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Euro And Cable In Tight Ranges Amid Thin Liquidity

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There was nothing to gain for traders in both EUR/USD and GBP/USD on Monday. Instead, we struggled with a whipsaw performance amid low volatility conditions. Even a downside break of 1.1910 in the EUR/USD failed to provide follow-through – at least until Tuesday morning.

As catalysts for bigger market moves lack, unprofitable trading conditions could possibly continue in the weeks ahead. Traders should therefore watch their risk assessment and stay on the sidelines as long as the summer doldrums impact trading conditions negatively.

Despite thin liquidity in the market, we expect some upside potential in the U.S. dollar ahead of Friday’s NFP report. We still see the risk tilted to the downside in both EUR/USD and GBP/USD with lower targets at 1.1870 and 1.18 in the euro and 1.38 and 1.3730 in the cable.

The DAX traded choppily between 15670 and 15540 yesterday and was unable to settle on a clear direction. Let’s see whether there could be bigger moves today.

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FOMC Event: Price Targets To Watch Out For

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Today will be an important trading day for traders as it may be the last one before the summer doldrums providing bigger market moves.

All eyes will be on the Federal Reserve decision at 18:00 UTC followed by Fed Chair Jerome Powell’s press conference 30 minutes later.

The base case scenario is dovish: While the U.S. employment gains are solid, the Fed has not seen the hoped-for job gain of more than a million, which could have been a condition to begin scaling back monetary support. Instead, labor market reports for the months of April and May have been disappointing relative to previous forecasts, strengthening the Fed’s argument that the job market is still a long way off from the “substantial further progress”.  The Fed could therefore wait for further improvements before starting the taper debate. In this case, the U.S. dollar could fall on the back of disappointment.

The hawkish surprise: In the unlikely case of the begin of the discussion to reduce asset purchases, the greenback will rise against other peers.

The focus will also be on the Fed’s dot-plot forecast. It is expected that the forecast will shift to an earlier rate hike expectation in 2023 from 2024 back in March. This would be dollar-positive.

Let’s take a brief look at the technical picture:

GBP/USD

The pound dipped below 1.4070 but held firmly above 1.40. If the 1.40-support remains unbroken, we anticipate a rebound towards 1.4150. For significant price breakouts, we would need to see either a bullish break above 1.42 or a bearish break below 1.40. Above 1.42 we will shift the focus to a higher target at 1.4290, whereas below 1.40, next targets could be at 1.3920 and 1.38.

EUR/USD: Not much has changed in this pair. As long as the euro trades between 1.2230 and 1.2080 there is nothing new to report. A rise above 1.2250 could open the door to further gains towards 1.2350, whereas on the downside, a fall below 1.2080 could lead to further losses towards 1.20 and probably even 1.1940.

We wish everyone good trades today.

We wish you good trades!

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Fokus auf technisches Bild inmitten aller Inflationssorgen

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Die Gewinne waren im GBP/USD bis 1.4220 gedeckelt, was so auch zunächst erwartet worden war. Trader fragen sich nun, ob eine tiefere Korrektur bis 1.4150 anstehen könnte – vorausgesetzt, dass die 1.4220-1.4230-Region ein Widerstand bleibt.

Ähnlich sieht es im EUR/USD aus, denn das Paar weitete seinen Aufwärtstrend oberhalb von 1.22 aus, jedoch fehlte daraufhin die Folgedynamik – zumindest bis jetzt.

Die Volatilität könnte heute zunehmen, denn Investoren erwarten die Veröffentlichung des Sitzungsprotokolls des Federal Reserve Treffens im April. Das FOMC Protokoll um 20:00 Uhr könnte eine Einsicht in die Denkweise der Währungshüter über den Inflationsdruck, sowie Hinweise zum Zeitplan einer Straffung liefern.

Ungeachtet aller Inflationssorgen werden wir das technische Bild beider Währungspaare im Auge behalten.

