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Further Bearish Momentum?

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The U.S. dollar roared back to life as safe haven demand increase due to concerns of escalation and spread in the Middle East.

As written in our last technical analysis, we prepared for renewed bearish momentum in both EUR/USD and GBP/USD which has proved to be key last Thursday and Friday.

Next targets to watch out for

EUR/USD: The euro retreated after hitting 1.0640 and thus the area around the upper descending trendline of the pair’s latest downtrend channel. It then fell back towards a test of 1.05. For accelerated bearish momentum we would need to see a break below 1.0480. A lower target is seen at 1.0350. Bulls on the other side, will wait for prices above 1.0620 in order to buy euros towards 1.07.

GBP/USD: The cable held above 1.2120 so far but it will depend on geopolitical tensions whether we will see a next leg down to 1.19. As for sterling bulls we recommend waiting for a renewed break above 1.23 in order to buy sterling towards 1.24.

DAX: The index is hovering the 15100 area but we prepare for further losses towards 14800. On the upside we see a strong resistance at around 15500 which could limit any bullish momentum for now.

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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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Middle East Crisis As Risk Factor

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The news of violence erupting in the Middle East has roiled markets and despite the U.S. dollar’s haven status in times of trouble, the euro and British pound are (still) holding quite well against the greenback at the opening of this new week. The dollar even showed a reluctance to a further rally after Friday’s solid jobs report that saw 336k new jobs in September.

Following the shock of the Hamas attack in Israel over the weekend, the dollar opened only with a small upside gap.

However, the instability in the Middle East has the potential to reignite the greenback’s rally and may brings back the discussion about whether the euro may once again fall to parity.

Bob Savage, head of markets strategy at insights at BNY Mellon Capital Markets wrote in a note: The “dollar bid holds and the confusion over growth and inflation continues. We are more likely to see an escalation of conflict than a resolution both at home and abroad, in markets and in economics, in monetary and fiscal policy.”

Today is a holiday in the U.S. which may contribute to slipperier market conditions than usual on these days with less liquidity.

 

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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.

Any and all liability of the author is excluded.

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Policymakers Find Themselves In A Dilemma

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Yesterday we saw how the market reacts when panic sets in. Panic about a new banking crisis, panic about deposits at Europe’s largest banks. After the collapse of Silicon Valley and Signature Bank in the USA, Credit Suisse is also in a fragile position. Investors fear a domino effect on other banks and fled into reserve currencies such as the U.S. dollar. Nevertheless, even the greenback will not be safe in the event of a system crash.
Policymakers are in a dilemma. Inflation is not abating because there has been too much fiat money in circulation in recent years, provided by governments to support struggling economies. This money is not tied to the price of a commodity, so there is too much money on too few goods. Thus, years of ultra-loose monetary policy are inevitably the cause of inflation. Monetary authorities are now trying to curb the rate of inflation with restrictive measures such as interest rate hikes, but in the process, they are adding fuel to the fire.  Higher interest rates mean that companies are having difficulty borrowing money from banks or servicing loans. This in turn forces companies to cut jobs because they are no longer solvent. And there we have stagflation, a stagnation of the economy with simultaneous demonetization. In the worst-case scenario, this will lead to a recession and a liquidity crisis for the banks and thus, as with the SVB, to a collapse.

In short, the only solution would be a return to an accommodative monetary policy, the price of which would be inflation that no one would be able to contain. In the worst case, which no one wants to talk about, the Western financial system could come to an end.

It remains to be seen whether policymakers will pull another wild card for their battered system.
At 13:15 p.m. today, we will learn from the European Central Bank by how many basis points the key interest rate will be raised again. Expectations tended to a hike of 50 basis points, but after all the turmoil of recent days traders are now betting on a smaller 25bp increase. A smaller rate hike would be neutral to bearish for the euro.
EUR/USD: We will pay attention to price breakouts either above 1.0810 or below 1.0480.

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!

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Risk Aversion Returns To The Market

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Traders saw a strong sell-off on Monday which led in many indices to a slump towards psychological support zones such as the 15000 level in the DAX. The index fell to the lowest level since May as investors rushed into safe haven assets as sentiment soured. A bout of risk aversion returned to the summer markets amid renewed fears over an economic slowdown, driven by a resurgence in Covid cases.

DAX

The index did not stop its fall until nearly 15000. Buying the dip could lead to some rebound towards 15500 now.

As for the currencies, the biggest beneficiaries of haven demand were the U.S. dollar and Japanese Yen. The GBP/USD dropped towards the descending trendline of its recent downward channel near 1.3650. If now 1.3630 holds, we may see a small rebound towards 1.3750.

The EUR/USD was the only currency pair that ended the trading day virtually unchanged. We keep tabs on technical breaks below 1.1730 and 1.17 on the downside and 1.1850 on the upside.

