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690

FOREX NEWS: DOLLAR STRENGTHENS AHEAD OF FIRST U.S. JOBS DATA OF THE MONTH


EUR/USD

Forex News: Yesterday’s trading session was mostly controlled by the sellers, who managed to take the pair below the 50 period Exponential Moving Average. It is now clear that 1.0630 is strong resistance and that it will probably reject price in the future.


Technical Outlook

If the pair remains below the 50 period Exponential Moving Average, the current move will turn into a reversal of the previous move up and will make 1.0525 the first target. The Stochastic and Relative Strength Index are showing good downside momentum and this increases the chances of a move into the mentioned support. As long as the pair is trading below the 50 EMA our bias is bearish but an important role will be played today by the U.S. jobs data.

Fundamental Outlook

At 1:15 pm GMT we take a first look at the U.S. jobs situation with the release of the ADP Non-Farm Employment Change, a report that tracks changes in the total number of employed people, excluding the Government and Farming sectors. The impact is lower than the Government issued Non-Farm Payrolls (which is scheduled Friday) but nonetheless, the US Dollar usually reacts strongly to the data. Higher numbers than the forecast 184K show increased economic activity and signal a future increase in consumer spending.

GBP/USD

The US Dollar continued to strengthen against the Pound yesterday, breaking support and re-establishing a medium term downtrend.


Technical Outlook

The pair is now headed towards the key support zone between 1.2125 and 1.2090 and the overall picture seems bearish but it must be noted that the Relative Strength Index has entered oversold for the second time in a short while. This is a solid indication that the pair is likely to show a deeper retracement to the upside in the near future.

Fundamental Outlook

At 12:30 pm GMT the HM Treasury will release UK’s Annual Budget and this may trigger increased Pound volatility but the exact impact is not known.

691

FOREX NEWS: DRAGHI TAKES CENTRE STAGE AS THE MARKET PREPARES FOR ECB MEETING

EUR/USD

Forex News: Yesterday the ADP Non-Farm Employment report showed a reading of 298K, way above the expected 185K but the Dollar’s reaction was mixed, strengthening at first and then erasing all gains and moving back to where the initial drop started.


Technical Outlook

There is no clear reason for the climb back up but it must be noted that the entire move is just under 30 pips and no major S/R level was broken so we may very well see another drop generated by a delayed effect of yesterday’s U.S. jobs data. The pair is still under the 50 period Exponential Moving Average so the bias is bearish but direction will probably be decided by the ECB meeting today.

Fundamental Outlook

Today the focus is on the Euro as the ECB will announce their interest rate at 12:45 pm GMT, followed at 1:30 pm GMT by a press conference held by ECB President Mario Draghi. The rate is not expected to change from the current 0.00%, so unless anything surprising happens, the event will mostly go unnoticed because usually traders wait for Draghi’s reaction at the press conference. The way he answers journalists’ questions will have a high impact on the Euro, especially if he hints towards a rate hike.

GBP/USD

Price action established 1.2215 as resistance and continued lower as the Pound weakened and the greenback strengthened throughout the day, generating a bearish session overall.


Technical Outlook

The pair is headed towards the support at 1.2125 but the Stochastic and Relative Strength Index are both showing clear oversold condition and also bullish divergence (price is making lower lows while the oscillator is making higher lows). These factors make us anticipate a bounce higher, possibly into the newly established resistance at 1.2215, but may extend into 1.2250.

Fundamental Outlook

It’s another slow day for the Pound as the United Kingdom did not schedule major economic news releases, thus the pair will be mainly affected by the technical side.

692

FOREX NEWS: NFP REPORT – FINISHING THE WEEK WITH A BANG

EUR/USD

Forex News: After reaching the support at 1.0525 the pair immediately jumped higher, boosted by a stronger Euro. The ECB decided to maintain the rate unchanged, as expected but Draghi’s press conference was the main catalyst for the move.


Technical Outlook

It looks like the pair is entering a ranging period, capped by 1.0525 as support and 1.0630 as resistance. Yesterday’s price action clearly showed that 1.0525 is still a strong support and that it may reject falling price in the future but for the time being the Euro is strengthening and the pair seems headed towards 1.0630. Today’s direction will be heavily affected by the U.S. jobs data and the technical aspect will be somewhat secondary.

Fundamental Outlook

The U.S. Non-Farm Payrolls report is released today at 1:30 pm GMT, showing changes in the total number of employed people, excluding the farming sector. This is widely considered the most important jobs data in the U.S. and usually has a very strong impact on the US Dollar, with higher values than the forecast 185K, strengthening it.

GBP/USD

As it was expected, the pair retraced higher yesterday, following an oversold condition of the oscillators. However, movement was rather slow and without conviction from either side.