GBP/USD

Nachdem die 1.4220-Marke angetastet wurde sahen wir den Cable die Gewinne korrigieren und solange die Kurse unterhalb von 1.42 bleiben könnten wir die Formation einer Bullenflagge sehen mit einem möglichen Tief bei rund 1.4150. Eine Bullenflagge ist ein Fortsetzungsmuster innerhalb eines starken Aufwärtstrends. Sollten sich daher genügend neue Käufer oberhalb von 1.42 einfinden, so könnten wir eine Fortführung der Aufwärtsbewegung in Richtung von 1.4230 und 1.43 sehen. Auf der Unterseite, fällt das Paar unter 1.4140, erwarten wir weitere Verluste Richtung 1.4070 und eventuell sogar ein Abrutschen bis 1.40.

EUR/USD

Der Euro blickt auf die nächste Hürde bei 1.2250 und ist diese Barriere überwunden, richten wir den Fokus auf 1.2320. Auf der Unterseite bleibt die 1.21 Unterstützung im Blick.

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Der Inhalt des Beitrags spiegelt die persönliche Meinung des Autors wider. Dieser übernimmt für die Richtigkeit und Vollständigkeit keine Verantwortung und schließt jegliche Regressansprüche aus. Dieser Beitrag stellt keine Kauf- oder Verkaufsempfehlung dar.

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Focus On Technical Picture Amid Inflation Concerns

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Gains were capped at 1.4220 in the GBP/USD which was an anticipated resistance level. Traders wonder whether there could be a deeper correction towards 1.4150 now – provided that the 1.4220-1.4230-area remains a resistance.

The situation was similar in the EUR/USD with the pair extending its uptrend above 1.22 but being reluctant to show much follow-through, at least until now.

Volatility could pick up today with investors awaiting the release of the minutes from the Federal Reserve’s April meeting. The FOMC minutes due at 18:00 UTC may offer more insight into policy maker’s thinking about inflation and may hint on a timeline for tapering stimulus.

Regardless of all inflation concerns, we will keep tabs on the technical picture in both major currency pairs.

GBP/USD

After 1.4220 has been hit we saw the cable correcting some of its gains and as long as the price remains below 1.42, we could see the formation of a bull flag with a potential low at around 1.4150. A bull flag is a continuation pattern within a strong uptrend and if new buyers enter the market above 1.42, we could see another leg up towards 1.4230 and possibly 1.43. On the bottom side, if the pair falls below 1.4140, we anticipate further losses towards 1.4070 and possibly even a dip towards 1.40.

EUR/USD

The euro faces the 1.2250-hurdle now and once this barrier is eliminated, we will focus on a higher target at 1.2320. On the downside, the focus is on the 1.21-support.

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Keine Nachfrage im U.S. Dollar

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Die U.S. Einzelhandelsumsätze stiegen um 9,8 Prozent im Monat März, was der zweit-höchste Anstieg in Regierungsdaten seit 1992 war. Die starke Lesung kann den staatlichen Zahlungshilfen zugeschrieben werden, welche einen kurzfristigen Ausgabenschub ermöglichen. Der Ausgabenboom könnte sich auch in den kommenden Monaten fortsetzen, denn die Verbraucher sitzen auf einem Berg angehäufter Ersparnisse während sich die Wiedereröffnung der Wirtschaft fortsetzt.

Der U.S. Dollar konnte trotz der starken Einzelhandelsumsätze zu keiner neuen Stärke finden denn die Treasury Renditen sanken.

Wir behalten im Hinterkopf, dass wir uns immer noch in einer Risiko-Umgebung befinden, wo die Erwartungen auf eine starke Erholung die Aktien auf Rekordstände treiben, während Risikoanlagen profitieren. Der anti-Risiko U.S. Dollar, auf der anderen Seite, ist in einer solchen Umgebung nicht gefragt.

EUR/USD- Zeit für eine Korrektur?

Der Euro kannte im April nur eine Richtung, nämlich aufwärts. Nun, wo das Paar eine wichtige Widerstandszone erreicht hat und von einem Bruch oberhalb des 1.20-Levels abließ, inmitten der überkauften Situation, so rechnen wir jetzt mit einer Abwärtsbewegung in Richtung von 1.19. Damit sich der Aufwärtstrend zu einem höheren Widerstand bei 1.21 ausweitet, müssten wir einen nachhaltigen Bruch des 1.2020-Levels sehen.

