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U.S. Dollar Slightly Strengthened After Turkey Airport Attacks

Dear Traders,

After Tuesday’s recovery the euro and British pound dropped back to their lower levels where the rallies had started out yesterday. The rapid decline is due to an airport terror attack in Istanbul late Tuesday. Three suicide bombers killed at least 36 people at the entrance to the main international airport in Istanbul. Investigations indicated the Islamic State (IS) was behind the terror attack. The attack came at a time when Turkey is struggling with the biggest slump in tourism as a result of the ongoing terrorist threat in the country.

Overall, there is a considerable degree of uncertainty in the market which negatively influences investments as well as the economic environment. European leaders pressed the U.K. to lay out a Brexit plan as quick as possible in order to avoid further uncertainty. However, it may take some time as the U.K. will only start the EU withdrawal process once a new government has been installed. This could happen as early as September.

From a technical perspective not much has changed. The euro traded consolidated between 1.11 and 1.1035. While we are still looking for breakouts either above 1.1135 or below 1.10 the trading range has narrowed which is why traders should keep an eye on prices above 1.1085 for bullish and, vice versa, for prices below 1.1035 for bearish engagements.

The cable peaked at 1.3419 before trending lower again. Our focus shifts to a renewed break below 1.3270 before anticipating lower targets at 1.3220 and 1.3150. On the topside, the 1.3370-level is seen as a current resistance.

Apart from the EU-U.K. summit, German Consumer Prices scheduled for release at 12:00 UTC and the U.S. PCE index due at 12:30 UTC could have a minor impact on the currencies.

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Euro Appeared Unaffected By Geopolitical Tensions

Dear Traders,

The euro remained resilient amidst heightened tensions between Turkey and Russia. The European currency was capped at 1.0670/75, resulting in a barrier for any bullish engagements. While other currencies such as the JPY benefitted from safe haven flows after geopolitical tensions overshadowed financial markets, the U.S. dollar received less attraction as a safe haven. Political analysts consider a major escalation unlikely given the risks associated with any conflict between Russia and Turkey as a NATO member.

The British pound traded lower on dovish comments from Bank of England officials. BoE Governor Mark Carney said in testimony to lawmakers that interest rates are likely to remain low for some time. BoE Chief Economist Andrew Haldane sounded even more dovish saying risks to the inflation outlook were to the downside. So all in all, given the bleak outlook, sterling could be vulnerable to further losses in the near-term. The currency pair marked a recent support at around 1.5050. Next target is 1.50.

Yesterday’s U.S. data came in mixed and failed to trigger a big reaction in the USD. The focus will now shift to Personal Consumption Expenditure and Durable Goods Orders, scheduled for release at 13:30 GMT. U.S. New Home Sales are due for release along with Michigan Confidence at 15:00 GMT.

EUR/USD

The euro is trending downwards. A current resistance can be found at 1.0690/1.07. Any bullish breakouts above 1.07 are likely to be limited until 1.0760-75. A lower support could currently be at 1.0575, from where some pullback may occur.

Chart_EUR_USD_4Hours_snapshot25.11.15

 

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