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ECB Meeting Unlikely To Move Euro Exchange Rate

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Dear Traders,

It’s decision day at the European Central Bank today but whether this event risk carries much weight will depend on ECB President Mario Draghi’s comments at the ECB press conference. Traders are looking for hints on when interest rates will begin to rise but ECB policy makers suggested earlier that a rate hike won’t come at least until the end of summer 2019. If there is no change in guidance, the euro could give up some of its recent gains.

General speaking, it seems unlikely that Draghi intents to move the single currency at today’s meeting, so watch out for range-bound price action.

As for the dollar, the most interesting piece of data will be released tomorrow with the U.S. 2Q GDP.

EUR/USD: The next hurdle is now seen at 1.1750 before we turn our focus to the crucial resistance area between 1.18-1.1850. Looking however at larger time frames, the currency pair remains trading sideways between 1.1850 and 1.15.

 

Summer trading break: We are slowly preparing for our summer holiday break which means that we are reducing risk exposure while adopting a cautious approach.

Announcement: Shortly after the summer break our Chief Currency Strategist will commence her maternity leave, which is why daily analysis and signals will be paused until the end of her period of maternity leave.

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GBP/USD Tests Crucial Price Levels

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Dear Traders,

The British pound has broken lower against the U.S. dollar after rejecting the 1.34-hurdle. The cable is still trading within a bullish channel, at least as long as 1.33 holds. We therefore may see a run for 1.3420, provided that the pound remains above 1.3290.

The EUR/USD failed to show any signs of a sustained recovery Monday while the upward movement was limited to a high of 1.1744. As long as the euro holds above 1.1675 we may see a leg higher towards 1.1850. On the bottom side we will pay attention to lower supports at 1.16 and 1.1550.

This week we will see a slew of Bank of England speakers as well as ECB President Mario Draghi who is scheduled to speak in Frankfurt today at 13:00 UTC.

For sterling traders, the U.K. Services PMI due at 8:30 UTC might be of interest, followed by a speech of BoE member Cunliffe.

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ECB Meeting: Does Draghi Intend To Push The Euro Further Down?

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Draghi Is Unlikely To Signal Early Exit From The ECB’s QE Program

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Dear Traders,

As expected, the euro rejected the 1.2450-level in a first attempt but the single currency was able to hold above $ 1.24 ahead of the upcoming ECB monetary policy announcement. While no changes in interest rates are expected, the focus will be on a fresh set of economic projections and ECB President Draghi’s commentary on what could happen to the central bank’s QE program which is due to run until September.

There is still a high degree of ECB optimism in the market and given that optimistic sentiment market participants may tend to push the EUR/USD higher even though Mario Draghi is unlikely to signal an early exit to their QE program. Traders should bear in mind that making significant adjustments to their communication right now could cause confusion which is why ECB policymakers could maintain a cautious stance for the time being. Mr. Draghi is not in a hurry to announce a change right now. Therefore, the ECB could hold off until the summer to start talking about unwinding QE and tell the market when rates will begin to rise.

The ECB will announce its rate decision at 12:45 UTC, followed by the ECB’s press conference 45 minutes later.

EUR/USD

The euro is still calm but, as usual, we will prepare for heightened volatility during the day.

For bullish momentum to continue we would need to see a break above 1.2480 and 1.25. A higher target could then be at around 1.2560. In the chart below we have sketched out potential support areas which could be tested in case of a bearish twist. The nearest support comes in at 1.2350 from where buyers could swoop in – depending on the ECB’s commentary.  A break below 1.2330 could send the euro lower towards 1.2280.

Let us be surprised.

GBP/USD: The price action in the cable is still messy with the pair struggling to find a clear direction. Yesterday we saw the pound confined to a small trading range between 1.3910 and 1.3845. In terms of profitable trading opportunities, the recent price development leaves much to be desired for day traders.

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The Euro’s Fate Is In Draghi’s Hands

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Dear Traders,

What a trading day! The U.S. dollar extended its slide against other major currencies on the back of protectionism while the pound’s rally intensified the uptrend in GBP/USD.

Moreover, comments from U.S. Treasury Secretary Steve Mnuchin steepened the dollar’s dive. He said that” obviously a weaker dollar is good for us as it relates to trade and opportunities”, a departure from America’s traditional strong dollar policy.

