Technical News | Daily

FOREX NEWS: BEARISH PRESSURE ESCALATES, SUPPORT LEVELS THREATENED

EUR/USD

Forex News: The pair had a bearish session yesterday, on the back of a stronger US Dollar, boosted partly by higher than expected values posted by the JOLTS Job Openings.


Technical Outlook

Price broke the 50 period Exponential Moving Average and the support at 1.0900, showing strong bearish momentum, so we anticipate a move into 1.0850. At the time of writing the pair is showing rejection at the previous low (1.0875) but this hurdle will probably be taken out soon. If the support at 1.0850 is broken, we will probably see a move to close the weekly gap in the near future, but this scenario will be invalidated for now if price moves back above the 50 period EMA.

Fundamental Outlook

ECB President Mario Draghi will speak today at the Dutch House of Representatives, about the impact of monetary policy. The effect of this speech is not known but as usual, caution should be used whenever heads of central banks speak publicly. The scheduled time is 12:00 pm GMT.

GBP/USD

The pair had a mixed session yesterday, first dropping into support and then bouncing higher from the confluence zone created by the 50 EMA and the level at 1.2905. For now the pair is still in an uptrend but bearish pressure has increased.



Technical Outlook

Price is facing an important support zone created by the Exponential Moving Average and the level at 1.2905. Judging by yesterday’s trading session, price is reacting to this zone because it moved higher immediately after touching it, but as long as the pair stays below 1.2965, we expect a drop through this zone and into 1.2855 – 1.2850. The oscillators are showing good downside momentum and are not oversold, further increasing our bearish bias; however, keep in mind that we are still in an uptrend, so the possibility of a move up shouldn’t be ruled out.

Fundamental Outlook

The Pound has another light day in terms of economic releases, but this doesn’t mean that the pair will have a slow trading day; however, the technical aspect will prevail.

FOREX NEWS: POUND IN THE SPOTLIGHT: BOE INTEREST RATE, INFLATION REPORT AND MONETARY POLICY SUMMARY

EUR/USD

Forex News: The speech of ECB President Draghi was shifted an hour earlier than initially scheduled but the Euro remained mostly unfazed by the event and was stuck in 40 pip range for the most part of yesterday’s trading session.


Technical Outlook

Although movement was slow yesterday, the pair remained below the 50 period Exponential Moving Average and broke the previous low at 1.0875. These are bearish signs, which make us anticipate a break of 1.0850 in the short term, followed by an extended move to the downside, possibly to the place where the bullish gap originated. This scenario is valid as long as the pair remains below the 50 period EMA.

Fundamental Outlook

At 12:30 pm GMT the United States Producer Price Index comes out, showing changes in the price charged by producers for their goods. The index acts as a leading indicator of inflation because a higher producer price usually means that consumer prices will increase. The forecast is a change of 0.2% (previous -0.1%) and higher values tend to strengthen the US Dollar but often the impact is limited if the actual number matches expectations.

GBP/USD

The Cable had another close encounter with the resistance at 1.2990 but immediately bounced lower, thus offering more hints that the uptrend is starting to fade.



Technical Outlook

The bulls failed to take out 1.2990 resistance but the pair is still trading above the 50 period Exponential Moving Average, so the bias is not yet bearish. Once (and if) the 50 EMA is broken, we expect price to move below 1.2905 and closer to 1.2855 but it must be noted that today is an important day for the Pound, due to multiple Bank of England releases. The technical aspect will be secondary and the pair’s direction will be mostly decided by the fundamentals.

Fundamental Outlook

At 11:00 am GMT the Bank of England will release the Monetary Policy Summary, containing their interest rate decision as well as the breakdown of the rate votes and commentary about the reasons that influenced the votes. The rate is not expected to change (currently 0.25%) but if the Summary contains hints about future changes, volatility will increase on all Pound pairs.

At the same time the BoE will release the Inflation Report, containing their economic and inflation predictions for the next 2 years. This is yet another reason for increased volatility so the Pound is likely to have a busy day ahead.

FOREX NEWS: FOCUS SHIFTS ON THE US DOLLAR: U.S. RETAIL SALES AND INFLATION DATA

EUR/USD

Forex News: Yesterday’s trading session belonged to the bears, who managed to test 1.0850 support, partly helped by a better than expected value of the U.S. Producer Price Index.


