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GBP/USD: Upcoming Breakout?

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Dear Traders,

The U.K.’s formal triggering of Brexit has proved to be a non-event for traders. The market showed little reaction to the Article 50-trigger with the pound trading consolidated between 1.2480 and 1.2385. However, the GBP/USD remains a sell on rallies against the background of uncertain prospects for the U.K. economy and, in a countermove, the Federal Reserve’s tightening path.

GBP/USD

In short-term time frames, chances are in favor of upcoming breakouts given the symmetrical triangle. A break above 1.2465 could push the pound towards higher targets at 1.25 and 1.2560, whereas a break below 1.2420 may reinvigorate bearish momentum towards 1.2340.

The U.S. dollar received some support from fresh hawkish Fed comments particularly from Fed President Eric Rosengren who was in favor of a total of four rate hikes this year. The latest round of hawkish comments should serve as a reminder that the Fed is still the only central bank which sees the possibility for additional rate hikes in 2017 amidst a healthy economy growth.

The U.S. GDP report is scheduled for release today at 12:30 UTC and could have an impact on the dollar’s price action.

The EUR/USD traded lower following the Brexit trigger. After dropping below 1.0775 the bearish move came to a temporary halt at 1.0740. Whether we will see further losses in this pair could depend on the German Consumer Price Index, scheduled for release today at 12:00 UTC. CPI data is expected to show a slowdown and this could increase pressure on the European Central Bank to maintain its accommodative monetary policy. If the euro falls below 1.0740 it could extend its losses towards 1.07 and 1.0650. On the upper side, euro bulls may wait for a renewed break above 1.0825 in order to buy euros towards 1.0920.

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U.S. Dollar Weakens On Unchanged Fed Forecasts

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Dear Traders,

The market’s response to the FOMC announcement was as expected. The Federal Open Market Committee raised its benchmark interest rate to a range of 0.75-1.00 percent and continued to project two more hikes in 2017. In a nutshell, since the Fed’s rate hike path remained unchanged from December 2016 there was no new hawkish guidance which would have helped to boost the U.S. dollar. Thus, yesterday’s rate hike is interpreted as a ‘dovish hike’.

The U.S. dollar slipped on the unsurprising decision as well as unchanged forecasts and both euro and pound climbed toward higher targets in return. The euro touched a high of 1.0746 while euro bulls were able to pocket a good profit. The euro received an additional boost after a large majority of Dutch voters have rejected anti-European populists. Conservative Dutch Prime Minister Mark Rutte has beaten his far-right rival Geert Wilders in the Dutch elections.

On balance, that’s good news for the euro but what can we expect from a technical perspective? There could still be some room for further upward momentum toward 1.08. If the euro climbs above 1.0750 it may head for a test of 1.08 but gains could be limited until that level. For the euro to continue to rally, it may require a break above 1.0830. If the 1.08-level remains unbroken we expect some corrections towards 1.0650 and 1.0550.

Eurozone Consumer Prices are scheduled for release at 10:00 UTC but those figures are not expected to surprise the market.

The British pound slightly strengthened on a weakening greenback but gains have been limited until the 1.23-resistance area. In case the pound will be able to overcome that hurdle we anticipate a run for 1.24.  On the downside, we will wait for a significant break below 1.22 in order to favor a bearish bias. The 1.2230/10-area could act as a current support-zone for the pound.

Today’s major risk event will be the Bank of England’s monetary policy announcement at 12:00 UTC. While no changes are expected, the BoE’s statement could trigger large market moves in the GBP/USD. Let us be surprised.

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U.S. Dollar Is In A State Of Limbo On Trump’s Policies

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Dear Traders,

The euro ended the day virtually unchanged against the U.S. dollar after it fell to a low of 1.0620. German inflation came in slightly below forecast, easing pressure on the European Central Bank to unwind its stimulus program. The greenback is however in a state of limbo as Donald Trump’s order on immigration overshadowed his promises to pursue pro-growth policies. Instead, the focus has been recently on trade and immigration. The dollar however, outperformed the pound sterling which fell towards 1.2465, providing a good profit for short traders. As the 1.2470/60-level is considered a major support we shall wait for prices below that support zone in order to sell sterling towards 1.2420. Around 1.2420 we may see some pullback before a potential break below 1.24 could send the pound towards 1.2250. A current resistance is however seen at 1.26.

