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BoE Disappoints Sterling Bulls

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The Bank of England disappointed sterling bulls that have hoped for a far more hawkish outcome at yesterday’s BoE decision. Consequently, the pound corrected recent gains until a daily low of 1.3890. The BoE reiterated that it does not intend to tighten policy until there is clear evidence that the pickup in inflation will persist for a sustained period. As expected, Andy Haldane voted for a reduction in the stimulus while the other MPC members voted 8-1 to maintain the stimulus for now. Policy makers are due to revise inflation forecasts in August where we expect bigger market movements at the time of the policy decision.

Amid thin liquidity conditions we expect both EUR/USD and GBP/USD to fluctuate within relatively narrow trading ranges.

GBP/USD: We pencil in a short-term price range between 1.4070 and 1.3750.

EUR/USD: For bullish momentum to accelerate we will need to see a fresh break above 1.1960 with a next target at 1.20. Below 1.1910, the focus shifts to lower targets around 1.1870.

DAX: Chances increase in favor of a run for 15900 as long as 15400 holds on the downside.

Have a nice weekend.

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GBP/USD: What To Expect Today

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The GBP/USD has staged a notable rebound from its post FOMC low around 1.38 to a test of 1.40 yesterday. Sterling bulls now wonder whether there could be a run back towards 1.41 and possibly even 1.42 but today’s price action will mainly hinge on the Bank of England rate decision.

The BoE is expected to leave its monetary policy unchanged while there is no updated monetary policy report. The focus will be instead on the guidance for QE and there are rising expectations for a relatively more hawkish Bank of England, signaling a shift in policy. If this is confirmed the pound could extend its recent rebound towards higher targets.

It will be the last rate decision for BoE’s Chief Economists Andy Haldane who steps down this month. Haldane is the BoE’s most outspoken contrarian and inflation hawk and his removal could see a more dovish tone at future BoE meetings. Even if Haldane votes in favour of a reduction in asset purchases, his vote could be dismissed by the market while more attention will be placed on whether other MPC members vote to curb the scale of the central bank’s asset purchase program. However, while risks are more skewed to the hawkish side, there is also danger of disappointment for bulls. Traders should brace for higher volatility around the decision at 11:00 UTC but should not expect too much from today’s meeting as the BoE is likely to wait until August for changes in its guidance and further tapering.

GBP/USD

Given the more optimistic outlook in the U.K. traders brace for an extension of pound gains but given the Federal Reserve’s hawkish pivot gains might be limited in this pair. We see a next higher target at 1.4090. On the downside, the 1.38-handle has proved to hold. In case of a disappointment from the BoE, the pound could extend losses towards 1.3750 and 1.3650.

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High Volatility Led To Unsteady Currency Movements

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Dear Traders,

The Bank of England surprised investors with a hawkish twist yesterday and warned that rate hikes may be faster and larger than originally anticipated. This hawkish tone caught the market by surprise and led to high volatility and a short squeeze in GBP/USD. While sterling bulls were able to benefit from the rapid surge to a high of 1.4067, the upward move turned out to be only short-lived and traders had to be quick to take the profit.

To sum it up, the BoE lifted its forecasts for economic growth and said interest rates may need to rise at a steeper pace than previously thought. BoE policymakers now see three rate hikes over the course of three years while the market is now pricing in a 70 percent chance of a rate increase in May, up from nearly 50 percent yesterday.

While the BoE’s hawkishness should pave the way for further gains in the pound, it were high volatility and ongoing Brexit uncertainty that prevented the currency from rising further against the U.S. dollar.

We were able to book a good profit yesterday by trading our daily long signal.

The euro ended the day unchanged against the greenback after it dropped to a low of 1.2212. For euro bears, however, the downward move has proved insufficient to provide a sustained profit. Prices in the EUR/USD narrowed, suggesting that we may see some upcoming breakout of that tight range. If the euro climbs above 1.2265 we may get another test and potential break of 1.2295. A higher target could then be at 1.2330. If the euro, however, falls below 1.2240 it could further decline towards 1.22. A lower target could then be at 1.2150.

There are no major economic reports scheduled for release today. U.K. Manufacturing Production is the only second-tier report scheduled for release at 9:30 UTC.

Have a nice weekend.

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2018 Maimar-FX.

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EUR/USD Remains Below 1.18, GBP/USD Faces 1.33

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Dear Traders,

The euro ended the trading day virtually unchanged against the U.S. dollar after a bullish reversal towards 1.18 has proved short-lived. We now expect the EUR/USD to trade lower towards 1.1680 unless we see a sustained break above 1.18 and farther 1.1840, which would shift the bias in favor of the bulls.

