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Euro With A Tailwind

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The U.S. dollar lost ground against the euro and British pound. The euro and British pound had a strong performance and showed an impressive run higher against the greenback last week. The EUR/USD managed to climb above 1.08 while the pound clinched in 1.28 by a strong bull candle. Also, bulls in the DAX got paid off as the index strongly rose above 18600, even though a correction followed after the sharp rise.

Weekly charts EUR/USD and GBP/USD:

As for last Friday’s nonfarm payrolls report, analysts expect that it is only a matter of a month or two before we see a drop in US employment which will be important for the Federal Reserve to kick off the rate-cut cycle. The U.S, payrolls report came in slightly better than average expectations but the overall picture of the labor market seems noticeably tighter than previously imagined. In short, the current report was moderately negative for the greenback.

The euro opened with a small gap today after the French elections results showed a surprise Left-Wing win. Market participants see a left-wing victory as euro-positive. Thus, the euro stabilized above 1.08, heading to close the opening gap.

This week, Fed Chair Jerome Powell will testify before the Senate Banking Committee on Tuesday and Wednesday. Any clear comments on the rate cycle path could drive the dollar but expectations are for 50bp worth of rate cuts in 2024.

On Thursday, the outcome of the U.S. CPI data could be even more important. A further slowdown in inflation will weigh on the U.S. dollar.

 

We entered the summer doldrums which is why we may face quieter trading conditions. Therefore, we will not invest much, trade with smaller positions and don’t trade every day.

 

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Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

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All Eyes On NFP Data

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It’s payrolls day in the U.S. and traders eagerly wait for the job numbers of May. A solid job print could increase chances in favor of further Federal Reserve tightening instead of rate cuts.

The euro regained some strength against the U.S. dollar but we bear in mind that the 1.0780-area could act as a short-term resistance. For a bullish reversal we would need to see prices above 1.0850.

The British pound is currently testing the 1.2550-hurdle. Since it entered overbought territory, we expect some corrections soon.

U.S. non-farm payrolls are set to be released at 12:30 UTC.

If you want to know if and how we trade this important monthly release, subscribe to our signals.

We wish you a beautiful weekend!

We will be back on Tuesday!

 

Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2023 MaiMarFX.

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Pivotal Week

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It will be a big week for traders with crucial central bank meetings in the U.S. and U.K. on tab as well as the U.S. Nonfarm payrolls report at the end of this pivotal week.

The market’s expectations of the FOMC decision on Wednesday are clear. Fed policy makers are expected to decide to scale back their massive bond-purchase program while this expectation is fully priced in into the U.S. dollar’s steadiness. When it comes to interest rate hikes, Fed Chair Jerome Powell told a virtual panel discussion on Oct. 22 that policy makers “can be patient” and “allow the labor market to heal”. Powell expects that jobs growth moves back up closer to the high levels seen last summer.

A first test of Powell’s expectations will come on Friday with the October jobs numbers due for release. Economists forecast that payrolls show a bigger jobs gain than the report in September but numbers are expected to be below the 1.03 million monthly average in June and July.

The crux

It is a very tricky job for monetary policy makers since the labor market has changed following the Covid-19 shock. Many jobs are not going to come back while millions of Americans were prompted to permanently leave the workforce or have retired early because of the crisis. The changes to the jobs market could thus be more lasting than Powell apparently believes, making it difficult to return to pre-pandemic levels without spurring inflation.

The hawkish surprise

Most attention will be paid to the Bank of England interest rate decision on Thursday. The expectation is that the BoE will deliver a 15bps rate rise given the heightened concerns over inflation. If BoE policy makers however choose not to raise rates, the pound will experience its most negative scenario with potential price dips. In the GBP/USD we currently see a potential trading range between 1.40 and 1.3330 and prepare for high volatility in the coming days.

