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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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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2018 Maimar-FX.

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Euro And Pound Sell-Off, Focus Now On U.S. GDP Data

Dear Traders,

The EUR/USD sold off on the back of a dovish ECB announcement on the one side and a strengthening U.S. dollar on the other side. European Central Bank policy makers agreed to cut monthly bond purchases in half to EUR30 billion in January but extend the bond buys at this pace until September 2018. While this outcome was exactly what the market has anticipated, Draghi said there won’t be a “sudden end to the buying” and the shift shouldn’t even be called tapering. What weakens the euro was the fact that a “large majority” of ECB policy makers favored keeping the bond buying program open-ended so they can adjust it at any time in case inflation stays sluggish. With regard to future interest rate hikes, Draghi said that rates will remain “at the present levels for an extended period of time, and well past the horizon of our net asset purchases”.

In short, the ECB’s decision can be described as slightly more dovish than euro bulls may have hoped for.

As regards the U.S. dollar, prospects for the U.S. tax reform spurred the dollar rally. The U.S. House passed a budget resolution unlocking a process to cut taxes by the end of the year. The greenback experienced broad-based gains versus other major currencies but the focus now shifts to the third-quarter GDP reading, scheduled for release today at 12:30 UTC. Even though economists are looking for slower growth of 2.6 percent, dollar bulls may take this opportunity to jump back in on pullbacks. Traders should prepare for heightened volatility around the GDP release.

EUR/USD: The euro cleared its crucial support at 1.17 and even 1.1650. After breaking below theses support levels, the case has built up for the bears and we now expect the euro to tumble towards 1.1550 but maybe not straight-lined. Former support levels could now turn into resistances with pullbacks may be limited until 1.17/1.1730.

GBP/USD

Only yesterday we have talked about the pound’s bullish break above 1.3230 which seemed to indicate further gains towards 1.33 but the opposite happened: The pound fell in tandem with the euro and headed for another test of 1.3110. If the 1.31-support breaks the previous bull breakout above 1.3230 turns out be a fake-out. In case the cable falls below 1.3085 we anticipate further losses towards 1.3030 and 1.2950.

We wish you good trades and a relaxing weekend.

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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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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!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

www.maimar.co

Profitable Trading For Euro Bulls, Now What?

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!

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts http://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

 

 

Will The Euro Rise Or Fall? Waiting For Draghi

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 http://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

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 http://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service http://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 Listens To Draghi: Tapering Or Expanding Stimulus Plan?

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 http://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service http://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