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Upcoming breakouts?

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Dear Traders,

While the British pound experienced a rollercoaster ride, trading choppily sideways between 1.4020 and 1.39, the euro continued its recent downward trend against the U.S. dollar Tuesday. The greenback strengthened after the ISM index showed a higher reading, adding to evidence that the pressure on manufacturing may be easing.

Nevertheless, both of our major currency pairs failed to show sustained movements yesterday, raising the chances of upcoming break-outs – perhaps as early as today. Dollar bulls are eager to see whether the labor market is showing further signs of improvement and today’s ADP report may provide a little foretaste of the NFP report. However, disappointing ADP numbers could prompt investors to refrain from any long dollar positions ahead of Friday’s high risk event.

The euro dropped as low as 1.0834 but ended the day unchanged against the dollar. Consequently, the technical outlook has not changed and a downside break of 1.08 could be a next possible scenario. On the upside we will focus on a break above 1.09, which could drive the euro towards 1.0950/60.

GBP/USD

Traders had to struggle with sharp fluctuations and false breakouts within a narrow 100-pip trading range. Given the recent consolidation we expect a breakout in the near-term, triggering fresh momentum. Current resistances are seen at 1.4030 and 1.4070, whereas support levels are seen at 1.3905 and 1.3850.

The U.K. Construction PMI is scheduled for release at 9:30 GMT and could have a short-term impact on the GBP.

Important economic data for today:

9:30 UK Construction PMI

10:00 UK BoE’s Broadbent speaks

13:15 USA ADP report

15:30 USA Crude Oil Inventories

(Timezone GMT)

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Will U.S. Payrolls Trigger A Second Round Of Dollar Weakness?

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Dear Traders,

Choppy fluctuations in the GBP/USD Thursday left much to be desired for traders. Any upward movements were oriented towards the rising trend-line, limiting further gains in the currency pair. The short-lived downward move during the release of the Bank of England’s inflation report also failed to show sustained momentum. In the light of the latest inflation forecast the outlook has become cloudy, at least until 2018. The Bank of England cut its inflation forecast once again, while the Monetary Policy Committee voted 9-0 to keep rates on hold. The MPC reflected the possibility of greater persistence of low inflation in the near-term, while the forecast shows inflation will rise in two years.

In a nutshell, the bearish bias is likely to continue into the second half of 2016 before a trend reversal.

The euro appeared to be unaffected by European Central Bank President Mario Draghi, who said on Thursday that policy makers must not surrender to low inflation and reiterated the ECB’s dovish monetary policy stance. On the contrary, the EUR/USD preferred the upward trend on speculations the Fed will delay tightening policy.

Going into today’s’ highly anticipated Non-Farm Payrolls report, the current weakness of the U.S. dollar is dominating the markets and we are eager to see whether payrolls data will trigger another round of dollar weakness.

The odds are in favor of further dollar weakness as the January U.S. jobs report is forecast to show a smaller expansion, rising only by 190K last month. The focus will also be on Average Hourly Earnings and if payrolls and wage growth surprise to the downside, the USD is in trouble.

As the expectations are very high, trading is very risky at the time when payrolls are due for release. Traders should therefore use a proper risk management in order to avoid disappointments.

Non-Farm Payrolls are scheduled for release at 13:30 GMT.

Have a nice weekend.

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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 2016 Maimar-FX.

www.maimar.co