Technical Outlook

The pair is slowly making its way lower but the support at 1.0850 is still not broken and can reject price higher. The short term bias is bearish, anticipating a move into 1.0800 and a closing of the gap later on. A move above the 50 period Exponential Moving Average would invalidate our bearish scenario for the time being and keep in mind that today the US Dollar will be affected by important releases so the technical side will be secondary.

Fundamental Outlook

At 12:30 pm GMT the U.S. Consumer Price Index is released, showing changes in the price paid by consumers for the goods and services they purchase. The expected value is 0.3% and because the indicator has inflationary implications, higher numbers usually strengthen the US Dollar.

At the same time another important indicator comes out: the U.S. Retail Sales, expected to show a change of 0.6% from the previous -0.2%. Sales made at retail level represent the main part of consumer spending, which in turn accounts for the major part of economic activity, so higher numbers can also strengthen the U.S. Dollar.

GBP/USD

The Bank of England kept the rate unchanged as expected but the Monetary Policy Summary and Governor Carney’s press conference triggered a boost of volatility and moved the pair into key support.



Technical Outlook

The pair has moved strongly below the 50 period Exponential Moving Average and is now facing a key level at 1.2855 (1.2850). We will probably see some sort of rejection here, but the extent should be limited and followed by a break of the mentioned support, if the pair will remain below the 50 period EMA and below 1.2900. Also keep in mind that the US Dollar will be affected by important economic releases that will play a major role for today’s price direction.

Fundamental Outlook

The Pound doesn’t have anything major on the economic calendar, so the pair’s movement will be mainly influenced by the USD releases and the technical aspect.

FOREX NEWS: SUPPORT HOLDS, BULLS STEP BACK INTO THE GAME

EUR/USD

Forex News: U.S. Consumer Price Index disappointed Friday by showing a change of only 0.2% (forecast 0.3%), but also the Retail Sales showed a 0.4% change compared to the expected 0.6%. All this combined with rumours of ECB tapering the QE, triggered a strong move up.


Technical Outlook

Friday’s move up was fast and strong and broke the 50 period Exponential Moving Average to the upside, thus making the short term bias bullish. However, it must be noted that usually, moves like this one are followed by a counter move or a period of stagnation so we might see a descent into 1.0900 and the 50 EMA. If this support zone holds, the next destination will be 1.0950.

Fundamental Outlook

Today there are no major releases scheduled for either the US Dollar or the Euro, so the technical aspect will prevail and will be the main market mover.

GBP/USD

Friday the pair bounced at support following weak U.S. CPI and Retail Sales data but the bullish advances weren’t substantial and overall we had a slow session, below the 50 period Exponential Moving Average.


Technical Outlook

The support at 1.2855 (1.2850) rejected price twice during the recent period and this may be an indication that the bears lack the strength to clearly end the uptrend. The upside is capped by the 50 period Exponential Moving Average and as long as the pair is trading between these two barriers, our short term bias is neutral. A strong break will be probably followed by an extended move in that direction.

Fundamental Outlook

Similar to the United States and the rest of Europe, the United Kingdom didn’t schedule major news releases, so the technical side will decide the pair’s direction.

FOREX NEWS: POUND AFFECTED BY INFLATION DATA, STRONG MOVES AHEAD

EUR/USD

Forex News: The pair remained above the 50 period Exponential Moving Average yesterday and had a strongly bullish session, without retracing lower. No major economic indicators were released, so most of the move was technical.


Technical Outlook

Yesterday’s move easily broke through 1.0950 resistance and came very close to 1.1000 psychological level, bringing the Relative Strength Index and Stochastic in overbought territory. The overextended position of the pair calls for a retracement lower (possibly into the 50 period EMA) although the bias is bullish for the medium term. However, it should be noted that from a longer term perspective the pair is still in a range.

Fundamental Outlook

At 9:00 am GMT the Euro will be affected by the release of the Eurozone Gross Domestic Product, which is the main gauge of economic performance across the European Union. The forecast is a change of 0.5% and usually the release has a stronger impact if the actual number differs from expectations. Higher values strengthen the currency.

At the same time the German ZEW Economic Sentiment is released, showing the opinions of about 275 German professional investors and analysts about the state of the German economy. It acts as a leading indicator of optimism and economic health, and higher numbers than the forecast 22.3 are usually beneficial for the Euro.