Our yesterday’s long entry in the GBP/USD has proved highly profitable even though we have been on the lookout for corrections. Despite the cable’s strong uptrend which could persist over the medium-term, we may see some pullback tomorrow when both U.K. and U.S. GDP reports are due for release.

GBP/USD

The pair jumped to the highest level since June 23, 2016 – the day of the Brexit referendum. The reasons for the strong rally lie not only in the weakening dollar but also in good U.K. data and the progress in Brexit talks. On a weekly basis we got a bullish breakout suggesting that there could be accelerated bullish momentum on the way towards 1.46 – the next crucial resistance zone. As long as the pound remains above 1.40, the overall outlook remains constructive.

While the biggest story was the pound’s strong rise, the performance of the euro was not bad either. The euro broke above 1.2350 and headed towards 1.2450 ahead of the ECB meeting. Whether the euro can hold onto its high levels or can even extend its rally, will hinge on the rhetoric of Mr. Draghi at the ECB press conference at 13:30 UTC.

If ECB President Mario Draghi joins the chorus of policymakers speaking against the euro’s strength, the euro could quickly give up some of its gains. However, the devil is in the details and if Draghi fails to convince the market of the ECB’s concerns about the currency’s strength, the euro could further rise.

EUR/USD

We prepare for higher volatility today and expect larger market swings. On the topside, we will now focus on the 1.2460-barrier, which could act as a short-term resistance. For bearish momentum to accelerate, it would need a break below 1.23 and further 1.22. As long as the euro remains above 1.23 chances are in favor of the bulls.

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USD Weakness Sends EUR And GBP Soaring

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Dear Traders,

While the House passed its version of tax bill Thursday, the U.S. dollar was little impressed and plunged during the Asian session amid low trading volumes.

The EUR/USD traded higher in the early European trading hours and we now focus on the 1.1850-barrier, which could prove crucial in terms of further bullish momentum. If the euro is able to stabilize above 1.1850, the next target is 1.1905. Sellers should, however, wait for a break below 1.1720 in order to sell euros towards 1.1670 and 1.1580.

Most attention will be paid to a speech of ECB President Mario Draghi today at 8:30 UTC, which could affect the euro’s price action.

The British pound soared on new Brexit optimism. After the U.K. has shown a “willingness to conclude a positive outcome” according to German MEP Manfred Weber, the EU is growing more confident that the current Brexit impasse will be broken and that exit talks will progress. While there might be some room for further gains in the GBP/USD, we bear in mind that as long the pair remains range-bound between 1.3340 and 1.30 there is no directional bias.

We wish you a nice weekend.

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 2017 Maimar-FX.

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EUR/USD: 1.19 Could Be A Make-It Or Break-It Level

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Dear Traders,

Yesterday was dominated by a weakening U.S. dollar, which extended its slide against the euro and British pound after the market interpreted the FOMC minutes as slightly dovish. While Fed policy makers see another rate hike this year, many issued concern that low inflation was not a temporary phenomenon. The priced-in probability of a December rate hike is still unchanged around 75 percent but if Fed officials believe that inflation could stay low for longer, then they might be less inclined to stay committed to a steep rate hike path in the future. The minutes were neither more dovish nor more hawkish but market participants interpreted the increasing concern about inflation as dollar-negative.

The focus now shifts to tomorrow’s U.S. Consumer price report, which, if positive, could boost the dollar.

EUR/USD

The euro rose steadily up to a high of 1.1878 and the linear movement seems quite an atypical performance of the market. The 1.19-level could now serve as a ‘make-it’ or ‘break-it’ barrier. If the euro is able to break significantly above 1.1910, we expect further gains towards 1.20 and possibly even the September high of 1.2092. If the price, however, remains below the 1.19-barrier, the euro could start giving up some gains and may fall back towards 1.1780. Moreover, we bear I mind that the RSI index approaches overbought territory, a situation that could limit near-term gains in the euro.

ECB President Mario Draghi will hold a speech today at 14:30 UTC in Washington and if he touches on monetary policy the euro could respond to his comments with volatile swings.

The GBP/USD traded range-bound between our entry levels at 1.3235 on the upper and 1.3175 on the lower side. During the Asian trading session, the pound sterling was finally able to break above 1.3235 and rose to a high of 1.3265. As mentioned in previous analysis, we expect a next resistance near 1.33 and this level could be crucial for the future price development in the cable.

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 2017 Maimar-FX.

www.maimar.co