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U.S. Dollar Benefits Amid Crypto Volatility

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The anti-risk U.S. dollar appreciated against other currencies amid warnings of a broad-based repricing in the market. Following the dramatic price swings in cryptocurrency assets, central bankers warned that speculation in stocks and cryptocurrencies could pose a threat to financial stability, derailing the global recovery. Investors fled into safe haven assets and the greenback benefited. From an objective point of view, however, it is no surprise that policymakers intervene as they do not want to give up their monetary monopolies while cryptocurrencies begin to compete with regular currencies.

The overall performance of cryptocurrency could serve as a compass for changes in market sentiment and moves in risk trends.

The economic docket this week thins out with potential catalysts lacking. While we do not expect big movements, we will keep tabs on the technical picture and important price barriers.

EUR/USD: As long as the euro is unable to overcome the 1.2250-barrier, chances are in favor of the bears with the focus being on a sustained break below 1.2150. Lower supports are seen at 1.2050 followed by 1.20. Above 1.2250, the focus shifts to 1.2290 and further 1.2350.

GBP/USD: The February-high at 1.4243 remains an obstacle and as long as we do not see prices above 1.4270, we brace for a correction towards 1.40.

DAX: The index is heading towards 15500 again. We see a next target at 15580 before a potential bullish breakout happens. A current support is however seen at 15100.

We wish everyone a good start to the new week.

We wish you good trades!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2021 MaiMarFX.

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Trade War Has Begun

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Dear Traders,

Yesterday was the official start of a trade war with the Trump administration announcing a at least $50 billion tariff on Chinese imports. And that decision had a reciprocal effect. Subsequently, China announced plans for tariffs on $3 billion of imports from the U.S., including products from steel to pork.

Investors now fear an escalation in trade tensions between the U.S. and China while an escalation in trade wars could hurt global growth.

The Japanese yen served as a safe haven while the U.S. dollar’s fate is still uncertain amidst an uncertain geopolitical environment.

The British pound’s reaction to the Bank of England announcement was strong but short-lived. The BoE rate decision was a bit more hawkish than expected, increasing the odds for a next rate in May to 72 percent now. The pound soared to a high of 1.4220 but quickly deviated from its highs as market participants took profit at 1.42. We still see the pound trading within an uptrend channel which is why we expect further gains towards 1.4270. As mentioned in yesterday’s analysis, the current support around 1.4070 proved intact from where some buyers have shown up. For the bias to shift from bullish to bearish it would require a sustained break below 1.40.

The euro bounced off the falling trendline and tested the 1.23/1.2280 support area. If the euro climbs back above 1.2370 we expect further gains towards 1.24. A break above 1.2415 would shift the bias in favor of the bulls.

Traders will watch U.S. Durable Goods Orders today at 12:30 UTC.

It has been a very profitable trading week and we therefore advise traders to secure their weekly profit now.

Enjoy the weekend.

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Forex Market Unfazed By North Korea Provocations

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Dear Traders,

There was not much to gain for daytraders yesterday or, more explicitly, the Forex market was unfazed by the developments on the North Korea front. Following North Korea’s nuclear test and latest provocative actions, there was an increasing demand for safe havens such as Gold but on the currency front, there was no clear trend on Monday. In recent times, markets generally tend to ignore large risks, rather, they are betting against them. Whether this behavior is an underestimation or the right preparation remains to be seen.

EUR/USD hovered around 1.19 but with US markets closed for a holiday, insufficient liquidity hindered the currency pair to rally. We now focus on the short-term resistance at 1.1920. If the pair is able to break through that barrier, we expect higher targets at 1.1960 and possibly even another run for 1.20. On the bottom side, traders should pay attention to a break below 1.1860. A lower target could then be at 1.1825, followed by 1.1785.

GBP/USD trended lower but remained well above 1.29. As noted in yesterday’s analysis, the cable would need to break significantly below 1.29 in order to invigorate fresh bearish momentum. As long as 1.29 remains unbroken we favor a neutral stance in this pair. A break above 1.2960 could encourage buyers for another test of 1.30.

The U.K. Services PMI is scheduled for release at 8:30 UTC.

From the U.S., we have Durable Goods Orders due for release at 14:00 UTC but this report is not expected to have a significant impact on the greenback.

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2017 Maimar-FX.

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Pound In Free Fall Amidst Uncertainty

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Dear Traders,

The free fall of the British pound continues with the U.K. economy facing difficult times in the aftermath of Britain’s vote to leave the EU-bloc. The huge sell-off in the pound was the biggest story in the market yesterday and it continued even during the Asian trading session, sending the pound to a record low of 1.2797. The effects of Brexit on the U.K. economy and its confidence are becoming more and more evident. Meanwhile, Bank of England Governor Mark Carney outlined more tools to contain the Brexit fallout, pledging to implement any other measures needed. Carney warned of prospects for “a material slowing of the economy” amid concern over the health of the global economy.Given the high level of uncertainty in the U.K. commercial property market, three of the U.K.’s largest real estate funds have frozen almost 9.1 billion pounds of assets to halt Brexit retreat. All in all, the pound’s future does not look bright and traders should expect further losses given the uncertain environment. Dark clouds are gathering on Britain’s horizon and this is only the beginning.