GBP/USD

The pair had a slower session than the EUR/USD but maintained a bullish bias and managed to climb above the 50 period Exponential Moving Average and above 1.2905 resistance. The economic scene was calm, without major releases.


Technical Outlook

If the current move above the 50 period EMA and 1.2905 can be sustained, the pair is likely to climb into 1.2965 in the near future. A break below the EMA and 1.2905 will open the door for 1.2855, a level which proved a strong support in the past and may reject falling prices higher. The oscillators are showing good bullish momentum, without being overbought, thus increasing the chances of an extended move north.

Fundamental Outlook

At 8:30 am GMT we take a look at the always important British CPI, which is the main gauge of inflation in the UK. The indicator measures changes in the price paid by consumers for the goods and services they purchase and usually strengthens the Pound if it posts a reading above the forecast, which for today is 2.6% (previous 2.3%).

FOREX NEWS: EURO POPS HIGHER. THE BULLS RUN THE SHOW

EUR/USD

Forex News: The pair climbed for more than 100 pips yesterday, without retracing lower and the bulls scored a major victory by taking price way above 1.1000 psychological level.


Technical Outlook

At the time of writing the pair was hovering around the 1.1080 mark, after a strongly bullish session during which the pair moved straight up. The Relative Strength Index and Stochastic are both extremely overbought and this calls for a retracement lower but the overall picture is bullish and we expect to see a move into the next area of resistance, located at 1.1100 – 1.1120.

Fundamental Outlook

At 9:00 am GMT we take a look at European inflation with the release of the Final version of the Consumer Price Index. This is the last version and tends to have the lowest impact but it shouldn’t be overlooked because it can generate increased volatility. The forecast for today is 1.9% and usually a higher number strengthens the Euro.

GBP/USD

British inflation showed a better than expected value but this created just a quick spike up, followed by a drop and by another move that almost erased the earlier dip. Overall we had mixed movement, without a clear bias.


Technical Outlook

It looks like the pair is stuck in a range and control doesn’t clearly belong to either side. Lately price doesn’t react to the level at 1.2900 and we saw it breached several times, so the boundaries of the range are 1.2855 as support and 1.2990 as resistance. Until the pair exits one of these boundaries, we expect more of this choppy movement, without a clear winner. The oscillators lack momentum and the 50 period EMA is flat, further showing the ranging state of the pair.

Fundamental Outlook

The British Average Earnings Index comes out at 8:30 am GMT, showing changes in the price that businesses pay for labor. If people are paid more, they tend to spend more, thus boosting consumer spending and this leads to increased economic activity and usually a stronger Pound. Today’s forecast is a change of 2.4%, while the previous was 2.3%.

FOREX NEWS: US DOLLAR TAKES A BIG HIT. ALL EYES ON POUND FOR RETAIL SALES RELEASE

EUR/USD

Forex News: The Euro continued to strengthen and the pair showed another bullish session, moving above the long term resistance located at 1.1120. Despite the overextended condition of the pair, the buyers remained in control.


Technical Outlook

Since the latest move up started, only one candle was bearish and the pair climbed strongly, without any form of retracement lower. The Relative Strength Index and Stochastic are extremely overbought and this would normally call for a pullback but the US Dollar totally lacks strength, making us anticipate further advances north for the pair. The previous resistance at 1.1120 – 1.1100 may turn into support, while to the upside the next level of importance is 1.1240.

Fundamental Outlook

At 12:30 pm GMT the U.S. Unemployment Claims are released, showing the number of people who asked for unemployment related benefits. A higher number than the forecast 240K usually weakens the US Dollar and the opposite is true for a lower number but this indicator has a low-to-medium impact, mostly because it is released every week.

GBP/USD

British jobs data matched analysts’ expectations but US Dollar selling pushed the pair higher, into the top of the channel, at 1.2990.


Technical Outlook

The pair is facing a strong resistance at 1.2990 – 1.3000. If this area can be surpassed, we expect to see a move into 1.3050, followed by 1.3100 but we cannot rule out a bounce lower from the current resistance. However, the weakness showed by the US Dollar against most of its counterparts makes us anticipate a break of the level and a continuation higher.

