:30 UTC.

We wish you profitable trades and a wonderful weekend.

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Will The BoE Deliver Or Disappoint?

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Dear Traders,

The U.S. dollar slightly advanced versus the euro after the ADP report came in better than expected. Unlike the euro, the British pound lacked direction before the Bank of England’s rate decision and fluctuated within a sideways range of 100 pips.

Today, there is only one subject in the market: The Bank of England rate decision and Inflation Report, scheduled to be released at 11:00 UTC. Our focus therefore shifts to the GBP/USD as we prepare for volatile swings. While a 25bp rate cut is widely expected, the price action will depend on how aggressive BoE policymakers will support their dovish stance. If they signal further easing in the near-term, the pound could quickly fall towards 1.32 and even lower. On the other hand, if the central bank is in no hurry to introduce further easing except the anticipated 25bp rate cut, investors could be disappointed and give up on their short positions. The pound could surge as a result of a less dovish BoE.

However, as stated in yesterday’s analysis the 1.3420 level could act as a crucial resistance for the pound. Hence, gains could be limited until 1.3425 and 1.3480. Only a significant break above 1.35 would change the bias in favor of the bulls. On the bottom side, we will focus on the 1.32-level. In case sterling drops below 1.3170 we see chances of an extended downward move towards 1.3030.

Given the fact that today’s focus is on the pound sterling, we do not expect larger fluctuations in the EUR/USD. The euro could trade sideways between 1.12 and 1.11. We recommend traders not investing too much today and take profits at smaller targets if there are any.

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Currency Pairs Trade Almost Motionless

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Dear Traders,

The currency market was fairly quiet or rather motionless on Monday. While the euro hovered around the 1.1170-mark, the British pound traded slightly lower against the U.S. dollar. Given the fact that the market is short the pound on speculation the Bank of England will ease monetary policy on Thursday, the risk is clearly to the downside. We will pay attention to a break of 1.3150 and 1.3060 in order to sell sterling towards lower levels. Upward movements however, could be limited to 1.3340 and 1.3440.

The only piece of second-tier economic data will be the U.K. Construction PMI scheduled for release at 8:30 UTC. From the U.S. we only have Personal Income and Spending figures scheduled for release at 12:30 UTC alongside the PCE report. These reports are not expected to have a significant impact on the currencies.

As there will be no market movers today, the consolidation phase may continue to dominate the markets. We therefore do not expect any major movements and recommend taking smaller profits if there are any.

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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

 

 

 

U.S. Dollar Slumped as Fed September Rate Hike Seems Unlikely

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Dear Traders,

The euro and British pound rebounded strongly against the U.S. dollar after bearish momentum failed to drive both currency pairs significantly lower. Ultimately, short-traders’ efforts did not pay off and we suffered losses with yesterday’s short-entries.

The Federal Reserve is more upbeat about the economic outlook, saying that near-term risks to the U.S. economy have diminished and that job gains were strong, the FOMC statement showed. However, there was no indication of the specific timing of the next potential rate hike and with Esther George being the lone hawk, it has not been enough for the greenback to maintain it strength. Consequently, traders gave up on dollar long positions as they see only little chance of a rate hike in September. The market is now pricing in a 50-50 chance of a rate increase in December.

The euro rose towards 1.1080 on the back of broad based dollar weakness. We now see a next resistance around the 1.11-level which could limit the gains in the EUR/USD. If the euro breaks above 1.1130 it could head for a renewed test of 1.1160. However, if prices fall back below 1.10 we will favor a bearish stance.

The British pound marked a strong support at 1.3060 from where it reversed. Given the recent sideways trend we will now focus on an upper bound at 1.33, whereas the 1.3060-level is seen as the lower bound of the cable’s trading range. Above 1.3350 the sentiment may shift in favor of the bulls but we expect short-term gains to be limited until 1.3410/50.

There are no major economic reports scheduled for release today. The German Unemployment report (due at 7:55 UTC) may have a short-term impact on the euro but the price action will depend on risk appetite.