Technical Outlook

We will probably see an extended period when the pair will remain trapped between 1.2215 resistance and 1.2125 support, unless today’s NFP can trigger strong movement and a clear breakout. Both oscillators are moving upwards, from their respective oversold levels, thus increasing the chances of a move into resistance but the medium-term downtrend is down and this makes another drop probable. Our bias is slightly bearish, expecting the NFP release for further clues.

Fundamental Outlook

At 9:30 am GMT the Pound will be affected by the release of the Manufacturing Production, an indicator that tracks changes in the total value of goods produced by manufacturers. The expected change is -0.6% from the previous 2.1% and higher numbers are usually beneficial for the Pound but the pair will probably respond stronger to the NFP report later in the day.

694

FOREX NEWS: US DOLLAR WEAKNESS – A TEMPORARY AFFAIR?

EUR/USD

Forex News: The US Dollar softened Friday against the Euro, despite the Non-Farm Payrolls report posting a number of 235K jobs, higher than the expected 196K. The weakness was mostly generated by a drop in hourly wages.


Technical Outlook

Friday’s strong climb took the pair above 1.0680 resistance and sent the two oscillators in overbought territory. This move is likely to retrace lower and to find support at 1.0630 but if price continues higher, we don’t expect it to pass 1.0710 before a retracement occurs. Keep in mind that the NFP report was better than expected and this may trigger a delayed strengthening effect on the US Dollar, so a drop into the 50 period Exponential Moving Average is not out of the question.

Fundamental Outlook

At 1:30 pm GMT, ECB President Mario Draghi will deliver a speech at the Massachusetts Institute of Technology Labs for Innovation Science and Policy Fostering, in Frankfurt. Although the topic is not directly tied to the financial markets, caution is recommended, as always when Draghi speaks. Other than this, no major events will affect the currencies today.

GBP/USD

The pair was mostly unaffected by the Non-Farm Payrolls and remained in a relatively tight range for the entire duration of Friday’s trading session, without threatening support or resistance.


Technical Outlook

Friday’s price action doesn’t give a lot of clues about the next move and our bias is neutral until 1.2215 resistance or 1.2125 support is broken. The pair is in a medium term downtrend but the Relative Strength Index and Stochastic are exiting oversold, moving up and thus increasing the chance of a test of 1.2215. Given the lack of major economic indicator releases, we don’t expect to see a clean break of either support or resistance today.

Fundamental Outlook

United Kingdom’s economic calendar is light and the Pound will not be affected today by major economic releases.

695

[B]FOREX NEWS: US DOLLAR STILL FEEBLE, RESISTANCE EXPOSED[/B]

[B]EUR/USD[/B]

Forex News: The pair pushed into 1.0710 resistance but there, an expected retracement took place and now price is moving lower, below 1.0680. Mario Draghi’s speech didn’t have a strong impact and yesterday’s price direction was mostly driven by the technical aspect.

[B]Technical Outlook[/B]

As seen from the chart above, the Stochastic and Relative Strength Index reached overbought almost at the same time and this also coincided with the touch of 1.0710 resistance. These factors generated a bearish move, which is considered a retracement at the moment, not a reversal. We expect 1.0710 to be tested again today and if the bulls fail to take price above it, this will suggest that a reversal is in the making and 1.0630 will become the first target.

[B]Fundamental Outlook[/B]

The first important release of the day is the German ZEW Economic Sentiment, a survey of about 275 German investors and analysts that tries to gauge their opinions regarding a 6-month economic outlook. The survey acts as a leading indicator of optimism, with higher numbers strengthening the Euro. The time of the release is 10:00 am GMT and the expected number is 13.2.

The US Dollar will be affected by the release of the Producer Price Index, which tracks changes in the price charged by producers for their goods. It acts as a leading indicator of inflation because a higher producer price will eventually translate into a higher price paid by the consumer. The release is scheduled at 12:30 pm GMT and the forecast is a change of 0.1% (previous 0.6%).

[B]GBP/USD[/B]

The pair retraced higher, as it was signaled by the long distance traveled to the downside and by the bottoming pattern formed near 1.2125 support. Overall the bias remains bearish after the retracement becomes exhausted.

[B]Technical Outlook[/B]

Yesterday’s climb took the pair into the 50 period Exponential Moving Average and now the candles are showing long wicks, which is a sign of indecision; however, this could be just an accumulation for a push above the 50 EMA and above 1.2250 resistance. If this is the case and the two forms of resistance are broken, the pair is likely to climb back towards 1.2350 but this distance will not be traveled in one day unless surprising events take place.

[B]Fundamental Outlook[/B]

The United Kingdom didn’t schedule important economic releases, thus the deciding factors for direction will be the technical aspect and the U.S. Producer Price Index.