Fundamental Outlook

The British Retail Sales are today’s highlight, released at 8:30 am GMT and expected to show a change of 1.2% compared to the previous -1.8%. Sales made at retail levels represent the major part of consumer spending and usually a higher number strengthens the currency, because it shows increased economic activity.

FOREX NEWS: RESISTANCE REACHED, RETRACEMENTS UNDERWAY

EUR/USD

Forex News: Yesterday the bulls pushed the pair higher, reaching a high at 1.1170. The U.S. Unemployment Claims showed a better than expected number, contributing to a limited extent to a pullback that tested 1.1120.


Technical Outlook

The pair retraced and breached the previous resistance at 1.1120 but at the moment this level can be considered support because rejection here is present (candles have long wicks in both their upper and lower sides). The bias remains clearly bullish and we expect further advances, with 1.1170 as first target, followed by 1.1240. Even if the pair breaks 1.1120 to the downside, the extent of the move lower should be limited.

Fundamental Outlook

There are no major economic releases scheduled for the last day of the trading week, so we expect price action to remain driven by the technical aspect.

GBP/USD

Yesterday the Pound benefited from a much better reading for the British Retail Sales (expected 1.2%, actual 2.3%) and this was the main catalyst for a move into key resistance at 1.3050.



Technical Outlook

The pair has reached an important resistance level at 1.3050 and now the Stochastic and Relative Strength Index are approaching overbought levels. This is not a sure indication that price will bounce lower from here, because as seen numerous times before, price can continue higher or lower despite overbought or oversold levels. However, if we get a bounce south, this move will encounter support at 1.2990 followed by 1.2965. To the upside, a break of 1.3050 will make 1.3090 the immediate target.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound will not be affected by economic indicators today, so the main focus will be on the technical side.

FOREX NEWS: BEARISH PRESSURE MOUNTS. STRONG RESISTANCE AHEAD

EUR/USD

Forex News: Friday the buyers remained in control, taking the pair above the previous top at 1.1170. The economic scene was calm, without major releases and most of the move was technical.


Technical Outlook

After establishing a low at 1.1075 the pair started to move up, resuming the uptrend and breaking 1.1170. The first upper target is located at 1.1240 but it must be noted that the Relative Strength Index (RSI) is showing bearish divergence, which is present when price is making a higher high and the oscillator is making a lower high. This divergence and the overbought condition of the RSI are early warnings that price may bounce lower but overall the picture remains bullish.

Fundamental Outlook

The day’s only notable event is the Eurogroup Meeting, attended by Finance Ministers from the Euro Area member states, as well as other personalities from the political and financial scene. The impact on the currency varies depending on the matters discussed, but caution should be used throughout the day.

GBP/USD

Friday the pair erased an earlier drop occurred Thursday and moved back into the resistance at 1.3050. The bias is still bullish but bearish pressure has increased.


Technical Outlook

The sudden drop after the first encounter with 1.3050 resistance is a warning sign that the uptrend may be coming to a stop or at least that it is weaker than before. However, the bearish move was completely erased, so the bulls still have enough “juice” for a break of 1.3050; if that happens, the next key level is located at 1.3430 but it’s way too far to be reached during one day. A bounce at 1.3050 will probably take the pair into 1.2990 but our bias for today is mostly neutral.

Fundamental Outlook

The Pound will not be affected today by major economic releases but United Kingdom representatives will attend the Eurogroup Meetings and this could generate increased volatility.

FOREX NEWS: EURO BOOSTED BY ‘TOO WEAK’ COMMENTS, POUND STILL ON THE FENCE

EUR/USD

Forex News: The Euro got another boost yesterday, this time from Germany’s Merkel, who mentioned that she considers the currency “too weak”. The comment sent the pair higher, rebounding around 1.1170 and moving past 1.1240 resistance.



Technical Outlook

Although the current move up is overextended, the Euro found new strength in Chancellor Merkel’s comments and now the resistance at 1.1240 is in danger. The overall picture remains bullish and the next target is located at 1.1340 if 1.1240 can be decisively broken. However, it is highly likely to see a bearish retracement before the pair can reach that zone. Bearish divergence is still present (price is making higher highs and the Relative Strength Index is making lower highs), thus increasing the chances of a pullback.

