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Fed To Pave The Way For Renewed Dollar Strength?

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Dear Traders,

We welcome you to a new trading week which promises to be an interesting one with the Federal Reserve meeting and plenty of economic news scheduled for release throughout the entire week. While the economic calendar includes plenty of important news, such as first-quarter GDP numbers from the U.S., U.K. and the Eurozone, the main focus will be on the FOMC statement and the Fed’s plan to raise interest rates twice this year. The Fed is not expected to change monetary policy this month but market participants are eager to learn whether policy makers changed their outlook for rate increases in 2016 or maintain their hawkish policy stance.

Accordingly, the U.S. dollar will be back in focus this week and should determine the direction in both EUR/USD and GBP/USD. Apart from the FOMC meeting, traders will be watching Gross Domestic Product reports and German Unemployment numbers, scheduled for release on Thursday and Friday. The euro dropped as low as 1.1220 on Friday, confirming our presumption of renewed bearish momentum although euro bears have been fooled by the final upswing towards 1.14 before a reversal occurred. The euro would now need to break below 1.1190 in order to revive fresh bearish momentum towards 1.1150 and 1.1080. We expect the 1.1150 and 1.1080/70-levels to lend a crucial support to the EUR/USD before the focus shifts to a break of 1.1050 and 1.10. On the upside, possible resistance levels are currently seen at 1.13, 1.1335 and 1.1360.

GBP/USD

The most important piece of U.K. data will be GDP numbers due for release on Wednesday. Taking a look at the daily chart we see sterling trading within an uptrend channel approaching important resistance levels. The next crucial resistance level is at 1.45, from where sterling will have the opportunity to start a decline. If the pair is able to break above 1.4515, next resistances are seen at 1.4560 and 1.46. As we generally maintain a bearish stance in this pair, we are looking for resistance levels which could cap on gains in the British pound. A current support-zone is seen at 1.43 – 1.4285.

Chart_GBP_USD_Daily_snapshot25.4.16

This week starts off with the German IFO Index, due at 8:00 UTC today, a report which could have a short-term effect on the euro. Furthermore U.S. New Home Sales are scheduled for release at 14:00 UTC.

We wish everyone many profitable trades and a nice week.

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Subdued Market Activity

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Dear Traders,

There was only little consistency in the performance of the U.S. dollar Thursday. U.S. Consumer prices were below expectations and as long as inflation fails to pick up, there is no call for rate increases by the Federal Reserve. Rather, the Fed may tend to be even more restrained in maintaining a hawkish stance, at least until inflation accelerates.

The recent price fluctuations in both major pairs left much do be desired for day-traders and the speculative interest was relatively muted. For now, we must wait until the risk appetite of investors increases in order to profit accordingly from new opportunities in the market.

The only interesting economic data releases could be U.S. Industrial Production, due at 13:15 GMT and University of Michigan Confidence at 14:00 GMT. Whether these reports will affect the USD remains to be seen.

EUR/USD: The euro traded between 1.1295 and 1.1230. If the pair falls back below 1.1235 we expect next crucial price levels to be at 1.1195 and 1.1170. However, if the euro climbs above 1.13 a next resistance is seen at 1.1330/50.

GBP/USD: The cable currently formatted a narrow trading range between 1.4170 and 1.4130. Above 1.4170, sterling must significantly break through 1.42 in order to regain bullish strength. Below 1.4130, the focus remains on the 1.41-mark but once this level is breached to the downside, GBP could slide towards 1.4050 and 1.40.

We wish you profitable trades and a wonderful weekend.

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U.S. Data To Help The Greenback Regain Strength?

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Dear Traders,

The British pound extended its gains towards 1.4350 after CPI data came in stronger than expected, reaching the highest level since December 2014. Nonetheless, the pound was not able to maintain the high price level and finally ended the day unchanged against the U.S. dollar. Our focus now shifts to the next support level at 1.4225. In case of a break below 1.4225, lower targets are seen at 1.4207, 1.4195 and 1.4170. The market’s attention is focused on U.S. Retail Sales, scheduled for release at 12:30 GMT and as the figure is a significant market mover and expected to show a rise in March, market participants might be inclined to be bullish on USD ahead of the report.

The euro peaked at a yearly high of 1.1465 before prices quickly reversed direction and dropped back to below 1.14. The attention is now directed to the lower band of the euro’s current trading range. A break below 1.1335 could boost bearish momentum and send the euro towards 1.13 and 1.1285. Below 1.1280 we expect the euro to decline toward the 1.12-level. However, in case of renewed upward momentum, we will pay attention to current resistance levels at 1.14 and 1.1430 but bullish movements exceeding these levels could be limited until 1.1470.