696

FOREX NEWS: FED IN THE SPOTLIGHT, US DOLLAR SET FOR BIG MOVES. RATE HIKE EXPECTED

EUR/USD

Forex News: European data disappointed yesterday, while the U.S. Producer Price Index showed a better than expected change, triggering a drop into support and a trading session mostly controlled by the bears.


Technical Outlook

Price is testing the support at 1.0630 and the 50 period Exponential Moving Average is in close vicinity, creating a confluence zone which will be difficult to break. The current level was touched several times in the recent past and almost every time the pair had a strong reaction to it, so the same may be happening now; a bounce here is very possible but on the other hand, a break followed by a move below the 50 EMA would be a clear sign of strength from the part of the sellers.

Fundamental Outlook

Today is a key day for the US Dollar, because the Fed will meet to announce the interest rate at 6:00 pm GMT and Fed Chair Yellen will hold a press conference half an hour later, discussing the rate decision. A rate hike is expected, from the current <0.75% to <1.00% and if this prediction comes true, the US Dollar will likely strengthen and a lot of volatility will be generated. We recommend caution if trading during the event.

GBP/USD

Price dropped yesterday, partly due to technical reasons and partly due to Brexit fears, so now the pair is in a bearish environment, testing support.


Technical Outlook

After failing to stay above the 50 period Exponential Moving Average, the pair is testing 1.2125 and the US Dollar seems to have regained some of its strength. However, a stronger support is located at 1.2090 but it must be noted that the pair is already showing signs of rejection at 1.2125. Today’s price direction will be mainly affected by the fundamental side but the levels to watch remain 1.2090 as support and 1.2250 as resistance.

Fundamental Outlook

At 9:30 am GMT we take a look at the UK unemployment situation with the release of the Claimant Count Change, an indicator that shows changes in the number of people who asked for unemployment benefits. The forecast is 3.2K (previous -42.4K) and higher numbers usually weaken the Pound. Of course, later in the day the pair will be directly affected by the Fed rate decision.

697

FOREX NEWS: US DOLLAR BATTERED AS FED HIKES, BUT EXPECTATIONS DISAPPOINT


EUR/USD

Forex News: The US Dollar came under heavy pressure yesterday as the Fed decided to hike from <0.75% to <1.00% but expectations for 2017 remained at only 2 more hikes, which was generally perceived as dovish and was the main reason for greenback weakness.


Technical Outlook

After failing to break the 50 period Exponential Moving Average, the pair jumped and moved strongly to touch 1.0710 resistance despite a Fed rate hike. If the current resistance is broken, we expect price to re-test it form above, thus confirming it as support; if the pair can firmly remain above 1.0710, then 1.0800 will become the first bullish target but until 1.0710 is broken, a reversal can take place.

Fundamental Outlook

At 12:30 pm GMT the US Dollar will be affected by the release of two medium-impact indicators: the Building Permits (anticipated number 1.26M) and the Philly Fed Manufacturing Index (anticipated number 30.2). The former shows the annualized number of residential building permits issued during the previous month and the latter is a survey or purchasing managers that acts as a leading indicator of optimism and economic health. Higher numbers for any of these indicators usually generate US Dollar strength.

GBP/USD

US Dollar weakness pushed the pair higher yesterday, taking it into the resistance at 1.2300. It looks like the bearish move is over and the market is turning, with the bulls taking control.


Technical Outlook

The pair moved above the 50 period Exponential Moving Average and the Dollar took a blow from Fed expectations of only 2 more rate hikes this year. This puts control in hands of the bulls and makes us anticipate a break of 1.2300, followed by a move into 1.2350 but the Relative Strength Index is rapidly approaching overbought and usually after a strong move, price retraces to the opposite side. This means that 1.2250 may be touched but as long as the level remains intact, our bias is bullish.

Fundamental Outlook

The Bank of England will announce today at 12:00 pm GMT the interest rate, accompanied by a Monetary Policy Summary and a breakdown of the MPC members’ rate votes. The rate is not expected to change form the current 0.25% and we don’t expect to get any clear hints towards a near-future hike or cut, so the event will probably create just temporary volatility.

698

FOREX NEWS: WEAKNESS CONTINUES, RETRACEMENTS IN SIGHT AS OSCILLATORS REACH OVERBOUGHT LEVELS

EUR/USD

Forex News: The pair pushed higher yesterday, above 1.0710 and returned to re-test the level from above, thus establishing it as support. The economic data released yesterday was mixed and didn’t have a substantial impact on the pair.


Technical Outlook

It looks like the bulls are in clear control of the pair and now that 1.0710 is support, we expect price to head towards 1.0800 in the medium term. However, it must be noted that both oscillators are approaching overbought and the Relative Strength Index is also showing bearish divergence (price is making a higher high and the oscillator is making a lower high), which is a signal that a move south may soon follow. If this potential move extends below 1.0710 and 1.0680, the 50 EMA will become the first place where bullish action may resume.