Fundamental Outlook

The day’s highlight is the release of the German IFO Business Climate, scheduled at 8:00 am GMT. This is a survey with a very large sample size of about 7,000 German businesses, focused on the respondents’ view on current business conditions as well as a 6-month outlook. The forecasted value is 113.1 and usually the Euro is strengthened by a higher than expected number but the impact of this indicator is not very high.

GBP/USD

The pair dipped below support, in close vicinity of the 50 period Exponential Moving Average but soon after, it climbed back to where the market opened. Overall yesterday’s session lacked substantial developments or a clear bias.


Technical Outlook

The pair showed rejection near the 50 period EMA but also failed to move past 1.3050 again. These are indications that control doesn’t clearly belong to either side for the moment, although from a longer term perspective the pair is still in an uptrend. Today’s price direction will be mostly determined by Governor Carney’s testimony and the technical side will be secondary. The levels to watch remain 1.3050 followed by 1.3090 to the upside and the 50 period EMA to the downside.

Fundamental Outlook

At 9:00 am GMT the Inflation Report Hearings take place. During these hearings, BOE Governor Mark Carney and several MPC members will testify before the Parliament’s Treasury Committee on inflation and economic outlook. The Pound can be strongly affected by the testimony but the impact cannot be accurately predicted, thus caution is recommended.

FOREX NEWS: US DOLLAR SHOWS MINOR SIGNS OF RECOVERY. FOMC MEETING MINUTES EYED

EUR/USD

Forex News: The German IFO Business Climate survey released yesterday posted a better than expected value but this didn’t help the Euro to push higher, mostly because the pair was already overbought for a long period.



Technical Outlook

The uptrend failed to break 1.1240 for the time being, although the pair climbed briefly above this resistance. In the short term it’s very likely to see a move into 1.1170, followed possibly by an encounter with the 50 period Exponential Moving Average. Overall the pair is in a clear uptrend but it is also under bearish pressure.

Fundamental Outlook

At 12:45 pm GMT, ECB President Mario Draghi will speak at the First Conference on Financial Stability, organized in Madrid by the Bank of Spain. The speech may have an impact on the Euro and volatility may be affected, so caution is recommended.

On the US Dollar side we have the FOMC Meeting Minutes, scheduled for release at 6:00 pm GMT. The document contains details of the reasons behind the latest interest rate decision but more importantly, it can contain hints about future monetary policy. If this is the case, the US Dollar will be strongly affected so, as always, we recommend caution.

GBP/USD

The Pound slipped lower yesterday but movement was choppy and lacked a strong bias. The 50 period Exponential Moving Average was touched but offered good support and pushed the pair higher.


Technical Outlook

The failure to break the 50 period EMA to the downside shows that the pair is not yet ready for a strong move south but on the other hand, the bulls also lack clear determination. It looks like the pair is still trapped in a range, but with a slightly bullish bias as long as it remains above the 50 period EMA. To the upside 1.3050 is still the first target and a strong resistance.

Fundamental Outlook

The Pound will not be affected by any major economic indicators today but the pair’s direction will be influenced by the contents of the FOMC Meeting Minutes.

FOREX NEWS: US DOLLAR ON SHAKY GROUND: ADVANCES AGAINST POUND, LOSES GROUND AGAINST EURO

EUR/USD

Forex News: The pair had a flat day before the release of the FOMC Minutes but volatility increased at the time of the announcement and the Dollar weakened. The support at 1.1170 is still intact and shows clear rejection at the time of writing.


Technical Outlook

As long as the pair remains above 1.1170 support and above the 50 period Exponential Moving Average, our bias is bullish, anticipating a move into 1.1240 resistance and possibly above it. Almost all of yesterday’s price action took place very close to the mentioned support, so this level is clearly important for short term movement and a break would indicate that the bears are winning the battle and would make the 50 EMA the first target.

Fundamental Outlook

Today the two currencies will not be affected by major economic indicator releases but the OPEC Meetings take place in Vienna and this may influence the markets to a certain extent. Also, keep in mind that German and French banks will be closed in observance of Ascension Day.

GBP/USD

Overall the pair had a bearish session yesterday and the US Dollar losses seen at the time of the FOMC Minutes release were quickly erased. Price is now trading below the 50 period Exponential Moving Average, which is a bearish sign.


Technical Outlook

As long as the pair is trading below 1.2990 and below the 50 EMA, our bias is bearish for the short term, anticipating a move into 1.2900. It must be noted that the Stochastic has moved into oversold territory, so a potential move into the mentioned support might be followed by a bounce higher. Overall the pair remains in an uptrend but control doesn’t clearly belong to either side.

