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Euro And Pound Are Not Able To Maintain High Levels

Dear Traders,

The U.S. dollar slightly strengthened versus the euro and pound Tuesday. The euro gave up some of its recent gains but was, for the time being, able to hold above the 1.07-mark. With only one day to go before the ECB meeting we do not expect huge market moves in the EUR/USD. Rather, we expect the euro to range-trade between 1.0760 on the upside and 1.0660 on the downside. There are no major important economic reports scheduled for release today, so market participants may stay on the sidelines.

The British pound reversed after peaking at 1.2775 and fell back below 1.27. Recently, sterling was supported by hopes that a hard Brexit can be avoided but the Supreme Court’s ruling on the legitimacy of the U.K. government to trigger Britain’s exit from the EU is still far from done and dusted. From a technical perspective we see next supports around 1.2550 and 1.25 where the pound is probably headed before gaining some ground.

U.K. Industrial and Manufacturing Production figures are scheduled for release at 9:30 UTC and could impact the cable’s price action.

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Risk-Aversion Leads To Sideways Trends

Dear Traders,

There is not much news to report on the currency market. The performance of both major currency pairs showed only little consistency Thursday, although we saw a slight shift towards the U.S. dollar. However, any attempts to sell both euro and cable have not been paid off. The unsteady fluctuations can be attributed to risk-averse investors who stayed at the sideline as market-moving data is lacking.

The gathering of  the four Federal Reserve chiefs Janet Yellen, Ben S. Bernanke, Alan Greenspan and Paul Volcker did not deliver any new insights into the Fed’s guidance. Yellen said “We are coming close to our assigned congressional goal of maximum employment”, even though she still sees some slack remaining in the U.S. labor market.

With no market-moving news we expect both currency pairs to trade sideways within the frequently discussed price levels. The only piece of economic data scheduled for release today will be U.K. Industrial and Manufacturing Production numbers (8:30 GMT). If data comes in weaker than forecast, the pound could drop below its current support at 1.4045. The focus will then shift to the 1.40-barrier and in case of a break below 1.3985 GBP could make a move towards 1.3920. Any pullbacks, however, could be limited until 1.4110 and 1.4150.

Have a nice weekend.

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Bears Regained Some Control – The Calm Before The Storm?

Dear Traders,

The British pound has begun to give up some of its gains and dropped below the 1.42-level. Meanwhile, the upcoming U.K. referendum and the Brexit debate have led to new tensions between lawmakers and the Bank of England. In yesterday’s hearing, the central bank was accused of being supportive of the “remain”-campaign, overstating the positives. Uncertainties surrounding a potential Brexit-scenario are weighing on the pound which is why the odds are in favor of further bearish momentum. The closer the June-vote approaches, the more tensions we can expect.

Next lower targets are seen at 1.4155 and 1.4110. If GBP breaks significantly below 1.41 we might see a slide towards 1.4060 and 1.4020. On the upside, gains were capped at 1.4275 and it would require a sustained break above 1.43 in order to revive fresh bullish momentum.

U.K. Industrial and Manufacturing Production figures are scheduled for release at 9:30 GMT, a report which could have a short-term impact on the cable.

The euro reversed just shy of 1.1060 and ended the day lower against the greenback. Our focus now shifts towards the 1.0950-support. A break below 1.0940 could drive the euro towards lower levels at 1.0910 and 1.0870. On the topside, the resistance-zone at 1.1060/70 remains intact.

There are no important economic reports from the Eurozone scheduled for release today but going into tomorrow’s crucial ECB meeting, the euro could be vulnerable to further losses.

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Will Yellen Help Breathing New Life Into The U.S. Dollar?

Dear Traders,

The U.S. dollar has become more fragile following the global market turmoil. Until recently, the greenback was considered a safe haven currency but the roles have reversed. Since the Federal Reserve set up a policy tightening path amidst global economy slowing and other central banks turning to negative rates, the U.S. dollar lost a large part of its demand. Investors are sceptical whether the Fed can continue raising interest rates this year, making the long-dollar trade unattractive.

Fed chair Janet Yellen is scheduled to appear before the House Financial Services Committee today at 15:00 GMT and market participants will be scrutinizing her remarks for hints of whether the Fed may downplay chances of a March rate hike. Even though the U.S. job market has been surprisingly strong, many analysts believe the central bank could shift to a dovish tone, preparing the market for no changes next month. However if Yellen keeps the door open to possible tightening in March, we could see the dollar strengthening. We will wait and see and prepare for high volatility at the time of the testimony.

