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Euro Drops In Thin Pre-Holiday Trade

Dear Traders,

The euro dropped in early Asia trading after Catalan separatists won the snap election in the region, reflecting once again Catalonia’s desire for independence from Spain. We were able to benefit from the downward move as our short trade hit the larger profit target at 1.1818. As long as the euro remains above 1.1760 we maintain a neutral stance in the EUR/USD. On the upside, a break above 1.1925 could spark some bullish momentum towards 1.1970.

The U.S. dollar slightly weakened against most of its major peers on the back of an unexpected downgrade of the third-quarter U.S. GDP, but the market’s reaction was muted in thin pre-holiday trade. The PCE deflator along with Durable Goods Orders is scheduled for release today at 13:30 UTC but with many market participants already being offline ahead of the Christmas holiday we do not expect larger market swings.

The pound sterling continued to trade within a narrow sideways trading range between 1.3390 and 1.3330 and thus, none of our yesterday’s entries was triggered.

U.K. Q3 GDP figures are scheduled for release at 9:30 UTC but no changes are expected. We expect GBP/USD to trade between 1.3450 and 1.3250 in the near-term.

We wish all traders and readers Merry Christmas and a Happy New Year 2018!

Christmas Trading Break: There will be no signal service during our Christmas holiday break between December 25 and January 4. Our signal service will be resumed on January 4.

 

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EUR/USD And GBP/USD Bounce Off Resistance Levels; USD Stronger

Dear Traders,

Positive developments in Washington and hopes that the U.S. tax reform bill could pass the House have been supportive for the U.S. dollar. The greenback advanced against the euro and British pound, driving both EUR/USD and GBP/USD towards important support levels. The U.S. Senate adopted a fiscal 2018 budget resolution on Thursday that House GOP leaders agreed to accept.

On the flipside, the euro received no support from political developments in Spain. Madrid is finalizing plans to take control of Catalonia and to suspend the region’s autonomy. This step should keep the political situation in Spain tense.

The pound fell on disappointing U.K. data and speculation that the upcoming Bank of England rate hike could be a one-off. The BoE is forecast to hike rates on their next monetary policy meeting on November 2 but analysts doubt that there could be more than one rate increase in the medium-term. For the time being, we expect the pound to trade with volatile swings between 1.3250 and 1.30. As mentioned in yesterday’s analysis, for bearish momentum to accelerate the pound will have to break the 1.31-support significantly.

EUR/USD: As expected, the resistance level at 1.1850/60 has proved correct and the euro tested this barrier before reversing some of its gains. We now expect the pair to trade lower and focus on targets at 1.1770 and 1.17.

There are no major economic reports scheduled for release today. Fed Chair Janet Yellen is scheduled to hold a speech today but since this speech is only due after markets close, it will not affect the price action.

We wish you good trades and a nice weekend.

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Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

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Can FOMC Minutes Fuel Demand For Dollars?

Dear Traders,

The U.S. dollar’s relief rally has lost some momentum with both EUR/USD and GBP/USD heading upwards. From a technical perspective it is noteworthy that the important resistance levels in both major currency pairs are still unbroken, at least for now. The greenback may receive attraction ahead of the FOMC meeting minutes which are scheduled for release today at 18:00 UTC. Bearing in mind that the Federal Reserve plans to raise interest rates one more time this year followed by another three hikes next year, the minutes should confirm the hawkish outlook. While this alone is dollar positive we have to consider that a December rate hike has been largely priced in by the markets. Thus, the minutes could possibly be a non-event for traders today but let us be surprised.

On the flipside, the euro received some support from Catalonia’s president Carles Puigdemont who stepped back from an immediate declaration of independence from Spain. He said he would “suspend” the referendum result for a period of some weeks for dialogue with Prime Minister Mariano Rajoy’s administration. The euro rose towards its resistance area at 1.1830-40 but as long as that barrier remains unbroken, we expect the euro to drop back towards 1.1775 and possible even 1.17.

The British pound touched the lower bound of its current resistance zone ranging from 1.3250 to 1.3220. In short-term time frames we see the cable formatting a potential double top pattern which could predict upcoming bearish momentum, provided that the cable remains below 1.3230. A break below 1.3175 could reignite bearish momentum driving the pair towards 1.3130.

Apart from the FOMC minutes there are no major drivers in the market today. Let us wait to be surprised.

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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