Fundamental Outlook

At 8:30 am GMT the Pound will be affected by the release of the Second Estimate Gross Domestic Product, expected to show a change of 0.3%, same as previous. This version of the GDP is less important than the Preliminary but more important than the Final so we can expect to see some movement, especially if the actual change will differ from analysts’ forecast; better than expected numbers usually strengthen the Pound.

FOREX NEWS: CAN THE US DOLLAR BOUNCE BACK? U.S. GROSS DOMESTIC PRODUCT EYED

EUR/USD

Forex News: Yesterday the pair spent the entire session bouncing between support and resistance, without breaking either of them. The economic scene was calm, without major releases from either side.



Technical Outlook

By failing to break 1.1240, the pair printed a lower high yesterday and this suggests that we may see a move into the 50 period Exponential Moving Average in the near future. Price remains in an uptrend for the time being but the bulls are starting to lose their clear control and a move below the 50 EMA would further weaken the uptrend. To the upside the first important barrier remains 1.1240, followed by 1.1340.

Fundamental Outlook

At 12:30 pm GMT the Preliminary version of the U.S. Gross Domestic Product is released, showing changes in the total value of goods and services generated by the economy. This is the main gauge of economic performance and usually, higher numbers strengthen the US Dollar. Today’s forecast is a change of 0.9% compared to the previous 0.7%.

Also today the G7 Meetings start and will be attended by representatives of the 7 industrialized nations. The matters discussed may have an impact on the pair’s movement, so caution is recommended.

GBP/USD

British GDP numbers released yesterday disappointed and this reversed an earlier climb above 1.2990 resistance. Overall the session had choppy price action, with a bearish bias.


Technical Outlook

If the bears can push price lower, keeping the pair below the 50 period Exponential Moving Average, we are likely to see a move into the support at 1.2900. A push above the 50 EMA will probably take the pair above 1.2990 – 1.3000 and closer to 1.3050. From a longer term perspective the pair is in an uptrend but the break of the 50 EMA signals a possible short term bear market.

Fundamental Outlook

The Pound will not be affected by any important economic indicators today but UK and US representatives will attend the G7 Meetings and this can influence the pair overall.

FOREX NEWS: ECB PRESIDENT DRAGHI TESTIFIES, U.S. AND U.K. BANKS CLOSED DUE TO HOLIDAYS

EUR/USD

Forex News: The U.S. Preliminary GDP released Friday posted a better value than analysts had anticipated (actual 1.2%, forecast 0.9%) and this was part of the reason why the US Dollar had a strong session.


Technical Outlook

After the failure to break 1.1240 the pair moved into the confluence zone created by the 50 period Exponential Moving Average and the support at 1.1170. This zone will be today’s main focus, as a break would probably trigger a move into 1.1120 but a bounce will make 1.1240 the target once more. The pair is still in an uptrend, with no significant low printed, so the possibility of another climb shouldn’t be overlooked although bearish pressure is mounting.

Fundamental Outlook

Today at 1:00 pm GMT, ECB President Mario Draghi will testify in front of the Economic and Monetary Affairs Committee about the economy and monetary policy. This speech can have a high impact on the Euro, so caution is recommended. U.S. banks will be closed in observance of Memorial Day and no major indicators will be released.

GBP/USD

The Pound weakened against most of its counterparts Friday, on concerns that Prime Minister May’s Conservative Party may not be able to win the June 8 election. The pair moved through several support levels and lost about 150 pips in a day.



Technical Outlook

The bears are in control of short term price action but the strong drop seen Friday is likely to retrace higher, possibly into the resistance at 1.2850. Both the Relative Strength Index and Stochastic are oversold, increasing the chances of a bounce higher from 1.2770 but bearish pressure is high and this could generate another move south after the said retracement. The lacklustre fundamental scene may contribute to a ranging session, without major developments.

Fundamental Outlook

UK banks will be closed due to Spring Bank Holiday and no important indicators will be released. This may contribute to a low-volatility day, with possible choppy price action.