Given the pound’s sharp depreciation, investors seek for safer assets, flocking into the U.S. dollar. The euro dropped towards 1.1035 as a result of that risk aversion. A next important support is seen around the 1.0990-level. Below 1.0980, we expect the euro to fall towards 1.0940 and 1.0870. On the upper side, the euro rejected the 1.1186-level, from where it went into a tailspin. With the 1.12-resistance being intact for the time being, euro bulls should wait for a break above 1.1215/20 in order to buy euros towards higher targets.

Market participants pushed back their bets for a Federal Reserve rate hike this year, even though the Fed is likely to stay on track to raise interest rates if growth and inflation expectations are met.

The Fed releases minutes from its June 14-15 FOMC meeting, but the FOMC minutes are expected to take a backseat to heightened concerns about global growth and risk aversion.

The ISM Non-Manufacturing Index, scheduled for release at 14:00 UTC will be watched closely whereby a better figure could add further strength to the greenback.

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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.

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UK Referendum Cast Its Shadows Before – Investors Are Turning To Safe Assets

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Dear Traders,

We welcome you to a new trading week and it is getting more and more exciting as we are approaching the U.K. referendum next week, which will maintain its grip on the markets. The U.S. dollar appreciated against the euro and British pound last Friday as it benefited from safe-haven flows in the run-up to the U.K. vote. The British pound broke below 1.43 as anxiety about a potential Brexit considerably reduced the demand for sterling. While the Yen benefits most from safe-haven flows, the appetite for U.S. dollars mainly hinges on the Federal Reserve’s tightening cycle. Despite a busy economic calendar this week, the main focus will therefore be on the FOMC rate decision on Wednesday. No one expects the Fed to raise interest rates this month but Janet Yellen’s press conference could set the tone of the debate on further tightening in 2016. Apart from the FOMC announcement, the June 23 referendum is casting its shadows before: A survey published last Friday showed the ‘Leave’ camp being in the lead. U.K. Consumer Prices are scheduled for release on Tuesday, while the Bank of England will announce its monetary policy decision on Thursday. However, overshadowed by Brexit concerns, the BoE announcement is going to be a non-event for traders.

From the U.S. we have Advanced Retail Sales (Tuesday) and the CPI report (Thursday) scheduled for release. All in all, it could be a busy week for traders and as long as there is volatility in the markets, there will be opportunities for larger gains.

GBP/USD

The cable broke below its crucial support at 1.43 and could be headed for a test of 1.41 and 1.4050 in a next step. Looking at the daily chart we see a current downward channel which suggests further bearish momentum towards the lower bound at 1.4080. But be careful: The pound fluctuates in an oversold territory and could now be vulnerable to volatile upswings. Thus, pullbacks towards 1.4350 and 1.44 are not unlikely.

Chart_GBP_USD_Daily_snapshot13.6.16

From the Eurozone there will be no major economic reports on the calendar. Thursday’s Consumer Price report could have a minor impact on the euro but how the EUR/USD will trade this week, will mainly hinge on the performance of the greenback and safe-haven demand. The euro marked a current support at 1.1230. With a break below 1.1225 it could extend its losses towards 1.1195 but we expect bearish momentum to be limited as the currency pair could be vulnerable to some pullbacks now. We see a current resistance at 1.13/1.1320.

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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

 

 

 

Euro as a safe-haven currency

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Dear Traders,

Who would have thought it: Not long ago, the euro seemed to depreciate to parity against the U.S. dollar. Now, however, on the back of China’s devaluation and a cloudy outlook for a Federal Reserve rate increase, the euro is trading as a safe-haven. A September liftoff is still on the table, but expectations for the first rate hike since 2006 have been pushed back.

EUR/USD

The euro broke above its 1.11- resistance, touching a one-month high of $ 1.1213. This level could meanwhile act as a new hurdle for the currency pair. Above 1.1215, chances are that the euro heads for a test of 1.1279 and further 1.1375.

Below 1.1040 the euro could again tend towards its support around 1.09-1.0850.

Chart_EUR_USD_Daily_snapshot13.8.15

The British Pound did not move much yesterday. Our long-trade has exactly reached its profit target, and that was yet the highest level. GBP/USD is still captured within a consolidated trading range between its resistance zone 1.5650-90 and a current support at 1.5450. Traders will need to wait for break-outs of this range before expecting fresh momentum to either side.

U.S. Advance Retail Sales are scheduled for release today at 12:30 GMT, an important report which could trigger a strong reaction in the dollar.

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 2015 Maimar-FX.

www.maimar.co