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British Pound Reacts With High Volatility To Opinion Polls

Dear Traders,

The pound sterling is reacting with high volatility to fresh opinion polls ahead of the June 8 U.K. general election. After rallying towards 1.29, the pound dropped sharply as a poll showed Theresa May’s Conservative Party may miss a majority. With sterling’s direction being determined by opinion polls, the technical outlook currently seems to recede into the background. For sterling traders, Tuesday has been a profitable trading day with our long entry hitting the profit target exactly before the pound reversed towards lower levels. If the GBP/USD drops below 1.2790 there could be a next barrier at 1.2750 which needs to be significantly broken in order to spark fresh bearish momentum.  On the topside, we still expect a crucial resistance at 1.2980.

For euro traders, the upward trend proved successful with the euro testing the 1.12-mark. From a technical perspective, the euro seems to be formatting a downward channel with the lower barrier currently coming in around 1.11 while the upper barrier, which is currently seen at 1.12, may limit near-term gains in the EUR/USD.

The euro-area’s preliminary headline inflation rate will be released today at 9:00 UTC and the euro might come under some selling pressure ahead of this report as economists forecast a slightly lower reading.

From the U.S., we have Pending Home Sales at 14:00 UTC and the Fed’s Beige Book at 18:00 UTC scheduled for release.

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Euro Trends Downwards While Pound Remains Stable

Dear Traders,

The euro depreciated against the U.S. dollar and fell below 1.07 while the British pound has shrugged off the U.K.’s process of leaving the European Union. One reason for the pound’s resilience is the fact that an expected slowdown of the U.K. economy has not yet materialized. Inflation seems to be accelerating, paving the way for higher interest rates while investors expect the U.K.’s negotiation talks with the EU to be constructive.

The pound tested the 1.25-level but for the time being, it was unable to hold above that level. A break above 1.2530 could encourage sterling bulls to push the pound for a test of 1.2560. Above 1.26 however, we expect sterling to head for a test of 1.27. A current support is seen at 1.2425. Sterling traders will watch the U.K. GDP report scheduled for release at 8:30 UTC.

The euro knew only one direction on Thursday: downwards. The single currency came under pressure following a report that European Central Bank officials said they are cautious about changing their monetary policy any time soon. Given that dovish message and the slowdown in German consumer prices, there was no reason for euro bulls to justify higher price levels. The EUR/USD could even extend its losses provided that Eurozone CPI data, due for release at 9:00 UTC, comes in weaker-than-expected. Euro traders should also keep an eye on the German Employment report scheduled for release at 7:55 UTC. In short-term time frames we expected the currency pair to trade between 1.06 and 1.0715.

We wish you a wonderful weekend.

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2017 Maimar-FX.

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