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Will The Euro Rise Or Fall? Waiting For Draghi

Dear Traders,

It’s decision day at the European Central Bank and traders are eagerly awaiting ECB President Draghi’s comments. Today’s ECB meeting is a very important event as it is expected to provide clarity on the withdrawal of stimulus. The majority of analysts expect Mario Draghi to delay announcing a timetable for cutting its monthly bond purchases at this meeting. The reason is the strength of the euro which may prevent the central bank from announcing a big change in monetary policy. Moreover, improving economic conditions in the Eurozone are likely to balance out near-term concerns over the euro’s strength. Ongoing EU improvements thus give room for the ECB to forego an announcement of a QE taper. If the ECB downplays tapering, the euro could fall. In the bullish case of a surprise announcement particularly a reduction of 30 billion or more, the euro will further rise. Whatever the case, the central bank has little choice but to cut asset purchases by next year, simply because it has no more bonds to purchase. In a first step, the ECB could reduce its monthly purchases to 40 billion from 60 billion which could happen at the start of 2018.

It all depends on Draghi’s rhetoric but even in the case of a dovish announcement, the medium-term trend is towards euro strength.

The U.S. dollar, in contrast, has become incredibly oversold. So any disappointments on the Eurozone front would be sufficient to trigger a correction in the EUR/USD, even though a setback may not last very long. Let’s be surprised.

The European Central Bank decision is scheduled for 11:45 UTC, followed by the highly anticipated ECB press conference 45 minutes later.

The euro traded virtually unchanged against the U.S. dollar while the price action of the EUR/USD was limited to a tight range between 1.1950 and 1.1910. We are still waiting for breakouts of that narrow range and prepare for larger swings today. Above 1.1960 the euro could head for 1.2120. Below 1.1890 it could fall back towards 1.18 and possibly even 1.17.

We wish you good trades!

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Can Euro And Pound Hold Onto Their High Levels?

Dear Traders,

The U.S. dollar fell to its lowest level since November as investors assessed the U.S. administration’s ability to push through promised tax cuts and infrastructure spending. That, in turn, raises doubts as to whether the Federal Reserve can raise interest rates as aggressively as had been priced in. Fed chair Janet Yellen will speak today at 16:50 UTC and dollar bulls fear that fiscal uncertainty may discourage Fed officials from taking an aggressive stance towards higher rates. In case Yellen’s tone is more cautious, the dollar could tend to fall.

Apart from Yellen’s speech, U.S. Advance Goods Trade Balance (12:30 UTC) and Consumer Confidence (14:00 UTC) are scheduled for release.

The euro broke above 1.0870 and extended its gains to a high of 1.0906. In case of a renewed break above 1.0875 we expect further bullish momentum, sending the euro higher towards 1.0920/50. A current support is however seen at around 1.0820.

The pound sterling marked a fresh high at 1.2615 while sterling traders have shrugged off tomorrow’s Brexit trigger. On Wednesday, U.K. Prime Minister Theresa May will formally trigger the start of two years Brexit negotiations and while this event poses a risk to the currency the British pound remained stable around 1.2550. Nonetheless, we expect the upward movement to be limited to 1.2650 in short-term time frames. The pound may tend to test that resistance area before we will see any major pullback.

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There Is No Reasonable Explanation For The Dollar’s reversal

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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U.S. Dollar Regains Strength, Focus On GDP Data

Dear Traders,

The U.S. dollar regained some strength Thursday, leading to downturns in the euro and cable. The pound currently faces its support at 1.2550 and sterling bears may wait for breakouts below 1.2530 and 1.2490 to sell sterling towards 1.2450/1.24. For the pound to rally, it may need to climb through the 1.2610-level again.

The euro dropped significantly below 1.07 and our guess of upcoming bearish momentum following a head-shoulders pattern (stated in Wednesday’s analysis) was finally right. Now the euro will need to break below 1.0650 so that we can focus on lower targets at 1.0620 and 1.0590. Below 1.0580 however, bearish momentum could accelerate towards 1.05. Those who are looking for any further upside momentum should rather wait for prices above 1.0720 in order to buy euros. Above 1.0770 a higher target could be at 1.0815.

Today, all eyes will be on important U.S. data such as GDP figures and Durable Goods Orders, both reports are scheduled for release at 13:30 UTC. Fourth-quarter GDP numbers are forecast to show slower growth and if that forecast proves to be correct, we may see further weakness in the greenback.

We wish you good trades for today and a relaxing weekend.

