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EUR/USD And GBP/USD: Further Losses Ahead?

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Welcome to a new trading week.

Last week ended with a trend reversal in many currency pairs as market participants rushed to reprice the U.S. dollar’s low price level following the big nonfarm payrolls number. The NFP report last Friday came in as a big surprise with 517k new jobs last month. This rosy labor market data forced the market to curb its push against the Federal Reserve’s credibility, pushing the greenback higher.

The dust settled after last week’s high impact data releases and given the quiet economic outlook this week, we may see some follow through of the fresh trends.

EUR/USD – Entering the support area

After the euro has tested the upper ascending trendline at 1.1030, euro bulls were not able to hold that high level and fell victim to a fresh round of dollar strength. It will now be interesting whether the support area between 1.08 and 1.07 holds. From here we may see another bullish attempt to push to the euro back towards 1.09. However, given the reversal’s strength we prepare for further losses and keep tabs on a potential break below 1.07.

GBP/USD – Double-top pattern following the price cap at 1.2450?

For the double-top pattern to be played out we would need to see a significant break below 1.1840 and further 1.1750. A lower target could then be at around 1.15.

 

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Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

All Eyes On The Fed

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Today, the Federal Reserve’s first policy announcement of 2023 is due (19:00 UTC).

The markets are confident that the Fed will slow the pace of tightening from a 50bp increase to a 25bp rate hike. Given the market’s certitude, there is room for disappointment and thus for volatility in case of a repricing. The focus will also be on the duration of the rate hike regime. The market expects only one more rate hike in March, which would lift the terminal rate to a range of 4.75-5.00 percent. The Fed itself, however, projected a terminal rate range of 5.00-5.25 percent. Volatility lies thus within this disagreement.

Let’s be surprised. We wish you good trades for today!

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We wish you good trades!

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Price Action Leaves Much To Be Desired

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This was definitely not the volatility what would be expected from the last large risk event of the year. The price action in the U.S. dollar was noticeably more constrained and there was no traction following the event.

Overall, yesterday’s outcome was in-line with expectations, even though Fed chair Jerome Powell warned the Fed is not close to ending its anti-inflation campaign of rate hikes while saying “we still have some ways o go”. In terms of terminal rates, policymakers projected rates would end next year at 5.1 percent before being cut to 4.1 percent in 2024 (see dot plot). Even though these are higher levels than previously indicated, the market didn’t see reason for a repricing.

The focus now shifts to the Bank of England and European Central bank decisions.

Both central banks are expected to announce a 50bp rate hike today. The BoE is expected to have further to run before hitting its own terminal in 2023 compared to its US counterpart while as for the ECB, there seems more potential for further tightening into 2023. with recession risks remarkably high for Europe and the rest of the world combatting inflation more aggressively, the Eurozone’s policy authority may find it reasonable to tapering its efforts with a lower terminal rate.

EUR/USD: The euro finds itself within the resistance zone between 1.06 and 1.08. The technical outlook has not noticeably changed which is why we still focus on price breakouts either above 1.08 or below 1.0350.

GBP/USD: The cable’s recent upward channel is still intact, showing a price range between 1.25 and 1.2150.

Given the December liquidity drain around the holiday, we do not expect to see larger movements after traction was all but absent even yesterday.

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Dovish Tilt

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The U.S. dollar sold-off after Federal Reserve Chair Jerome Powell signaled the central bank will slow the pace of interest rate increases this month. Following four straight 75bp rate hikes, the Fed is expected to raise rates by 50bp when they meet December 13-14.

Even if Powell reiterated that rates will be going higher, the slowdown in the Fed’s rate hike path was interpreted as a dovish tilt by markets.

Regarding rate hikes, “we think that slowing down at this point is a good way to balance the risks” to the economy from inflation and slower growth, Powell said. As for the high inflation Powell added that “despite the tighter policy and slower growth over the past year, we have not seen clear progress on slowing inflation.”

Today, traders will pay attention to the PCE index due for release at 13:30 UTC.

From a technical view it seems as if there is room for another upward movement in both EUR/USD and GBP/USD.

EUR/USD: Higher targets are seen at 1.05 and 1.0580 while 1.03 could act as a support.

GBP/USD: Above 1.19, we favor the uptrend with a next target at 1.2250.

Our trading ideas for today 1/12/22:

EUR/USD

Long @ 1.0475

Short @ 1.0440*

GBP/USD

Long @ 1.2125

Short @ 1.2085*

DAX® (GER40)

Long @ 14580

Short @ 14470

Settings for all trades today: Entries from 8:00 am UTC, SL 25, TP 40

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2022 MaiMarFX.

www.maimar.co

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Here Is When The Fed Could Signal Tapering – But Not Today

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The FX market appeared to be taking a breather at the beginning of the week with market participants cautious ahead of today’s Federal Reserve policy decision. Consequently, there was nothing to gain for FX traders but this could possibly change today with traders bracing for higher volatility around the Fed’s statement.