EUR/USD

Last week, the euro was temporally boosted by the ECB’s reluctance to push back against market rate hike bets but the single currency has returned to its support levels and ended last week lower. If the euro falls below 1.1520 and further 1.15, we will shift our focus to a lower target at 1.1450. Falling below 1.14 could spur a bearish follow-through until 1.12. For bullish momentum to accelerate we would need to see a renewed break above 1.16 and 1.1630.

Conclusion

The market is pricing in two Fed rate hike by the end of 2022. Any shift away from these hawkish expectations will hurt the dollar. If Powell acknowledges however upside risks to inflation at the Fed press conference, the dollar could further strengthen.

The BoE will be tightening nonetheless, regardless of whether policy makers decide to raise rates this Thursday or months later. This expectation could buoy the pound in the medium-term.

 

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Weird U.S. Labor Market Still Favors Fed Tapering

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The U.S. dollar weakened in an initial response to the non-farm payrolls miss last Friday. While a strong U.S. job report was previously expected, the job growth in September turned out to be the slowest this year. With only 194,000 jobs added last month, it was the unemployment rate that fell to 4.8 percent and rising wage growth that prevented the greenback from a steeper decline. The lower unemployment rate, however, can be attributed to the decline in the size of the overall labor force. Average hourly earnings showed the strongest advance since April, highlighting companies’ attempt to attract workers be offering higher wages.

Despite the weird labor market picture that simultaneously shows signs of weakness and overheating, the Federal Reserve is expected to proceed with a tapering of bond purchases.

The British pound stabilized above 1.36 as the likelihood of a December rate hike by the Bank of England increases. Latest remarks from BoE officials suggest that the market should brace for a “significantly earlier” rate increase than previously thought to curb inflation.

GBP/USD: If the cable climbs above 1.3660 we pencil in higher price targets at 1.3750 and 1.38. On the downside, we would wait for a renewed fall below 1.3540 in order to expect a test of 1.34.

EUR/USD: Chances could shift in favor of the bulls, provided that the 1.16-hurdle can be taken out. A sustained break above 1.16 would shift our focus to a higher target at 1.1670, followed by 1.1750. However, if 1.16 remains a resistance, we see a lower support zone between 1.1430-1.14.

This week, most attention will be paid to the September U.S. CPI print on Wednesday. Elevated price pressures may underline that Fed tapering is just around the corner.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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GBP/USD Jumps On BoE, Focus Now On NFP Report

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The British pound posted a sharp increase after the Bank of England stated that negative rates are not coming in the foreseeable future. The main focus had been on the debate about the feasibility of negative interest rates and while the BoE stated that it is appropriate to get ready for negative rates if needed, they do not intend to signal that this policy tool will be implemented in the near-term. The central bank forecast that the U.K. economy is heading for a powerful rebound thanks to an aggressive push to vaccinate citizens. Furthermore, the inflation is expected to rise sharply towards 2 percent in spring.

This was enough for GBP/USD to jump from a low of 1.3565 to a high of almost 1.37. Technically, the pair is back in its sideways range where we pay attention to prices between 1.3750 and 1.3610.

EUR/USD: The euro succumbed to the dollar’s rebound and fell towards 1.1950. Traders should now focus on lower targets at 1.1930 and 1.19 from where we could see a reversal since the pair is in oversold territory.

DAX: The index was finally able to take out the 14030-barrier and could now be primed for a test of 14130. Above that level there are no significant resistances until 14350.

Today we have the Non-farm payrolls report scheduled for release at 13:30 UTC which is forecast to show that 100,000 jobs were added in the U.S. in January after a 140,000 drop in December. A stronger report could increase the buying pressure in the U.S. dollar.

We wish you a beautiful weekend!

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

www.maimar.co

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Further U.S. Dollar Strength Ahead? Waiting For NFP Outcome

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Dear Traders,

Bullish exposure seems to be fading ahead of the March U.S. employment report with bears gaining control of the EUR/USD and GBP/USD. However, we are hesitant in our assessment of further dollar strength as we know that payrolls can catch traders on the wrong foot.

