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U.S. Dollar Soars On Fed’s Dot-Plot And Traders Profit

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We got what we have been looking for in a best-case scenario relative to our trades: A hawkish surprise from the Federal Reserve and a subsequent big price move in the U.S. dollar, providing a large monetary profit. We were able to take a 100-pips gain with our short trade in the EUR/USD and a 67-pips gain in the GBP/USD.

The Fed sent a more aggressive signal in order to prepare the market for a taper. Fed Chair Jerome Powell said that officials would begin a discussion about scaling back bond purchases, admitting that “the economy has clearly made progress”. “You can think of this meeting as the talking-about-talking-about meeting, if you like” Powell added referring to the taper debate.

However, the biggest surprise was the Fed’s dot-plot forecast that showed eleven officials saw at least two rate increases by the end of 2023 while seven of them saw even a move early as 2022. In comparison to the March forecast: The newest projections showed 13 of 18 Fed officials favored at least one rate hike by the end of 2023, versus seven in March.

The greenback soared on that hawkish signal.

Powell, however, cautioned the discussion about raising rates, saying it would be “highly premature”.

Are there more dollar gains in store?  Maybe, as the Fed inches towards tapering but traders should be cautious amid thin liquidity conditions and the summer doldrums. Price movements could be limited to resistance and support levels.

EUR/USD: The euro dropped slightly below 1.20 but refrained from a dip below 1.1980 – at least for now. Below 1.1980 we see a next lower target at 1.1930. A break below 1.19 could even see accelerated bearish momentum towards 1.18 and 1.16. On the upside, a current resistance is seen at 1.2120.

GBP/USD: The cable broke below 1.40 and if the pair now falls below 1.3970 it may extend its slide towards 1.3910 and possibly even 1.38. A current resistance is seen at 1.41.

We wish you good trades!

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FOMC Event: Price Targets To Watch Out For

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Today will be an important trading day for traders as it may be the last one before the summer doldrums providing bigger market moves.

All eyes will be on the Federal Reserve decision at 18:00 UTC followed by Fed Chair Jerome Powell’s press conference 30 minutes later.

The base case scenario is dovish: While the U.S. employment gains are solid, the Fed has not seen the hoped-for job gain of more than a million, which could have been a condition to begin scaling back monetary support. Instead, labor market reports for the months of April and May have been disappointing relative to previous forecasts, strengthening the Fed’s argument that the job market is still a long way off from the “substantial further progress”.  The Fed could therefore wait for further improvements before starting the taper debate. In this case, the U.S. dollar could fall on the back of disappointment.

The hawkish surprise: In the unlikely case of the begin of the discussion to reduce asset purchases, the greenback will rise against other peers.

The focus will also be on the Fed’s dot-plot forecast. It is expected that the forecast will shift to an earlier rate hike expectation in 2023 from 2024 back in March. This would be dollar-positive.

Let’s take a brief look at the technical picture:

GBP/USD

The pound dipped below 1.4070 but held firmly above 1.40. If the 1.40-support remains unbroken, we anticipate a rebound towards 1.4150. For significant price breakouts, we would need to see either a bullish break above 1.42 or a bearish break below 1.40. Above 1.42 we will shift the focus to a higher target at 1.4290, whereas below 1.40, next targets could be at 1.3920 and 1.38.

EUR/USD: Not much has changed in this pair. As long as the euro trades between 1.2230 and 1.2080 there is nothing new to report. A rise above 1.2250 could open the door to further gains towards 1.2350, whereas on the downside, a fall below 1.2080 could lead to further losses towards 1.20 and probably even 1.1940.

We wish everyone good trades today.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

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Will The U.S. Dollar’s Rebound Continue?

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The U.S. dollar rebounded on Friday while short traders in the EUR/USD and GBP/USD were able to book a good profit with both major currency pairs declining towards crucial support levels. We will have a look at the technical picture further below.

