Jackson Hole – MaiMarFX

No Fundamental Changes After Jackson Hole

August 30, 2021/in General News & Updates /by MaimarFX

The market has been waiting for Jackson Hole throughout the summer and now that the Jackson Hole symposium is behind us, not much has changed as Federal Reserve Chair Jerome Powell didn’t offer a conclusive timeline for scaling back stimulus. He said the central bank could begin reducing its bond purchases this year but won’t be in a hurry to raise interest rates. One thing is certain following Powell’s virtual speech from Friday: A taper is coming. But this is what the market has already priced in, which is why the U.S. dollar sold off on the market’s interpretation that the Fed’s tempo is less aggressive than what was anticipated.

The focus now shifts to the U.S. jobs data on Friday for clues about the economic recovery.

We remind traders that the week before the U.S. Labor Day holiday is notorious for its quiet and illiquidity. In other words, big market moves could be missing in the coming days.

EUR/USD

The greenback fell and pushed the pair towards 1.1810. Since the pair entered overbought territory and tested the 1.18-resistance zone, we prepare for a correction in the latest upward movement. For the bullish movement to continue, we will keep tabs on a break above 1.1860 which could see a test of 1.1890-1.1920. Dollar bulls, on the other side, will have to wait either for a sustained break below 1.17 or a failed attempt to break above 1.19 in order to push the pair lower towards the crucial 1.16-support.

GBP/USD – As long as the cable holds above 1.3650-10, we see a next resistance at around 1.3820. An upside break of 1.3910 could spur bullish action towards 1.40. Breaking, however, significantly below 1.36 could pave the way for a sell-off towards 1.34.

DAX – The index marked a short-term support at 15700. We will focus on a renewed break above 15920 in order to anticipate a higher target at 16050 but bullish momentum will depend on liquidity.

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Will Powell Send A Hawkish Message Despite Delta?

August 27, 2021/in General News & Updates /by MaimarFX

It might be a big day for traders and big decision for Federal Reserve Chair Jerome Powell who will have to decide which message he conveys. Even if the delta variant creates further uncertainty, the Fed must decide whether the costs of extending the commitment to maximum stimulus have come to outweigh the benefits. The risk of bubbles and financial instability is growing, so it makes sense to phase out quantitative easing. This would be positive for the U.S. dollar which could climb to fresh highs on such confirmation. In the opposite case, if the Fed delays plans to taper its bond purchases as expected, we could see a sell-off in the greenback, pushing other counterparts higher in turn.

Powell’s highly awaited symposium speech is scheduled for today at 14:00 GMT.

Going into today’s event, chances are slightly in favor of the dollar this morning.

EUR/USD

The pair marked a short-term resistance at around 1.1775. Above 1.1780, we see a next target at 1.1815. Breaking above 1.1860 could see a test of 1.1890 and possibly even a run for 1.1940. Dollar bulls will wait for a renewed break below 1.1725 and more importantly below 1.17 in order to push the pair lower towards the crucial 1.16-support.

GBP/USD

The pair rebounded and as long as it holds stable above 1.3650-10, we pencil in higher targets at 1.3830 and 1.39. An upside break of 1.3910 could spur bullish action towards 1.40. Breaking, however, significantly below 1.36 could pave the way for a sell-off towards 1.34.

We wish you good trades and a beautiful weekend.

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Traders Reluctant Ahead Jackson Hole

August 25, 2021/in General News & Updates /by MaimarFX

Not much was going on in the FX market on Tuesday as traders are holding back ahead of the Jackson Hole symposium which takes place from Thursday through Saturday. Chances are currently in favor of riskier assets with the market preparing for a potential delay in the Federal Reserve’s taper timeline. The fast-spreading Delta variant may cause policy makers to potentially rethink the Fed’s taper timeline, which is why we might not get a hawkish surprise at the symposium. Continued central bank stimulus would represent a significant tailwind for risk assets and would thus lead to a sell-off in the U.S. dollar.

Traders should therefore be prepared for a potential short squeeze in the EUR/USD and GBP/USD.

Fed Chair Powell is scheduled to speak at the Jackson Hole symposium on Friday at 14:00 GMT.

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All Eyes on Jackson Hole This Week

August 23, 2021/in General News & Updates /by MaimarFX

We are back from our holidays and back at the trading desks, relaxed and revived. We hope that all of you are happy and healthy too.