While U.S. job growth is expected to have slowed last month, the jobless rate was forecast to have fallen to 4.0 percent amid stronger wage growth. If the latter headline figure meets or even exceeds expectations it might be dollar-positive but traders should be careful. There is plenty of room for a surprise and volatile swings can make today’s trading difficult.

Sign-up for our professional day trading support if you want to know how we trade the NFP report.

The NFP Report is due at 12:30 UTC.

GBP/USD

The worst performing currency was the British pound which dropped below its crucial support at 1.40 and extended its slide towards 1.3965. As mentioned in previous analysis, our focus now shifts to a lower target of 1.3880, provided that the pound remains below 1.4050. A break above 1.4060, however, could encourage sterling bulls for a test of 1.41 but it all depends on the outcome of the payrolls.

EUR/USD: The euro dropped below 1.2235 and this pair seems to be heading towards 1.2190 now. A break below 1.2180 could spark bearish momentum towards 1.2150 and possibly even 1.2050 but that remains to be seen. The 1.23-level could act as a short-term resistance.

We wish you good trades and a beautiful weekend!

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We wish you good trades and many pips!

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U.S. Dollar Weaker Ahead Of NFPs

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Dear Traders,

The best performing currency pair on Thursday was the EUR/USD, which took another glimpse above 1.25 but was yet unable to hold that level. Our yesterday’s long signal has proved profitable while euro bulls lie in wait for a next leg up, targeting at 1.27. The question whether the single currency could be vulnerable to further gains will mainly depend on the demand for dollars following today’s U.S. labor market data.

One reason for the euro’s surge were reports that some ECB policymakers are pushing President Mario Draghi to give investors clearer guidance on when rates might rise. In a nutshell, these rumors confirm that the ECB is comfortable with the euro’s appreciation.

The most prominent event risk on the last trading day of this week will be the January Non-Farm Payrolls at 13:30 UTC and if payrolls exceed expectations combined with an uptick in wage growth we could see the dollar recovering some of its recent losses. However, traders should bear in mind that given the dollar’s strong downtrend, market participants might be inclined to sell USD at higher levels.

Recently, the release of the monthly NFP report failed to generate extreme volatility in the market, which is why traders now brace for a more muted market reaction. Whatever the case, we will prepare for both bullish and bearish scenarios.

EUR/USD

The current uptrend channel is still intact and after the euro refrained from falling below 1.2385 the chances are in favor of further bullish momentum, driving the pair towards 1.2650 and possibly 1.27.

GBP/USD: There has been no significant correction in the recent performance of the cable with the pair following a clear uptrend. How the cable will trade within the next hours will however depend on the outcome of the payrolls. If the pound finds its way above 1.43 we focus on higher targets at 1.4380 and 1.4450. For bearish momentum to accelerate, the pound would first need to fall below 1.4220 and further 1.4185.

Have a beautiful weekend!

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 2018 Maimar-FX.

www.maimar.co

Will Payrolls Help Or Hurt The Greenback?

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Dear Traders,

It’s payrolls day again and today’s U.S. jobs numbers could matter more than usual as investors assess the possibility of a steeper Federal reserve rate hike path in 2018. While the Fed has established a commitment to gradual monetary policy pacing even under the chairmanship of Mr. Powell, job and wage growth will shape the expectations for 2018 tightening. The central bank is expected to endorse a wait-and-see approach in the first half of the next year after a last rate hike in 2017, which is widely expected to be announced on next week’s Fed meeting.

In short, there is a greater risk of disappointment than an upside surprise when coming to the latest job numbers. If job growth comes in below expectations amid slowing wage growth, the dollar will give up its recent gains. If today’s NFP report surprises to the upside, the dollar will continue to rise amid progress on the tax-cut legislation.

Traders around the world will watch the NFP release at 13:30 UTC.

