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Pound Consolidates – Focus Now On CPI Data

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Dear Traders,

Those who had been looking for sustained breakouts or extended gains on Monday had been disappointed by the market’s consolidation phase. The pound sterling traded sideways within a 100-pip trading range between 1.2435 and 1.2335. Given the fact that the pound was unable to hold above the 1.24-level, we expect upcoming bearish momentum in the GBP/USD. As long as sterling remains below 1.2430 we see a higher likelihood of a downside break below 1.23 which could accelerate bearish momentum towards 1.22 and possibly even 1.2050.

How the cable will trade within the next days will mainly hinge on the Brexit trigger, which will happen on March 29. Prime Minister Theresa May plans to invoke Article 50 of the Lisbon Treaty next Wednesday, starting two years of exit talks. A hard Brexit will be negative for the currency, so traders should prepare for downward movements. However, before Article 50 is triggered, the pound could retest the 1.24-mark and possibly even the 1.2470-level on stronger inflation figures. U.K. Consumer Prices are scheduled for release at 9:30 UTC and a rise in inflation could help pushing the pound higher in the short term.

The euro traded consolidated between 1.0775 and 1.0720. A renewed break above 1.0770 may prompt euro bulls to buy the single currency toward 1.0815. A break below 1.0720 however, could lead to further losses towards 1.0680. With no market-moving economic reports from the Eurozone, we expect the price action to be limited to a range of 1.0820 – 1.0680.

Towards the end of the North American trading session some Fed officials are scheduled to speak. Any hawkish comments could have a positive impact on the U.S. dollar.

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Yellen Testimony Takes Center Stage

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Dear Traders,

The currency market got off to a cautious start before the testimony from Federal Reserve’s Janet Yellen. The U.S. dollar was little changed against the euro and British pound Monday and while the euro took a dip below the 1.06-level, we still cannot speak of a significant downside breakout. The pound sterling ended the trading day in positive territory and it currently appears poised to break through the 1.2550-barrier. For sterling traders, it will be an interesting trading day with U.K. Consumer Prices being due for release at 9:30 UTC. Traders should prepare for volatile swings even ahead of the upcoming inflation figures. Above 1.2560 the pound may head for a test of 1.2575/95. While the risk for inflation is clearly on the upside there is also potential for disappointment last month.

The euro is hovering around the 1.06-mark and we still wait for a sustained break below the 1.0580-support. Once that level is breached we expect further losses towards 1.0550 and 1.0520. On the upside, the 1.0650-level may limit potential gains but today’s price action will hinge on Yellen’s testimony. Euro traders will also pay attention to the German ZEW Survey and Eurozone GDP figures, both reports scheduled for release at 10:00 UTC.

The Fed chair will start testimony in Congress in Washington at 15:00 UTC. While Yellen is not expected to give any clear hints as to the timing of the next rate hike, her comments on monetary policy could trigger larger market moves.

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All Eyes On May’s Speech

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Dear Traders,

Those who traded yesterday’s consolidation in the GBP/USD had to struggle with volatile but choppy price swings, generating only losses ahead of today’s key event risk. Sterling traders are in the starting blocks for high volatility when U.K. Prime Minister Theresa May is scheduled to give a speech on the Brexit approach and we hope for more profitable trading opportunities today. May’s speech will be closely watched as it is designed to set out the government’s position and goals over the upcoming Brexit negotiations. Traders will look for any hints as to whether the U.K. will pursue a ‘hard’ or ‘soft’ Brexit. The market is currently pricing in a higher likelihood of a hard Brexit approach with the U.K. being likely to pull out of the European Union’s single market for goods and services. May will use her speech to explicitly say she expects the U.K. to leave the single market (hard Brexit), according to a person familiar with the matter. Given the fact that May is expected to be aiming for full separation from the EU, we expect the pound to remain under pressure. Pullbacks may therefore be an attractive opportunity to sell the pound at higher levels. However, we bear in mind that when market’s expectations are very high, there is a greater potential for disappointment and thus there is also a small chance of a short squeeze in the pound. In short, anything can happen today and we recommend traders to prepare for both bullish and bearish scenario even if the risk is to the downside.

PM May’s speech is scheduled for 11:45 UTC.

