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FOMC To Provide An Excuse For Profit-Taking On Dollar Long Positions?

Dear Traders,

The U.S. dollar showed no signs of weakness and extended its gains versus other major peers Tuesday. Thus, short traders in the EUR/USD and GBP/USD were once again able to book a good profit.

Having just warned in our analysis from Monday that signs could point to a bearish breakout, that break below crucial key levels in both of our major currency pairs came faster than we had expected. Despite the oversold situation in many major pairs and the need for consolidation, the U.S. dollar continued its bullish bias for the 9th trading day pushing its counterparts even lower. While the greenback’s linear rise is surprising, many traders wonder how long this dollar move will last. However, we continue to warn traders of profit-taking and potential pullbacks.

The market focus will now turn to the Federal Reserve meeting and FOMC rate decision today at 18:00 UTC.  The expectation for any change in monetary policy is very low at this meeting with no updated forecasts and no press conference from Fed Chairman Powell. However, the meeting should be a runway for another rate hike in June and if Fed policy makers don’t commit to rate increase next month the dollar will quickly fall as market participants are positioned for hawkishness from the Fed.

Investors will closely watch for whether the Fed makes more explicit its intention to raise rates three more times this year, for a total of four hikes in 2018.

In a nutshell, while the policy statement is expected to tilt to the hawkish side, there is a risk of disappointment. Dollar bulls may thus take the opportunity to take profit on dollar long positions.

Before coming to the FOMC decision, we will watch the ADP Employment Change at 12:15 UTC.

EUR/USD

The euro fluctuates around the 1.20-level while still being in oversold territory. We now expect the pair to trade between 1.2050 on the upper side and 1.1950 on the lower side.

GBP/USD

Given the strong bear candles in the daily chart we expect the risk to remain tilted to the downside with a lower target being at 1.3530/1.35. However, the cable is deeply oversold, which is why we prepare for pullbacks towards 1.37 and 1.3730.

 

 

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Focus Turns To The Fed: Dot-Plot To Show 4 Rate Hikes This Year?

Dear Traders,

This trading week has been, so far, not only volatile but also very profitable for traders. Yesterday, we saw the U.S. dollar gaining back ground against the euro and British pound ahead of today’s highly anticipated FOMC decision. Thus, short traders were able to book a good profit.

The pound slipped below 1.40 after U.K. inflation data came in worse-than-expected but losses were limited due to hopes that tomorrow’s Bank of England statement will be hawkish.

The euro sold off after the German and Eurozone ZEW Surveys fell well below expectations.

Today, all eyes will be on the Fed decision due at 18:00 UTC followed by Jerome Powell’s news conference 30 minutes later. Market participants are curious whether the central bank will lift its projections for the pace of policy tightening this year. While a 25-basis-point rate is almost certain the focus will turn to updated economic projections (SEP – Summary of Economic Projections) and the Fed’s dot plot forecast. If the dot plot shows monetary policy makers favoring 4 rate hikes this year, the dollar will rise. Anything else could disappoint the market’s high expectations and could send the dollar tumbling.

While today’s Fed decision will be one of the most important decisions in years, it does not mean that it will be market-moving in terms of profitable trading opportunities. As usual, we will prepare for both bullish and bearish scenarios and will update traders (subscribers) about all current and pending trades on our live signal page.

We wish you profitable trades for today!

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Will Yellen’s Final Move Depreciate The USD?

Dear Traders,

It’s decision day at the Federal Reserve and what makes this final policy decision of the year a significant meeting is not the anticipated rate hike, but the monetary policy outlook for 2018. While the market is certain of a third 2017 hike, the focus will turn to forecasts for the pacing through 2018. We will therefore keep an eye on the dot-plot in order to shape expectations for next year’s rate hike path. If the Summary of Economic Projections (SEP) projects another three or possibly even four rate hikes ahead, the dollar will further rally. However, it is very unlikely that the Fed surprises the market and accelerates its pace. Hence, there is a risk of disappointment today, which could lead to a sell-off in the dollar. We recommend preparing for heightened volatility during the entire North American trading session, while most price action will take place around the FOMC decision and press conference, as well as the CPI reading that will be due before the rate decision.

For Fed Chair Janet Yellen it will be her final quarterly press conference before she steps down in February. It is therefore unlikely that she will signal any new prospects on the Fed’s guidance.

13:30 USD Consumer Price Index (CPI)

19:00 USD FOMC Rate Decision

19:30 USD Yellen Holds Press Conference

(Time zone UTC)

Yesterday’s price performance in both EUR/USD and GBP/USD was not to our liking as both currency pairs failed to pick a clear direction despite the broad-based strength in the USD. Technically speaking, the picture has not changed.

GBP/USD: The cable refrained from a break below 1.33 and we currently focus on a price range between 1.3450 and 1.3220. Yesterday’s better-than-expected U.K. inflation data failed to lift up the currency but if investors take profit on dollar positions today, we could finally see some corrective movements driving the pair higher before the holiday liquidity drain.  

EUR/USD: The euro remained well above 1.17 and as long as there is no clear break below 1.1680 the euro could head for another test of 1.1790. Below 1.1680 we focus on lower targets at 1.1640 and 1.16.

We wish you good trades for today.

