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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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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!

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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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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.

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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

 

 

 

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.

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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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Pound In Free Fall Amidst Uncertainty

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Dear Traders,

The free fall of the British pound continues with the U.K. economy facing difficult times in the aftermath of Britain’s vote to leave the EU-bloc. The huge sell-off in the pound was the biggest story in the market yesterday and it continued even during the Asian trading session, sending the pound to a record low of 1.2797. The effects of Brexit on the U.K. economy and its confidence are becoming more and more evident. Meanwhile, Bank of England Governor Mark Carney outlined more tools to contain the Brexit fallout, pledging to implement any other measures needed. Carney warned of prospects for “a material slowing of the economy” amid concern over the health of the global economy.Given the high level of uncertainty in the U.K. commercial property market, three of the U.K.’s largest real estate funds have frozen almost 9.1 billion pounds of assets to halt Brexit retreat. All in all, the pound’s future does not look bright and traders should expect further losses given the uncertain environment. Dark clouds are gathering on Britain’s horizon and this is only the beginning.

Given the pound’s sharp depreciation, investors seek for safer assets, flocking into the U.S. dollar. The euro dropped towards 1.1035 as a result of that risk aversion. A next important support is seen around the 1.0990-level. Below 1.0980, we expect the euro to fall towards 1.0940 and 1.0870. On the upper side, the euro rejected the 1.1186-level, from where it went into a tailspin. With the 1.12-resistance being intact for the time being, euro bulls should wait for a break above 1.1215/20 in order to buy euros towards higher targets.

Market participants pushed back their bets for a Federal Reserve rate hike this year, even though the Fed is likely to stay on track to raise interest rates if growth and inflation expectations are met.

The Fed releases minutes from its June 14-15 FOMC meeting, but the FOMC minutes are expected to take a backseat to heightened concerns about global growth and risk aversion.

The ISM Non-Manufacturing Index, scheduled for release at 14:00 UTC will be watched closely whereby a better figure could add further strength to the greenback.

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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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Uncertainties Before U.K. Vote Result In Massive Widening Of Volatility

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Dear Traders,

The biggest story was the sharp rise of the British pound early this morning, which once again demonstrates the enormous potential despite uncertainties surrounding the U.K. referendum. Only this morning we saw a higher likelihood for upcoming bullish momentum if the cable was able to break above 1.4480 but the pound came up first with its strong upward move before we published today’s analysis. The British pound has soared within seconds by 180 pips towards a high of 1.4661 but was not able to hold onto its huge gains. The currency pair remains vulnerable to high-volatile swings and traders should be prepared for huge breakouts at any time.

Yellen’s speech had only little impact on the market’s sentiment as she avoided addressing the timing of another interest-rate increase. While her comments were less hawkish this time, omitting a previous phrase that an increase would likely be “appropriate in the coming months”, the Fed is still on track to raise rates this year. Yellen described the latest labor-market report as “disappointing”, but also pointed to the increase in average hourly earnings, which is seen as one of the few encouraging elements of the report.

In a nutshell, a June move is off the table and the Federal Open Market committee is now expected to keep rates on hold when they meet next week. Also, the chances of a July hike have fallen substantially after the latest labor-market weakness and Yellen’s speech. The next major risk event will now be the U.K. referendum and investors are likely to remain risk-averse in the run-up to the important vote, a fact that could depress the market environment in the near-term.

The U.S. dollar was little changed yesterday and this could possibly last for some time as there will be no major economic reports this week, which could help determine the market’s direction. Traders should therefore not expect too much, take profits even at smaller targets and do not invest too much.

The only second-tier report from the Eurozone today will be revisions to the first-quarter GDP, due at 9:00 UTC. This report is not expected to have a major impact on the euro. The EUR/USD marked a recent trading range between 1.1392 and 1.1325. Based on that range we will focus on price swings above and below these bounds, while we expect the 1.1409-level to act as a short-term resistance. Above 1.1415 a next bullish target could be at 1.1445. However, a break below 1.1325 could drive the euro towards 1.1290 and 1.1260.