GBP/USD: Der Cable war wenig verändert und verblieb unterhalb von 1.38 inmitten einer kleinen Schwankungsbreite. Wir erwarten, dass das Paar vorerst zwischen 1.3850 und 1.36 handeln wird. Was die Bärendynamik angeht, so achten wir auf einen Fall unter 1.3720, was zu weiteren Verlusten Richtung 1.3670 und 1.36 führen könnte.

Ein schönes Wochenende allerseits!

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Der Inhalt des Beitrags spiegelt die persönliche Meinung des Autors wider. Dieser übernimmt für die Richtigkeit und Vollständigkeit keine Verantwortung und schließt jegliche Regressansprüche aus. Dieser Beitrag stellt keine Kauf- oder Verkaufsempfehlung dar.

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No Love For The U.S. Dollar

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U.S. retail sales increased by 9.8 percent in March, which was the second-largest increase in government data back to 1992. The huge monthly sales number can be attributed to federal stimulus payments that provided a temporary spending boost. The consumer spending boom could continue in the months ahead with consumers still sitting on a pile of accumulated savings as the economy continues to reopen.

The U.S. dollar failed to strengthen on the back of strong retail sales as Treasury yields fell.

We bear in mind, that we are still in a risk-on environment where expectations of a strong recovery are pushing equities to record levels while risky assets benefit. The anti-risk U.S. dollar, on the other hand, is not in demand in such environment.

EUR/USD – Finally due for a correction?

The euro knew only one direction in April – upwards. Now that the pair has reached a crucial resistance zone and refrained from a break above 1.20 amid its overbought situation, we expect the price to decline towards 1.19. For the uptrend to continue towards a higher resistance at 1.21, we would need to see a sustained break above 1.2020.

GBP/USD: The cable was little changed and remained below 1.38 in low volatile trading. We expect the pair to trade between 1.3850 and 1.36. As for bearish momentum, if the pound drops below 1.3720 we anticipate further losses towards 1.3670 and 1.36.

Have a nice weekend everyone!

We wish you good trades!

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Will CPI Figures Spark Another Upswing in The U.S. Dollar?

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Investors poured back into riskier assets which in turn led to a pullback in Treasury yields, a weakening U.S. dollar and thus an upward tendency in both EUR/USD and GBP/USD. The DAX on the other side, was reluctant to extend its upward move and refrained from a test of our next bullish target at 14500.

Today, traders expect higher volatility around the upcoming release of the monthly U.S. inflation data at 13:30 UTC. A higher-than-expected reading could spark another upswing in bond yields and the greenback.

Looking at the technical picture and in case of further USD strength we will mark next lower targets at 1.1820 and 1.1760 in the EUR/USD and at 1.3815 and 1.3780 in the GBP/USD. A break below 1.3770 in the cable could invigorate fresh bearish momentum and send the pair lower towards 1.37.

Conversely, if inflation figures surprise to the downside, we will see a rebound in both major FX pairs. Current resistances are seen at 1.1960 and 1.2050 in the EUR/USD and at 1.39 and 1.40 in the GBP/USD.

We wish you good trades for today!

We wish you good trades!

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USD Rally Appears Overstretched

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Dear Traders,

The U.S. dollar resumed its advance on Monday but we are continuing to be on the lookout for reversals since the dollar’s rally could be somewhat overstretched in many major currency pairs.

The euro extended its slide to a low of 1.2184 but the breakout below 1.22 appears unsustainable, at least as long as the euro remains above 1.22. We now keep tabs on the 1.2240/50-level which could act as a short-term resistance in the EUR/USD. A higher resistance is seen at 1.2330. On the bottom side, we expect a lower support around the 1.2160/55-level that could limit losses. We bear in mind that the pair is in oversold territory which is why traders should prepare for pullbacks.

Short traders of the GBP/USD have been able to gain a good profit in recent days. Commentary made by BoE Governor Carney has sent the pound into a tailspin as he prompted speculation that a rate hike in May is not sure. Consequently, rate hike odds have dropped from 85 percent to below 50 percent following Carney’s remarks.

The GBP/USD traded with a heavy bearish bias and dropped towards 1.39. Given the oversold situation, we still expect some pullback sending the pound back towards a test of 1.4015 and 1.4050. A lower support is, however, seen at around 1.3875.