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

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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 Pound Steady Ahead Of FOMC Decision

Dear Traders,

The British pound stabilized above 1.27 after touching a fresh low at 1.2635 on Friday. It seems that sterling at least temporarily reached bottom after Prime Minister Theresa May’s Conservative Party unexpectedly lost the majority in Thursday’s U.K. election. This makes Brexit negotiations with the EU more difficult, leading to new complications in the U.K. The Bank of England will decide on monetary policy on Thursday but BoE policy makers are in no position to alter their course in the near-term. Sterling traders shall pay attention to the U.K. Consumer Price Index, scheduled for release on Tuesday. As long as GBP/USD trades above 1.27, we anticipate some upward movements towards 1.2850 and possibly even 1.2950. A significant decline below 1.27 could however open the door for further losses towards 1.26 and 1.24.

 

The highly anticipated FOMC decision on Wednesday is expected to end with a rate hike. How the U.S. dollar will trade, hinges however on the Fed forecasts for the second half of 2017. If the Federal Reserve calls for three rate hikes this year despite recent disappointing U.S. economic data outcomes, the greenback could strengthen. However, given the low probability the Fed will embark on an aggressive tightening cycle, traders should prepare for a weakening dollar, especially ahead of U.S. inflation data due to be released on Wednesday.

The EUR/USD traded little changed between 1.1215 and 1.1165. Technically, the recent sideways trading range is still unbroken and as long as there is no breakout either above 1.1285 or below 1.11, there is nothing new to report.

From the Eurozone, the most important piece of economic data will be the German ZEW survey scheduled for release on Tuesday morning.

 

With no major market drivers and given the typical seasonal lull in market activity, we do not expect exaggerated currency moves.

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

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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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Traders Prepare For Volatile Swings This Week

Dear Traders,

We welcome you to a new trading week. Financial markets are dominated by uncertainty surrounding Donald Trump’s administration, prompting large investors to adopt a wait-and-see stance. The U.S. dollar came under further pressure after Trump’s order halting some immigration, causing geopolitical tensions. Risk aversion has therefore led to a recent sideways trend with both major currency pairs trading in relatively narrow trading ranges. This phase of trendless and uncertain markets makes it difficult for day traders to benefit from limited fluctuations and the lack of price breakouts.

This week’s major event risks might bring some new momentum to the markets and trigger profitable breakouts. The economic calendar is very busy in terms of market moving data and traders await high volatility throughout the entire week. The week starts off with the German Consumer Price report, scheduled for release today at 13:00 UTC which could lend a support to the euro. On Tuesday, the Eurozone Consumer Price report will be important to watch while an upbeat report could lead to speculation that the European Central Bank might start to reduce its asset purchases in the near future. With regard to top-tier U.S. economic data, the FOMC rate decision and the Non-Farm Payrolls report (Friday) will take center stage this week. The FOMC committee will deliver an update on its policy stance on Wednesday and while the FOMC statement is expected to be relatively upbeat, the fiscal policy uncertainty may frustrate the greenback’s recovery.

For sterling traders, the most interesting event will be the Bank of England‘s ‘Super Thursday‘ which may shape expectations for the near-term outlook for sterling. The BoE releases its Quarterly Inflation Report alongside its monthly monetary policy decision. If BoE policymakers show greater willingness to drop their dovish tone and gradually move away from their easing cycle, the pound could be vulnerable to further gains, heading for a test of 1.2780/90.

Important data for today:

13:00 EUR German CPI data

13:30 USA PCE Report

15:00 USA Pending Home Sales

Daily Forex signals:

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

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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

 

 

 

Will FOMC Statement Pose A Risk To Dollar Bulls?

Dear Traders,

The biggest story Friday was the sharp rise in the GBP/USD. After hitting a fresh five-year low at 1.4079 on Thursday, the currency pair rallied towards 1.4365 despite Friday’s weaker-than expected retail sales report. The rise can be attributed to the result of profit-taking after the recent linear decline in the British pound. The cable now faces the 1.4250/30 support-area once again but as long as the pair remains trading above that zone we expect some possible upward swings which may occur in the near-term (see technical analysis below).

The most important piece of U.K. economic data will be Gross Domestic Product, scheduled for release on Thursday and if data disappoints to the downside, sterling could be vulnerable to further losses again. On Tuesday, Bank of England Governor Mark Carney appears in Parliament to speak on financial-stability risks and a major topic could be the U.K. referendum on its membership in the EU and a potential “Brexit“.

The EUR/USD trended slightly lower, moving around the 1.08 support level. For the time being, we anticipate the 1.0770-level to be the next support before a renewed downswing toward 1.0730/15. On the upper side, we see current resistance-levels at 1.0835 and 1.0860.

The most important piece of Eurozone data this week will be the German IFO report, due for release at 9:00 GMT today. If IFO numbers fall short of expectations, the euro could tumble toward lower targets. Furthermore, German Consumer Prices are scheduled for release on Thursday.

All eyes will be on the Federal Reserve’s monetary policy meeting on Wednesday. While the central bank is not expected to alter its monetary policy and there will be no press conference, the statement could fail to add further strength to the U.S. dollar. Rather, the risk for the USD is to the downside, in case the FOMC statement turns out to be more dovish, suggesting a rate hike in March is less likely.

Further important U.S. economic reports are due for release with Consumer Confidence (Tuesday), Durable Goods Orders (Thursday) and U.S. Gross Domestic Product (Friday).

GBP/USD

Looking at the 4-hour chart, we see that there could be some upside room after a break of 1.4365. A next bullish target could be at 1.4420/45 with a possible extension until 1.4470. However a current support-zone is seen at 1.4250/30 and if the cable falls again below that level, we expect bearish momentum to accelerate towards 1.4170 and 1.4130.

Chart_GBP_USD_4Hours_snapshot25.1.16

 

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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