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British Pound Takes Breather On Carney Comments

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Dear Traders,

Monday has been a quite challenging trading day for traders of the EUR/USD and GBP/USD. While the British pound declined against the U.S. dollar after Bank of England Governor Carney’s comments were interpreted as more dovish following last week’s MPC statement, we have shot all our powder and finally missed out on the profitable bearish movement in the GBP/USD.

Carney reinforced the BoE’s view that the rate hike cycle in the U.K. will be “limited and gradual” and acknowledged that there was still clear concern over the health of the economy amid Brexit. His comments weakened the pound in the short term. GBP/USD traded consolidated and fell towards 1.3460. We now see a lower support at 1.34/1.3380 and if the pound drops below that level we may see a correction towards 1.33. On the topside, the 1.3620-level remains unbroken and sterling bulls may focus on a bullish break of that resistance level in order to buy pounds towards 1.38.

The euro traded sideways between 1.1970 and 1.1915. We now focus on price breakouts either above 1.1990 or below 1.1935. The German and Eurozone ZEW Survey are both scheduled for release at 9:00 UTC today and may have a slight impact on the euro.

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Euro And Cable Fall In Thin Trading

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Dear Traders,

Trading was quiet on Monday with the euro and cable trading within tight trading ranges. Only at the end of the trading day, prices gathered momentum. The euro fell in thin trading below 1.1160 and headed towards 1.11. The cable dipped slightly below 1.28 but was able to hold above that support level. We now expect the 1.2760-level to lend some short-term support to the pound. Above 1.2865 however, the pound could head for a test of 1.2950/60.

EUR/USD

The euro broke below the 1.1160-support and as a result, bearish momentum accelerated. The euro might tend to test the 1.11-threshold before we see a reversal. On the upside we see a resistance at 1.1170 until which potential gains could be limited while on the bottom side, a crucial support area is currently seen at around 1.1080.

Important economic data for today:

12:00 EUR German Consumer Price

12:30 USA PCE Report

14:00 USA Consumer Confidence

(Time zone: UTC)

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Euro Strength: No End In Sight, Next Target 1.13?

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Dear Traders,

The euro further advanced against the U.S. dollar after German Chancellor Angela Merkel said the euro is “too weak” because of the European Central Bank’s monetary policy. Her statement gave traders yet another reason to buy euros towards the next resistance level at 1.13. Speaking of euro strength, an end to the rally is not yet in sight and if the euro overcomes the 1.13-reistance significantly, we may see a run for 1.1420/50. A current support is however seen at around 1.1215, followed by a stronger support zone near 1.1170.

The German PMI report is scheduled for release at 7:30 UTC, followed by the German IFO Index 30 minutes later. However, none of these reports is expected to have a significant impact on the euro’s price action.

The British pound failed to make significant progress above the 1.30 level, whereas, on the other side, it was little affected by a terrorist attack at a concert in Manchester in which 22 people were killed. The pound traded resiliently between 1.3050 and 1.2965 and as long as it remains firmly above 1.29 we do not see any major downside risks. On the topside, the 1.3065-mark needs to be broken in order to spark fresh bullish momentum.

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Euro Bulls Profit From U.S. Dollar Weakness

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Dear Traders,

The U.S. dollar traded lower against the euro and British pound after U.S. retail sales and CPI data fell short of estimates. Following Friday’s softer reports, the odds for a Federal Reserve rate increase next month have fallen to about 70 percent, even though data was still good enough to bolster the case for tightening in June.

EUR/USD

The euro rose towards its 1.0950-resistance after re-testing the current support zone ranging from 1.0855 to 1.0820. We will now pay close attention to a renewed break above 1.0950 which could result in a climb towards 1.1050.

Despite the low-volatile market environment there might be a catalyst for some swings throughout this week. The German ZEW Survey is due for release on Tuesday, followed by the Eurozone Consumer Price Report which is due on Wednesday and a speech of ECB President Draghi on Thursday.

