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Geopolitical Tensions Lead To Risk-Aversion In The Market

Dear Traders,

Yesterday’s U.S. inflation data and March FOMC minutes took a backseat to geopolitical tensions between the U.S. and Syria. U.S. President Trump warned Russia of incoming airstrikes on Syria for the Assad regime’s suspected use of chemical weapons. The prospect of U.S. military action against Syria have led to broad-based risk aversion in the market with Gold benefiting from its reputation as a safe-haven investment.

From a technical perspective there was nothing to gain for day traders in the Forex market with the U.S. CPI data and FOMC having only a limited impact on yesterday’s price action amidst the risk-off mode in the market.

As long as the risk of military conflict between Russia and the U.S. in Syria remains very high, we may see a lackluster price development in the market which provides little profitable trading opportunities.

Looking at the technical daily chart in both major currency pairs we see that near-term momentum is deep in overbought territory which is why we are looking for upcoming pullbacks.

EUR/USD: A drop below 1.2330 could open the door for accelerated bearish momentum towards 1.23 and 1.2250. However, given the overall uptrend buyers may swoop in at lower levels following a potential pullback. On the topside, the euro would need to take out the 1.24-hurdle to spark fresh bullish momentum towards 1.2430 and 1.2470.

Euro traders should keep an eye on the ECB minutes which are due for release today at 11:30 UTC.

GBP/USD: The pound refrained from stabilizing above 1.42 and dropped back towards 1.4160. We now expect a lower support zone to come in between 1.4120-1.4080. A current resistance is however seen at 1.4270.

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Will The Pound Receive A Boost From U.K. GDP Data?

Dear Traders,

The U.S. dollar appreciated against its major counterparts in the aftermath of the Fed’s minutes. The tone of the FOMC minutes was passively hawkish while the transcript showed increasing confidence that economic growth will pick up steam despite inflation concerns.  Market participants are now pricing in the possibility of a tighter Fed rate hike path with a current 90 percent chance of a next rate hike in March and a 60 percent chance of three rate hikes through the year. The possibility of even four rate hikes in 2018 is currently over 20 percent. After initial teething problems, the dollar was finally able to end the trading day in positive territory against the euro and pound.

The British pound was volatile as expected but again failed to overcome the 1.40-barrier. Technically speaking, however, we got the price breakouts we were looking for and given the fact that 1.40 remained unbroken we got a dip towards 1.39. A next lower target could now be at around 1.3850/30.

Today we have the U.K. GDP scheduled for release at 9:30 UTC and this report could possibly provide a boost to the weakening pound.

EUR/USD: The euro traded with a downward tilt on the back of a strengthening dollar but from a technical perspective, we still see this pair confined to a sideways trading range between 1.2550 and 1.22. Only if the euro breaks significantly below 1.22 the short-term outlook will shift in favor of the bears.

The next top event risk is the minutes from the European Central Bank’s January meeting which are due at 12:30 UTC. However, unlike the January release, which covered the December meeting which had a new set of Staff Economic Projections revealed, the coming minutes will have much less hard information to discuss. Thus, it could be a non-event for euro traders.

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2018 Maimar-FX.

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U.S. Dollar Directionless Despite Strong U.S. Data

Dear Traders,

There was little consistency in the performance of the U.S. dollar on Wednesday despite the unexpected strength of the ISM Non-Manufacturing data. The jump in the ISM services index is an argument in favor of further Federal Reserve rate hikes. While this should actually be positive for the greenback, we saw EUR/USD and GBP/USD trading sideways.

GBP/USD

Bearish momentum is not fading and it seems as if the pair tends to test the lower support zone at 1.32-1.3150 before starting a potential reversal. Based on the current downtrend channel we expect a short-term resistance to come in at around 1.33. Above 1.3315, a next target could be at 1.3350.

Looking at the economic calendar, the only interesting piece of data will be the ECB minutes due for release at 11:30 UTC. Investors brace for monetary policy changes at the European Central bank and expect such decisions to be made at the next ECB meeting on October 26. Speculation about monetary policy tightening at the ECB have a generally positive influence on the euro.

If the euro climbs back above 1.1810 and further 1.1835 it could be headed for a test of 1.19. On the bottom side, the focus remains on a break below 1.1680 and further 1.1660.

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Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

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Euro And Cable Are Stuck In Tight Ranges

Dear Traders,

As expected, the FOMC minutes failed to trigger any major market movements and both currency pairs traded boringly within tight trading ranges. Consequently, there was nothing to be gained for traders.

Many Federal Reserve officials saw increased downside risks to the outlook for the U.S. economy if the recent global market turmoil, including the slowdown in China was sustained, the minutes showed. While rate hike expectations for 2016 have been gradually priced out, there is still a small chance for the Fed to raise interest rates in the middle of the year. Policy makers emphasized that the timing and pace of adjustments will depend on future economic and financial developments and so, if the U.S. economy continues to improve the Fed could follow its path of further tightening.

We will wait and see and focus on technical conditions. The EUR/USD formatted a current trading range between 1.12 and 1.11 and traders should rather wait for any sustained breakout above or below that range. If the euro breaks above 1.1215, there is a next hurdle at 1.1240/50, which needs to be broken before we can shift our focus to 1.13 again. On the downside, we expect the 1.1085-70 area to be crucial for further bearish momentum. With a break of 1.1070, we could see the euro falling towards 1.1050 and 1.0990.

The GBP/USD remained well above 1.4240 but was not able to exceed the 1.4340-level. Once the 1.4340-level will be breached to the upside, sterling could rally towards 1.4380 and 1.44. Above 1.4410 the next crucial level could be at 1.4450. However, below 1.4270 we will turn our focus towards the 1.42-mark.

Today we will keep an eye on the following important economic reports which may have an impact on the currencies:

12:30 EUR ECB Meeting Minutes

13:30 USA Philly Fed Index

16:00 USA Crude Oil Inventories

(Time zone GMT)

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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