The Federal Reserve is expected to announce it will begin trimming its monthly asset purchases before the end of the year but it will leave asset purchases untouched for several more months.

Nonetheless, the most likely scenario is that today’s FOMC decision will be an uneventful one since Fed President Jerome Powell is unlikely to hint at the timeline for tapering at this meeting, given that U.S. economic data has only just begun to pick up momentum and the U.S. Treasury market has calmed. But as the economic recovery continues, the Fed could soon send a signal.

In the unlikely event of a hawkish signal during Powell’s press conference or if he provides any clues about the tapering timeline, we will get a strong market reaction with the U.S. dollar rising. However, the Fed is not expected to follow the Bank of Canada that surprised the market with a hawkish tilt last week.

As for the tapering, most economists expect a taper to happen in the first quarter of next year with the Fed starting to signal tapering from the July semi-annual testimony.

EUR/USD: The pair remained in a tight trading range, increasing the chances for price breakouts to either side. For bullish momentum to accelerate we need to see a renewed break above 1.2115 or on the downside, a test of the current support zones at 1.20 or 1.19. If the pair remains however unable to overcome the 1.2110-barrier, chances are in favor of the bears with the focus being on the 1.1950-1.19-support zone.

GBP/USD: The cable failed to gather momentum and remained in a narrow sideways trading range between 1.3930 and 1.3850. If the pair falls below 1.3850, we will focus on a lower target at 1.38. A break below 1.3770 could even open the door to a deeper correction towards 1.3670. Sterling bulls on the other side, will have to wait for a significant break above 1.3930 and further 1.3960 in order to expect a higher target at 1.4070.

Good trades everyone!

 

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Will The Fed Signal Faster Rate Hikes?

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The U.S. dollar was mostly stronger versus other peers ahead of the Federal Reserve policy statement. The global recovery gains traction and investors eager to see whether the Fed will come up with a new guidance on interest rates and upbeat economic projections. Fed Chair Jerome Powell has promised to maintain an accommodative monetary policy but the central bank’s quarterly economic forecasts today will show how many of the Fed members share his commitment. Alongside their expected policy path, the Fed will also release its first dot-plot of the year, offering their point of view on expected interest rates in the future.

The main focus will be on any unexpected findings on the dot-plot such as one rate hike in 2023. If the Fed signals that rates could rise earlier than previously forecasts, the U.S. dollar will rally. If there is however no change of the Fed’s guidance on interest rates or asset purchases, the dollar could give up some of its recent gains.

Last but not least we will have the Fed’s press conference where Powell may push back against the rise in yields and may also downplays the significance of the dot-plot projections.

Regardless of the outcome, traders will brace for higher volatility and larger market moves and we hope that this risk-event will not be as disappointing for traders as the latest ECB decision where the market’s reaction was muted.

The FOMC statement is scheduled for 18:00 UTC, followed by the Fed’s press conference 30 minutes later.

EUR/USD: We focus on a price range between 1.2050 and 1.18. Above 1.2060, a higher target is seen at 1.2180. Below 1.1750 the euro may extend its slide towards a lower target at 1.16.

GBP/USD: The cable traded recently sideways between 1.40 and 1.38. A renewed break above 1.4010 could push the pair higher towards 1.42 and 1.4340. On the bottom side, we will pay attention to a breakout below 1.3770 that could lead to further losses towards 1.36 and 1.35.

Good trades!

 

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Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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Federal Reserve Is Front And Center This Week

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We wish everyone a good start to the new week.

This week will be dominated by the Federal Reserve meeting and the Fed’s statement on Wednesday. Traders will pay attention to updated economic projections and potential comments on rising Treasury yields. While no change in the Fed’s rate-hike timing is expected, economists forecast that a strong recovery from the pandemic recession is likely to prompt the Fed to lift interest rates in 2023 but they also expect the central bank’s own forecasts will show that rates will stay on hold near zero throughout the that year.

President Joe Biden’s massive fiscal stimulus, monetary support and accelerating vaccinations are boosting the economic outlook and could prompt the Fed to raise its estimates of 2021 growth in its first quarterly economic forecasts of the year. As for the sharp rise in U.S. Treasury yields in the past month Fed Chair Jerome Powell has attributed the increase to improving prospects and said it doesn’t appear to be troubling.

In a nutshell, the Fed will remain in a wait-and-see mode with no major change in the statement. The focus will be on economic projections and on the Fed’s latest dot plot.