EUR/USD

Head-Shoulders pattern could still be in play. Based on that pattern we expect a current resistance to be at around 1.0750. Thus, it could be rewarding to buy euros following a sustained break above 1.0750 while on the downside, the 1.0580-level remains in focus. It should be noted, that this pattern becomes void as soon as the euro breaks above 1.0770. Below 1.0580 we expect bearish momentum to accelerate.

Euro traders will watch the Eurozone Consumer Price report scheduled for release at 10:00 UTC, which could have an impact on the euro, provided that it exceeds expectations. Before that report, the German Unemployment report due at 8:55 UTC and ECB president Mario Draghi‘s speech at 8:00 may have a minor impact on the EUR/USD.

From the U.S. we only have Consumer Confidence scheduled for release at 15:00 UTC. Moreover, any action or word from Mr. Trump will dominate the markets.

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Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2017 Maimar-FX.

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January Is Typically Dominated By U.S. Dollar Strength

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Dear Traders,

The U.S. dollar jumped to the highest level in 14 years against the euro as U.S. manufacturing expanded. From a seasonality perspective, January is the greenback’s best month of the year and thus typically a bearish month for the EUR/USD. Looking back at the past performance, this pair has usually depreciated in January, making it an attractive opportunity to sell the pair on dips.

The euro touched a fresh low at 1.0340 but ended the trading day slightly above 1.04. From a technical perspective, we expect the EUR/USD to trade between 1.05 and 1.0370 in short-term time frames.

The British pound tested its 1.22-support which has proved intact for the time being. If the pound falls below that level we anticipate a lower support-level at 1.2150/30. Above 1.2310, however, sterling may head for a test of 1.2350 and 1.2380.

Today, the focus shifts to the Eurozone Consumer Price report, due for release at 10:00 UTC and the FOMC minutes of the Dec. 13-14 meeting, scheduled for release at 19:00 UTC. However, the Federal Reserve minutes are not expected to be a big market mover since Fed officials are unlikely to reveal anything new about the timing of the next policy move. Economists will also be looking for insights into policy maker’s thinking about fiscal policy changes under President-elect Trump and how they might react to measures. Nonetheless, the central bank will probably maintain a wait-and-see mode as too much remains uncertain.

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Market Absorbed Brexit Shock But Don’t Get Fooled By The Upward Correction

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Dear Traders,

Markets stabilized for a second consecutive trading day with the euro rising above 1.11 and the pound touching a high at 1.3534 after the 1.3280-level has proved to be a short-term support. Market participants have got over the Brexit shock from last Friday since a worst-case scenario for the EU and a contagion effect seem relatively unlikely. The focus is therefore gradually shifting back to monetary policy. Economists predict that the Bank of England will cut interest rates before the end of the year, while they see only little chances of a rate increase by the Federal Reserve this year. This fact could limit dollar gains in the short-term, whereas the pound sterling remains under pressure. The price direction will mainly hinge on risk appetite for each currency, although any new hawkish hints from Fed policymakers would provide a boost to the U.S. dollar.

Bank of England Governor Carney is scheduled to speak at 15:00 UTC today and any dovish comments could drive the pound lower. The U.K. GDP is due for release at 8:30 UTC but given the recent uncertainty this report is not expected to have a significant impact on the pound.

GBP/USD

We see the pound formatting a short-term upward channel after its sharp selloff. Once it breaks below that channel, falling back below 1.3370, we expect a higher likelihood of renewed downswings towards 1.3290, 1.3220 and 1.31.

However, above 1.3480 the pound could head towards the upper bound of the trend channel, which is currently around the 1.36-level.