FOREX NEWS: GERMAN INFLATION, U.S. CONSUMER CONFIDENCE – CATALYSTS FOR SURGING VOLATILITY

EUR/USD

Forex News: Price action was very slow yesterday, with a slightly bullish bias after a failed attempt to break the 50 period Exponential Moving Average. Draghi’s testimony did not have a notable impact on the pair and volatility remained low throughout the session.


Technical Outlook

For now the pair has found good support at the confluence zone created by the 50 period Exponential Moving Average and the horizontal level at 1.1170. If the bears cannot break this zone soon, we will probably see a resurgence of the uptrend and possibly another test of 1.1240 key resistance. On the other hand, a break of 1.1170 and the 50 EMA will open the door for a touch of 1.1120 but currently price action lacks momentum and our bias is mostly neutral.

Fundamental Outlook

Today at 12:00 pm GMT we take a look at German inflation with the release of their Consumer Price Index. The indicator shows changes in the price paid by consumers for the goods and services they purchase and usually strengthens the Euro if it posts numbers above forecast, which for today is -0.1% from the previous 0.0%.

On the US Dollar side we have the Consumer Confidence, which is a survey with a large sample size of about 5,000 households, focused on the respondents’ opinions regarding the overall state of the economy. Today’s forecast is 120.1, the time of the release is 2:00 pm GMT and normally, a higher number strengthens the US Dollar but the impact is often medium.

GBP/USD

U.K. and U.S. banks were closed yesterday due to holidays but nonetheless, the big move seen Friday was retraced higher and the pair reached the previous support, now turned resistance.


Technical Outlook

The pair has bounced almost perfectly at 1.2770, which remains a strong support and price is likely to react to it in the future. The latest strong move is bearish and yesterday’s climb can be considered a normal retracement, so if 1.2850 resistance holds, we expect to see a continuation of the move started Friday and potentially a break of 1.2770 or at least another test; otherwise, the pair will probably climb into the 50 period EMA.

Fundamental Outlook

There are no major economic indicators scheduled for release today, so the pair’s direction will be decided by the technical aspect and by the U.S. Consumer Confidence survey.

FOREX NEWS: BULLS ERASE LOSSES, EUROZONE INFLATION EYED FOR NEXT MOVE

EUR/USD

Forex News: The euro moved higher yesterday on speculation that the European Central Bank may remove easing at their June meeting. Now the pair is trading again above the 50 EMA and above support.


Technical Outlook

Although the pair briefly dipped below the 50 period Exponential Moving Average, the bulls quickly pushed price higher after a bounce at 1.1120 support. This makes 1.1240 the first target and a break would mean uptrend resumption and probably a move into 1.1340 resistance. If the pair moves below the 50 period EMA again, we will probably see a break of 1.1120 and a move into 1.1075.

Fundamental Outlook

The Eurozone Consumer Price Index will be released today at 9:00 am GMT, offering insights into the state of European inflation. Today’s version is the Flash Estimate and tends to have a bigger impact than the Final, which is released about two weeks later, so we can expect to see increased volatility, with bullish bias if the actual number exceeds the forecast of 1.5% (previous 1.9%).

GBP/USD

The Pound rebounded and erased some of the losses suffered last week, making the short term bias bullish and bringing the pair above 1.2850, a level that acted as both support and resistance in the past.


Technical Outlook

The resistance at 1.2850 initially pushed price lower but the sellers quickly ran out of steam and the pair continued higher, through the mentioned resistance, now turned support. The immediate target seems to be the 50 period Exponential Moving Average but if the line is not broken, we expect to see another push below 1.2850. The 50 EMA is in close vicinity of 1.2900 resistance and together the 2 elements create a confluence zone which will be tough to break.

Fundamental Outlook

The United Kingdom didn’t schedule important news releases for today, so the pair’s direction will be mainly decided by the technical side.

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FOREX NEWS: US DOLLAR WEAK ACROSS THE BOARD AHEAD OF ADP NON-FARM EMPLOYMENT CHANGE

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EUR/USD

Forex News: European inflation data came slightly below expectations yesterday but despite this fact, the pair climbed above the 50 period Exponential Moving Average and tested 1.1240 resistance, giving us a bullish session.

Technical Outlook

The pair climbed above the 50 period EMA and above 1.1170, which has now turned into support once more. If the key resistance at 1.1240 can be surpassed with ease, we expect to see a move into the next resistance, located 100 pips higher, at 1.1340. Another failed attempt to break 1.1240 would show increased pressure and would make our bias bearish, aiming for 1.1170, followed by 1.1120.