This week, all eyes turn to the Federal Reserve meeting with the Fed’s policy decision and press conference due on Wednesday. The market is unanimous: The Fed will reaffirm that its ultra-loose policy remains appropriate, and that it is too soon to start the taper talk. While this might be the case at the Fed’s press conference on Wednesday, chances are slightly in favor of a modestly stronger U.S. dollar. Economists predict that policy makers won’t signal scaling back monetary stimulus until the Jackson Hole Economic Symposium in late August but the quarterly rate-forecast “dot-plot” could show at least one rate increase in 2023. By way of reminder, the Fed’s forecast in March showed no liftoff until 2024. Such change would be slightly more hawkish. In a nutshell, it will be hard for the Fed to be more dovish than the market currently expects. But if there is a hawkish surprise, the greenback will soar with market participants rushing pricing in the shift.

Is the shift in monetary policy starting? To be sure, the shift is still conditional.

Fed policy makers continue to insist that higher inflation is unlikely to persist as it reflects bottlenecks as the economy rebounds from the pandemic. As for the labor market, recent weaker-than-expected job data strengthen the Fed’s wait-and-see approach.

Economists are therefore split on when the tapering announcement is most likely. One-third predict August, another third September and the last third December.

EUR/USD

The euro posted an almost linear decline until the 1.21-support last Friday. If we now see a break below 1.2080, the focus shifts to the lower support at 1.20. For the euro to resume its primary uptrend, it would need a sustained break above 1.2250.

GBP/USD

We see a mesh of support and resistance lines in the cable’s chart. Given the recent downward movement we see a next support zone between 1.4080 and 1.4060. Below 1.4070 we could see the pair drifting towards the crucial 1.40-support. On the topside, the 1.42-resistance needs to be broken before shifting the focus towards a higher target at 1.4280.

Trading could be muted at the beginning of this week with a number of holidays including Australia and China. Have a good start to the new week everyone.

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We wish you good trades!

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Will The Fed Signal Faster Rate Hikes?

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The U.S. dollar was mostly stronger versus other peers ahead of the Federal Reserve policy statement. The global recovery gains traction and investors eager to see whether the Fed will come up with a new guidance on interest rates and upbeat economic projections. Fed Chair Jerome Powell has promised to maintain an accommodative monetary policy but the central bank’s quarterly economic forecasts today will show how many of the Fed members share his commitment. Alongside their expected policy path, the Fed will also release its first dot-plot of the year, offering their point of view on expected interest rates in the future.

The main focus will be on any unexpected findings on the dot-plot such as one rate hike in 2023. If the Fed signals that rates could rise earlier than previously forecasts, the U.S. dollar will rally. If there is however no change of the Fed’s guidance on interest rates or asset purchases, the dollar could give up some of its recent gains.

Last but not least we will have the Fed’s press conference where Powell may push back against the rise in yields and may also downplays the significance of the dot-plot projections.

Regardless of the outcome, traders will brace for higher volatility and larger market moves and we hope that this risk-event will not be as disappointing for traders as the latest ECB decision where the market’s reaction was muted.

The FOMC statement is scheduled for 18:00 UTC, followed by the Fed’s press conference 30 minutes later.

EUR/USD: We focus on a price range between 1.2050 and 1.18. Above 1.2060, a higher target is seen at 1.2180. Below 1.1750 the euro may extend its slide towards a lower target at 1.16.

GBP/USD: The cable traded recently sideways between 1.40 and 1.38. A renewed break above 1.4010 could push the pair higher towards 1.42 and 1.4340. On the bottom side, we will pay attention to a breakout below 1.3770 that could lead to further losses towards 1.36 and 1.35.

Good trades!

 

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Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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Focus Turns To The Fed: Dot-Plot To Show 4 Rate Hikes This Year?

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Dear Traders,

This trading week has been, so far, not only volatile but also very profitable for traders. Yesterday, we saw the U.S. dollar gaining back ground against the euro and British pound ahead of today’s highly anticipated FOMC decision. Thus, short traders were able to book a good profit.