Until this morning, the pound traded sideways between 1.2085 and 1.1985 and the focus has therefore shifted to breakouts above or below this range. Bearing in mind that Monday’s gap was not yet closed, the pound might tend to test the 1.2170 area before falling back towards 1.1965. A significant break above 1.22 however, could send the pound toward 1.23. On the downside, the 1.1960-level needs to be broken in order to reinvigorate fresh bearish momentum.

Before May’s important speech we have the U.K. Consumer Price report scheduled for release at 9:30 UTC. Analysts are looking for an uptick in inflation while this report alone could help the pound strengthening in short-term time frames. With inflation being on the rise, the Bank of England could intend to raise interest rates in a next move, unless Brexit developments undermine the economy.

Trading in the EUR/USD was very quiet and none of our yesterday’s entries was triggered. Today, euro traders will watch the German ZEW Survey at 10:00 UTC, which could have a impact on the euro. The 1.0685-resistance area remains in focus and if the single currency climbs above that level we may see an extended upward move toward 1.07/1.0715.

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We wish you good trades and many pips!

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Will U.K. CPI Data Push The Pound Above 1.27?

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Dear Traders,

The U.S. dollar weakened against most major currencies on Monday. Ahead of Wednesday’s Federal Reserve statement investors are concerned that US-policymakers were to flag the risk of a strengthening dollar on the U.S. economy, suggesting that the dollar rally has gone too far. Most of the dollar gains have come about as a result of expectations that Trump will enact policies that increase spending as well as spur growth and inflation. It remains to be seen how the political program will look like during Trump’s term as president while the details of an eventual fiscal-spending program are still written in the stars.

The euro tested the 1.0650-level and our yesterday’s long-entry has proved successful. We will now wait for the euro to overcome the 1.0665-barrier in order to focus at higher targets at 1.0710 and 08. On the bottom side, the 1.0470-support remains intact. Euro traders should keep an eye on the ZEW Survey, due for release at 10:00 UTC. The euro might tend to strengthen ahead of that report.

Particular attention will be paid to the British pound and the U.K. Consumer Price report scheduled for release at 9:30 UTC. CPI data is expected to show an uptick in November which is why the pound may appreciate against the greenback ahead of that report. We will focus on an upside break above 1.27, which could drive the pound towards higher targets at 1.2770 and perhaps even 1.2870. A current support is however seen at 1.2530.

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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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U.S. Dollar Weakened Ahead Of CPI Data

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Dear Traders,

The U.S. dollar weakened against the euro and British pound ahead of today’s consumer price reports. While Monday’s trading in the EUR/USD was quiet and none of our entries was triggered, sterling traders had to struggle with false breakouts within a tight trading range. Thus we had to record some losses before our last buy attempt proved to be successful. The pound strengthened before the U.K. releases inflation figures today at 8:30 UTC and sterling traders should pay close attention to the CPI report as it could have a major impact on the price action in the GBP/USD.

Technically, the pound broke above a descending trend line, pointing to further upside momentum in the short-term. If the pair is unable to break above 1.2275, the recent upward movement could be on shaky ground.

Bullish scenario: Above 1.2275 we expect further gains towards the next resistance at 1.2320/50. Above 1.2375 the pound may even head towards 1.2430.

Bearish scenario: Below 1.2130 we expect further pound weakness.

chart_gbp_usd_4hours_snapshot18-10-16

Apart from the U.K. CPI report we have U.S. Consumer Prices scheduled for release at 12:30 UTC. Economists predict the report to show inflation is accelerating and if they are right the dollar will strengthen in the wake of Federal Reserve rate hike speculations before year-end.

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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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Further Gains In The British Pound? Focus On CPI Data

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Dear Traders,

The euro ended the day unchanged against the U.S. dollar after it fluctuated considerably on Federal Reserve Governor Lael Brainard’s comments. She remained dovish and urged “prudence” in her approach to tighter monetary policy, even as she acknowledged that the U.S. economy is moving toward achieving the Fed’s goals of maximum employment and 2 percent inflation. Traders had to struggle with unsteady price movements in the EUR/USD, leading to losses instead of profits. The most important piece of economic data from the eurozone will be the German and Eurozone ZEW Survey, due to be released at 9:00 UTC. We hope for a breakout of the euro’s recent trading range, sending the pair towards 1.1315 on the upside or 1.1170 on the downside.

