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Euro And Cable: Muted Price Development

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Dear Traders,

There is nothing new to report as yesterday’s price development was anything but spectacular.

The euro hovered around the 1.15-level while gains were capped at 1.1530. Consequently, euro bulls’ efforts didn’t pay off and we suffered some losses with our long-entry. As expected, the 1.1510-1.1540 zone proved to be a short-term resistance for the EUR/USD and we will now wait for prices above 1.1540 or even better for a break above 1.1565 in order to buy euros. On the bottom side, the 1.1450-level remains in focus and euro bears might have to wait for prices below 1.1440 and 1.1430 before downward momentum may intensifies.

There are no important economic reports from the eurozone scheduled for release today. The only second-tier report from the U.S. will be Continuing and Initial Jobless Claims due at 12:30 UTC.

The British pound initially dropped towards 1.4460 but the downward move was not sustained and so GBP ended the day more or less unchanged against the U.S. dollar. The U.K. Services PMI is scheduled for release at 8:30 UTC and if data disappoints, sterling could fall towards 1.4430.

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Despite Low Volatility Bulls Still Gain The Upper Hand

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Dear Traders,

Despite worse-than-expected German business-confidence data the euro has held up well against the U.S. dollar Monday. Although prices fluctuated within a confined band of only 40 pips, the euro showed resilience against the greenback ahead of the Federal Reserve meeting. With the euro remaining firmly above 1.1240, we expect another test of the 1.13-barrier, which may result in an upswing towards 1.1335 and 1.1355. However, while we do not expect a shift in sentiment a test of these lower resistances might be likely before the Fed statement.

The British pound tested the 1.45-mark but was unable to sustainably maintain the high price level. Whether we will see an extended upside move remains to be seen and should also hinge on the performance of the U.S. dollar. Above 1.4520 the pound could extend its gains towards 1.4560 and 1.4590. However, below 1.4480 it could fall back towards 1.4450 and 1.4410.

Traders should keep an eye on important economic data from the U.S. such as Durable Goods Orders, scheduled for release at 12:30 UTC and Consumer Confidence due at 14:00 UTC.

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Subdued Market Activity

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Dear Traders,

There was only little consistency in the performance of the U.S. dollar Thursday. U.S. Consumer prices were below expectations and as long as inflation fails to pick up, there is no call for rate increases by the Federal Reserve. Rather, the Fed may tend to be even more restrained in maintaining a hawkish stance, at least until inflation accelerates.

The recent price fluctuations in both major pairs left much do be desired for day-traders and the speculative interest was relatively muted. For now, we must wait until the risk appetite of investors increases in order to profit accordingly from new opportunities in the market.

The only interesting economic data releases could be U.S. Industrial Production, due at 13:15 GMT and University of Michigan Confidence at 14:00 GMT. Whether these reports will affect the USD remains to be seen.

EUR/USD: The euro traded between 1.1295 and 1.1230. If the pair falls back below 1.1235 we expect next crucial price levels to be at 1.1195 and 1.1170. However, if the euro climbs above 1.13 a next resistance is seen at 1.1330/50.

GBP/USD: The cable currently formatted a narrow trading range between 1.4170 and 1.4130. Above 1.4170, sterling must significantly break through 1.42 in order to regain bullish strength. Below 1.4130, the focus remains on the 1.41-mark but once this level is breached to the downside, GBP could slide towards 1.4050 and 1.40.

We wish you profitable trades and a wonderful weekend.

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Risk-Aversion Leads To Sideways Trends

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Dear Traders,

There is not much news to report on the currency market. The performance of both major currency pairs showed only little consistency Thursday, although we saw a slight shift towards the U.S. dollar. However, any attempts to sell both euro and cable have not been paid off. The unsteady fluctuations can be attributed to risk-averse investors who stayed at the sideline as market-moving data is lacking.

The gathering of  the four Federal Reserve chiefs Janet Yellen, Ben S. Bernanke, Alan Greenspan and Paul Volcker did not deliver any new insights into the Fed’s guidance. Yellen said “We are coming close to our assigned congressional goal of maximum employment”, even though she still sees some slack remaining in the U.S. labor market.

With no market-moving news we expect both currency pairs to trade sideways within the frequently discussed price levels. The only piece of economic data scheduled for release today will be U.K. Industrial and Manufacturing Production numbers (8:30 GMT). If data comes in weaker than forecast, the pound could drop below its current support at 1.4045. The focus will then shift to the 1.40-barrier and in case of a break below 1.3985 GBP could make a move towards 1.3920. Any pullbacks, however, could be limited until 1.4110 and 1.4150.

Have a nice weekend.

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Possible Pullbacks In The Greenback – Focus On U.S. Retail Sales

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Dear Traders,

The U.S. dollar was supported by speculation about the trajectory of interest rates before the Fed announcement tomorrow. While a rate hike this month is very unlikely ,chances for an increase later this year have increased. The probability of a rate hike in June is now about 50 percent while analysts see a 63 percent chance of an increase by December.