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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

 

 

 

U.S. Dollar Suffers Losses After Yellen Sends Dovish Message

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Dear Traders,

While dollar bulls may have hoped for salvation before Yellen’s speech in New York, the chair indoctrinated the market with a dovish message and stressed the need for a cautious approach. Yellen stated detailed conditions investors need to watch for future rate hikes. These conditions contain the stabilization of commodity prices and foreign economies. Furthermore she stressed the importance of a strong dollar, which would depress inflation and exports if it appreciates further.

The most dovish line was when Yellen said that the committee “would still have considerable scope” to ease policy if needed, smashing down the latest hawkish comments from Fed officials pointing to the possibility of a rate hike in April. The Fed chair said it was appropriate to “proceed cautiously” and reiterated that the Fed is not following a pre-set course of rate hikes, but will act when conditions are right.

On the bottom line we can say that there is not much hope for the U.S. dollar to show signs of recovery in the near-term. Yellen’s dovish message diminished rate hike expectations for 2016, changing the odds in favor of a December rate hike or even later.

As expected in yesterday’s analysis, the euro headed for a test of 1.13 after breaking above 1.1260. We expect the euro to continue its bullish bias and focus on a break above 1.13 and further 1.1340. If the euro is able to climb above the February high of 1.1376 we see a next resistance at 1.1430/50 before facing the 1.15-barrier. Current supports are seen at 1.1250 and 1.1220.

The British pound responded with the most volatile upswing, jumping more than 130 pips from our long-entry. As stated in yesterday’s analysis the pound could be vulnerable to losses after peaking at 1.44/1.4430. However, a break above 1.4450 could send sterling towards 1.45. On the bottom side we expect the 1.43-level to lend a current support to the GBP/USD.

Traders should pay close attention to important economic data, such as the German CPI, scheduled for release at 12:00 GMT followed by the ADP report 15 minutes later.

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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

 

Market May Underestimate The Fed’s Hawkish Outlook

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Dear Traders,

Despite the relatively low volatility in the currency market the U.S. dollar appreciated against all other major currencies. Trading conditions in the EUR/USD were overall quiet and short-traders had to be satisfied with smaller profits. Given the low volatility environment before the Easter break we do not expect the euro to show larger movements today even though U.S. Durable Goods Orders are scheduled for release at 12:30 GMT and forecasts point to a decline in the headline figure, which may trigger short-term pullbacks in the greenback.

Unlike the euro the GBP/USD showed more volatile swings which have unfortunately resulted in two false breakouts before sterling was able to break below 1.4150. According to the saying “all good things come in threes” a third sell order would have finally hit all profit targets but as we always abide by our trading rules we missed out on that profitable downward move.

Having digested the recent terror attacks in Brussels the interest of investors is once again increasingly directed towards the Federal Reserve’s tightening cycle. Comments from Fed speakers seem to be suggesting a more hawkish outlook for interest rates than the market is currently pricing in. Fed Bank of St. Louis President James Bullard said in an interview yesterday that policy makers should consider an interest rate increase at their next meeting in April. He sees the case for a move in April if another strong jobs report confirms that the labor market is improving, underlining the unchanged economic outlook and prospects for higher inflation. Bullard stressed that the committee might “raise rates more rapidly later on” if unemployment exceeds targets. Fed officials will now “look at April and see what the data looks like” when the next meet on April 26-27.

The focus will therefore shift to March Nonfarm payrolls data due for release next Friday April 1. As a rate hike next month has not been priced in, the dollar could rally strongly if the jobs report is strong.

U.K. Retail Sales (9:30 GMT) and U.S. Durable Goods Orders (12:30 GMT) are due for release today and could trigger the last volatile swings this week.

GBP/USD: Technically we see current resistances at 1.4155 and 1.4190, whereas lower support levels could be at 1.4035 and 1.40.

EUR/USD: Amidst low volatility conditions we see current resistances at 1.1205 and 1.1235. However, lower supports are seen at 1.1135 and 1.1110.

Please note that we will not provide any signal alerts on Good Friday and Easter Monday. We will be back on Tuesday, March 29.

We wish you a very Happy Easter!

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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

 

 

 

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.

www.maimar.co