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

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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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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2018 Maimar-FX.

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Will The Euro Rise Or Fall? Waiting For Draghi

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Dear Traders,

It’s decision day at the European Central Bank and traders are eagerly awaiting ECB President Draghi’s comments. Today’s ECB meeting is a very important event as it is expected to provide clarity on the withdrawal of stimulus. The majority of analysts expect Mario Draghi to delay announcing a timetable for cutting its monthly bond purchases at this meeting. The reason is the strength of the euro which may prevent the central bank from announcing a big change in monetary policy. Moreover, improving economic conditions in the Eurozone are likely to balance out near-term concerns over the euro’s strength. Ongoing EU improvements thus give room for the ECB to forego an announcement of a QE taper. If the ECB downplays tapering, the euro could fall. In the bullish case of a surprise announcement particularly a reduction of 30 billion or more, the euro will further rise. Whatever the case, the central bank has little choice but to cut asset purchases by next year, simply because it has no more bonds to purchase. In a first step, the ECB could reduce its monthly purchases to 40 billion from 60 billion which could happen at the start of 2018.

It all depends on Draghi’s rhetoric but even in the case of a dovish announcement, the medium-term trend is towards euro strength.

The U.S. dollar, in contrast, has become incredibly oversold. So any disappointments on the Eurozone front would be sufficient to trigger a correction in the EUR/USD, even though a setback may not last very long. Let’s be surprised.

The European Central Bank decision is scheduled for 11:45 UTC, followed by the highly anticipated ECB press conference 45 minutes later.

The euro traded virtually unchanged against the U.S. dollar while the price action of the EUR/USD was limited to a tight range between 1.1950 and 1.1910. We are still waiting for breakouts of that narrow range and prepare for larger swings today. Above 1.1960 the euro could head for 1.2120. Below 1.1890 it could fall back towards 1.18 and possibly even 1.17.

We wish you good trades!

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 2017 Maimar-FX.

www.maimar.co

Profitable Trading Week

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Dear Traders,

In brief, we got what we were looking for: The ECB delivered a surprise which was initially misinterpreted and we realized a good profit from trading both bullish and bearish breakouts in the EUR/USD.

Let’s quickly analyze what had happened: When the ECB announced that they will wind down quantitative easing from 80 billion euro to 60 billion euro in April 2017, market participants wrongly interpreted the reduced amount as a taper. The euro therefore soared beyond 1.0830 as a first response but quickly retreated from its high at 1.0874 after the market realized that the ultimate stock of ECB bonds instead will be higher. While economists had been looking for asset purchases to continue six months beyond the previous end date, ECB policy makers added another three months of purchasing, boosting its balance sheet to 540 billion euros instead of 480 billion euros. Moreover, ECB president Mario Draghi insisted “that there is no tapering in sight”. This was finally reason enough to sell the euro below 1.07.

In a nutshell, the ECB may have bought some time and nine months of keeping their options open, but looking at the future, cutting to 60 billion euro per month could be a staging post to further cuts and thus, effectively tapering.

Whatever the case, we are looking back at a very profitable trading week, specifically in the EUR/USD. On balance, this week alone we generated a profit of 166 pips by our daily signal alerts and a great gain of 250 pips by our swing signals for the euro. We will therefore not invest our weekly profits today.

Have a wonderful weekend and trade well!

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

 

 

 

Euro On A Rollercoaster While Pound Continues To Weaken

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Dear Traders,

The broad-based strength of the U.S. dollar drove the activities in the currency market and allowed for adequate profits for sterling and euro bears. The British pound was hit hard by Brexit concerns on the one hand and dollar strength on the other. As a result, the cable fell to a 31-year low against the greenback and traders prepare for further losses in the GBP/USD. While the pound is expected to depreciate further ahead of Britain’s planned exit from the EU, investors believe that a weaker currency will help to boost British exports, making larger U.K. companies more competitive.

Technically, we expect the 1.27-level to lend a short-term support to the pound before we may see further losses. In case that the 1.27-mark withstands the downward pressure, we anticipate a correction toward the 1.28-level.

The euro was accompanied by higher volatility on Tuesday and losses in the EUR/USD were soon erased after a report said that the European Central Bank will probably taper bond purchases before the conclusion of quantitative easing. The euro overreacted on that hawkish statement and jumped towards 1.1250. Nevertheless, the technical picture has not changed materially as the euro is still confined to its tight trading range between 1.1240 and 1.1140. Above 1.1240 we may see a renewed test of 1.1270 while a current support is still seen around the 1.1130-level.

Today, we have some interesting economic data scheduled for release, influencing the price development of both major currency pairs:

8:30 UK Services PMI

9:00 EUR Euro-zone Retail Sales

12:15 USA ADP Employment Change

14:00 USA ISM Non-Manufacturing Composite

(Time Zone 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