The U.S. Retail Sales report will be the most important piece of economic data today and Industrial Production figures from the Eurozone (9:00 GMT) and the Fed’s Beige Book (18:00 GMT) could thus take a backseat.

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Copyright © All Rights Reserved 2016 Maimar-FX.

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Will Draghi Liberate The Euro From Its Narrow Trading Range?

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Dear Traders,

We can call the latest FOMC minutes a non-event for traders as the minutes revealed nothing fundamentally new. Several Federal Reserve policy makers argued against an April interest rate hike while some favored it. Although the minutes reflect inconsistency in terms of the timing of rate hikes, the Fed’s fundamental stance remains more hawkish than dovish. All Fed officials agreed on the relative health of the U.S. economy amidst persistent global risks. Nonetheless, several officials advocated a cautious approach as they worried that slowing global growth could hurt U.S. exports and reduce corporate investments.

While market participants see no chance of an April hike the odds increase slightly for a June hike but first top 50 percent for a rate increase in December. The market has a difficulty in pricing in rate hikes for 2016 but if future U.S. data show that the economy continues to improve, the dollar will begin to rally.

The British pound confirmed its bearish bias and showed that there is still room for a further decline ahead of the upcoming U.K. referendum in June. The currency pair tested the 1.40-support but was able to recover most of its losses towards the end of the day. For any bullish engagements the 1.4175-level should be of primary interest as a break above that level could send the pound towards 1.4230. However the trend is down and if GBP falls back below 1.4080, we could see another dip lower.

The euro is still captured between 1.1430 and 1.13 and every attempt to break significantly above 1.14 has resulted in a reversal. Once the 1.1440-level has been breached to the upside we might see an attempt to test the 1.1480/1.15 level. However, if the pair remains below 1.14 we will favor a bearish stance and focus again on a break below 1.1335 and further 1.13. A break below 1.1285 could drive the euro as low as 1.1240/20.

Chart_EUR_USD_4Hours_snapshot7.4.16

The most important risk event for the euro will be the speech by ECB President Mario Draghi in a meeting at the Council of State in Lisbon, Portugal. The speech is scheduled for around 14:00 GMT. The risk for the euro is to the downside as Draghi might take the opportunity to put pressure on the common currency.

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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.

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The Lack Of Market Moving Data Could Result In Sideways Motion

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Dear Traders,

Friday’s U.S. labor market report showed that the economy is still performing well overall. While the unemployment rate rose to 5 percent from 4.9 percent as more people entered the labor force, closely-watched average hourly earnings increased 0.3 percent. The uptick in wages and a solid 215k gain in payrolls add confidence that the U.S. economy will hold up against slowing global growth. The U.S. dollar strengthened in response to the report but gains were limited in the EUR/USD, whereas the cable came under increased pressure on the back of a weaker manufacturing PMI and amid concern that economic and political uncertainty could deter investment inflows from overseas.

As expected the short-term uptrend in the British pound has been reversed and the focus returns to the next support levels at 1.4150 and 1.4050. Short-traders efforts paid off last Friday as our short-entry proved to be profitable and reached our target of 90 pips. Before shifting our focus to next support zones at 1.4140 and 1.4120, the cable must break below 1.4170. After a break below 1.41 a next important support is seen at 1.4050. On the topside we expect upward movements to be limited until 1.4320 and 1.4345.

The euro marked a current resistance around the 1.1440-level. With a renewed break above 1.1415 we might see another test of that resistance level followed by a rise towards 1.1460 and further 1.15. Remaining below 1.14, we expect the 1.1350-level to lend a short-term support to the euro. However, below 1.1335 the focus will shift to the 1.13-barrier.

This week’s economic calendar is relatively light in terms of market moving data. Apart from the FOMC minutes on Wednesday we get some speeches from Fed Presidents throughout this week as well as a speech by ECB President Mario Draghi, scheduled for Thursday. The only important piece of U.S. data will be the ISM Non-Manufacturing index, due for release on Tuesday.

Sterling traders should pay attention to Tuesday’s PMI reports as well as Manufacturing and Industrial Production figures, due for release on Friday.

Today, the U.K. Construction PMI, scheduled for release at 8:30 GMT could have an impact on the British pound.