The pound slipped below 1.40 after U.K. inflation data came in worse-than-expected but losses were limited due to hopes that tomorrow’s Bank of England statement will be hawkish.

The euro sold off after the German and Eurozone ZEW Surveys fell well below expectations.

Today, all eyes will be on the Fed decision due at 18:00 UTC followed by Jerome Powell’s news conference 30 minutes later. Market participants are curious whether the central bank will lift its projections for the pace of policy tightening this year. While a 25-basis-point rate is almost certain the focus will turn to updated economic projections (SEP – Summary of Economic Projections) and the Fed’s dot plot forecast. If the dot plot shows monetary policy makers favoring 4 rate hikes this year, the dollar will rise. Anything else could disappoint the market’s high expectations and could send the dollar tumbling.

While today’s Fed decision will be one of the most important decisions in years, it does not mean that it will be market-moving in terms of profitable trading opportunities. As usual, we will prepare for both bullish and bearish scenarios and will update traders (subscribers) about all current and pending trades on our live signal page.

We wish you profitable trades for today!

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We wish you good trades and many pips!

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Will Yellen’s Final Move Depreciate The USD?

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Dear Traders,

It’s decision day at the Federal Reserve and what makes this final policy decision of the year a significant meeting is not the anticipated rate hike, but the monetary policy outlook for 2018. While the market is certain of a third 2017 hike, the focus will turn to forecasts for the pacing through 2018. We will therefore keep an eye on the dot-plot in order to shape expectations for next year’s rate hike path. If the Summary of Economic Projections (SEP) projects another three or possibly even four rate hikes ahead, the dollar will further rally. However, it is very unlikely that the Fed surprises the market and accelerates its pace. Hence, there is a risk of disappointment today, which could lead to a sell-off in the dollar. We recommend preparing for heightened volatility during the entire North American trading session, while most price action will take place around the FOMC decision and press conference, as well as the CPI reading that will be due before the rate decision.

For Fed Chair Janet Yellen it will be her final quarterly press conference before she steps down in February. It is therefore unlikely that she will signal any new prospects on the Fed’s guidance.

13:30 USD Consumer Price Index (CPI)

19:00 USD FOMC Rate Decision

19:30 USD Yellen Holds Press Conference

(Time zone UTC)

Yesterday’s price performance in both EUR/USD and GBP/USD was not to our liking as both currency pairs failed to pick a clear direction despite the broad-based strength in the USD. Technically speaking, the picture has not changed.

GBP/USD: The cable refrained from a break below 1.33 and we currently focus on a price range between 1.3450 and 1.3220. Yesterday’s better-than-expected U.K. inflation data failed to lift up the currency but if investors take profit on dollar positions today, we could finally see some corrective movements driving the pair higher before the holiday liquidity drain.  

EUR/USD: The euro remained well above 1.17 and as long as there is no clear break below 1.1680 the euro could head for another test of 1.1790. Below 1.1680 we focus on lower targets at 1.1640 and 1.16.

We wish you good trades for today.

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Additional daily and long-term 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 2017 Maimar-FX.

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No Chance Of A Fed Rate Hike?

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Dear Traders,

Markets were generally calm as investors wait for decision from the Bank of Japan and the Federal Reserve today. While the euro continued its sideways trend between 1.12 and 1.1140 Tuesday, the British pound dropped significantly below 1.30 as European Union leaders recalled the consequences of a Brexit, provided that Article 50 will be invoked next year.

While the Bank of Japan decision is expected to spark some volatile moves in the market this morning, the focus will be on the Fed meeting and Janet Yellen‘s press conference. The Fed is widely expected to hold rates steady this month but there are a few banks forecasting that officials will hike rates. The argument in favor of a rate increase in September is that traders have too steeply discounted Fed officials’ intent to hike after the central bank has remained on hold for longer than expected. Hawks out there are wondering that, if the Fed is confident in its outlook to send a hawkish signal of an upcoming rate hike in December, why not hike rates now? Many would argue that the Fed doesn’t want to derail the economy before the presidential election in November but on the other hand, politics has little impact on the rate setting decision.