GBP/USD

The pound sterling remained range-bound between 1.2990 and 1.2845 and traders still wait for, at least, a test of 1.30. It could be an interesting week for sterling traders with U.K. Consumer Prices (Tuesday), Employment data (Wednesday) and Retail Sales (Thursday) scheduled for release. Most of these reports are expected to surprise to the upside, so we may see a run for 1.30 and possibly even a test of 1.3050.

A bearish break below 1.2750 however, could increase bearish momentum towards lower targets around 1.26.

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Euro And Cable Test Crucial Support Levels On USD Strength

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Dear Traders,

Sellers in the EUR/USD and GBP/USD profited from a stronger U.S. dollar on Tuesday. The current strength in the greenback is of a more technical nature since market participants are tending to take profit on long positions when currency pairs approach overbought territory. Hence, a pullback was the logical consequence. Moreover, the Federal Reserve’s tightening cycle is keeping the demand for U.S. dollars at higher levels. While the euro dropped towards 1.0860 on a strengthening greenback, the pound sterling remained relatively stable ahead of tomorrow’s ‘Super Thursday’. While the Bank of England is unlikely to change its policy anytime soon, officials may raise their inflation forecasts in the central bank’s quarterly inflation report which should have a positive impact on the pound.

Based on the overall resilience of the pound, it can be seen that investors prepare for a positive outcome of tomorrow’s inflation report. Technically, we believe that there could be some room for further gains in the GBP/USD. If the pound makes it through 1.2965, we could possibly see a run for 1.30/1.3020.

EUR/USD

Is the euro’s recent downward move only a correction within its uptrend or a trend reversal? As long as the price remains above 1.0820, the recent downward movement can be considered a normal correction. If the euro falls below 1.0820, filling up the gap until 1.0740 it could be considered a steeper correction but still, bullish sentiment could be intact. Only a break below 1.0650 would change the bias in favor of the bears. On the topside, we will pay attention to the 1.10 and 1.1050-resistance levels.

From a fundamental perspective, there are no major economic reports scheduled for release today so the price action could be oriented towards technical barriers.

ECB President Mario Draghi is due to speak in Dutch Parliament at 11:00 UTC. Any comments on the ECB’s monetary policy could have an impact on the euro.

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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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Forex Market Is Fairly Quiet In The Absence Of Market Movers

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Dear Traders,

While concerns over French elections have disappeared after the market-favorable Macron victory, the euro’s response was anything but enthusiastic. Rather, the single currency favored lower price targets near 1.0915 after having rejected the 1.10-resistance. Euro traders should now pay attention to the 1.0890-support level which may prove to be the new lower bound of the euro’s current upward trend channel. If the 1.0890-support gives way to bearish pressure, the focus shifts to a break of 1.0850 and further 1.0820. On the topside we will pay attention to a potential re-test of 1.10 which could result in a sustained bullish breakout. In the absence of catalyst to spur further momentum we expect the EUR/USD to trade between 1.10 and 1.0895.

The GBP/USD did not move much and traded within a narrow 55-pips trading range. Ahead of the BoE’s quarterly inflation report on Thursday sterling traders may refrain from taking any risks, which is why we anticipate sideways movements between 1.30 and 1.2860. In short-term time frames we expect a next support at around 1.29, whereas a lower resistance could be at 1.2975.

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Any and all liability of the author is excluded.

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All Quiet In The Market

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Dear Traders,

It has been a quiet start on Monday with the euro being stuck to a 40-pips range and the cable not showing much effort to break below its recent uptrend channel. The British pound found some halt around the lower barrier of its latest upward trend-channel at 1.2465 but it was unable to hold onto that high level and fell towards 1.24 this morning. If the pound breaks also below 1.2390, we expect further losses towards 1.2330 and 1.23. As noted in yesterday’s analysis, the cable will need to break the 1.26-level significantly in order to invigorate fresh bullish momentum.

Sterling traders will watch the U.K. Construction PMI, scheduled for release at 8:30 UTC. This report could have a short-lived impact on the pound.