The FOMC minutes are not expected to be a big market mover as Fed Chair Janet Yellen has just reiterated the Fed’s approach to proceed cautiously in raising interest rates. Given that cautious outlook, the dollar could thus show further signs of weakness.

We wish all traders a good start to this week and many profitable trades.

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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.

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Have Euro And Cable Peaked?

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Dear Traders,

The U.S. dollar has depreciated against most major currency peers after the Federal Reserve lowered expectations for the path of interest rate increases in 2016. The British pound surged to a fresh one-month high after the Bank of England left interest rates unchanged. The 1.45- level will now be crucial for the currency pair. Once GBP breaks above 1.4515 we see next resistances at 1.4545 and 1.4580. On the bottom side there could be a current support zone around the 1.43-level.

EUR/USD

The euro climbed above 1.13 and marked a new high at 1.1342. The big questions now is whether the euro will extend its gains even further but looking at the four-hour chart we see a major resistance at 1.1370/75 that could limit gains in the pair. However, in case of a break above 1.14 the next important resistance level is seen at 1.15. On the bottom side, we will turn our focus to a downside break of the 1.1275-level which could increase bearish momentum towards 1.1240 and 1.1160.

Chart_EUR_USD_4Hours_snapshot18.3.16

We had a successful week and therefore recommend traders not to reinvest their weekly profits and even consider a trading break today. So we will stay risk-averse and save our profits.

Michigan Confidence due for release at 14:00 GMT is the only important piece of U.S. data today.

We wish everyone a beautiful weekend!

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Copyright © All Rights Reserved 2016 Maimar-FX.

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Dollar Weakened On Dovish Fed Statement

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Dear Traders,

The FOMC statement came in slightly more dovish than markets had expected, predicting two quarter-point rate increases by the end of this year. The Federal Reserve’s stance was generally friendly and while policy makers are still looking for two rate hikes in 2016 the statement pointed to risks to global economic growth, citing the impact from global risks on the U.S. economy. The market’s reaction to the Fed’s statement suggests that expectations were somewhat more bullish, focusing on the “dot-chart” of interest-rate forecasts which finally represented only two rate hikes instead of the expected three hikes this year. With regard to the so-called “dot plot” projections which were recently of considerable importance, Yellen tried to downplay the significance of those forecasts saying that they are neither a present plan nor a commitment.

On the bottom line, the Fed maintains its hawkish monetary policy stance even if the pace of further tightening slightly slowed. The probability of a rate hike in April is currently at 15 percent whereas economists see a 42 percent-chance of a rate increase in June.

Both euro and British pound benefitted from the dovish statement and rose towards next resistance levels. The EUR/USD bounced back from the next resistance level around 1.1250 but was able to remain above 1.12. For euro traders it was yet another day of huge profits and our monthly performance increased by 100 pips to 304 pips profit. Technically we see a next hurdle at 1.1280 before heading towards a test of 1.13 but traders should bear in mind that the euro is generally not the most attractive currency and can quickly give up on its gains as soon as risk appetite declines. Euro bears should wait for a break of 1.1050 and 1.10.

The British pound climbed towards 1.43 on the back of broad-based dollar weakness. Whether the pair will be able to break above 1.43 remains to be seen. However, concerning the technical picture the bias remains bearish and we will focus on current resistance from where the pound may bounce back.

The Bank of England will announce its monetary policy statement including the rate decision today at 12:00 GMT but no changes are expected. Let us have a look at the technical outlook.

GBP/USD

Looking at the daily chart we see that the overall trend is bearish and that the recent upward move can yet be considered as correction within a downward trend. With a break above 1.4310 next resistances are seen at 1.4375 and 1.44. We expect the 1.4515- 1.4580 area to be a key resistance for the currency pair. Consequently we favor the downward trend sending sterling back towards 1.4040 and 1.40.

Chart_GBP_USD_Daily_snapshot17.3.16

Further important economic data for today:

10:00 EUR Eurozone Consumer Prices

12:00 UK Bank of England Rate Decision

12:30 USA Philly Fed Index

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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.

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Possible Pullbacks In The Greenback – Focus On U.S. Retail Sales

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Dear Traders,

The U.S. dollar was supported by speculation about the trajectory of interest rates before the Fed announcement tomorrow. While a rate hike this month is very unlikely ,chances for an increase later this year have increased. The probability of a rate hike in June is now about 50 percent while analysts see a 63 percent chance of an increase by December.

