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Uncertainties Before U.K. Vote Result In Massive Widening Of Volatility

Dear Traders,

The biggest story was the sharp rise of the British pound early this morning, which once again demonstrates the enormous potential despite uncertainties surrounding the U.K. referendum. Only this morning we saw a higher likelihood for upcoming bullish momentum if the cable was able to break above 1.4480 but the pound came up first with its strong upward move before we published today’s analysis. The British pound has soared within seconds by 180 pips towards a high of 1.4661 but was not able to hold onto its huge gains. The currency pair remains vulnerable to high-volatile swings and traders should be prepared for huge breakouts at any time.

Yellen’s speech had only little impact on the market’s sentiment as she avoided addressing the timing of another interest-rate increase. While her comments were less hawkish this time, omitting a previous phrase that an increase would likely be “appropriate in the coming months”, the Fed is still on track to raise rates this year. Yellen described the latest labor-market report as “disappointing”, but also pointed to the increase in average hourly earnings, which is seen as one of the few encouraging elements of the report.

In a nutshell, a June move is off the table and the Federal Open Market committee is now expected to keep rates on hold when they meet next week. Also, the chances of a July hike have fallen substantially after the latest labor-market weakness and Yellen’s speech. The next major risk event will now be the U.K. referendum and investors are likely to remain risk-averse in the run-up to the important vote, a fact that could depress the market environment in the near-term.

The U.S. dollar was little changed yesterday and this could possibly last for some time as there will be no major economic reports this week, which could help determine the market’s direction. Traders should therefore not expect too much, take profits even at smaller targets and do not invest too much.

The only second-tier report from the Eurozone today will be revisions to the first-quarter GDP, due at 9:00 UTC. This report is not expected to have a major impact on the euro. The EUR/USD marked a recent trading range between 1.1392 and 1.1325. Based on that range we will focus on price swings above and below these bounds, while we expect the 1.1409-level to act as a short-term resistance. Above 1.1415 a next bullish target could be at 1.1445. However, a break below 1.1325 could drive the euro towards 1.1290 and 1.1260.

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Price Action Continues To Be Muted But Watch Out For A GBP/USD-Breakout

Dear Traders,

The U.S. dollar failed to trade sustainably higher against the euro and British pound Thursday. While dollar bulls may have hoped for stronger U.S. data to reaffirm the dollar’s strength, expectations have been disappointed – at least yesterday. The Philadelphia Fed index came in softer than expected and thus failed to encourage dollar bulls to push the currency higher. With the Fed’s willingness to raise rates as early as June, the main focus will be on the May Non-Farm Payrolls report due to be released on June 3. The currency market is generally looking to further dollar strength and if incoming U.S. data is surprising on the upside it could be a catalyst for some downside breakouts in both EUR/USD and GBP/USD.

U.S. Existing Home Sales are scheduled for release at 14:00 UTC but this report is unlikely to trigger significant movements.

The British pound initially rose as high as 1.4663 as the price action was boosted by stronger-than-expected U.K. retail sales. However, sterling was unable to hold onto its gains and ended the day unchanged against the greenback. We now see a higher likelihood of an upcoming breakout of the cable’s recent narrow trading range. We will therefore focus on prices above 1.4620 for any bullish and vice versa on prices below 1.4590 for any bearish engagements. Given the recent uptrend channel higher targets could be at 1.4695 whereas a support could be at 1.4490.

Chart_GBP_USD_4Hours_snapshot20.5.16

The price action in the EUR/USD was muted and the currency pair fluctuated within a narrow trading range of 50 pips. Traders should wait for an upside break above 1.1230 or vice versa, a downside break below 1.1180. Above 1.1230, higher targets could be at 1.1260 and 1.1290, whereas below 1.1180, the euro could fall towards 1.1130.

We wish good trades and a wonderful weekend.

Daily Forex signals:

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

Subscribe to our daily signal service http://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