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Can U.S. Retail Sales Boost Attractiveness Of The USD?

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Dear Traders,

After the first day of testimony from Janet Yellen the currency market returned to business as usual. Investors ignored the second day of her testimony and shifted their focus away from the dollar towards safe havens such as the yen. The euro continued to benefit from its role as a funding currency and trended upwards, extending its gains as far as 1.1376. The cable, however, traded lower and dropped towards its support at 1.4380. The GBP/USD defined a current trading range between 1.4590 and 1.4380 and therefore may need a catalyst in order to extend movements above or below that range. The U.S. Retail Sales report and U.S. Consumer Confidence, scheduled for release today, may trigger some movements in the greenback.

The euro traded resiliently above 1.13 on Thursday and euro-bulls must have strong nerves in order to pocket their later profits. Unfortunately we terminated our trading slightly too early and therefore missed out on the last profitable upward move in the EUR/USD.

The most important economic report today will be U.S. Retail Sales due for release at 13:30 GMT. Stronger spending is an indication of strength in the U.S. economy which is why the Fed is closely monitoring this report. Given the forecast of no outstanding rise, the risk is to the downside for the USD. In case the report surprises with a far higher increase than 0.1 percent, the greenback could rally.

Furthermore we have the GDP reports from the eurozone, scheduled for release at 10:00 GMT, which could have a short-term impact on the EUR/USD. Last but not least, Michigan Confidence, due for release at 15:00 GMT could affect the dollar.

Have a nice weekend.

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Dollar Weakness To Continue?

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Dear Traders,

What a day for the USD! The U.S. dollar depreciated sharply against all of the major currencies as signs of a slowing U.S. economy pushed the 2016 rate-hike likelihood lower. Despite a stronger-than anticipated ADP report, the USD was exposed to strong selling pressure after a report showed U.S. services industries expanded last month at the slowest pace in nearly two years, clouding the economic outlook. In addition, comments from New York Fed President William C. Dudley, who said that the recent financial turmoil “may alter the outlook for growth and the risk to the outlook for growth going forward” set off the dollar’s weakness.

The subsequent rise in the euro and cable was also technical driven as stops were triggered, sending both pairs even higher. The focus now shifts to the Non-Farm Payrolls report due for release tomorrow, which is expected to show fewer than 200K jobs for the first time since September. The payrolls report may determine whether the dollar weakness will continue. In the meantime, let us focus on the technical side:

EUR/USD

The euro rose as high as 1.1145 on the back of broad-based dollar weakness. Depending on tomorrow’s U.S. labor market data, we may see another round of a dollar selloff, which could send the euro towards 1.12 and 1.1280 in a next step. For the time being, we expect the 1.1160-level to act as a current resistance, while downward moves may be limited until 1.10/1.0980. An important support zone is currently seen at 1.0850.

ECB President Mario Draghi is scheduled to speak at 8:00 GMT today, which could have a short-term impact on the EUR/USD.

Chart_EUR_USD_Daily_snapshot4.2.16

GBP/USD

The Bank of England will present its Quarterly Inflation report along with the monetary policy announcement at 12:00 GMT today. While the Monetary Policy Committee is widely expected to keep rates unchanged, BoE Governor Mark Carney may offer some insight when he presents the BoE’s latest economic projections at a press conference 45 minutes later. The expectations are high and traders should be prepared for everything. If the February predictions look bright, predicting inflation would overshoot the BoE’s target over the medium term, the pound sterling could extend its gains versus the greenback. Let’s wait and see.

Taking a look at the 4-hour chart the risk seems to be to the downside. The cable tagged a fresh resistance at 1.4650 and it might be smarter to wait for a significant break above 1.4665/70 in order to buy GBP towards key resistances at 1.47 and 1.48. The direction will hinge on the BoE Inflation report and Carney’s comments but in case of a dovish tilt, we may see the cable sliding back towards 1.4440, 1.4370 and 1.43.

Chart_GBP_USD_4 Hours_snapshot4.2.16

U.S. data such as Initial and Continuing Jobless Claims (13:30 GMT) and Factory Orders (15:00 GMT) may take a back seat.

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2016 Maimar-FX.

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