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Fed Holds Dovish Line, Focus Shifts To BoE

The Federal Reserve held its dovish line and continued to project near-zero interest rates at least through 2023 while the central bank upgraded its forecasts for economic growth and the labor market. The dot plot showed that seven of 18 Fed officials predicted higher rates by the end of 2023 compared with five of 17 at the December meeting which was a slightly larger group of ‘hawkish dots’.

As for the withdrawal of the ultra-easy monetary policy, Fed Chair Jerome Powell said in a virtual press conference that the time to talk about reducing the Fed’s asset purchases was “not yet”.

While prospects of stronger growth have ignited some concern about higher inflation among investors the Fed expects that a bump in inflation this year will be short-lived.

In a nutshell, the market did not get such a hawkish outcome leading to a shift in the current risk sentiment. Instead, the Fed’s projected policy path and its upgrade of the economic outlook provide a positive backdrop for risk assets, which is why the anti-risk dollar weakened.

Today we will have the Bank of England rate decision at 12:00 UTC. The BoE is expected to leave monetary policy unchanged but volatility could pick up around the time of the decision.

GBP/USD: The technical picture has not materially changed. We will pay attention to price breakouts either above 1.4020 or below 1.3850 and further 1.3780.

DAX: The index hit our bullish target of 14720. If there is no break above 14760, the DAX could be due to a correction now. A higher support is seen at around 14500.

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Will The Pound Receive A Boost From U.K. GDP Data?

Dear Traders,

The U.S. dollar appreciated against its major counterparts in the aftermath of the Fed’s minutes. The tone of the FOMC minutes was passively hawkish while the transcript showed increasing confidence that economic growth will pick up steam despite inflation concerns.  Market participants are now pricing in the possibility of a tighter Fed rate hike path with a current 90 percent chance of a next rate hike in March and a 60 percent chance of three rate hikes through the year. The possibility of even four rate hikes in 2018 is currently over 20 percent. After initial teething problems, the dollar was finally able to end the trading day in positive territory against the euro and pound.

The British pound was volatile as expected but again failed to overcome the 1.40-barrier. Technically speaking, however, we got the price breakouts we were looking for and given the fact that 1.40 remained unbroken we got a dip towards 1.39. A next lower target could now be at around 1.3850/30.

Today we have the U.K. GDP scheduled for release at 9:30 UTC and this report could possibly provide a boost to the weakening pound.

EUR/USD: The euro traded with a downward tilt on the back of a strengthening dollar but from a technical perspective, we still see this pair confined to a sideways trading range between 1.2550 and 1.22. Only if the euro breaks significantly below 1.22 the short-term outlook will shift in favor of the bears.

The next top event risk is the minutes from the European Central Bank’s January meeting which are due at 12:30 UTC. However, unlike the January release, which covered the December meeting which had a new set of Staff Economic Projections revealed, the coming minutes will have much less hard information to discuss. Thus, it could be a non-event for euro traders.

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GBP/USD Trends Upwards While EUR/USD Remains Stuck In Consolidation Phase

Dear Traders,

Monday was characterized by a weakening U.S. dollar which suffered a slight setback against its counterparts. The recent weakness can be attributed to uncertainty over the future monetary policy stance of the Federal Reserve. New York Fed President William Dudley plans to retire next year and with Dudley’s planned exit, the unfilled board seats create uncertainty over the Fed’s approach to policy in the coming year.

The EUR/USD extended its consolidative mode into the new week and traders are still struggling with false breakouts and limited price swings. ECB President Mario Draghi is scheduled to speak at the ECB Forum on Banking Supervision today at 9:00 UTC but these opening remarks might be not enough to free the euro from its lethargy. Technically speaking, we now wait for a break below 1.1570 to sell euros whereas on the topside, we expect potential gains to be limited until 1.1660 and 1.17 amidst subdued price action.

The best performer was the GBP/USD which rose towards 1.3180, providing buyers a good profit yesterday. The latest upward move is not surprising given the fact that the pound continues to oscillate within its range between 1.3340 and 1.30.

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Copyright © All Rights Reserved 2017 Maimar-FX.