Fundamental Outlook

The University of Michigan will release today at 2:00 pm GMT a Consumer Sentiment survey, which gauges the opinions of about 500 consumers regarding current and future economic conditions. Usually a higher number than the forecast 97.1 shows optimism and strengthens the US Dollar but to a limited extent.

Also today the G20 Meetings start, attended by central bankers and finance ministers from the member states. Volatility may increase, depending on the matters discussed.

GBP/USD

The Bank of England decided to maintain the rate unchanged but one of the 9 members of the Monetary Policy Committee (MPC) saw the need for a rate hike (previously all agreed to hold rates) and this triggered Pound strength that took the pair above another resistance level.


Technical Outlook

Although the Pound is in control and several resistance levels have been broken, we expect a move lower, possibly after 1.2385 is reached. Supporting this view is the fact that both oscillators are approaching overbought and also, price travelled a long distance without a deeper pullback. A good target for this potential move down is 1.2300.

Fundamental Outlook

The Pound will not be affected by major economic releases today but United Kingdom representatives will attend the G20 Meetings and this may be a cause for increased volatility.

699

DAILY ANALYSIS: PULLBACKS IN SIGHT, AS OSCILLATORS REACH OVERBOUGHT LEVELS

EUR/USD

Daily Analysis: The Consumer Sentiment survey released Friday by the University of Michigan didn’t have a strong impact on the US Dollar, mostly because it came very close to analysts’ expectations, but the pair retraced lower due to overbought conditions signalled by both oscillators.


Technical Outlook

The move lower seen Friday should be considered just a simple retracement at the moment, not a reversal but it is very possible to extend into the support at 1.0710. As long as this barrier remains intact, our view is bullish, anticipating a move into 1.0800; however, such a long distance will not be travelled today probably, mostly due to the lack of major economic releases, a fact which may generate ranging price action. Also, the oscillators are just coming out of overbought, favouring a touch of support.

Fundamental Outlook

Today’s direction will be mainly driven by the technical aspect because the United States and Europe have a lacklustre economic calendar, without any major releases.

GBP/USD

Price action was choppy Friday but the buyers managed to remain in control and to keep the pair above 1.2350. Rejection is present and the upside momentum seems to fade away but the medium term bias is still bullish.


Technical Outlook

Long wicks have started to appear on the last few candles and both oscillators have reached overbought, with price at resistance. These factors suggest that a deeper retracement will soon follow, so we don’t expect to see a break of 1.2420 today but if the pair does move above this level, the extent should be limited. After the potential retracement, we expect the pair to move above 1.2420 and into 1.2480 but this will not happen today unless surprising developments take place.

Fundamental Outlook

Similar to the other two currencies, the Pound will not be affected today by major economic releases, so the technical side will be the main market mover.

700

FOREX NEWS: RESISTANCE HOLDS. US DOLLAR STAGES A COMEBACK?

EUR/USD

Forex News: Yesterday’s price action slowed down and the pair retraced after making another attempt to break last week’s high. The fundamental scene was lacklustre, without major announcements.


Technical Outlook

Price printed a lower high, which is a sign that the bullish run may come to an end or at least that we will see a move into 1.0710 support. By the time price reaches support, the 50 period Exponential Moving Average will probably climb and will be in close vicinity of 1.0710, thus creating a confluence zone that will increase the chances of a bounce higher. A move below the moving average and the mentioned level would show that the balance of power is tipping towards the sellers; however, the pair is still in a good uptrend, so a move above the minor resistance around 1.0775-1.0780 will add more strength and would make 1.0800 the first target.

Fundamental Outlook

Today the ECOFIN Meetings start and will be attended by Finance Ministers from the European Union member states. The matters discussed may have an impact on the Euro but the meetings are closed to the press and a formal statement is released at the end of the day.

GBP/USD

Price pierced 1.2420 resistance yesterday but in the afternoon the US Dollar showed signs of recovery and pushed the pair lower. The bearish move is considered a simple retracement, which was overdue, considering the overbought position of the oscillators.


Technical Outlook

The move lower seen yesterday was mostly generated by the fact that price travelled a long distance north without a proper retracement and was signalled earlier by the overbought condition of the oscillators. However, the pair remains in a short-to-medium term uptrend and this means that once the overbought condition is cleared and a notable level is touched, we may see another push higher. The first level of importance is 1.2350 and there we expect to see a resumption of the uptrend.

Fundamental Outlook

The release of the British Consumer Price Index is today’s highlight, scheduled at 9:30 am GMT and expected to show a change of 2.1% from the previous 1.8%. The CPI is the main gauge of inflation and can have a strong impact on the currency, with higher numbers usually strengthening it so be careful if you plan on trading at the time of release.