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We wish you good trades and many pips!

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All Eyes On May’s Speech

Dear Traders,

Those who traded yesterday’s consolidation in the GBP/USD had to struggle with volatile but choppy price swings, generating only losses ahead of today’s key event risk. Sterling traders are in the starting blocks for high volatility when U.K. Prime Minister Theresa May is scheduled to give a speech on the Brexit approach and we hope for more profitable trading opportunities today. May’s speech will be closely watched as it is designed to set out the government’s position and goals over the upcoming Brexit negotiations. Traders will look for any hints as to whether the U.K. will pursue a ‘hard’ or ‘soft’ Brexit. The market is currently pricing in a higher likelihood of a hard Brexit approach with the U.K. being likely to pull out of the European Union’s single market for goods and services. May will use her speech to explicitly say she expects the U.K. to leave the single market (hard Brexit), according to a person familiar with the matter. Given the fact that May is expected to be aiming for full separation from the EU, we expect the pound to remain under pressure. Pullbacks may therefore be an attractive opportunity to sell the pound at higher levels. However, we bear in mind that when market’s expectations are very high, there is a greater potential for disappointment and thus there is also a small chance of a short squeeze in the pound. In short, anything can happen today and we recommend traders to prepare for both bullish and bearish scenario even if the risk is to the downside.

PM May’s speech is scheduled for 11:45 UTC.

Until this morning, the pound traded sideways between 1.2085 and 1.1985 and the focus has therefore shifted to breakouts above or below this range. Bearing in mind that Monday’s gap was not yet closed, the pound might tend to test the 1.2170 area before falling back towards 1.1965. A significant break above 1.22 however, could send the pound toward 1.23. On the downside, the 1.1960-level needs to be broken in order to reinvigorate fresh bearish momentum.

Before May’s important speech we have the U.K. Consumer Price report scheduled for release at 9:30 UTC. Analysts are looking for an uptick in inflation while this report alone could help the pound strengthening in short-term time frames. With inflation being on the rise, the Bank of England could intend to raise interest rates in a next move, unless Brexit developments undermine the economy.

Trading in the EUR/USD was very quiet and none of our yesterday’s entries was triggered. Today, euro traders will watch the German ZEW Survey at 10:00 UTC, which could have a impact on the euro. The 1.0685-resistance area remains in focus and if the single currency climbs above that level we may see an extended upward move toward 1.07/1.0715.

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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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U.S. Dollars Recovers On Hawkish Fed Rhetoric

Dear Traders,

The U.S. dollar regained some strength following a slew of hawkish Fed rhetoric. Federal Reserve Chair Janet Yellen reiterated in a town hall meeting that the U.S. economy is doing quite well. She was optimistic on the labor market and inflation and wage growth, saying that inflation is close to the Fed’s 2 percent goal.

These hawkish remarks helped the greenback to recover from its recent lows. The euro peaked at 1.0684 before falling back toward the 1.06-support level. Below 1.0570 we may see further losses towards 1.0480.

The British pound took a brief glimpse above 1.23 but was not able to stabilize above that high level. The 1.21-level will now be back in focus and if the pound drops below that mark, we expect a next lower target to be at 1.20. The beginning of next week is going to be interesting for sterling traders as U.K. Prime Minister Theresa May will set out her Brexit vision in a speech on Tuesday. Recent speculation about a so-called ‘hard Brexit’ has increased the pressure on the pound.

Today we will watch important economic data releases such as U.S. Retail Sales, scheduled for release at 13:30 UTC and University of Michigan Confidence due at 15:00 UTC. The Retail Sales report is expected to show an uptick in December and should this be confirmed, the dollar could recover even more quickly.

Have a nice weekend.

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We wish you good trades and many pips!

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More To Lose Than To Gain Amid Liquidity Drain

Dear Traders,

With many U.S. market participants being on holiday for a long weekend, there was not much consistency in the performance of the U.S. dollar and given the unsteady fluctuation there was more to lose than to gain. With liquidity running short we recommend traders not investing much or doing a trading break until market liquidity stabilizes next week.

The euro was little changed and refrained from trading any higher than 1.0585. On the downside, it marked a fresh low at 1.0518 which was much to the displeasure of short traders as our short entry was triggered and quickly stopped out. We expect the euro to trade between 1.0610 and 1.0540 today whereas a break above 1.0615 may drive the euro higher towards 1.0640 or even 1.0660. Below 1.0540 we see chances of accelerated bearish momentum towards 1.05 and 1.0480.