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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

 

 

 

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

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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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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

 

 

Upward Movement To Be On Shaky Foundations?

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Dear Traders,

While we actually got the breakouts what we have been looking for, the market’s fluctuations proved to be limited to either side Monday. Sterling traders were able to pocket some profits with both long and short-entries whereas euro traders still struggle with the euro’s poor performance. The EUR/USD fluctuated between 1.1075 and 1.1015 and neither our sell attempt nor a later buy order provided a sustained profit. Consequently, euro traders will need some more patience and wait until market conditions improve.

The pound sterling climbed towards 1.31 as the leadership certainty in the U.K. provided some relief for the currency. Theresa May will be appointed as Britain’s next prime minister and even though May will have to resist pressure to rush into the Brexit negotiations, Britain’s second female prime minister is not seen in a hurry to trigger Article 50, the formal start of an EU exit.

In the meantime, it is going to be a big week for Bank of England Governor Mark Carney, who faces the U.K. parliament’s Treasury Select Committee today at 10:00 UTC, ahead of Thursday’s interest rate decision. Economists expect the BoE to cut rates by 25 basis points, which would be the first rate cut since 2009. With this in mind sterling is expected to remain under pressure ahead of Thursday’s monetary policy decision.

Furthermore, two Fed officials are scheduled to speak today around 14:00 UTC, which could influence the dollar’s performance as long as they maintain a hawkish stance.

The euro rose towards 1.11 but the technical picture has not changed significantly. Long-term swing entries are available for subscribers.

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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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Brexit Or Bremain? A Fateful Day

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Dear Traders,

This is a crucial day for the U.K. with Britain’s vote on membership of the European Union. The island nation will determine its future with or without the EU and the market is eagerly awaiting the decision. The voting booths are set to open at 7 a.m. London time, while first projections are likely to be announced during the evening hours.

The final outcome is anything but certain. Recent polls showed the ‘Remain’ camp being in the lead with 48 percent ‘Remain’ and 42 percent ‘Leave’.  The pound strengthened beyond 1.48 based on the assumption of a victory for the “Remain” campaign. But beware: Sterling is moving in tandem with bookmakers’ odds, while the chances of ‘Leave’ and ‘Remain’ are equal. The sentiment can therefore change very quickly at any time.

“Bremain” scenario: Traders should bear in mind that, even in the case of a pro-EU victory, unlimited upside swings won’t be a foregone conclusion. In other words, gains in the British pound could be limited as the focus will shift to the U.K. economy and the prospects of interest hikes in the aftermath of the vote. Since the Federal Reserve will be the first central bank to raise interest rates, the attention will switch to the U.S. dollar and the prospects of further Fed tightening. This fact may discourage investors to buy the pound unlimitedly.

“Brexit” scenario: In the event of an exit from the European Union, the pound will be vulnerable to huge losses as the consequences are incalculable. The market is currently pricing out a Brexit scenario which is why the market’s reaction on unexpected surprises could be excessive.

GBP/USD

Looking on the big picture, we see chances of an imminent trend reversal. Once the pound is able to climb above 1.4850, it could head for the next major resistance zone which we expect to be at 1.52-1.5350. Above 1.55 it could be tempting to anticipate a test of 1.60 but this would be the most optimistic forecast. However, in case of any negative headlines, the focus will be on the 1.40-support level. If sterling breaks below that level, it could easily fall towards 1.3840, 1.3550 or even lower.

Chart_GBP_USD_Weekly_snapshot23.6.16

EUR/USD

Upcoming breakout? The euro traded with a tailwind, heading for a renewed test of 1.1350. In the light of the highly anticipated result of the U.K. vote traders should prepare for volatile swings in this pair. Above 1.1365 we see a higher likelihood of further bullish momentum, driving the euro towards 1.14 and 1.1440. Above 1.1470 it may head for 1.1520 and 1.1615. Bear in mind, that like the British pound, upswings might be limited as the focus will shift back to Federal Reserve rate-hike expectations in the aftermath of the vote. Extended upswings might be subject to a possible short squeeze which could be short-lived.