GBP/USD: The pound rose against the dollar on speculation that Ireland and Britain were close to a Brexit deal. U.K. Prime Minister Theresa May will have time until Sunday to resolve the deadlocked Brexit talks. The GBP/USD jumped back towards 1.3520 after it found support at 1.3320. With the pound trading above 1.3330 we now expect the pair to head for a test of 1.3630/50.

EUR/USD: The euro further declined against the greenback and appears to be headed for a test of the falling trendline of its recent downtrend channel. We anticipate a crucial support area between 1.1740 and 1.1710 and if that threshold remains intact we could see some pullback towards 1.1805 and possibly 1.1850.

We wish you profitable trades for today and a cozy and relaxing winter weekend.

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

 

Greenback Strengthens Pre-NFP

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Dear Traders,

Finally, the U.S. dollar returned to its former strength pre-NFP with also EUR/USD joining the downward trend. The euro gave way to the strengthening dollar and thus, EUR/USD dropped below 1.17 after gains were capped at 1.1780.

The main topic in the market was however the fall of the British pound which came under severe downward pressure after chaotic U.K. politics put the country’s outlook on very shaky foundations. The pound came under selling pressure after UK Prime Minister Theresa May put in a disastrous performance at the annual conference of her Conservative Party. Her speech was disrupted by prankster and then by a coughing fit. That disastrous speech weakened her position as PM while the idea of replacing May in the middle of Brexit negotiations is widely viewed with horror. A replacement by Brexit hardliner Boris Johnson could make a deal with the EU harder rather than easier to reach.

The GBP/USD fell below important support-levels at 1.3150 and 1.31 and could now be headed towards a test of 1.30.

Today, all eyes will be on the Non-farm payrolls report scheduled for release at 12:30 UTC.

The U.S. September Employment report is expected to show a weaker reading due to the impact of hurricanes on southern states. Meanwhile, comments from Fed officials reinforced optimism ahead of the jobs report, saying Fed policymakers “pencil in” a rate hike in December and three hikes next year. The priced-in probability of a December rate hike is currently at 75 percent.

If payrolls beat expectations, the greenback will receive a boost and could further rise against the euro and pound.

If you want to know how we trade the payrolls release sign up for our daily signal service.

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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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NFP Outcome Will Seal The Dollar’s Fate

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Dear Traders,

The BoE’s Super Thursday is behind us and we got what we were looking for: A breakout in GBP/USD. Our forecast of further bearish momentum toward 1.3110 following a break below 1.3190 proved to be correct. Thus, sterling bears were able to pocket a nice gain yesterday. What prompted the pound to decline? The Bank of England’s monetary policy committee voted 6-2 to keep interest rates unchanged but more importantly, policy makers lowered their economic growth projections to 1.7 from 1.9 percent. Furthermore, the BoE cut its forecast for wage growth for 2018 and 2019. The market was betting on a surprise hawkishness but what it got was some uncertainty when Carney expressed concerns about a “smooth transition to a new economic relationship with the EU”. While he also pointed towards some tightening in the next three years, yesterday’s policy statement was interpreted as negative.

The euro favored the upward movement after correcting towards 1.1830. Based on the recent uptrend we generally expect further gains towards 1.1960 and 1.20. A break below 1.1850 however, could send the euro towards its lower support at 1.18.

The pound now faces a crucial support at around 1.31. A significant break below that barrier may result in further bearish momentum towards 1.30.

All eyes will be on the U.S. employment report scheduled for release today at 12:30 UTC. Market participants hope that the NFP report will provide clues on the strength of the U.S. economy and the Fed’s next policy move. So the U.S. Dollar’s fate will depend on the NFP outcome. Let’s be surprised.

If you want to know how we will trade the payrolls, sign up for our daily signal service here.

We would like to inform all subscribers and readers that we will take a summer trading break until end of August. Our signal service and all daily analysis will be resumed in September.  

We wish you a very enjoyable summer.

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 2017 Maimar-FX.

www.maimar.co