701

FOREX NEWS: POUND POSTS FRESH HIGHS ON THE BACK OF SOLID INFLATION DATA

EUR/USD

Forex News: After moving very close to 1.0710 support yesterday, the pair jumped higher and briefly took out 1.0800 resistance, in a session that was controlled by the bulls almost entirely.


Technical Outlook

The resistance at 1.0800 was breached yesterday but after moving above it, the pair returned below and is now showing some signs of exhaustion, with the Relative Strength Index continuing to hover near its overbought level. Considering that 1.0800 is both psychological and technical resistance, we expect to see a deeper retracement from here, and a potential touch of 1.0775, which was previously resistance and now may turn into support. Overall the bias is bullish and the uptrend is healthy but in need of a pullback.

Fundamental Outlook

The day ahead lacks major economic releases, with the most notable one being the U.S. Existing Home Sales, scheduled at 2:00 pm GMT and expected to show a reading of 5.59M. The indicator shows the annualized number of homes sold, excluding new constructions and usually strengthens the US Dollar if it posts figures above expectations but the impact is not very high.

GBP/USD

The British Consumer Price Index released yesterday exceeded expectations, showing a 2.3% change and this was the main reason why the Pound had another solid day against an already soft Dollar.


Technical Outlook

After bouncing around 1.2350 support, the pair shot up through 1.2420 and reached 1.2480 resistance. In the past the pair spent a lot of time moving above and below this level, so we are likely to see some reaction this time as well; also, the Relative Strength Index is touching its overbought level, signalling that a move south may be next. If the current bullish impulse continues past 1.2480, we expect the extent to be limited and followed by a pullback but overall the bias remains bullish.

Fundamental Outlook

The Pound will not be affected by major economic releases, so the technical aspect will be the main driver behind price action today.

702

FOREX NEWS: BULLISH MOMENTUM WANES, BRITISH RETAIL SALES EYED FOR NEXT MOVE

EUR/USD

Forex News: The pair slowed down yesterday as the upside momentum faded and the bears stepped in, creating a pullback. The U.S. House data was softer than anticipated but the impact was mild and this contributed to the overall slow session.


Technical Outlook

The pair retraced lower but bounced perfectly at 1.0775, which is now support and a place where the pair might show some interesting movement in the future. The bias remains bullish and we expect to see a touch of 1.0830, followed by 1.0850 but a move below 1.0775 would invalidate such a scenario for the time being and would make the 50 period Exponential Moving Average the first target.

Fundamental Outlook

At 12:45 pm GMT, Fed Chair Yellen will speak at the Federal Reserve System Community Development Research Conference. We don’t expect this speech to trigger strong movement but it all depends on the matters she will discuss and her attitude; nonetheless, caution is recommended.

The release of the U.S. New Home Sales is today’s other notable event, scheduled at 2:00 pm GMT and expected to show a number of 566K. The impact is usually medium but a reading above expectations is considered bullish for the US Dollar.

GBP/USD

The pair had trouble breaking the resistance zone around 1.2480 and retraced lower yesterday, for a perfect touch of 1.2420. For now support is holding and the bias remains bullish.


Technical Outlook

The bounce at 1.2420 and the consequent move up show that the US Dollar is still weak and that we will soon see a break of 1.2480, which will open the door for a move into 1.2550. Both oscillators remain very close to overbought and this increases the chances of an extended move lower but even if this happens, as long as the pair is trading above the 50 period Exponential Moving Average, the overall bias is bullish.

Fundamental Outlook

The British Retail Sales come out today at 9:30 am GMT, showing changes in the total value of sales made through retail outlets during the previous month. A higher change than the forecast 0.4% usually brings Pound strength and the opposite is true for a lower reading.

703

FOREX NEWS: BEARISH PRESSURE MOUNTS, AHEAD OF EUROPEAN PMIS, U.S. DURABLE GOODS ORDERS

EUR/USD

Forex News: The US Dollar remained mostly indifferent to Yellen’s speech and to the better than expected figure posted by the U.S. New Home Sales. All this combined with the lack of major news from the Euro side, generated a slow and choppy trading session.


Technical Outlook

It’s becoming clearer that the bullish momentum has faded as the buyers failed to reach 1.0830 and the candles started to show long wicks in their upper side. However, the sellers also lack strength and determination so currently there is no short-term clear bias but as long as the 50 period Exponential Moving Average is below price and angled upwards, the overall trend is up.

Fundamental Outlook

At 9:00 am GMT two medium-impact indicators are released: the European Manufacturing PMI (expected reading 55.3) and Services PMI (expected reading 55.4). These are surveys of purchasing managers that focus on the health of the two sectors and usually strengthen the Euro if they show a better than expected reading but the releases tend to be overlooked if the actual figure matches or comes very close to analysts’ expectations.