The euro weakened against the greenback but was able to remain above the 1.1070-50 support area. We will focus on a break of 1.1070/50 in order to sell the pair EUR/USD towards lower levels at 1.10 and 1.0910. On the upside gains could be limited until 1.1160 and 1.1220. With only one day to go before the FOMC announcement the dollar could be vulnerable to pullbacks as U.S. Retail Sales scheduled for release at 12:30 GMT are forecast to show a marked decline in February.  

The pound sterling returned to the slippery slope, falling back below 1.43. As stated in yesterday’s analysis we see a current support at 1.4250/40. Once that support level is significantly breached to the downside we will shift our focus towards lower targets at 1.4170 and 1.4120. Current resistances are seen at 1.4310 and 1.4360.

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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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Amazing Trading Day: Bad For The ECB But Good For Traders

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Dear Traders,

What an amazing trading day! While the euro’s rise can be characterized as a bitter pill for the European Central Bank as the market’s reaction was certainly not the sort of movement the ECB may have hoped for, it was a very profitable day for traders. Before getting into the reasons for the euro rally let us look back on a very successful trading day. Short-trader’s efforts paid off after the ECB surprised the market with a drop in the benchmark to zero and we got what we have been looking for: +100 pips. Shortly after reaching our profit target the bearish movement was already exhausted and the euro started its relief rally. As if the profit would have not already been enough, just 90 minutes later our long-entry was triggered and we could watch the euro hitting our higher profit target where we have gained another 100 pips profit. The volatile swings in the EUR/USD allowed even more profit but at some point traders should not be profit-greedy and save the winnings.

The ECB delivered a full stimulus package which can be described as even more aggressive step than everyone has expected. That package included cuts in the deposit and benchmark rates, a pledge to increase the monthly QE purchases to 80 billion euros and four more multi-year lending operations (TLTROs). On top of that, the central bank lowered its GDP and inflation forecasts for 2016 and 2017.

So what was finally the reason for the euro’s later uptrend? ECB President Mario Draghi has made a little faux pas when he told reporters after the meeting that “from today’s perspective, we don’t anticipate it will be necessary to reduce rates further.” In other words there is a limit to monetary easing and the central bank has finished cutting rates further. Draghi’s comments thus considerably outweighed the impact of increased stimulus.

EUR/USD

The euro experienced an upside breakout above 1.1070. Given the high volatility and the shift towards a bullish bias the euro could possibly extend its gains towards 1.1245 and 1.13. While we see a current resistance at around 1.13, the next major resistance zone is only at 1.14-1.15. If the pair breaks above 1.1315 a next target is seen at 1.1370 before heeding towards 1.14. However, the bullish move is not a done deal and traders should also bear in mind that the Federal Reserve is likely to maintain its hawkish policy stance – a fact that could strengthen the U.S. dollar in the medium-term. The former resistance at 1.1070 could now act as a support.

Chart_EUR_USD_Daily_snapshot11.3.16

The ECB announcement also triggered volatility in other currencies such as the British pound. The pound participated in the euro’s uptrend and moved finally higher against the greenback. If the pair breaks significantly above 1.4315 we could see sterling rallying towards 1.44. Remaining below 1.43 lower targets could be at 1.4180.

We wish you a wonderful weekend!

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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: Steeper Decline Or Short Squeeze?

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Dear Traders,

Today will be an important day for the British pound and sterling traders seem to be waiting in their starting blocks. The Bank of England will announce its policy decision and release the minutes of its meeting at 12:00 GMT. While the central bank is expected to keep monetary policy unchanged, traders and analysts pushed back their expectations of a BoE liftoff. The market is currently pricing in a very dovish BoE tightening cycle, not expecting the central bank to raise rates until well into 2017. These speculations are manifested in the pound’s sustained downtrend. But we have learned from past experience, that any surprises can quickly alter the market’s sentiment which is why investors were caught on the wrong foot sometimes. Some currency traders even stress the idea that sterling’s’ weakness looks considerably overdone. It is worth noting that the depreciation of the British pound should suit policy makers and could have a positive impact on inflation. Any shifts away from the central bank’s dovish monetary policy stance could trigger a strong rebound in the GBP/USD.

However, following the motto “the trend is your friend”, traders should, for the time being, prefer to sell any rallies towards lower targets.

GBP/USD

Taking a look at the weekly chart, it is tempting to focus on a steeper decline, targeting at the 1.40-barrier. But first, we will pay attention to the 1.43-level and GBP will need to break significantly below that level in order to reveal fresh bearish momentum towards the next support at 1.4230. Current resistances are seen at 1.4530, 1.46 and 1.4640.

Chart_GBP_USD_Weekly_snapshot14.1.16

The euro bounce back from its 1.08-support and started a small relief rally against the U.S. dollar. The next hurdle will be at 1.09 and it remains to be seen whether the currency pair will be able to extend gains towards 1.0940 and 1.0980. There are no major important economic reports due for release today. The German GDP report, due for release at 9:00 GMT, may have some impact on the euro. However, the euro remains to trade between 1.10 and 1.08 and as long as there is no breakout above or below these zones, traders will have to wait and focus on the current trading range.

