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ECB Meeting Unlikely To Move Euro Exchange Rate

Dear Traders,

It’s decision day at the European Central Bank today but whether this event risk carries much weight will depend on ECB President Mario Draghi’s comments at the ECB press conference. Traders are looking for hints on when interest rates will begin to rise but ECB policy makers suggested earlier that a rate hike won’t come at least until the end of summer 2019. If there is no change in guidance, the euro could give up some of its recent gains.

General speaking, it seems unlikely that Draghi intents to move the single currency at today’s meeting, so watch out for range-bound price action.

As for the dollar, the most interesting piece of data will be released tomorrow with the U.S. 2Q GDP.

EUR/USD: The next hurdle is now seen at 1.1750 before we turn our focus to the crucial resistance area between 1.18-1.1850. Looking however at larger time frames, the currency pair remains trading sideways between 1.1850 and 1.15.

 

Summer trading break: We are slowly preparing for our summer holiday break which means that we are reducing risk exposure while adopting a cautious approach.

Announcement: Shortly after the summer break our Chief Currency Strategist will commence her maternity leave, which is why daily analysis and signals will be paused until the end of her period of maternity leave.

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Nothing New From The ECB, Focus Now On U.S. GDP Numbers

Dear Traders,

The ECB meeting is behind us but we had hoped for some larger market moves yesterday with a bit more follow-through after the euro’s technical break below 1.2150. The reason why the ECB statement turned out to be less market-moving this time is obvious: The central bank made absolutely zero changes to its policy statement in comparison with the March meeting, keeping to its commitment to bond-buying at a monthly 30 billion euros until at least September with interest rates on hold “well past” then.

ECB President Draghi talked primarily about their confidence in broad-based growth and that inflation will converge towards the ECB’s target over the medium term. He refrained from discussing monetary policy and the end of asset purchases.

In sum, despite Draghi’s upbeat tone the ECB statement revealed nothing fundamentally new. The next time the ECB releases a new set of Staff Economic Projections will be in June.

The euro dropped below 1.2150 but found a lower support at 1.2095 for the time being. The EUR/USD is still in deeply oversold territory, so traders should prepare for pullbacks. We expect a current resistance-zone to come in between 1.2160-80 but given the strong bearish bias the focus shifts to a next lower target around 1.2060/50.

Yesterday’s trading in the GBP/USD was not to our liking as the pound traded choppily between 1.40 and 1.39. As for sterling bulls, the way is clear with buyers waiting for an upside break above 1.40. On the bottom side, however, sterling bears will have to wait for a break below 1.3875 in order to anticipate further losses.

We will watch the U.K. GDP numbers at 8:30 UTC which could have a major impact on the cable’s price action.

From the U.S. we have the Q1 GDP numbers scheduled for release at 12:30 UTC. The annualized growth rate is expected to register 2 percent down from 2.9 percent. If there is an upside surprise, the greenback could resume its rally and drive other major peers lower in return.

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

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Draghi Is Unlikely To Signal Early Exit From The ECB’s QE Program

Dear Traders,

As expected, the euro rejected the 1.2450-level in a first attempt but the single currency was able to hold above $ 1.24 ahead of the upcoming ECB monetary policy announcement. While no changes in interest rates are expected, the focus will be on a fresh set of economic projections and ECB President Draghi’s commentary on what could happen to the central bank’s QE program which is due to run until September.

There is still a high degree of ECB optimism in the market and given that optimistic sentiment market participants may tend to push the EUR/USD higher even though Mario Draghi is unlikely to signal an early exit to their QE program. Traders should bear in mind that making significant adjustments to their communication right now could cause confusion which is why ECB policymakers could maintain a cautious stance for the time being. Mr. Draghi is not in a hurry to announce a change right now. Therefore, the ECB could hold off until the summer to start talking about unwinding QE and tell the market when rates will begin to rise.

The ECB will announce its rate decision at 12:45 UTC, followed by the ECB’s press conference 45 minutes later.