Below 1.1280 next lower targets could be at 1.1220 and 1.1160. Below 1.1150 the euro could drop towards 1.10 and even as low as 1.0830.

Chart_EUR_USD_Daily_snapshot23.6.16

It all depends on the results of the Bexit vote and we prepare for large movements to either side. We recommend traders to trade cautiously during the day as wild swings may wipe out open trades, making trading highly risky.

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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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Brexit Debate Enters Hot Phase

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Dear Traders,

The British pound extended its gains towards 1.48 while the euro went into a tailspin Tuesday. Sterling benefited from reduced chances of a so-called Brexit, even if Thursday’s U.K. referendum is not a foregone conclusion. We expect the pound to be highly volatile on the last day before the vote and we will not elaborate on the technical picture today as anything is possible.

The euro dropped towards 1.1235 after it rejected the 1.1350 level. In short-term timeframes we expect the 1.1310-level to act as a resistance for the euro, whereas a lower bound could be currently found at 1.1222/1.12. Above 1.1360 the euro could climb towards 1.1395 and 1.1435. Below 1.1220 we will favor a bearish stance, targeting lower levels at 1.1185 and 1.1135.

Fed chair Yellen adopted a cautious approach to the outlook and the appropriate pace of interest rate hikes in yesterday’s testimony before lawmakers in Washington. She highlighted concerns about longer-term problems in the U.S. economy, adding to signs that the Fed may go for only one hike this year. Yellen is due to address lawmakers for a second day today at 14:00 UTC, while at the same time U.S. Existing Home Sales are scheduled for release.

The Brexit debate is entering the hot phase and traders should prepare for higher volatility ahead of tomorrow’s vote. Whatever the outcome may be, we wait to be surprised and try to get the best out of the market’s movements.

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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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Brexit Polls Show Neck-And-Neck Race, Will GBP Maintain Its High Price Level?

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Dear Traders,

The British pound is exposed to extremely volatile trading conditions in the run-up to the U.K. referendum. Separate polls are showing leads for both sides, creating uncertainty among speculators. The most recent survey showed ‘Leave’ at 44 percent and 42 percent for ‘Remain’, while a different poll saw ‘Remain’ at 53 percent and ‘Leave’ at 46 percent. The British pound rose to a high of 1.4721 on increased risk appetite but, as noted in yesterday’s analysis, it still fluctuates within its range with the annual high at 1.4816. An upside break above 1.4730 may drive the pound towards its May high at 1.4770, while a downside break below 1.4580 could lead to a downswing towards 1.4520 and 1.4470.

U.K. Public Finances are due for release at 8:30 UTC, but Brexit headlines will continue to dominate the price action in the pound.

The euro was slightly tilted to the downside but for the time being, the 1.13-support proved to be intact. Hence, short traders’ efforts didn’t pay off as the downswing was limited. On the upper side, we will now focus on a renewed break above 1.1360 in order to buy euros towards 1.14 and 1.1440. Below 1.1280, we expect bearish momentum to increase, driving the euro towards 1.1230 and 1.12 in a next step.

Fed Chair Yellen is scheduled to testify before lawmakers in a semiannual report today at 14:00 UTC. Yellen is unlikely to provide new insights into the timing of future interest rates but she may stress the risks of a potential Brexit which would harm the U.S. economy. The U.S. dollar might be vulnerable to some losses if she sounds less hawkish.

From the Eurozone, we have the German ZEW Survey scheduled for release at 9:00 UTC, a report that could have a short-term impact on the euro. However, price fluctuation in the EUR/USD will be dominated by the level of risk-appetite for euros and dollars, while economic data will take a backseat with only two days before the Brexit vote.

Before Yellen’s testimony, ECB President Mario Draghi speaks in Brussels at 13:00 UTC.

Daily Forex 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 2016 Maimar-FX.

www.maimar.co