Unlike the euro, the British pound trended upwards and provided a good gain with both of our long-entries. Thus our swing long-entry at 1.3240 already proved to be highly profitable.

The U.K. Consumer Price report is scheduled for release at 8:30 UTC and should have a significant impact on the pound. Chances are that sterling extends its gains towards 1.3375 and even 1.3440. A break below 1.3250 however could shift the bias from bullish to bearish.

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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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Low Volatility Fails To Provide Profitable Environment For Traders

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Dear Traders,

There was little movement in the finical markets with the euro and British pound being uninfluenced by any hawkish Fed speak and U.S. economic data. Despite hawkish comments from Atlanta Fed President Dennis Lockhart and San Francisco President John Williams saying that recent economic data may justify additional policy tightening there was no appetite for U.S. dollars. Neither did weaker U.S. existing home sales numbers affect the greenback negatively.

Volatility has been very high during the last two weeks and many investors and day traders have locked up a good profit which is why many investors prematurely went on vacation or now refrain from taking any positions ahead of the Easter holidays. This week we expect volatility to remain moderate with traded volumes being subdued. Traders should therefore not expect too much and take profits at smaller targets.

The EUR/USD refrained from trading below the 1.1230-level but does not seem to favor the upward trend, either. A current resistance is seen at 1.1285, whereas short-traders should pay close attention to a break of the 1.1220-1.12 support. The German IFO and ZEW surveys are due for release today and forecasts point to an increased confidence. Positive numbers may lend support to the euro’s bullish bias.

Trading the GBP/USD yesterday has offered us nothing but losses. The cable marked a recent support at around 1.4360 whereas upward movements were limited until 1.4430. We see next important support levels at 1.4335 and 1.4310 which have to be breached in order to reinvigorate fresh bearish momentum. U.K. Consumer Prices are due for release at 9:30 GMT and if data provides a positive surprise we could see sterling strengthening towards 1.4450 and 1.45.

9:00 EUR German IFO Business Climate

9:30 UK Consumer Prices

10:00 EUR German ZEW Survey

13:45 USA Markit Manufacturing PMI 

(Time zone GMT)

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Copyright © All Rights Reserved 2016 Maimar-FX.

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Cable Remains Trading Sideways – Focus On CPI

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Dear Traders,

The euro dropped below 1.1160 as ECB President Mario Draghi confirmed the central bank’s easing bias. The ECB stands ready to act in the light of recent financial turmoil and would pay close attention to the impact of renewed declines in energy prices as well as the ability of banks to transpose the ECB’s monetary policy. Draghi said “if either of these two factors entail downward risks to price stability, we will not hesitate to act”. His remarks to the European parliament indicate that the central bank could unveil further stimulus at their next ECB meeting in March. The EUR/USD traded lower in response to Draghi’s statement.

Furthermore, the OMT bond buying program returns to the headlines. The Federal Constitutional Court holds again a hearing in a lawsuit against the European Central Bank’s Outright Monetary Transactions program (OMT), a never-used bond buying program announced in 2012. If Germany’s top judges decide that the ECB is overstepping its mandate, they could restrict the central bank’s options.

The Eurozone ZEW Survey is scheduled for release at 10:00 GMT along with German ZEW Index and if figures are even lower than the expectations, the euro could accelerate its decline.

The British pound traded lower on Monday but still remained within its current trading range. U.K. Consumer prices are due for release today at 9:30 GMT and may help to determine a clear direction and increase the momentum. A sustained break below 1.4350 could drive the cable towards 1.4290, whereas a break above 1.4540 may invigorate renewed bullish momentum.

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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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U.K. Inflation Data

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Dear Traders,

While the U.S. dollar traded slightly higher against most of its major peers, fluctuations have been unsteady – particularly for EUR/USD traders it has been a tough day, characterized by loss-making fake-outs rather than profitable break-outs.

The British Pound dropped below 1.56 after peaking at higher levels within its current resistance zone. U.K. Consumer Prices are scheduled for release today at 8:30 GMT. Economists forecast that consumer prices stagnated in July for a second month. The Inflation Data is of major importance and we expect high volatility.

Furthermore, U.S. Building Permits and Housing starts are scheduled for release at 12:30 GMT today.

We wish you a profitable trading day.

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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