Chart_GBP_USD_4Hours_snapshot30.6.16

 

The euro tested the 1.1130-resistance level, from where it first reversed. As stated in previous analysis we only expect further upward momentum after a significant break above 1.1135/40. However, if the euro breaks below 1.1080, we may see a decline towards 1.1035, 1.0990 and 1.0890.

From the Eurozone we have the German Unemployment report due for release at 7:55 UTC, followed by Eurozone Consumer Prices due at 9:00 UTC. If these reports are in line with expectations the impact on the euro will be limited.

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Copyright © All Rights Reserved 2016 Maimar-FX.

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UP Or DOWN For The USD?

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Dear Traders,

Today is going to be an historic day, as the Federal Reserve is expected to normalize monetary policy and end seven years of near-zero interest rates. The following guidance is expected to be dovish, implementing less than three increases of 0.25 percentage points in 2016. Market participants will turn their focus to the FOMC Press Conference, led by Fed Chair Janet Yellen. It might be a communicative challenge for Ms. Yellen, as the Fed neither want to cause turbulence with any hawkish comments nor want to lose their credibility. Anything can happen today, so traders should prepare for big moves in either side. If Yellen signals a clear guidance regarding the Fed’s tightening cycle, the USD could rally. However, the risk is to the downside for the greenback, as any cautious comments could trigger a sharp selloff.

The U.S. dollar advanced against its major peers going into the Fed’s decision. The British pound dropped like a stone on the Bank of England’s dovish monetary policy outlook. BoE Governor Carney said in an interview that economic conditions for a U.K. rate hike are not yet in place. The U.K. central bank has signaled it is in no rush to follow the Fed which is forecast to begin policy tightening.

The U.K. Employment Report is scheduled for release today at 9:30 GMT and the focus will be on Average Weekly Earnings. If wage growth comes in softer than expected, sterling could be vulnerable to further losses.

Eurozone Consumer Prices are due for release at 10:00 GMT, but as long as data meets expectations, the impact on the euro could be limited.

The Federal Reserve decides on monetary policy at 19:00 GMT, followed by the press conference at 19:30 GMT.

Let’s have a look at the technical side:

EUR/USD

Looking at the daily chart, we see the pair still trading within a downward channel. Depending upon the Fed speak, we see some chances that dollar bulls may drive the EUR/USD to lower levels. Lower targets could be at 1.0840 and 1.08. In case the pair falls significantly below 1.0780, the focus turns to 1.0690 and 1.0635. The support line is at 1.0450 but an unambiguously hawkish statement would be needed in order to send the pair towards such levels.

A bullish scenario could gain attraction with prices above 1.11.A sustained break above this key resistance could lead the EUR/USD towards 1.13.

Chart_EUR_USD_Daily_snapshot16.12.15

GBP/USD

We see an upward channel within a primary downward channel. While the primary trend is downwards, the pound sterling formatted a recent upward channel, which is still intact this morning. If GBP breaks below 1.5020 and further 1.50, we expect the pair to decline towards lower targets at 1.49 and 1.4850. Based on the recent upward channel, it is also possible that sterling rebounds, heading for 1.5130 and 1.5290.

Chart_GBP_USD_Daily_snapshot16.12.15

 

Everything will depend on the Fed. So,we will wait and see. We wish all traders profitable trades for today.

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Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2015 Maimar-FX.

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Obedient Euro And Stubborn Cable

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Dear Traders,

The story is always the same: Whenever the euro increased its value too rapidly only because of speculation against the U.S. dollar, someone has to talk down the currency. This is what happened yesterday. European Central Bank member Ewald Nowotny said yesterday in Warsaw, that core inflation in the euro area is “clearly missing the ECB’s target”. He added that “…in my view it is quite obvious that in the current economic situation additional sets of instruments are necessary. These include structural measures”. His comments were perceived as a signal that the ECB could step-up more stimulus in the near-term. In response to the remarks, the euro bounced off the 1.15-level and weakened significantly against the U.S. Dollar.