On the US Dollar side we have the Durable Goods Orders, released at 12:30 pm GMT and expected to show a change of 1.1%. The impact is medium to high, with numbers above forecast strengthening the greenback.

GBP/USD

The Pound continued its climb yesterday, fuelled by better than expected British Retail Sales (actual 1.4%; forecast 0.4%). Resistance is clearly broken but the oscillators are still overbought.


Technical Outlook

The pair is trading above the resistance at 1.2480 but most of yesterday’s move was generated by the solid British Retail Sales reading and from a strictly technical point of view, the need for a retracement lower has increased. Both oscillators are overbought and price has travelled a long distance without a proper pullback so today we expect a move south. The levels of interest are 1.2550 as resistance and 1.2480 as support.

Fundamental Outlook

The Pound will not be affected today by major economic releases, so the technical aspect and the U.S. Durable Goods Orders will be the main factors that will affect the pair’s direction.

We hope you had a profitable trading week and we wish you a relaxing weekend.

704

FOREX NEWS: RESISTANCE HOLDS, US DOLLAR PUSHES BOTH PAIRS LOWER

EUR/USD

Forex News: German PMI surveys released Friday showed better readings than analysts had expected and on the other hand the US Dollar remained mostly unaffected by the Durable Goods Orders. All this generated another bullish session, with the pair testing resistance.


Technical Outlook

The resistance at 1.0800 was again breached but the bulls couldn’t push price higher, which is a sign of weakness and an early indication that we will probably see a touch of the 50 period Exponential Moving Average today. As an alternate scenario, a continuation of the bullish move will probably extend into 1.0830, possibly 1.0850 but we don’t expect the upper resistance to be broken.

Fundamental Outlook

At 8:00 am GMT the German IFO Business Climate survey comes out, showing the opinions of about 7,000 German businesses regarding current economic conditions as well as a 6-month outlook. The expected figure is 111.2 and usually the Euro is positively impacted by numbers that exceed the forecast.

GBP/USD

For the most part of Friday’s trading session the pair moved sideways after establishing resistance at 1.2530. The overall bias remains bullish but the current move looks like the beginning of a deeper retracement.


Technical Outlook

If the bears manage to break 1.2480 and re-test it from below, thus establishing the level as resistance, then the next target will become the 50 period Exponential Moving Average, which will probably climb above 1.2420 by the time price descends to touch it. It must be noted however that the pair is in a clear uptrend from a medium term perspective and this means that once the 50 EMA is touched, we may see rejection and a potential move up.

Fundamental Outlook

The Pound will not be affected by any important economic releases today, so the technical aspect will be the main market mover.

705

FOREX NEWS: US DOLLAR ON THE ROPES AGAIN, PULLBACKS STILL A NECESSITY

EUR/USD

Forex News: The US Dollar was battered into a corner during yesterday’s trading session, following healthcare discussions in the U.S. over the weekend. The Euro benefited from a higher reading for the German IFO survey and all this took the pair significantly higher.


Technical Outlook

The week opened with a gap and the pair shot through 1.0830 and 1.0850 resistances, so the expected retracement lower didn’t occur. The move was mostly generated by fundamental (political) reasons and now a pullback is even more likely, considering that the Relative Strength Index and the Stochastic are in deep overbought territory and the pair travelled a long distance without retracement. It must also be noted that weekly gaps are usually closed – meaning that price will return to the place where the gap originated – but the timeframe for this potential move is not known.

Fundamental Outlook

At 2:00 pm GMT the Conference Board Inc. will release the U.S. Consumer Confidence, a survey of about 5,000 households, focused on their opinion regarding economic conditions. If consumers show confidence in their financial situation, they are likely to spend more, thus boosting consumer spending which represents an important part of overall economic activity. The expected value for today is 113.9 and higher values usually strengthen the US Dollar.

GBP/USD

US Dollar weakness was seen against most of its counterparts and the Pound was no exception, thus the pair climbed strongly yesterday, for almost the entire trading session.


Technical Outlook

After establishing 1.2480 as support the pair rallied and broke through 1.2550, marking an important victory for the bulls. However, even before this last climb, price was in need of a retracement and now the chance for a move lower has increased, considering how much it moved to the upside but also the overbought condition of the Relative Strength Index. These factors make us believe that today we will see a pullback that will have 1.2550 as target. To the upside the first level of importance is located at 1.2675 but we don’t believe it will be touched before a move down occurs.

Fundamental Outlook

The United Kingdom didn’t schedule major economic releases for today, so the U.S. Confidence survey and the technical aspect will be the main market movers.

