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High Volatility Led To Unsteady Currency Movements

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Dear Traders,

The Bank of England surprised investors with a hawkish twist yesterday and warned that rate hikes may be faster and larger than originally anticipated. This hawkish tone caught the market by surprise and led to high volatility and a short squeeze in GBP/USD. While sterling bulls were able to benefit from the rapid surge to a high of 1.4067, the upward move turned out to be only short-lived and traders had to be quick to take the profit.

To sum it up, the BoE lifted its forecasts for economic growth and said interest rates may need to rise at a steeper pace than previously thought. BoE policymakers now see three rate hikes over the course of three years while the market is now pricing in a 70 percent chance of a rate increase in May, up from nearly 50 percent yesterday.

While the BoE’s hawkishness should pave the way for further gains in the pound, it were high volatility and ongoing Brexit uncertainty that prevented the currency from rising further against the U.S. dollar.

We were able to book a good profit yesterday by trading our daily long signal.

The euro ended the day unchanged against the greenback after it dropped to a low of 1.2212. For euro bears, however, the downward move has proved insufficient to provide a sustained profit. Prices in the EUR/USD narrowed, suggesting that we may see some upcoming breakout of that tight range. If the euro climbs above 1.2265 we may get another test and potential break of 1.2295. A higher target could then be at 1.2330. If the euro, however, falls below 1.2240 it could further decline towards 1.22. A lower target could then be at 1.2150.

There are no major economic reports scheduled for release today. U.K. Manufacturing Production is the only second-tier report scheduled for release at 9:30 UTC.

Have a nice weekend.

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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 2018 Maimar-FX.

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Pound Jumps On Brexit Hopes

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Dear Traders,

Many wondered yesterday what happened to the pound as it jumped more than 150 pips after falling to a weekly low of 1.3220. The high volatility was triggered by reports that the U.K. and E.U. have agreed a deal over the U.K.’s Brexit divorce bill, achieving a breakthrough in Brexit talks. The pound experienced high volatile swings in the wake of these reports and, unfortunately, some of our yesterday’s trades became victims of high volatility.

The GBP/USD could now head for a test of the 1.34-threshold and if the 1.3450-level is breached on the upside we could see sterling rallying towards 1.36. As for the bears, the bearish momentum came to an abrupt end yesterday and it will be difficult to only focus on the technical picture as the pound is mainly affected by Brexit talks.

The EUR/USD traded lower and that bearish bias can be attributed primarily to the demand for U.S. dollars. The Senate tax cut proposal advanced out of committee and toward a floor vote. With the tax reform moving closer towards realization we expect the greenback to receive a further boost. Ongoing concerns about North Korea however, seem to play a minor role for the dollar.

EUR/USD

The single currency faces a crucial support around 1.18 and if this barrier gives way to fresh bearish momentum we could see the euro falling back towards 1.1720. If 1.18 however holds, we anticipate a potential run for 1.20.

What will be important today?

The German Consumer Price Index will be release at 13:00 UTC but this report is not expected to have a major impact on the euro. From the U.S. we have revisions to the third quarter GDP scheduled for release at 13:30 UTC followed by Yellen’s appearance before the Congress at 15:00 UTC.

Daily Forex signals:

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

View our daily signal alerts https://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.

www.maimar.co

 

Volatile Swings Expected Throughout The Entire Week

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Dear Traders,

We welcome you to the trading month of August. While markets are usually quieter during this summer month, the first week of August might be different this year as we have big market movers ahead of us. Before the highly anticipated U.S. Nonfarm Payrolls report, due for release on Friday, traders will scrutinize the ISM Manufacturing (Monday) and ISM Non-Manufacturing index (Wednesday). Apart from these market-moving reports, sterling traders prepare for a volatile week as the Bank of England is expected to cut interest rates and add stimulus to stem a potential fallout from Brexit. Analysts predict an aggressive action from the BoE, which could increase the pressure on the British pound. The BoE will announce its rate decision alongside the release of its Quarterly Inflation Report on Thursday. While the overall bias remains bearish for the pound, traders should prepare for volatile swings ahead of “Super-Thursday”. The sentiment only changes from bearish to bullish in case of a sustained break above the resistance area at 1.3485/1.35. On the other side however, if sterling is not able to break below 1.30 in order to reinvigorate fresh bearish momentum, we expect the current sideways trend to continue.

The U.S. dollar weakened against its counterparts after the U.S. GDP expanded at less than half the rate economists had forecast. The weak domestic data led to speculation the Federal Reserve may push back a rate increase to 2017. The focus therefore shifts to the U.S. labor market report this week and it would need an ambiguous strong report to help the dollar.

EUR/USD

The euro rallied towards 1.12 on the back of dollar weakness and broke above a secondary downward channel while it is now facing the higher resistance line of its primary downward channel at around 1.13. Gains might be limited until that level, whereas the 1.11-level could lend a short-term support to the euro.

Chart_EUR_USD_4Hours_snapshot1.8.16

Important economic data for today:

7:55 EUR German Manufacturing PMI

8:30 UK Manufacturing PMI

14:00 USA ISM Manufacturing

(Time zone: UTC)

Daily Forex signals:

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

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

Subscribe to our daily signal service https://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