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Yen Serves As Safe Haven On Korea Worry; Euro And Pound Unmoved

Dear Traders,

Nothing much has changed in the EUR/USD and GBP/USD while a holiday trade was clearly in effect on Tuesday. Other currencies, such as the yen were sought as a safer haven after North Korea said Tuesday it successfully test-fired an intercontinental ballistic missile, escalating tensions between North Korea and the U.S.

The political turmoil comes ahead of the G-20 summit in Hamburg this weekend. U.S. President Trump will attend the G-20 summit and is expected to hold his first meeting with Putin.

Today, market participants will focus on the Federal Reserve and its minutes from the latest FOMC meeting. Investors are looking for clues on the path for interest rates ahead of the U.S. jobs report due on Friday. With a number of market participants doubting the Fed rate hike plans, the FOMC meeting minutes could be an interesting event for traders.

The FOMC minutes are scheduled for release at 18:00 UTC.

The EUR/USD found some near-term support at 1.1335 but we expect a stronger support to be at 1.13. If the euro falls below 1.1280 we could see a slide towards 1.1220. Euro bulls should however focus on a renewed break above 1.14 in order to buy euros towards 1.15.

The GBP/USD refrained from dipping significantly below 1.29, at least for the time being. In order to sell pounds we will keep an eye on prices below 1.2880. Lower supports are seen at 1.2850 and 1.28. Buyers of the GBP/USD should either take advantage of corrections towards 1.2885 and 1.28 or wait for a breakout above 1.3030.

The U.K. PMI report is scheduled for release at 8:30 UTC and could have a short-term impact on the pound.

We wish you good trades for today!

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Copyright © All Rights Reserved 2017 Maimar-FX.

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Euro And Cable Remain Sideways

Dear Traders,

The U.S. dollar advanced against its major peers Monday after hawkish comments from Federal Reserve President Dudley provided some relief for dollar bulls. The EUR/USD fell to a low of 1.1140 but refrained from testing the lower 1.11-support level, at least for the time being. Unfortunately, we had to record one false breakout with our long entry at 1.1210 before the downward movement has finally proved profitable. Given the current low-volatility environment, we expect the EUR/USD to remain confined to a range between 1.1230 and 1.11. If the pair dips below 1.11 we could see further losses towards 1.1030. A sustained break above 1.12, however, could send the pair higher towards 1.1280.

The GBP/USD traded sideways while a break above 1.2810 proved only short-lived. Sterling traders will watch Bank of England governor Carney’s speech today at 7:30 UTC. If Carney touches on monetary policy the pound could be vulnerable to some volatile swings. We bear in mind that U.K. inflation has increased above the BoE’s 2 percent goal putting pressure on policymakers to reduce some of the central bank’s stimulus. If Carney begins to express a hawkish stance the pound could rise. Technically we are now waiting for price breakouts either above 1.2820 or below 1.2720.

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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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Euro And Cable Remain Above Crucial Support Levels

Dear Traders,

The FOMC minutes failed to provide fresh hawkish evidence dollar bulls had hoped for and at the end of the trading day, there was nothing to gain. While the minutes confirmed the likelihood of a June rate hike, they have been casting doubts over the future trajectory for rate increases. Fed policy makers stated that they wanted more evidence that the recent economic slowdown is in fact transitory. Consequently, these statements were interpreted as slightly more dovish due to the lack of certainty to the policy pace. Following the disappointing minutes, the U.S. dollar gave up previous gains and pushed the euro and pound again higher in return.

The EUR/USD finally rose towards its recent resistance area around 1.1260. Once the 1.1270-level is broken to the upside the euro could climb towards 1.13 and 1.1350. On the bottom side, the 1.1160-support remains intact. There are no major economic reports scheduled for release today, so trading might be quiet.

The GBP/USD traded stable above 1.29 and every attempt to sell the pair below 1.2950 proved unsuccessful. Above 1.30 the pound may tend towards a renewed test of the 1.3040-resistance. A break of that level could result in a rise towards 1.3080. U.K. GDP figures are due for release at 8:30 UTC and if there is a surprise, the pound could react with a volatile price action.

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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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GBP/USD: Upcoming Breakout?

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.

Daily Forex 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