EUR/USD

The euro is still calm but, as usual, we will prepare for heightened volatility during the day.

For bullish momentum to continue we would need to see a break above 1.2480 and 1.25. A higher target could then be at around 1.2560. In the chart below we have sketched out potential support areas which could be tested in case of a bearish twist. The nearest support comes in at 1.2350 from where buyers could swoop in – depending on the ECB’s commentary.  A break below 1.2330 could send the euro lower towards 1.2280.

Let us be surprised.

GBP/USD: The price action in the cable is still messy with the pair struggling to find a clear direction. Yesterday we saw the pound confined to a small trading range between 1.3910 and 1.3845. In terms of profitable trading opportunities, the recent price development leaves much to be desired for day traders.

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The Euro’s Fate Is In Draghi’s Hands

Dear Traders,

What a trading day! The U.S. dollar extended its slide against other major currencies on the back of protectionism while the pound’s rally intensified the uptrend in GBP/USD.

Moreover, comments from U.S. Treasury Secretary Steve Mnuchin steepened the dollar’s dive. He said that” obviously a weaker dollar is good for us as it relates to trade and opportunities”, a departure from America’s traditional strong dollar policy.

Our yesterday’s long entry in the GBP/USD has proved highly profitable even though we have been on the lookout for corrections. Despite the cable’s strong uptrend which could persist over the medium-term, we may see some pullback tomorrow when both U.K. and U.S. GDP reports are due for release.

GBP/USD

The pair jumped to the highest level since June 23, 2016 – the day of the Brexit referendum. The reasons for the strong rally lie not only in the weakening dollar but also in good U.K. data and the progress in Brexit talks. On a weekly basis we got a bullish breakout suggesting that there could be accelerated bullish momentum on the way towards 1.46 – the next crucial resistance zone. As long as the pound remains above 1.40, the overall outlook remains constructive.

While the biggest story was the pound’s strong rise, the performance of the euro was not bad either. The euro broke above 1.2350 and headed towards 1.2450 ahead of the ECB meeting. Whether the euro can hold onto its high levels or can even extend its rally, will hinge on the rhetoric of Mr. Draghi at the ECB press conference at 13:30 UTC.

If ECB President Mario Draghi joins the chorus of policymakers speaking against the euro’s strength, the euro could quickly give up some of its gains. However, the devil is in the details and if Draghi fails to convince the market of the ECB’s concerns about the currency’s strength, the euro could further rise.

EUR/USD

We prepare for higher volatility today and expect larger market swings. On the topside, we will now focus on the 1.2460-barrier, which could act as a short-term resistance. For bearish momentum to accelerate, it would need a break below 1.23 and further 1.22. As long as the euro remains above 1.23 chances are in favor of the bulls.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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Euro And Cable Trend Higher And Higher And Now…Maybe Lower?

Dear Traders,

There was nothing stopping the British pound from further rising against the U.S. dollar. While we still anticipate near-term corrections in the strong performance of the GBP/USD, we need to pay attention to the solid uptrend. The pound was able to stabilize above 1.40 and if it extends its gains above 1.4060 we could possibly see a run for 1.4170. On the bottom side, we expect some fresh support coming in at 1.3950. However, traders should bear in mind that corrections are inevitable following the strong performance of the recent days and weeks. One look at the weekly chart below is enough to realize that the cable approaches overbought territory and thus faces the risk of pullbacks.

Meanwhile, the U.S. dollar suffered another setback against its major counterparts. U.S. President Trump’s decision to put tariffs on imported solar panels and washing machines may stoke protectionism and fears of trade wars.

The euro trended upwards, contrary to expectations, ahead of tomorrow’s ECB meeting. We still see the risk of profit-taking in the EUR/USD given the possibility of dovish comments from ECB President Draghi at tomorrow’s ECB’s press conference. For now, we expect the EUR/USD to trade between 1.2380 and 1.2250.

Important economic data that could have an impact on today’s price action:

8:30 EUR German PMI Report

9:30 UK Labor Market Report

15:00 USA Existing Home Sales

(Time Zone UTC)

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We wish you good trades and many pips!