In a nutshell, the odds are in favor of a rate increase in December as the Fed doesn’t like to surprise the market. Dollar gains could therefore be limited as the market expects rates to remain on hold. The central bank will also release fresh “dot plot” projections, probably signaling one quarter-point rate hike by the end of the year.

Whatever the case, we will be prepared for surprises as well as breakouts in both directions.

The Fed is due to unveil its rate decision at 18:00 UTC, followed by the FOMC press conference 30 minutes later.

EUR/USD

The euro formatted a slight downtrend channel and it will now need to break below the current support level around 1.1130 in order to revive fresh bearish momentum towards the lower bound at 1.1090. In the unlikely event of a Fed rate hike, the dollar will soar, sending the euro below 1.1050. However, above 1.1220 gains could be limited until 1.1290.

chart_eur_usd_daily_snapshot21-9-16

 

GBP/USD

The pound fell to a one-month low against the greenback. We now see a next lower target at around 1.29 from where potential pullbacks may occur. Based on the current downward channel we see a resistance at 1.3125. The price action will be however dominated by the appetite for dollars. Below 1.2850 the pound could head for a renewed test of its record-low at 1.2797.

chart_gbp_usd_4hours_snapshot21-9-16

 

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/

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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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Dollar Weakened On Dovish Fed Statement

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Dear Traders,

The FOMC statement came in slightly more dovish than markets had expected, predicting two quarter-point rate increases by the end of this year. The Federal Reserve’s stance was generally friendly and while policy makers are still looking for two rate hikes in 2016 the statement pointed to risks to global economic growth, citing the impact from global risks on the U.S. economy. The market’s reaction to the Fed’s statement suggests that expectations were somewhat more bullish, focusing on the “dot-chart” of interest-rate forecasts which finally represented only two rate hikes instead of the expected three hikes this year. With regard to the so-called “dot plot” projections which were recently of considerable importance, Yellen tried to downplay the significance of those forecasts saying that they are neither a present plan nor a commitment.

On the bottom line, the Fed maintains its hawkish monetary policy stance even if the pace of further tightening slightly slowed. The probability of a rate hike in April is currently at 15 percent whereas economists see a 42 percent-chance of a rate increase in June.

Both euro and British pound benefitted from the dovish statement and rose towards next resistance levels. The EUR/USD bounced back from the next resistance level around 1.1250 but was able to remain above 1.12. For euro traders it was yet another day of huge profits and our monthly performance increased by 100 pips to 304 pips profit. Technically we see a next hurdle at 1.1280 before heading towards a test of 1.13 but traders should bear in mind that the euro is generally not the most attractive currency and can quickly give up on its gains as soon as risk appetite declines. Euro bears should wait for a break of 1.1050 and 1.10.

The British pound climbed towards 1.43 on the back of broad-based dollar weakness. Whether the pair will be able to break above 1.43 remains to be seen. However, concerning the technical picture the bias remains bearish and we will focus on current resistance from where the pound may bounce back.

The Bank of England will announce its monetary policy statement including the rate decision today at 12:00 GMT but no changes are expected. Let us have a look at the technical outlook.

GBP/USD

Looking at the daily chart we see that the overall trend is bearish and that the recent upward move can yet be considered as correction within a downward trend. With a break above 1.4310 next resistances are seen at 1.4375 and 1.44. We expect the 1.4515- 1.4580 area to be a key resistance for the currency pair. Consequently we favor the downward trend sending sterling back towards 1.4040 and 1.40.

Chart_GBP_USD_Daily_snapshot17.3.16

Further important economic data for today:

10:00 EUR Eurozone Consumer Prices

12:00 UK Bank of England Rate Decision

12:30 USA Philly Fed Index

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