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Profitable Trading For Euro Bulls, Now What?

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Dear Traders,

There was nothing stopping euro bulls from pushing the euro beyond 1.20 despite the absence of changes in the ECB’s monetary policy. The euro owes its recent appreciation in large part to the further improved outlook for economic growth in the Eurozone. The European Central Bank upgraded its forecast for growth this year to 2.2 percent, which is the fastest pace in a decade. While the ECB refrained from reducing asset purchases this time, Mario Draghi did suggest that decision on the quantitative easing program (QE) could be made next month. The strength of the EU economy has prompted the market to discount a policy shift, which is most obvious in the strong uptrend of the EUR/USD. While the currency pair has already charged remarkably high, the level of intervention rhetoric from the ECB was too mild to prevent euro bulls from pushing the single currency higher. Moreover, when coming to the currency’s sharp appreciation, Draghi didn’t seem overly concerned.

In other words, there was nothing in the way of further euro strength since the ECB will start tapering and if not today, then certainly next time.

Furthermore, the U.S. dollar continues its downtrend. Market participants are concerned that the impact from Hurricane Harvey and now Irma are causing data distortions, and thus, undermine the chances of a year-end Federal Reserve rate hike.

EUR/USD

We got what we have been looking for: A breakout of the euro’s narrow trading range. Our yesterday’s long entry has proven to be sustainably profitable. We now focus on a next target at 1.2135, from where we may see some pullback. On the downside, we expect the 1.20-area to lend a support for the time being. However, bear in mind that the pair approaches overbought territory, a fact that increases the chances of a reversal.

GBP/USD: The pound sterling headed for 1.3150 on the back of broad-based dollar weakness. Sterling bulls were able to gain a good profit by using our long entry at 1.3061. Once the cable breaks above 1.3165 we will shift our focus to the August high near 1.3270. Important supports are seen at 1.3050 and 1.30. Traders should keep an eye on the U.K. data (Industrial Production, Trade Balance) at 8:30 UTC.

We wish you good trades and a nice weekend!

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2017 Maimar-FX.

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Market Listens To Draghi: Tapering Or Expanding Stimulus Plan?

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Dear Traders,

Top event risk for the upcoming session is the European Central Bank meeting and ECB President Draghi‘s comments on tapering. While recent ECB meetings have rendered little market reaction, there has been speculation recently that the central bank will begin tapering its bond purchase program at one of its next meetings. While Draghi was optimistic about the outlook for the Eurozone economy, most economists predict the ECB won’t start tapering before the second half of 2017. Quantitative easing is currently scheduled to end in March and with consumer prices still hovering close to zero, policymakers should at least be comfortable with the current level of stimulus or even extend the program before gradually phasing it out once inflation approaches the ECB’s goal of 2 percent.

The ECB will announce its policy decision at 11:45 UTC but no changes are expected. The main focus will be on the press conference 45 minutes later and Draghi’s comments. If he pushes back aggressively against recent talk of tapering, the euro could be vulnerable to further losses. Any signal that the ECB plans to reduce bond purchases will provide a strong boost to the euro. If the central bank however refrains from providing any signals and defers any changes until December, today’s announcement could turn out to be a non-event for euro traders.

To cut it short, let us have a look at the technical chart and prepare for both possible scenarios.

EUR/USD

The euro recently weakened against the U.S. dollar but found some halt around the 1.0950-level, the descending trend line of the euro’s recent downward channel. If the pair breaks below 1.0940 we see a higher likelihood of further losses towards 1.09 and 1.0830. On the upside, the euro would need to break above 1.1060 in order to spark some bullish momentum towards 1.1170.

chart_eur_usd_daily_snapshot20-10-16

Apart from the ECB meeting we have U.K. Retail Sales at 8:30 UTC, the Philly Fed index at 12:30 UTC as well as U.S. Existing Home Sales at 14:00 UTC scheduled for release but all these reports could take a backseat to the ECB.

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.

www.maimar.co

 

Focus Shifts From U.S. Dollar Rally To Non-U.S. Event Risks

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Dear Traders,

We welcome you to a new trading week. While the last week ended with broad based U.S. dollar strength, the greenback could be pushed into the background this week given major event risks such as the European Central Bank meeting on Thursday as well as important economic reports from China and U.K.

Market participants will be closely watching U.K. inflation data on Tuesday. Consumer Price Inflation is forecast to accelerate in September given the fact that sterling’s recent drop boosts inflation. We saw the pound tumbling towards 1.2150 where it found some support for the time being. We anticipate some upward movements towards 1.2225/50 ahead of tomorrow’s report, whereas a break below 1.2130 may boost bearish momentum towards 1.21 and 1.2090.

Euro traders are eagerly awaiting the ECB’s policy decision and the announcement from ECB President Mario Draghi. The market was rocked earlier this month by a report that the central bank could start to taper its bond-buying program of 80 billion euros a month. Draghi could therefore attempt to calm the market by emphasizing that the stimulus would continue. The euro fell below 1.10 and tested the 1.0970-support level on the back of a strong dollar. Whether the EUR/USD could be vulnerable to further losses may hinge on the ECB announcement. If Draghi announces changes to the QE program the euro will react accordingly. For the time being, we consider the 1.0970-50 price area as a support for the pair. On the topside we see a current resistance at 1.1150.

From the U.S. we will have less market moving data this week with the CPI report (Tuesday) being the only interesting piece of economic data. Politically, U.S. presidential candidates Hillary Clinton and Donald Trump will hold their final debate on Wednesday. 

Today, Eurozone Consumer Prices are scheduled for release at 9:00 UTC but this report is not expected to have a major impact on the euro. Furthermore, U.S. Industrial Production figures are due at 13:15 UTC.

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 2016 Maimar-FX.

www.maimar.co

 

 

 

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.

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 2016 Maimar-FX.

www.maimar.co