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Demand For U.S. Dollar Could Strengthen in the Days Ahead

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Welcome everyone to a new trading month.

The U.S. dollar dipped this morning after Friday’s appreciation and Treasury yields stabilized following last week’s rally. Traders will likely continue paying attention to the recent bond selloff and corresponding surge in yields. We bear in mind that if the bond selloff grows more aggressive, the risk sentiment deteriorates even further which is buoying the demand for the greenback.

Looking to the week ahead we will have the February U.S. employment report due on Friday. On Thursday, Fed Chair Jerome Powell is scheduled to discuss the economy at a Wall Street Journal event.

The greenback experienced its best week in about four months and this renewed strength could even continue in the days ahead. Meanwhile, the U.S. House of Representatives passed President Joe Biden’s $1.9 trillion Covid-relief package and investors begin to price in an unwinding of loose monetary policy in the long run. Friday’s latest non-farm payrolls report could come in with a better-than-expected result with the focus on average hourly earnings.

While the U.S. dollar’s fundamental forecast is bullish, we will keep tabs on the technical picture in the GBP/USD and EUR/USD.

GBP/USD

The British pound experienced a long-needed correction after it rejected the 1.42-handle but bearish momentum ebbed after Friday’s dip below 1.39 proved short-lived. We now wait for another decline below 1.39 in order to mark lower targets at 1.3850 and 1.38. A lower resistance could now come in at 1.4120 and as long as the currency pair remains below 1.41 chances are in favor of the bears.

EUR/USD

The euro corrected its gains after a test of 1.2243 and it will be interesting whether sentiment could change in favor of the bears after a break below 1.2050. Lower targets are seen at 1.1960 and 1.19. Bulls in this pair should again wait for a break above 1.2185 but more importantly above 1.2230 in order to buy euros towards 1.23.

DAX

The index declined in tandem with the last week’s bond selloff but rebounded at the beginning of this week and is currently holding above 13800. As long as the DAX remains below the crucial price level of 14000, we will shift our focus to a lower target at 13600. A break above 14040 could however pave the way for a renewed test of 14150 and possibly even for a bullish breakout above 14200.

We wish you good trades!

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More USD Gains Ahead?

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Welcome everyone to a new trading week!

This week started with some corrective movements in the market as investors evaluate stretched valuations while becoming more cautious on global shares at recent high levels. The U.S. dollar rose against its major peers and higher yields could buoy the demand for the greenback.

Friday’s nonfarm payrolls report disappointed, showing the economy shed 140,000 jobs in December instead of adding 71,000 as expected but it was the unexpectedly spike in wage growth to a seven-month high of 5.1 percent on-year which has helped the dollar gaining some ground in the aftermath of the report.

Traders anticipate that incoming fiscal stimulus will underpin employment, which is why the market could shift away from dovish extremes on Federal Reserve policy expectations.

President-elect Biden pledged to lay out plans for another fiscal stimulus boost on Thursday.

While the longer-term outlook for the dollar remains bearish, we could see more USD gains in the near-term.

EUR/USD

The pair bounced of the 1.2350-barrier and could now be heading towards a designated support zone around 1.2080-60, from where buyers could swoop in. A break below 1.2050, however, would shift the focus toward a crucial support at 1.20. On the upside, we will keep an eye on a break above 1.2275 which could prompt bulls for a test of 1.24.

GBP/USD

The cable formatted a recent downtrend channel with a lower support zone seen between 1.3460 and 1.34. Bulls may attempt to push the pound higher when hitting the 1.3450-mark but if the pair drops below 1.34, we may see further losses towards 1.3330. A current resistance is, however, seen at 1.36.

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!

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Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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All Eyes On The FOMC Decision Even Though No Changes Are Expected

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Dear Traders,

While the euro ended yesterday’s trading day virtually unchanged, the pound sterling headed for a test of 1.33 but reversed some of its gains just shy of that barrier. Whether we will see a sustained breakout above 1.33 remains to be seen and hinges on the risk appetite for pounds ahead of tomorrow’s BoE Super Thursday. The bank of England is widely expected to raise interest rates for the first time in a decade but this move is shrouded in suspicion. We will discuss the risk potential in tomorrow’s analysis.

Today’s focus will be on the Federal Reserve and the market’s appetite for U.S. dollars. It could thus be a turbulent trading day with traders bracing for higher volatility in all USD crosses.

The FOMC rate decision today at 18:00 UTC is top listing but the market is virtually certain that no change to the benchmark will be made this month. Economists expect policy makers to keep rates on hold for now and increase them at the December meeting. The probability of a December rate hike is at 83 percent. However, even if today’s Fed decision is unlikely to serve as a big market mover it could still surprise dollar bulls. In case of a less hawkish outcome, in other words, if there are a number of hawkish dissents, the dollar could give up some of its gains. Let us be surprised.

With regard to the U.S. tax reforms, the House Republicans are expected to release the tax bill text on Thursday.

We also have the ADP Report scheduled for release at 12:15 UTC followed by the ISM Manufacturing Index due at 14:00 UTC, so there is plenty of economic data that could affect the price action in the greenback today.

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Euro & Pound: Are We Finally Seeing The Long Overdue Correction?

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Dear Traders,

Trading has been quiet with the dollar-trade losing its attraction. Fed Chair Janet Yellen did not comment on monetary policy when she spoke at a conference in Washington yesterday and market participants are skeptical about whether President Trump’s pro-growth policies will pass through Congress when Republicans did not even agree on a health-care bill.

U.S. Durable Goods Orders are scheduled for release today at 12:30 UTC but given the uncertain situation in the greenback, we doubt that we will see larger market movements today.

Gains in the EUR/USD were capped at 1.08 and given the fact that the euro was unable to overcome the 1.0820-boundary significantly, we expect further losses towards 1.0730/10. Euro bears should however wait for a renewed break below 1.07, which could send the currency pair tumbling towards 1.0620. On the upside we will focus on a break above 1.0805 which could lead to a subsequent test of the euro’s resistance level at 1.0850.

From the Eurozone we have the Manufacturing PMI reports scheduled for release at 8:30 and 9:00 UTC, but these reports could be of minor importance.

The pound sterling was on a roller-coaster ride after U.K. economic data came in better than expected. The GBP/USD surged from a low at 1.2463 to a high of 1.2531 but sterling bulls were unable to hold onto that high level. A correction was in any case long overdue and so we saw the pound falling back below 1.25. We will now focus on the 1.2430-level. A break below that short-term support could send the pound lower towards 1.2390 and 1.2340. On the topside, a short-term resistance is now seen at 1.25.

We wish you good trades for today and a beautiful weekend.

Daily Forex signals:

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

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

Subscribe to our daily signal service https://www.maimar.co/signals/

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