On Thursday we will have the Bank of England rate decision and while also the BoE is expected to leave monetary policy unchanged, the BoE’s decision will take a backseat to the Fed’s decision. The BoE is unlikely to offer a surprise but the monetary policy committee’s view on inflation or any commentary regarding the recent rally in global bond yields will be of interest for traders.

GBP/USD

The pound was trading on a softer note last Friday, succumbing to the greenback’s strength. As long as 1.40 remains a crucial hurdle for sterling bulls we expect bearish momentum to accelerate after a break below 1.3860. A lower support is seen at around 1.3780 and if that level breaks, we expect further losses towards 1.36.

EUR/USD: For the time being, we will focus on a trading range between 1.2050 and 1.1820.

DAX

The index touched a record high at 14607 and more gains could be in play, provided that the index holds above 14500. We see a next higher target at 14720 whereas on the downside, we will pay attention to breakouts below 14500 and 14450.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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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.

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts http://www.maimar.co/category/daily-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.

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All Eyes On U.S. Payroll Report

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Dear Traders,

The biggest story in the markets yesterday was the British pound which dropped like a stone after the Bank of England unleashed a stimulus package to combat the post-Brexit fallout. All MPC policy makers have unanimously decided to cut interest rates for the first time in seven years while further rate cuts may follow later this year if the economic outlook proves to remain grim. BoE Governor Carney said in his statement that the central bank “took these steps because the economic has changed markedly”, declaring that all elements of the stimulus can be taken further, including another rate cut. Furthermore, the BoE cut its growth forecast for 2017 to 0.8 percent from 2.3 percent (the most ever) and lowered its 2018 predictions. All this was enough for sterling bears to drive the pound lower towards 1.31. A next support area could now be at 1.3085-1.3065. Once the 1.3060-level gives way to the downward pressure, we could see sterling falling towards 1.30.

The euro remained largely unchanged against the U.S. dollar and traded comfortably between 1.1150 and 1.1115. We were a bit unlucky with our short-entry at the lower bound of the euro’s trading range which was exactly triggered before the price reversed. We now focus on a break below 1.11 before shifting the attention to the 1.1050-support. Euro bears should rather wait for prices below 1.1050 in order to sell the euro towards lower levels. However, above 1.1190 the euro may head for another test of 1.1230. A current resistance is seen at 1.1275.

Chart_EUR_USD_4Hours_snapshot5.8.16

Today it’s payrolls-day again and all eyes will be on the highly anticipated U.S. labor market report at 12:30 UTC. The monthly jobs report will provide more information on whether the Federal Reserve can raise interest rates in 2016. The report is expected to show a slower job growth in July after the strong increase in June but this does not necessarily mean that dollar bulls have no chance this month. Market participants will also pay close attention to the unemployment rate and wage growth figures and if these headlines come in with a positive surprise the dollar will rally. In case of any disappointments however, the greenback might be vulnerable to losses.

We wish good trades and a beautiful weekend.

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts http://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service http://www.maimar.co/signals/

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

 

 

 

U.S. Dollar Regains Strength, Pulling Euro And Sterling Down

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Dear Traders,

The U.S. dollar strengthened against most of its major peers Tuesday as economic data in the U.S. signal expansion. With the latest data showing that the U.S. economy is picking up steam overall, the greenback enjoys stronger demand among investors whereas other currencies are tumbling. This trend could continue as the Federal Reserve is the only central bank which is on track to raise interest rates while other central banks are ready to ease monetary policy to steer economic growth.

On the back of renewed dollar strength the euro was forced to test the 1.10-support, which still remains intact this morning. With no major economic reports scheduled for release today, the dollar might have difficulty pulling the euro below this important support level. In addition, we see a next lower barrier around the 1.0970-level which may lend an additional support to the euro. Today’s price action could thus be oriented towards the upper and lower bound of the current trend channel. Resistances are currently seen at 1.1080 and 1.1130, whereas a crucial support could be at 1.0970.

Chart_EUR_USD_4Hours_snapshot20.7.16

The British pound broke through 1.3120 and slid towards 1.3060. Unfortunately, we had two stop-losses with yesterday’s short-entry before the pound went down, which is why we missed out on the final downward move.We are now looking for a test of 1.30 before we expect major pullbacks to occur. A current resistance is seen at 1.3150 and if sterling is able to climb above that level it could head for a renewed test of 1.32. However, given the recent dollar strength, gains might be limited in the GBP/USD.

Sterling traders should keep an eye on the U.K. labor market report, scheduled for release at 8:30 UTC. The focus will be on Average Earnings and if wages exceed expectations, the pound could be vulnerable to some upswings within its downward trend.

Daily Forex signals:

Additional daily and long-term entries are available for subscribers.

View our daily signal alerts http://www.maimar.co/category/daily-signals/

Subscribe to our daily signal service http://www.maimar.co/signals/

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