706

FOREX NEWS: RETRACEMENTS UNDERWAY, SUPPORT TARGETED

EUR/USD

Forex News: The U.S. Consumer Confidence survey released yesterday showed a reading of 125.6, above analysts’ expectation of just 113.9 but surprisingly the release didn’t create strong movement and the pair drifted sideways almost the entire day.


Technical Outlook

The pair created minor resistance at 1.0905 and is now testing 1.0850 from above, trying to establish it as support. If the level will become support, pushing price higher, we expect to see another encounter with 1.0905 zone but it must be noted that the weekly gap is still open and the pair is still in need of a deeper retracement. The uptrend is still strong but our bias is bearish for today, anticipating a move below 1.0850.

Fundamental Outlook

The U.S. Pending Home Sales are today’s only notable release, scheduled at 2:00 pm GMT and expected to show a change of 2.3%. The indicator shows changes in the total number of houses under contract to be sold and usually has a low-to-medium impact on the US Dollar, with higher numbers strengthening it.

GBP/USD

Yesterday’s trading session belonged to the bears and the pair dropped below 1.2550, partly helped by a better than expected U.S. Consumer Confidence survey that strengthened the US Dollar and took price below the previous resistance.


Technical Outlook

Yesterday the pair printed a lower high and broke below 1.2550, which was prior resistance. This type of behaviour shows that a deeper retracement is underway and makes 1.2480 the first target, followed by the 50 period Exponential Moving Average. If the pair reaches these targets, we expect it to climb again, considering that a clear uptrend is still in place.

Fundamental Outlook

At 8:30 am GMT the Bank of England will release the Net Lending to Individuals, a report that shows changes in the total credit issued to consumers. A higher value shows that consumer spending is likely to increase in the future and usually this strengthens the Pound but the indicator is known to have just a medium impact. The forecast for today is 4.9 Billion, compared to the previous 4.8 Billion.

707

FOREX NEWS: PAIRS UNDER HEAVY SELLING PRESSURE AHEAD OF GERMAN INFLATION DATA AND UNITED STATES GDP

EUR/USD

Forex News: The U.S. Pending Home Sales released yesterday showed a solid reading, increasing by 5.5% (forecast 2.3%) but the US Dollar started to strengthen even before the release, breaking several support levels as well as the 50 EMA.


Technical Outlook

For quite a while we expected a move lower, due to the overbought position of the two oscillators but also because weekly gaps tend to be closed (price returns to where the gap originated). Now the gap is closed and the retracement complete but considering that the 50 period Exponential Moving Average was broken decisively, we may see this pullback turn into a full scale reversal. If the pair cannot climb above the 50 EMA and if the line turns into resistance, we may see a drop into 1.0700 zone, otherwise uptrend resumption is underway.

Fundamental Outlook

At 12:00 pm GMT the Euro will be affected by the release of the German Preliminary Consumer Price Index, which is the main gauge of inflation in Germany and accounts for a big part of overall European inflation. The expected change is 0.4% and readings above forecast usually generate Euro strength.

On the US Dollar side we have the U.S. Final Gross Domestic Product, an indicator that shows changes in the value of goods and services produced by an economy and acts as the main gauge of economic health. The expected change is 2.0% and higher numbers are beneficial to the greenback.

GBP/USD

The sellers stepped back in, taking the pair below the 50 period Exponential Moving Average and both oscillators moved out of the overbought territory where they previously spent a long time. The pair is now showing signs of recovery but signals are mixed.


Technical Outlook

After breaking the 50 EMA, price touched the support at 1.2385 and bounced higher, into the resistance at 1.2480. These levels will be important for short to medium term movement because rejection is visible at both of them, so we may get a trading session with price trapped between them. If 1.2385 will be broken to the downside, we can consider the move a reversal of the uptrend and we can expect to see lower prices in the medium term.

Fundamental Outlook

The Pound will not be affected by major economic releases today, thus the technical aspect and the U.S. GDP will be the main drivers behind price action.

708

FOREX NEWS: US DOLLAR SHOWS MIXED SIGNALS FOR THE LAST TRADING DAY OF THE WEEK

EUR/USD

Forex News: The US Dollar had another strong day against the Euro, fuelled by a better than expected GDP, while the single currency took a blow from thin German inflation data, so the pair moved closer to support.


Technical Outlook

Price remained below the 50 period Exponential Moving Average and below 1.0775, showing that we may be dealing with a reversal, not a simple retracement. For today we expect an encounter with 1.0710 support but it must be noted that now both the Relative Strength Index and Stochastic have become oversold, signalling that a bounce at support may happen. Also, the pair has been in an uptrend from the beginning of the month and this increases the chance or another move up.