In the end, the euro was re-balanced, falling back into its recent trading ranges below 1.14.

Moreover, the dollar received support from better than expected U.S. Consumer Prices.

It was not a good day for sterling traders. The British pound refused to trade above 1.55 and there was neither further bullish nor fresh bearish engagement in the GBP/USD. We had therefore to struggle with stop-losses without a profitable ending.

What is important for today?

Eurozone Consumer Prices are scheduled for release at 9:00 GMT today, which could have an impact on the EUR/USD.

Furthermore, traders should have an eye on today’s U.S. data. U.S. Industrial and Manufacturing Production are due for release at 13:15 GMT, followed by Michigan Confidence at 14:00 GMT.

We wish you a profitable trading day 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.

Copyright © All Rights Reserved 2015 Maimar-FX.

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Fasten your seatbelt for another volatile week

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Dear Traders,

The recent trading days have been very profitable for traders due to high volatility amid concern over China and global uncertainty. Given this week’s major risk events, volatility is likely to persist, providing traders new chances for some profitable moves.

While the divergence in monetary policy between the European Central Bank and the Federal Reserve should determine the market’s price action, the focus will be on the U.S. Non-Farm Payrolls report on Friday. The monthly job report could be a key factor for the Fed’s decision to raise rates in September. If there is a solid job growth with payrolls exceeding 200k and average hourly earnings moving up, the Fed could hike rates on their next FOMC meeting despite global turmoil. Nonetheless, investors have reduced the probability of a Fed move next month.

An important indicator before payrolls are due for release will be the ISM Manufacturing index, scheduled for release on Tuesday.

The European Central Bank will announce its monetary policy decision on Thursday. Moreover, ECB president Mario Draghi will present the quarterly economic forecasts at the press conference. Market participants are looking for further easing to be announced before year-end.

It should be an interesting week for traders and regardless of which way the financial markets move, we will try to gain a nice profit in either direction.

The week starts off with important data releases such as Eurozone Consumer Prices at 9:00 GMT.

EUR/USD

We see the euro currently trading between 1.13 and 1.12. If the currency pair is able to break significantly above 1.13, chances are that it heads for a test of 1.14. Below 1.12 we favor a bearish stance but note that the support line could still act as a small hurdle for euro bears.

Chart_EUR_USD_Hourly_snapshot31.8.15

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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 2015 Maimar-FX.

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First Fed-move expected in September – Focus now on ECB

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Dear Traders,

While sterling bears had to struggle with multiple short-entries, making it a strenuous trading day, euro trader’s efforts paid off. The euro traded lower on stronger U.S. data and hawkish comments from Janet Yellen, providing euro bears many green pips.

Yellen is optimistic and expects U.S. growth to strengthen over the rest of 2015. She said that “every FOMC meeting is a Live meeting”, which means that the Federal Reserve could raise rates at any meeting. She stressed that the pace of policy tightening is more important than the timing of the first rate increase. In other words, a September liftoff is still possible, increasing the demand for U.S. dollar.

Greek parliament approved new austerity measures

229 members of the 300-seat parliament in Athens accepted the agreement with creditors, paving the way for more emergency funds. The focus shifts now to the European Central Bank which must weigh the level of emergency liquidity assistance (ELA) in order to help Greek banks to re-open after more than two weeks.

The ECB will also decide on monetary policy at 11:45 GMT followed by the ECB Press Conference led by Mario Draghi at 12:30 GMT. Before the ECB decision, it should be important to watch the release of Eurozone Consumer Prices at 9:00 GMT. If data fails to meet the market’s expectation, it could lead to a strong reaction in the EUR/USD.

Furthermore, Fed Chair Janet Yellen delivers her testimony at 14:00 GMT along with the release of the Philadelphia Fed survey.

Today is our last trading day before our summer holiday break.We will leave for summer holiday from tomorrow until 31/07/2015 and will resume the signal service on August 3rd.

Until then we wish you successful trading and enjoyable summer days.

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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 2015 Maimar-FX.

www.maimar.co