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Potential U.S. Government Shutdown And Germany’s Coalition Talks In Focus

Dear Traders,

The U.S. dollar continues to disappoint dollar bulls while being unable to find its footing against other major currencies. Market participants remain focused on the political risk potential around the U.S. government shutdown, which could take effect at the end of today’s trading day if no budget deal is reached. With developments in Washington being the primary focus, the dollar could remain under pressure.

The University of Michigan’s Consumer Sentiment Index is due at 15:00 UTC, but this report might only have a limited impact on the greenback.

The pound sterling gained further ground against the dollar and seems to be well on track to recover its post-Brexit referendum losses. The GBP/USD followed the recent uptrend and climbed back above 1.39 after finding fresh support at 1.38. If the pound holds above 1.3850 we could see a bullish run for 1.40 and possibly 1.4040.

The U.K. Retail Sales report is due at 9:30 UTC today and could have a minor impact on the pound’s price action.

The Euro held above 1.22 but traders should be aware of profit-taking ahead of the upcoming ECB meeting next week. There is increased speculation that ECB President Draghi will seek to talk the Euro lower following its rapid appreciation. Apart from the ECB’s monetary policy, there will be a vote by the Social Democrats in Germany to begin talks regarding a grand coalition this weekend. If the SPD votes against a coalition the euro could suffer a setback.

From a technical perspective we keep tabs on the 1.2350-level which could serve as a short-term resistance in the EUR/USD. Euro bears should however wait for prices below 1.2190 in order to expect accelerating bearish momentum.

We wish you good trades and a beautiful weekend.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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ECB Decision Day: Hawkish Or Dovish Taper Mr Draghi?

Dear Traders,

It’s decision day at the European Central Bank and traders in all EUR crosses brace for heightened volatility at this highly anticipated event that will bring forth news on the pace of the ECB’s quantitative easing program (QE). The euro traded higher against the U.S. dollar ahead of today’s announcement since the ECB is expected to announce a reduction in the size of its monthly bond buying. While this expectation alone is considered euro-positive, the devil is in the details. There are a number of possible scenarios while the best (but most unlikely) scenario for the euro would be a reduction of EUR40 billion bonds buys until September 2018. The most likely scenario is however a taper of 30 billion euros with a nine-month extension of the QE program. Since the latter scenario is already largely priced in the euro’s price development, the risk is tilted to the downside if the ECB fails to surprise the market. Bearing in mind that ECB policy makers want to avoid a too strong euro they need to be careful in their statement. If the market senses a more cautious approach towards monetary policy normalization or in the case of a reduction of only EUR20 billion bond buys per month, the euro could fall.

Whatever the case, the good news is that ECB President Mario Draghi can be expected to emphasize that the Eurozone economy is in a good shape and probably capable to withstand tighter monetary policy over the medium-term.

The ECB’s decision will be announced at 11:45 UTC and Draghi will speak 45 minutes later.

EUR/USD

The euro currently trades around the resistance line of its recent downtrend channel near 1.1840. If the euro breaks above this barrier, the focus will shift to the 1.19-level. A sustained break above 1.1915 is needed to encourage euro bulls for a run for 1.20 or 1.21. If 1.19 however holds, particular focus remains on the 1.17-support. A renewed break below 1.1680 and 1.1650 could send the euro towards 1.1580.

The British pound rose on upbeat U.K. GDP data that bolstered the case for a Bank of England rate hike next week.

From a technical point of view, the primary uptrend channel finally proved correct and suggests that we may see further gains towards 1.33 and 1.3350. A break above 1.3365 would brighten the bullish outlook. A current support is however seen at 1.3150.

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We wish you good trades and many pips!