The euro remained stuck between 1.0680 and 1.0640. We may see some accelerated momentum today but euro traders are unlikely to get any new insights into the ECB’s thinking from ECB president Mario Draghi who is scheduled to speak at 13:30 UTC in Frankfurt. If he does not refer to monetary policy, his speech will be a nonevent for traders. From a technical perspective, we expect the EUR/USD to trade between 1.06 and 1.07 in short-term time frames.

From the U.S. we have Durable Goods Orders due for release at 14:00 UTC but this report is only of secondary importance.

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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GBP/USD: Upcoming Breakout?

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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.

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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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Pound Depreciates Ahead Of Brexit Trigger

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Dear Traders,

The biggest story on Tuesday was the trend reversal of the British pound. Sterling reversed shy of 1.26 and dropped sharply towards 1.2350. The sharp sell-off was due to the much-anticipated Brexit trigger which will happen today. The formal Brexit process starts around 13:30 local time when a letter personally signed by U.K. Prime Minister Theresa May will arrive in Brussels. May signed the historical document on Tuesday evening and it will be handed to EU President Donald Tusk today. Tusk will read out a statement at 13:45 (GMT+2) while May will address the U.K. Parliament about the same time. The uncertainty over terms of Brexit could weigh on the pound in the medium-term, so traders should generally prepare for further losses as long as the prospects of U.K. monetary policy tightening remain far off.

From a technical perspective, sterling bears should wait for a bearish break below 1.2340 in order to sell the pound towards 1.21. Nonetheless, there is also a risk of a short squeeze in short-term time frames which could occur through profit taking. We see a crucial resistance zone between 1.2530 – 1.2570 and it would require a renewed break above that area to shift the bias in favor of the bulls.

EUR/USD

The shared currency was unable to break above 1.0875 and therefore fell back towards 1.08. For the time being, the euro is holding above the 1.08-mark but this may change quickly as the Brexit trigger poses a risk to the euro.

Bearish scenario: If the euro falls below 1.0780 it may heads for a test of the lower support-zones at 1.0760 and 1.07. A significant break below 1.0680 could lead to further losses towards 1.06.

Bullish scenario: A fresh break above 1.0875 may prompt euro bulls to buy euros towards 1.0920/50.

The risk is however to the downside.

 

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

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There Is No Reasonable Explanation For The Dollar’s reversal

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Dear Traders,

It seemed as if dollar bulls just sought an excuse for taking profits on dollar positions after the U.S. dollar rose to new highs on evidence of firming inflation. Whereas for the U.S. all signs are pointing to higher inflation and thus, higher interest rates and a stronger dollar, there was no reasonable explanation for the sharp reversal of the USD towards the end of the trading day. During the House Financial Services Committee hearing, conservatives Republicans pressed Fed Chair Janet Yellen to concede that economic growth is still disappointing and that the Fed has failed to fix underlying problems. For the most part, Yellen’s tone was positive, defending the Fed’s efforts that had contributed to strong job growth. The only negative point during the hearing was that Yellen acknowledged that economic growth has been “quite disappointing”. This seemed to be the reason for the weakening dollar in short-term time frames.

The EUR/USD traded higher, heading towards 1.0630 and it will now be interesting whether the 1.0660-resistance is going to hold. If the euro breaks through 1.0665/70 we expect accelerated bullish momentum towards 1.0710 and possibly even 1.0750. A current support area is however seen at 1.0580-60. If the euro falls back below 1.0560 it could extend its losses towards 1.0510.

The pound sterling ended the trading day virtually unchanged against the greenback. A break above 1.2520 could boost bullish momentum but we bear in mind that the barrier at 1.2550 is still unbroken. Crucial support levels are seen at 1.2350 and 1.2310 and as long as the pound remains firmly above these zones we will rather focus on higher price levels.

There are no major economic reports scheduled for release today and those of you who have already made a good profit this week, shall better not reinvest their profits.

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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