The U.S. dollar has gained traction in August as investors sought safe havens amid rising risk aversion in the wake of concerns about Covid, the tapering of Federal Reserve stimulus and economic growth. Volatility was notably higher in recent days and traders brace for turbulences if anxiety continues.

Also, market participants are on high alert ahead of the August 26-28 symposium in Jackson Hole, an annual event that has been the setting for important announcements in the past. Traders view it as a potential venue for Federal Reserve Chair Jerome Powell to lay out the timing of the Fed’s expected move to taper its bond purchases. Traders hope for more clarity at the annual conference and want to hear from the central bank on when it will reduce its $120 billion of monthly bond purchases. While many market participants expect a taper by December 2021, the greenback’s rise could gain momentum if we get an exact timeline this week. The opposite could however happen in case Powell refrains from delving into the policy outlook during the symposium. Disappointment could thus lead to a sell-off in the dollar. We could know more on Thursday.

From a technical perspective and after the U.S. dollar has gained ground against other major currencies, both EUR/USD and GBP/USD were approaching crucial support barriers last week. The sell-off eased somewhat at the beginning of this week while the euro and cable seem to start a small rebound.

Both EUR/USD and GBP/USD have been in a downtrend since May 2021.

EUR/USD – 1.16- A make-it or break-it level

After the euro broke below 1.17, traders have shifted their focus to the crucial 1.16-support. If 1.16 breaks significantly, we could see a sharp sell-off with lower targets at 1.14 and 1.10. If 1.16, however holds, we anticipate rebounds towards 1.18 and 1.19. In short-term time frames we now expect the pair to trade between 1.1760 and 1.1640.

GBP/USD

After failing to climb back above 1.39, the cable went downhill towards 1.36 and thus entered its medium-term support zone which extends from 1.3650 to 1.34. We expect the pair to trade between 1.3850 and 1.3450 now. We bear in mind that the cable is currently in oversold territory, making rebounds more likely.

DAX

The index trended upwards after dipping towards 15600 last week. A break above 15920 could lead to another test of 16000 and maybe even an upward extension towards 16100. A crucial support zone is currently seen at around 15500.

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FOMC July Meeting A Non-Event For Traders?

July 26, 2021/in General News & Updates /by MaimarFX

We welcome you to this new trading week which will be the last one before our summer trading break (2/8/ -20/8/21).

This week’s key event risk will be Wednesday’s Federal Reserve policy decision but traders should not expect too much from the July FOMC meeting as it falls between the June FOMC which brings new economic projections (SEP) and the August meeting in Jackson Hole. The July meeting is therefore typically “overlooked” with investors shifting their focus to the central bank’s August 26-28 annual policy retreat in Jackson Hole, where the Fed is likely to hint at tapering.

There are no published FOMC forecasts this meeting and with Fed Chair Jerome Powell recently indicating that slowing stimulus is too early, the Fed may discuss its tapering plans but is not expected to make a formal announcement at this time. For traders, the FOMC meeting could thus prove to be a non-event in terms of big market moves.

Fresh signals from the Fed (and thus bigger market moves) are expected either at the Aug. 26-28 policy retreat in Jackson Hole or at the Sept. 21-22 FOMC meeting.

GBP/USD: More upside potential might be in store for this pair but we expect the 1.3830-50 region to serve as a short-term resistance. A break above 1.39, however, could open the door for a run towards 1.40. Below 1.3650, the focus shifts towards 1.35.

EUR/USD: As long as price action remains muted in this pair, we continue to watch out for a price range between 1.1850 and 1.17.

DAX: We keep an eye on the price range between 15900 and 15000. A sustained break above 15900 could open the door for a run for 16250. On the downside, a break below 15000 could see a next lower target at 14800.

Summer is in the markets and given a lower-liquidity backdrop across many markets during the summer months the potential for range-bound conditions is high. We therefore recommend traders staying on the sidelines during these low-liquidity periods, taking a break from the markets and adjusting risk exposure. The next major risk event will be later in the summer with the Jackson Hole Economic Symposium August 26-28.

We will take our annual summer trading break from August 2 to August 20 but we adjusted risk exposure even in the month of July.

We wish you good trades!

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