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Euro Jumps On Migration Deal At EU Summit

Dear Traders,

There was nothing to gain for day traders on Thursday with the price action in both major currency pairs EUR/USD and GBP/USD remaining limited to a tight trading range. Rather, we suffered losses while trying to benefit from the choppy swings yesterday. The moderate market development can be attributed to lacking fundamental headlines, while the first day of the EU Leaders summit ended without a deal on migration issues. However, those that had a look at the market in today’s early trading hours may have wondered what happened to the euro which showed an impressive rise towards a high at 1.1666. News that EU leaders have reached a deal on migration at the summit spurred the euro’s bullish price action in early Asian trading. The euro jumped at the prospect of the deal defusing a dispute over how to share the burden of immigration within the EU.

EUR/USD: As stated in yesterday’s analysis, as long as the 1.15-support holds we expect the euro to test the 1.17-resistance and possibly even the 1.18-handle.

GBP/USD: The pound rose in tandem with the euro this morning but was unable to overcome the short-term resistance at 1.3130, at least until now. A break above 1.3130 could result in an upswing towards 1.3150/70 whereas a renewed break below 1.3060 could lead to a test of 1.30.

Today we will watch the U.K. GDP Report, due at 8:30 UTC, followed by the Eurozone Consumer Price Index (9:00 UTC) and the U.S. PCE Index (12:30 UTC).

Have a wonderful weekend.

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Pound Falls On Fears Of Collapse Of Brexit, Focus Now On Inflation

Dear Traders,

Trading was relatively quiet on Monday with the EUR/USD trading within a narrow 40-pip range. The picture was different in the GBP/USD, which started the week with volatile swings ranging from a daily high of 1.3312 to a low of 1.3225. As mentioned in our analysis from Monday, the pound sterling is currently torn between rising inflation and thus, higher interest rates on the one side and Brexit uncertainty on the other side. Yesterday, the pound came under selling pressure on speculation that Brexit talks could break down, unless the European Union gives ground at a summit of EU leaders later this week. A person familiar with the matter said the entire Brexit process will be in danger of collapse as long as negotiations are failing to make progress. The pound fell to a low of 1.3225 on the concerns about the lack of progress.

The focus will now shift to the U.K. Consumer Price Report, due at 8:30 UTC followed by BoE Governor Carney’s appearance before congress at 10:15 UTC. We expect the GBP/USD to remain vulnerable to volatile swings while we currently see the chances in favor of further bearish movement towards 1.30. If the cable breaks above 1.33 again, it may head for a test of 1.34 but the upward movement could be limited as Brexit concerns continue to weigh on the currency.

From the Eurozone we have the Consumer Price Report and ZEW Survey scheduled for release at 9:00 UTC. These reports may have a short-lived impact on the euro.

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No Clarity On The ECB’s QE Program, Next Decision To Be Made In December

Dear Traders,

Mario Draghi refused to provide any clear information on what the ECB plans to do in the coming months, leaving investors suitably disappointed. Neither did he refer to tapering nor to extending the ECB’s QE program. The only takeaway that we got from yesterday’s ECB meeting is to wait and to come back in December and see what the central bank thinks then. Nonetheless, Draghi’s stance could be described as somewhat more “dovish”, noting that there is no “convincing upward trend” in underlying inflation, suggesting that the ECB might announce an extension of its bond buying program, rather than a taper at their policy meeting December 8.

Market participants sent the euro on a roller coaster ride before it ended the trading day significantly lower against the greenback. During the Asian session the euro slightly broke below 1.09 and we now wait for a significant break below 1.0880 in order to sell euros towards the next support level at 1.0820/1.08. Current resistance levels are seen at 1.10 and 1.1050.

There was little consistency in the performance of the British pound yesterday. While the currency remains vulnerable to further losses given the troubled picture of the eventual Brexit negotiations at the EU summit, it remains a sell on rallies. We now focus on a downside break below 1.22 or on the other hand, an upside break above 1.23.

Apart from the EU summit there are no major economic reports scheduled for release today. We recommend not investing your weekly profits today and wish you a wonderful weekend.

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Copyright © All Rights Reserved 2016 Maimar-FX.

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U.S. Dollar Slightly Strengthened After Turkey Airport Attacks

Dear Traders,

After Tuesday’s recovery the euro and British pound dropped back to their lower levels where the rallies had started out yesterday. The rapid decline is due to an airport terror attack in Istanbul late Tuesday. Three suicide bombers killed at least 36 people at the entrance to the main international airport in Istanbul. Investigations indicated the Islamic State (IS) was behind the terror attack. The attack came at a time when Turkey is struggling with the biggest slump in tourism as a result of the ongoing terrorist threat in the country.

Overall, there is a considerable degree of uncertainty in the market which negatively influences investments as well as the economic environment. European leaders pressed the U.K. to lay out a Brexit plan as quick as possible in order to avoid further uncertainty. However, it may take some time as the U.K. will only start the EU withdrawal process once a new government has been installed. This could happen as early as September.

From a technical perspective not much has changed. The euro traded consolidated between 1.11 and 1.1035. While we are still looking for breakouts either above 1.1135 or below 1.10 the trading range has narrowed which is why traders should keep an eye on prices above 1.1085 for bullish and, vice versa, for prices below 1.1035 for bearish engagements.

The cable peaked at 1.3419 before trending lower again. Our focus shifts to a renewed break below 1.3270 before anticipating lower targets at 1.3220 and 1.3150. On the topside, the 1.3370-level is seen as a current resistance.

Apart from the EU-U.K. summit, German Consumer Prices scheduled for release at 12:00 UTC and the U.S. PCE index due at 12:30 UTC could have a minor impact on the currencies.

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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