risk-on mode – MaiMarFX

Market’s Risk-On Mode Could Be Premature

March 28, 2022/in General News & Updates /by MaimarFX

Last trading week was none of our favorites since low volatility has left us with uncomfortably narrow trading ranges. This has led to some false price breakouts, particularly in the EUR/USD and DAX. Despite the ongoing war in Ukraine, we can see an increase in the market’s appetite for risk, with the most liquid crypto currency pairs surging above recent resistance levels. However, while everybody hopes for a ceasefire in Ukraine that would ease pressure on the market, the ‘risk on’ approach could be premature and dangerous.

The U.S. dollar has fallen even if the Federal Reserve follows the most aggressive monetary policy approach in over 20 years. The market is pricing in a 60 percent chance of a 50bps rate hike in May and 70 percent chance of another 50bps hike in June. Given the Fed’s hawkish lean, dollar bulls should keep an eye on USD crosses.

This week we will watch the PCE deflator on Thursday and the Nonfarm Payrolls on Friday.

EUR/USD – Testing the 1.0950-support

The euro seems to be primed for a dip towards 1.09, provided that 1.0950 breaks. We will then pay attention to a potential break below 1.0880 which could send the euro tumbling towards 1.07. Overall, as long as the euro remains below 1.1050, we favor a bearish bias.

GBP/USD: The cable refrained from a climb above 1.33 and fell back towards 1.3140. For further bearish momentum, we would need to see a sustained break below 1.3080.

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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Can U.S. CPI Data Boost Rate Hike Forecasts Much Further?

January 12, 2022/in General News & Updates /by MaimarFX

The Federal Reserve’s hawkish outlook and the rate hikes are very well priced in by the market, so what we now see in both pairs EUR/USD and GBP/USD is a risk-on-mode amid extremely quiet trading conditions.

The EUR/USD remained stuck in a small range between 1.1390 and 1.1270 over the last 40 days. We see potential for a test of the 1.1420-area but recall the pair’s overbought situation.

The cable extended its upward movement and broke above 1.36. A next hurdle comes in at 1.3670 which could attract sellers.

Traders’ next focus is the U.S. CPI report scheduled for release today at 13:30 UTC. The headline inflation is expected at 7.0 percent y/y in December and core at 5.4 percent. These would be the highest readings in 30-40 years. Since faster Fed rate hikes are already priced in, it remains to be seen whether today’s data can boost forecast much further.

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ETH/USD

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Buying The Dip

December 8, 2021/in General News & Updates /by MaimarFX

Investors were buying the dip – this was at least apparent in the DAX that took out the 15500-handle and surged toward 15900 in a next leg up. Early evidence that omicron cases haven’t overwhelmed hospitals appears to have calmed the markets. Risk assets recovered.

However, there are warnings that buying-the-dip could be too early as turbulences could continue.

DAX

The index stabilized above 15500 and headed toward 15900 in a next move. Whether we will see a test of 16000 depends on investors’ risk appetite but it seems as if there could be further room for the bulls. 16000 is the next bullish target.

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Risk-On Mode Continues

May 21, 2021/in General News & Updates /by MaimarFX

And the market’s risk-on mode continues with the anti-risk U.S. dollar depreciating against other currencies. Consequently, we saw both euro and cable heading towards higher levels Thursday, slowly approaching overbought territory. While growth optimism is currently overshadowing the latest Fed minutes, we bear in mind that a Fed policy shift could happen sooner rather than later should the economic recovery continue at its current pace. And such a shift would buoy the dollar trade in the medium-term.

However, as long as we are risk-on we will keep tabs on higher targets in both currency pairs.

GBP/USD: Breaking significantly above 1.42, we see a next target at 1.4250. On the downside there is a current support at around 1.4120 and if the cable breaks below that level we may see a correction towards 1.4070.

EUR/USD: If the euro is able to overcome the 1.2250-hurdle and further 1.2270 we will shift our focus to a higher target at 1.2340. If the pair falls however back below 1.2150, it may extend the slide towards 1.2120 and 1.21.

DAX: Traders in the DAX were again able to book a good profit amid the index’s volatile swings. We now focus on a higher target at 15580 while a crucial support is seen at 15000.

Have a good weekend.