The GBP/USD followed its short-term upward trend channel (see yesterday’s analysis) and rose to a high of 1.3280. If the cable is able to hold above 1.32 we expect further gains towards 1.3310 and possibly even 1.3325. But irrespective of the technical outlook, any new Brexit headlines or speculation about the Brexit progress will affect the cable’s price action in the near-term.

Sterling traders should keep an eye on the Bank of England testimony at 10:00 UTC. Several BoE officials are scheduled to testify before Parliament and if there are indications of further monetary policy normalization in 2018, the pound could soar.

Federal Reserve Chair Janet Yellen is scheduled to speak later today at 23:00 UTC but her comments may have little impact on the greenback’s price action as she announced her retirement from the Fed in February after Jerome Powell has been sworn into office.

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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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British Pound Reacts With High Volatility To Opinion Polls

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Dear Traders,

The pound sterling is reacting with high volatility to fresh opinion polls ahead of the June 8 U.K. general election. After rallying towards 1.29, the pound dropped sharply as a poll showed Theresa May’s Conservative Party may miss a majority. With sterling’s direction being determined by opinion polls, the technical outlook currently seems to recede into the background. For sterling traders, Tuesday has been a profitable trading day with our long entry hitting the profit target exactly before the pound reversed towards lower levels. If the GBP/USD drops below 1.2790 there could be a next barrier at 1.2750 which needs to be significantly broken in order to spark fresh bearish momentum.  On the topside, we still expect a crucial resistance at 1.2980.

For euro traders, the upward trend proved successful with the euro testing the 1.12-mark. From a technical perspective, the euro seems to be formatting a downward channel with the lower barrier currently coming in around 1.11 while the upper barrier, which is currently seen at 1.12, may limit near-term gains in the EUR/USD.

The euro-area’s preliminary headline inflation rate will be released today at 9:00 UTC and the euro might come under some selling pressure ahead of this report as economists forecast a slightly lower reading.

From the U.S., we have Pending Home Sales at 14:00 UTC and the Fed’s Beige Book at 18:00 UTC scheduled for release.

Daily Forex signals:

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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Quiet Trading

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Dear Traders,

The euro’s short-lived break above 1.0630 proved unsuccessful after euro bulls got fooled by the false breakout. It may require another test of that resistance level to finally invigorate further bullish momentum but the price action will also hinge on the appetite for U.S. dollars ahead of Friday’s payrolls report. However, from a technical perspective, nothing has changed and we still wait for prices either above 1.0630/40 or, on the other side, below 1.0490.

The pound sterling depreciated against the U.S. dollar but held steady above its 1.22-support. In short-term time frames, we now wait for a renewed break below 1.2230 in order to sell sterling towards 1.2190.  On the topside we anticipate the 1.2285-level to act as a current resistance. For the pound to rally, it would need to significantly break through the 1.23-level.

There are no major important economic reports scheduled for release today, so trading could be quiet again with market participants remaining risk-averse until the end of the week.

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

 

 

 

Quiet Trading Environment

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Dear Traders,

Not much has happened in the market on Wednesday and trading can be described as very quiet. Market-moving economic data was still lacking and thus the price action in both major currency pairs was constricted to tight trading ranges. The technical picture has therefore not changed.

While none of our daily entries was triggered in the EUR/USD, the cable showed a slight upward trend towards 1.2550. The 1.2550-barrier is considered an important resistance and if the pound rises above that level we may see a continuation of the recent upward trend, driving sterling towards 1.26 and possibly even 1.2660. On the bottom side we will pay attention to a potential break of 1.2440. Lower targets could be at 1.2420 and 1.2320.

Bank of England Governor Mark Carney is scheduled to speak in London today at 18:30 UTC. This speech might be worth watching given accelerating inflation and recent hawkish comments. If Carney highlights a hawkish outlook despite the risks surrounding the U.K.’s exit from the EU, the pound could extend its gains. If he however, takes a neutral stance on monetary policy, sterling could fall back towards 1.24.

The euro traded between 1.0715 and 1.0640. As long as there is no fresh price breakout above or below this range, there is nothing new to report.

From the U.S. we have Continuing and Initial Jobless Claims scheduled for release at 13:30 UTC but these reports are of secondary importance to the greenback.

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

 

 

 

Is The Pound Poised For Further Price Gains?

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Dear Traders,

The U.S. dollar continued to weaken against the British pound and euro. Investors have been looking for further details on Trump’s plans to boost growth and government spending but there are no specific details given yet. In the long term however, this does not mean that the dollar rally is over. The greenback might continue its weakness on the lack of certainty but if president Trump delivers on his economic promises the dollar could quickly recover. Some economists, however, forecast the strong dollar to continue and even expect the dollar to reach parity with the euro by the end of the year. Let us wait to be surprised.