The euro weakened against the greenback but was able to remain above the 1.1070-50 support area. We will focus on a break of 1.1070/50 in order to sell the pair EUR/USD towards lower levels at 1.10 and 1.0910. On the upside gains could be limited until 1.1160 and 1.1220. With only one day to go before the FOMC announcement the dollar could be vulnerable to pullbacks as U.S. Retail Sales scheduled for release at 12:30 GMT are forecast to show a marked decline in February.  

The pound sterling returned to the slippery slope, falling back below 1.43. As stated in yesterday’s analysis we see a current support at 1.4250/40. Once that support level is significantly breached to the downside we will shift our focus towards lower targets at 1.4170 and 1.4120. Current resistances are seen at 1.4310 and 1.4360.

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 2016 Maimar-FX.

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Fed May Shift Towards Slower Pace Of Interest-Rate Hikes

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Dear Traders,

In the end the market reaction to the FOMC statement was muted and has left much do be desired for currency traders. While the statement was a communications challenge for the Federal Reserve it came in as balanced as possible. Particularly noteworthy is the shift into a wait-and-see mode, which signals a less-hawkish forward guidance. While an interest rate hike at the next FOMC meeting in March is less likely Fed policy makers have left the door open for a March. Officials said that rate increases will depend on how the U.S. economy performs and said that they were “closely monitoring global and financial developments”.

In a nutshell, the Fed may be inclined to move forward at a slower pace of interest-rate hikes but the main focus remains on labor market and inflation data.

The EUR/USD did not show much movement yesterday, trading firmly around the 1.09-mark. For the time being, we expect swings to be muted unless the euro breaks above 1.0960 or vice versa, breaks below 1.08 and 1.0770. Upwards movements could be capped at 1.0925 and 1.0955 while downward swings may be limited until 1.0870 and 1.0820 in the short-term.

The German Consumer Price Index is scheduled for release at 13:00 GMT, a report which could affect the price action in the EUR/USD.

The British pound continued to trade lower against the greenback. We generally favor a bearish stance in GBP/USD and our focus is on the 1.42-barrier. A renewed test of that support level may reinvigorate fresh bearish momentum towards 1.4170, 1.4150 and 1.4120. Current resistance levels are seen at 1.4285, 1.4308 and 1.4340.

U.K. GDP numbers are due for release at 9:30 GMT and if GDP is lower than expected, sterling could easily slide below 1.42.

Important U.S. data are scheduled for release at 13:30 GMT with U.S. Durable Goods Orders, followed by Pending Home Sales at 15:00 GMT.

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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

 

 

 

GBP/USD: Steeper Decline Or Short Squeeze?

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Dear Traders,

Today will be an important day for the British pound and sterling traders seem to be waiting in their starting blocks. The Bank of England will announce its policy decision and release the minutes of its meeting at 12:00 GMT. While the central bank is expected to keep monetary policy unchanged, traders and analysts pushed back their expectations of a BoE liftoff. The market is currently pricing in a very dovish BoE tightening cycle, not expecting the central bank to raise rates until well into 2017. These speculations are manifested in the pound’s sustained downtrend. But we have learned from past experience, that any surprises can quickly alter the market’s sentiment which is why investors were caught on the wrong foot sometimes. Some currency traders even stress the idea that sterling’s’ weakness looks considerably overdone. It is worth noting that the depreciation of the British pound should suit policy makers and could have a positive impact on inflation. Any shifts away from the central bank’s dovish monetary policy stance could trigger a strong rebound in the GBP/USD.

However, following the motto “the trend is your friend”, traders should, for the time being, prefer to sell any rallies towards lower targets.

GBP/USD

Taking a look at the weekly chart, it is tempting to focus on a steeper decline, targeting at the 1.40-barrier. But first, we will pay attention to the 1.43-level and GBP will need to break significantly below that level in order to reveal fresh bearish momentum towards the next support at 1.4230. Current resistances are seen at 1.4530, 1.46 and 1.4640.

Chart_GBP_USD_Weekly_snapshot14.1.16

The euro bounce back from its 1.08-support and started a small relief rally against the U.S. dollar. The next hurdle will be at 1.09 and it remains to be seen whether the currency pair will be able to extend gains towards 1.0940 and 1.0980. There are no major important economic reports due for release today. The German GDP report, due for release at 9:00 GMT, may have some impact on the euro. However, the euro remains to trade between 1.10 and 1.08 and as long as there is no breakout above or below these zones, traders will have to wait and focus on the current trading range.

Fed President Bullard is scheduled to speak at 13:30 GMT. At the same time, U.S. Continuing and Initial Jobless Claims are due for release.

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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