Fundamental Outlook

Today at 9:00 am GMT we take a look at European inflation with the release of the Consumer Price Index. Because the German CPI, which accounts for a big part of overall EU inflation, was released yesterday, the impact of today’s announcement may be somewhat muted but either way, numbers above the forecast 1.8% usually generate Euro strength.

GBP/USD

The Pound rallied yesterday, taking the pair above the 50 period Exponential Moving Average and above 1.2480 resistance, thus marking the end of the bearish retracement.


Technical Outlook

The bounce at 1.2385 followed by the bullish break of the 50 EMA shows that the Pound is not ready to give up control just yet and makes 1.2550 the first target for today. It is very possible to see a re-test of 1.2480 from above and if the pair bounces higher from there, it means that the level is now support, a thing that will increase the possibility of a break through 1.2550.

Fundamental Outlook

At 8:30 am GMT the Pound will be affected by two important releases: the Final version of the Gross Domestic Product (expected value 0.7%) and the Current Account (expected value -16.3 Billion). The first indicator is the main gauge of economic performance and the second measures the difference between imported and exported goods and services. Higher numbers for one or both indicators usually strengthen the Pound, taking the pair higher.

We hope you had a profitable trading week and we wish you a relaxing weekend.

709

FOREX NEWS: MANUFACTURING DATA HOLDS TODAY’S HEADLINES

EUR/USD

Forex News: Eurozone’s main gauge of inflation released Friday showed a disappointing change of 1.5% (expected 1.8%) and this allowed the US Dollar to drag the pair below support, for yet another bearish session.


Technical Outlook

The support at 1.0680 is now broken but both the Stochastic and Relative Strength Index are clearly oversold and the pair travelled a long distance without pullback. This indicates that a move up will soon follow, possibly after 1.0630 is touched but as long as the pair remains below the 50 period Exponential Moving Average, our bias is bearish and we expect another drop after the mentioned retracement.

Fundamental Outlook

At 2:00 pm GMT the United States will release the Manufacturing PMI, a survey of purchasing managers from the manufacturing sector, focused on the economic health of said sector. Usually, a higher reading than forecast shows optimism and strengthens the US Dollar but the impact is low-to-medium; today’s forecast is 57.2 while the previous value was 57.7.

GBP/USD

The Pound was boosted Friday by a better than expected Current Account value and this was partly the reason why the pair moved higher throughout the session.



Technical Outlook

After failing to break the 50 period Exponential Moving Average, the pair shot up and reached the resistance located at 1.2550, leaving us with a classic ‘bounce-or-break’ scenario. A break of this level would increase the chance of a move into 1.2615 (probably this target will not be reached in one day), while a bounce lower would mean that the pair is headed for the 50 EMA again. The PMI surveys released today for the Pound and US Dollar will play an important role for the outcome of the mentioned scenario.

Fundamental Outlook

The only notable release for the Pound is the British Manufacturing PMI, which as mentioned above, is a survey of purchasing managers, focused on economic and business conditions in the manufacturing sector. The release is scheduled at 8:30 am GMT and the forecast is 55.1, a small increase from the previous 54.6.

710

FOREX NEWS: PAIRS TRAPPED BETWEEN SUPPORT AND RESISTANCE. BREAKOUTS IN THE MAKING

EUR/USD

Forex News: The pair had a lacklustre and ranging day, without any special developments to either side. The U.S. Manufacturing PMI matched analysts’ forecast and this contributed to the stalemate seen yesterday.


Technical Outlook

Yesterday’s price action confirmed 1.0680 as short term resistance but the Relative Strength Index and Stochastic are starting to climb out of oversold territory and this increases the chance of a move up, towards the 50 period Exponential Moving Average. If the pair breaks 1.0680 but stops at 1.0710, we expect a drop into 1.0630, otherwise we will probably see a stronger move north.

Fundamental Outlook

There are no important releases on the Euro and US Dollar economic calendar so the deciding factor for price direction will be the technical aspect.

GBP/USD

The British Manufacturing data released yesterday showed a disappointing reading of just 54.2 (expected 55.1) and this was one of the reasons why the Pound weakened, allowing the bears to take the pair into support.


Technical Outlook

The bulls encountered heavy resistance at 1.2550, which is a level that continues to be of importance for short and medium term movement. However, the pair is having trouble breaking through the confluence zone created by 1.2480 and the 50 period Exponential Moving Average, so we may be facing the start of a ranging period, with price trapped between 1.2550 and 1.2480. A strong break of either one of these levels will probably decide the next direction but until that happens, our view is neutral.

Fundamental Outlook

The British Construction PMI is released today at 8:30 am GMT and may be a catalyst for a break of one of the levels mentioned earlier. This survey is derived from the opinions of purchasing managers from the construction sector and shows their optimism regarding business conditions in said sector; the expected figure is 52.5, same as previous and usually a higher number strengthens the Pound.