The euro still remained within its recent uptrend channel, albeit with a slight extension to a high of 1.0773. Yet, there was no bullish breakout and we will focus on prices above 1.0775 in order to buy euros towards 1.08/1.0850. A current support is however seen at 1.0660/50. The German and Eurozone PMI reports are scheduled for release at 8:30 and 9:00 UTC but we do not expect these reports to have a major impact on the euro.

The pound sterling knew only one direction: upwards. The pound headed for a test of its resistance zone around 1.2550 and it will now be interesting whether there is still room for further gains. Above 1.2570 we expect the pound to head for 1.2640 and 1.2690. How sterling will trade today also hinges on the U.K. Supreme Court ruling on the Parliament’s role in Brexit. It is expected that the High Court will vote in favor of Parliament’s approval in triggering Article 50. This decision may send the pound even higher. The ruling will be announced at 9:30 UTC and traders should prepare for volatile swings in the GBP/USD. Whatever the case, if the pound drops back below 1.24, we expect bearish momentum to accelerate.

From the U.S. we have Existing Home Sales due for release at 15:00 UTC but this report is unlikely to have a significant impact on the greenback.

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

 

 

 

U.S. Dollar Takes A Breather While Euro And Pound Recover Slightly

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Dear Traders,

We got what we have been looking for: A breakout of the cable’s narrow trading range. While an initial attempt to buy sterling above 1.2235 proved unsuccessful, breakout traders were later able to profit from the pound’s sharp drop towards 1.2080. Sterling tumbled before BoE Governor Carney’s testimony to the House of Lords Tuesday but bounced back from its fresh low of 1.2082 as Carney said there were limits to the Monetary Policy Committee’s (MPC) willingness to look beyond an overshoot of their inflation target. In other words, his comments on inflation mean that further easing is unlikely in the near term, highlighting policy makers’ concerns about the risk of stagflation, which arises from the depreciation of the pound.

Carney’s recent comments suggest the MPC will stick to the sidelines at the next ‘super Thursday’ event on November 3.

Technically the pound remains confined to a recent 100-pips trading range between 1.2250 and 1.2150. Above 1.2250 it could head for a test of 1.2320 whereas a break below 1.2130 may drive the GBP/USD to fresh lows around 1.2050.

The EUR/USD however, failed to show larger movements yesterday and remained stuck between 1.09 and 1.0850. It was the second consecutive trading day on which none of our signal entries was triggered. European Central Bank President Mario Draghi defended the ECB’s easy monetary policy but conceded that low interest rates are not ‘costless’ for the eurozone and policy makers “certainly prefer not to have to keep interest rates at such low levels for an excessively long time”. Draghi’s ‘neutral position’ drove the euro higher but gains were capped at 1.09 for the time being. We are still looking for a significant break above 1.09 but any upward movements could be on a shaky footing as a next resistance is seen at 1.0950.

There are no major economic reports scheduled for release today. The only reports come from the U.S. and will be Advance Goods Trade Balance at 12:30 UTC, Services PMI at 13:45 UTC and New Home Sales at 16:00 but none of these reports is expected to have a major impact on the greenback.

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 2016 Maimar-FX.

www.maimar.co

 

 

 

Will The BoE Deliver Or Disappoint?

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Dear Traders,

The U.S. dollar slightly advanced versus the euro after the ADP report came in better than expected. Unlike the euro, the British pound lacked direction before the Bank of England’s rate decision and fluctuated within a sideways range of 100 pips.

Today, there is only one subject in the market: The Bank of England rate decision and Inflation Report, scheduled to be released at 11:00 UTC. Our focus therefore shifts to the GBP/USD as we prepare for volatile swings. While a 25bp rate cut is widely expected, the price action will depend on how aggressive BoE policymakers will support their dovish stance. If they signal further easing in the near-term, the pound could quickly fall towards 1.32 and even lower. On the other hand, if the central bank is in no hurry to introduce further easing except the anticipated 25bp rate cut, investors could be disappointed and give up on their short positions. The pound could surge as a result of a less dovish BoE.

However, as stated in yesterday’s analysis the 1.3420 level could act as a crucial resistance for the pound. Hence, gains could be limited until 1.3425 and 1.3480. Only a significant break above 1.35 would change the bias in favor of the bulls. On the bottom side, we will focus on the 1.32-level. In case sterling drops below 1.3170 we see chances of an extended downward move towards 1.3030.

Given the fact that today’s focus is on the pound sterling, we do not expect larger fluctuations in the EUR/USD. The euro could trade sideways between 1.12 and 1.11. We recommend traders not investing too much today and take profits at smaller targets if there are any.

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 2016 Maimar-FX.

www.maimar.co