The trading range in the GBP/USD narrowed and breakouts are becoming more likely in the near-term. Sterling traders should keep an eye on the U.K. GDP report scheduled for release at 9:30 UTC. Any surprises may boost the price action in the cable.

As the US rests we do not expect big market movements but nonetheless the U.S. Advance Goods Trade Balance due at 13:30 UTC might be worth watching.

Have a beautiful and relaxing 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.

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GBP/USD: Still Room For Further Gains?

Dear Traders,

We finally saw some corrections in both major currency pairs at the beginning of this holiday-shortened week as investors took profit on long dollar positions. While the euro rose only moderately to 1.0650, the British pound proved to be the best performer and surged to a high of 1.2513. While we believe that the upward movement in the EUR/USD may be limited until 1.0660/90, there could be some room for further gains in the GBP/USD. If the cable is able to break above the 1.2515-level, the focus shifts to the higher target at 1.2550. As stated in previous analysis, a sustained break above 1.2550 could reinvigorate fresh bullish momentum, driving the pair even higher towards 1.2770. Current supports are however seen at 1.2380 and 1.23.

Euro bears should however wait for a renewed break below 1.0570 in order to sell euro towards 1.05.

There are no major economic reports scheduled for release today. The U.S. Existing Home Sales report due at 15:00 UTC is not expected to have a significant impact on the dollar.

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

 

 

 

Quiet Trading Over US Thanksgiving Holiday?

Dear Traders,

The market’s sentiment was recently strongly influenced by political events and while political risks in the Eurozone continue to build up, the euro went into a tailspin. With the Italian constitutional referendum coming in on December 4, the situation for the euro may deteriorate as political risks are rising across Europe.

Trump’s win seems to have reinvigorated populist sentiment across the continent and if the UK can Brexit, the US can elect Trump, it is also possible that France and Italy could pull out of the EU. In this uncertain political environment, the euro remains vulnerable to losses. However, bearing in mind that the euro is oversold in short-term time frames, we expect some corrections in the EUR/USD.

The economic calendar this week is rather light in terms of market-moving data. The U.S. Thanksgiving holiday on Thursday usually leads to low liquidity in the market, which is why we do not expect significant market movements this week. The only interesting piece of U.S. data will be Durable Goods Orders on Wednesday followed by the FOMC Meeting Minutes which are expected to confirm the hawkish tilt of the Federal Reserve. Everything else than a Fed rate hike next month would be a big surprise.

From the Eurozone, we have the PMI Report (Wednesday) and the German IFO Report (Thursday) due for release this week. Furthermore, ECB President Mario Draghi speaks at the European Parliament in Strasbourg today at 16:00 UTC.

Technically we expect the EUR/USD to trade between 1.07 and 1.0530 in the near-term while a break above 1.0720 may invigorate some bullish momentum towards 1.0770 and 1.08 whereas a break below 1.0520 would increase the pressure on the currency pair.

GBP/USD

The pound sterling dropped towards 1.23 and sterling bears are eager to see whether the cable will break below that crucial support. After a break below 1.23 we see a next lower target at 1.2150. A break above 1.2550 however, would shift the bias in favor of the bulls.

chart_gbp_usd_daily_snapshot21-11-16

From the U.K. , the only interesting piece of economic data will be the Autumn Budget Statement (Wednesday) and Friday’s GDP Report.

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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Risk-Aversion Dominates The Market Ahead Of Major Risk Events

Dear Traders,

The U.S. dollar received less attention as investors turned risk-averse in the light of the latest twist in the U.S. election, causing uncertainty about the outcome of the looming vote. The euro still remained within a narrow trading range and none of our entries was triggered Monday. In order to expect an increase in momentum we now wait for an upside break above 1.0980 or, on the other side, a downside break below 1.0935.

Unlike the non-moving euro, the British pound rose to a high of 1.2249 as Bank of England Governor Mark Carney announced that he will remain in the role until 2019. Carney’s decision to stay at the BoE was seen as a positive for the U.K. even though the pound remains vulnerable to further losses in the medium term. The GBP/USD trades sideways between 1.2275 and 1.21 ans as long as there is no breakout of this range we will have to wait.

The U.K. PMI Manufacturing is scheduled for release at 9:30 UTC but this report is unlikely to have a dramatic impact on the pound.

More important will be the ISM Manufacturing index, due for release at 14:00 UTC which should affect the performance of the U.S. dollar provided that the report surprises to the upside.

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