Fed President Bullard is scheduled to speak at 13:30 GMT. At the same time, U.S. Continuing and Initial Jobless Claims are due for release.

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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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Dollar Weakens On Ambiguity About The Fed’s Tightening Path

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Dear Traders,

The FOMC minutes have revealed nothing fundamentally new. On the contrary, the overall picture of the minutes appeared somewhat dovish as the decision to raise interest rates was a “close call” among policymakers. While many Fed officials are confident that inflation would rise in the long-run, others expressed concerns about too-low inflation. Despite the committee’s unanimity to begin the policy normalization process, the expectations between Fed officials and the market regarding the future tightening path are diverging. Fed Vice Chairman Stanley Fischer said policymakers predict an estimated four interest increases throughout this year, while market participants believe that the Fed could disappoint with only two rate hikes.

Whatever the case, the U.S. dollar received no sustained support from U.S. economic data, whereupon the euro recovered some losses and climbed back above 1.08. Despite a strong uptick in ADP data, the greenback was not able to extend its gains against the euro. The British pound bounced off the 1.46-barrier but still remained below the 1.4650-hurdle this morning. We will therefore closely monitor the 1.4645-level. Once this level is breached on the upside, we could see sterling heading towards 1.4690 and 1.4725. Fresh bearish momentum may increase with a break below 1.46. A next support could be at 1.4565/55.

The euro might have difficulty breaking above 1.0840, where we see a next resistance. For euro bulls it might be smart to wait until prices exceed the 1.0860 level. On the bottom side, we see a current support at 1.0780/75, which should be significantly breached in order to sell EUR/USD towards 1.07.

There are no major important economic data releases today. Second-tier data such as Eurozone Retail Sales and U.S. Jobless Claims could only have a limited impact on the currencies.

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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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U.S. Dollar Benefits As A Safe-Haven But Gains Were Limited

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Dear Traders,

The first trading day was characterized by a worldwide selloff sparked by slower growth in China. Slowing manufacturing in Asia’s largest economy fueled fears over the possible effects for global growth and led to safe-haven flows into U.S. dollar and Yen. While the euro initially traded higher against the greenback which was mainly driven by expectations of stronger German consumer prices, the common currency came under selling pressure when inflation data fell short of expectations.

The U.S. dollar benefited from safe-haven flows but downward moves in both pairs were only short-lived. GBP/USD broke below 1.4690 but quickly found a support at 1.4663. The EUR/USD dipped below its important support at 1.08 but ended the day comfortably above $1.08. We are still looking for a sustained break of 1.08/1.0780. A next lower target could be at 1.0735/30.

The most important data from the eurozone will be Consumer Prices, scheduled for release at 10:00 GMT today. If CPI data shows any surprises to the upside the euro could be heading towards 1.09 and 1.0935. Before that we will keep an eye on the Labor Market report from Germany, due for release at 8:55 GMT. The British pound marked a short-term resistance at 1.4730/40. We will wait for a significant break above 1.4755 in order to buy sterling towards higher levels. The UK Construction PMI, scheduled for release at 9:30 GMT may help the currency to trade higher.

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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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Corrections In The USD Are Likely To Be Short-Lived

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Dear Traders,

The biggest story yesterday was the euro which rose against the U.S. dollar and traded well above 1.09. The reason for the correction can be attributed to positioning. Hedge funds reduced their dollar long positions on speculations the Federal Reserve will wait until at least April to raise interest rates again. However, we expect the dollar to resume its uptrend within the first months of the new year, but it might be difficult for dollar bulls to extend gains far beyond the 1.05-area in the EUR/USD. For the time being we expect the currency pair to remain range-bound between 1.0950/85 and 1.0810.

The British pound was accompanied by a slight bearish bias but remained firm above the 1.4875-area. In a next step, the pair will need to break the 1.4860-mark to the downside in order to gain further downward momentum. A reason for the GBP’s recent weakness is the Bank of England’s dovish monetary policy outlook. The BoE signaled the need for tighter policy is less immediate. Moreover, the U.K. Referendum on Britain’s European Union membership, which may take place as early as June, is weighing on the pound. The referendum could damp oversees investment into the U.K.. Consequently, the risk is to the downside. GBP may find a next support at around 1.4810/20. Below 1.4780 lower targets will be at 1.47, 1.4640 and 1.4590.

Today’s focus will be on U.S. data such as Personal Consumption, GDP revisions and Existing Home Sales. If data disappoints to the downside, we could see a slump in the USD.

9:30 UK Public Sector Borrowing

13:30 USA GDP & Personal Consumption

15:00 USA Existing Home Sales

(Timezone: GMT)

This is our last trading day of this year. We look forward to a successful year in 2016 and will continue to share many more profitable strategies with our subscribers.

We wish you all a very happy, healthy and prosperous New Year!

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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 2015 Maimar-FX.

www.maimar.co