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Euro Consolidates Pre-ECB While Pound Declines On Brexit Uncertainty

Dear Traders,

The EUR/USD is still consolidating within a narrow trading range as it waits for the ECB announcement to encourage volatility. Tomorrow’s ECB announcement is expected to bring a cut of the central bank’s monthly purchases to EUR30B but there is speculation that ECB policy makers may favour a dovish taper in the effort of keeping the euro relatively weak. Traders should prepare for more volatile swings now ahead of tomorrow’s highly anticipated event. However, with no new drivers we still expect the EUR/USD to fluctuate between 1.1850 and 1.17.

Sellers in the GBP/USD were able to gain a good profit yesterday with the pound heading for 1.31. The pound declined amid uncertainty around Brexit negotiations between the UK and EU and while the tortuous Brexit talks are continuing to sour the sentiment in the pound, there is a ray of hope – at least in short-term time frames: UK GDP figures (due for release today at 8:30 UTC) are expected to show an economic growth of 1.5 percent year/year that is likely to persuade the Bank of England to hike interest rates at the BoE’s ‘Super Thursday’ next week on November 2.

From a technical perspective, we still see the GBP/USD fluctuating within its crucial price range of 1.32/1.3230 – 1.31. While sustained price breakouts did not happen we still focus on both scenarios; either a bullish breakout above 1.3235 or a bearish breakout below 1.3085.

From the U.S. we have Durable Goods Orders scheduled for release at 12:30 UTC.

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We wish you good trades and many pips!

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Limited Price Swings Amid Lull In Volatility But Breakouts May Be Looming

Dear Traders,

There was nothing to gain for traders of the EUR/USD and GBP/USD on Monday. Both major currency pairs were little changed with larger price fluctuations being absent. The euro fell to a low of 1.1725 before reversing its losses towards 1.18. In sum, trading the EUR/USD lately did not serve us well since larger price movements and breakouts are still lacking. However, this unprofitable trading phase could soon be over as the ECB meeting looms ahead. The ECB policy announcement is expected to bring clarity on the fate of the ECB’s asset purchase program but until then the euro may continue its sideways movement between 1.1850 and 1.17.

EUR/USD: If the pair breaks above 1.1790 it faces the next hurdle at 1.18 but given prepositioning ahead of the ECB meeting, it may trend higher, heading for a test of 1.1850/60. A current support is however seen at 1.1720.

The German Manufacturing PMI is scheduled for release at 7:30 UTC but this report is unlikely to have a major impact on the price action in the euro.

GBP/USD: Recent price action in the cable indicates that a bullish breakout may be imminent. We see prices formatting an inverted head-shoulders pattern after failing to break the 1.31-support significantly. We now prepare for upcoming bullish momentum driving the cable towards 1.33 and possibly 1.3370.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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British Pound Virtually Unchanged Ahead Of U.K. Election

Dear Traders,

The British pound gapped slightly lower after the latest terror incident in London, in which seven people were killed and 48 were injured. The attack comes just days before the June 8 general U.K. election which is considered a big event for sterling traders. The latest polls indicate the Conservatives’ lead over Labour has shrunk to between 1 and 12 percentage points, indicating a tightening race. If Prime Minister Theresa May is not getting the increased majority she is hoping for, sterling could suffer further losses.

Friday’s NFP report proved disappointing even if the May jobs data were not bad enough to curtail the expectations for a Fed rate hike this month. While the U.S. dollar remained under selling pressure, the euro benefited the most from the greenback’s weakness and rose to a high of 1.1285. It will now be interesting whether the euro is able to tackle the hurdle at 1.13. Above that level, we see a next resistance at 1.1350, whereas the 1.12-level could lend a short-term support for the euro.

GBP/USD

In short-term time frames we see that prices narrowed, formatting a symmetrical triangle which could predict upcoming price breakouts. A break above 1.2910 could result in an upswing towards 1.2950 while a decline below 1.2850 could drive the pound lower towards 1.28.

This week’s economic calendar is fairly light in terms of market moving data. The only highlight will be the U.K. election and the European Central Bank meeting on Thursday which can be market moving events.

The service-sector ISM survey is scheduled for release today at 14:00 UTC but with the NFP report behind us, this report might not attract much attention.

In short, it could be a quiet start to the new week but let us 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