Before the main event risk, sterling traders should keep an eye on U.K. Industrial and Manufacturing Production, scheduled for release at 9:30 GMT. The cable traded between 1.4515 and 1.4378 providing no clear direction. While today’s price action will be determined by investor’s appetite for U.S. dollars, we will focus on the following important price levels:

  Resistances Supports
GBP/USD 1.4520

1.4545

1.46

1.4640

1.4375

1.4350

1.4245

1.4150

 

  Resistances Supports
EUR/USD 1.1330

1.1380

1.1450

1.15

 

1.1155

1.1105

1.1070

1.0980

 

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GBP/USD: Next Bearish Target At 1.4455?

Dear Traders,

Yesterday’s trading was dominated by a  counter-movement in both major currency pairs. The euro trended downwards, moving away from its resistance at 1.0940, but the slide came to a halt at nearly 1.0840. For the time being, we expect the euro to trade within its current 100-pip trading range between 1.0935 and 1.0840. A break above 1.0945 may push the common currency for a rise towards 1.0980. However, with no important economic data releases from the eurozone, gains in the EUR/USD could be capped at 1.10 and 1.1050. On the bottom side, we expect a next support at 1.08, provided that the euro breaks below 1.0840.

Traders should listen to comments of Federal Reserve Presidents this week. Fed’s Vice Chair Fischer speaks in Paris today at 10:30 GMT.

The British pound recovered from the 1.45-support and tested the next important price level at 1.46. In the end, the upward turned out to be short-lived and sterling gave up its gains. Today could be a busy day for sterling traders, with Industrial Production figures due at 9:30 GMT and BoE Governor Mark Carney scheduled to speak in Paris at 14:15 GMT. Investors are pessimistic with regard to a first BoE rate increase. Even though a weakening pound comes handy to the economy and inflation, BoE policymakers are unlikely to feel any pressure following the Fed in raising rates.

GBP/USD

While the trend is clear, it will hinge on economic data and BoE speak whether GBP could be vulnerable to further losses. We see a next possible halt at 1.4460/50, from where GBP may bounce back in a first attempt. On the other side, upwards moves could be limited until 1.4630 and 1.4665.

Chart_GBP_USD_4Hours_snapshot12.1.16

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Next Targets To Watch Out For

Dear Traders,

While the British Pound continued to weaken against the U.S. dollar, the euro tested the 1.08-barrier which lends a short-term support for the currency pair. The big question ahead the FOMC meeting next week is whether the euro will remain comfortable above this zone or will rapidly fall back towards 1.05. A Federal Reserve interest rate hike is priced into the market, which is why we expect downward pressure to be limited in the coming days. However, the odds are in favour of the USD and we will be looking for lower targets at 1.0750 in the EUR/USD and 1.5020/00 in the GBP/USD.

EUR/USD: Breaking below 1.0730 may prompt the EUR/USD for a test of 1.07/1.0690. Current resistances are seen at 1.0860 and 1.09. Euro bulls should be looking for a sustained break above 1.09 targeting higher levels at 1.0940.

GBP/USD: GBP is trending downwards but where could be a next stop? We consider the 1.50-mark as a crucial support for the pair. Once this level is breached to the downside, the next stop could be at 1.4950 and 1.4920. On the upper side, the 1.5080-level may act as a resistance for sterling. Above 1.51 a bullish target could be at 1.5150.

Important data for today which could impact on the currency pairs:

9:30 UK Industrial & Manufacturing Production

10:00 EUR Eurozone GDP

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Euro is losing strength – GBP at lofty height

Dear Traders,

After the euro’s brief rebound against the greenback, the common currency failed to extend its gains. We believe that the upside potential in the EUR/USD could be limited ahead of the highly anticipated FOMC meeting next week. A current resistance is seen at 1.1215 and euro bulls would need to clear that hurdle significantly in order to revive fresh bullish momentum towards 1.1270. However, we generally favor a bearish bias on the euro and expect the downward pressure to increase in the near term.

The British Pound experienced a significant recovery against the U.S. dollar. Ahead of tomorrow’s BoE monetary policy announcement, investors might be risk-averse, dampening the demand for sterling. As long as GBP remains below its next resistance at 1.5435, we expect the currency to be vulnerable to bearish corrections.

U.K. Industrial Production and Trade Balance are scheduled for release at 8:30 GMT. Apart from that, there are no major economic reports due for release today.

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