Fundamental Outlook

Today at 12:15 pm GMT we take a first look at the U.S. employment situation with the release of the ADP Non-Farm Employment Change. The report shows changes in the total number of employed people, excluding Government and the farming sector. The indicator is less important than the Non-Farm Payrolls, released Friday but nonetheless, higher numbers are indicative of a thriving economy and usually strengthen the US Dollar. Today’s forecast is 181K, a small increase from the previous 177K.

GBP/USD

After a perfect bounce at 1.2770 the pair rallied and the bulls managed to break 1.2850. The US Dollar has weakened against most of its counterparts and this will likely generate additional upside movement.

Technical Outlook

The pair is facing an important hurdle represented by the 50 period Exponential Moving Average, followed by the horizontal resistance at 1.2900. If these two elements can be broken, we expect to see a climb into 1.2990 but this target will probably be reached after a retracement. If the pair bounces lower at the 50 EMA or at 1.2900, it will probably move into 1.2770 area once again.

Fundamental Outlook

The Pound will be affected today by the release of the British Manufacturing PMI, a survey derived from the opinions of purchasing managers about the state of the manufacturing sector. Numbers above the forecast usually strengthen the currency but the impact is limited if the actual number comes close to expectations. The indicator is released at 8:30 am GMT and the anticipated number is 56.5.http://i.imgur.com/hOTPSVV.jpg

FOREX NEWS: UNCERTAINTY AHEAD OF U.S. NON-FARM PAYROLLS. PREPARE FOR A VOLATILITY BOOST

EUR/USD

Forex News: The ADP Non-Farm Employment Change posted a much better number than expected (actual 253K, forecast 181K) and this strengthened the US Dollar, bringing the pair lower after another encounter with 1.1240 zone of resistance.

Technical Outlook

Most of the US Dollar gains triggered by the positive employment data were erased soon after but overall the session was bearish. The failed break of 1.1240 – 1.1250 zone is a sign that the uptrend may be coming to an end and makes the 50 period Exponential Moving Average the first target, followed by 1.1170. A break of 1.1240 would invalidate this scenario but price action today will be influenced by the U.S. employment data and the technical side will be secondary at release.

Fundamental Outlook

Today at 12:30 pm GMT the most important U.S. jobs indicator will be released: the Non-Farm Payrolls (aka Non-Farm Employment Change). The report shows changes in the total number of employed people during the previous month, excluding the farming sector and usually has a very strong impact on the US Dollar, with higher numbers strengthening it. Today’s forecast is a change of 186K, a drop from the previous 211K.

GBP/USD

Yesterday the pair descended into 1.2850 support on the back of US Dollar strength but the bears failed to break the level and instead price bounced higher, testing resistance again.

Technical Outlook

During the last couple of days the pair bounced between support and resistance, offering mixed signals. As long as the pair remains above the 50 period Exponential Moving Average and breaks 1.2900, our bias is bullish but the technical aspect will be secondary to the fundamental as both currencies in the pair will be influenced by economic releases.

Fundamental Outlook

The Construction PMI is today’s highlight for the Pound, scheduled at 8:30 am GMT and expected to show a value of 52.7. This is a survey derived from the opinions of purchasing managers, which tries to gauge their opinions regarding business conditions and the overall health of the Construction sector. Usually a value above expectations strengthens the Pound but the effect is limited if the actual number matches the forecast. The pair will also be affected by the release of the U.S. jobs data.

FOREX NEWS: POUND AND US DOLLAR AFFECTED BY SERVICES DATA, EUROPEAN BANKS CLOSED DUE TO WHIT MONDAY

EUR/USD

Forex News: Friday was all about the story of the US Dollar and the Non-farm Payrolls that posted a change of 138K, much lower than the anticipated 181K. The previous value was also revised lower, from 211K to 174K and all this weakened the greenback severely, taking the pair above resistance.

Technical Outlook

Before the NFP release the pair had a slow session but once the numbers came out, the US Dollar weakened and as a result the resistance at 1.1240 was broken. We may see a re-test of the level, which may turn into support but for now the first target is located at 1.1340. It is likely that the trip there will take more than one day but a quick return below 1.1240 followed by a break of the 50 period EMA would invalidate such a scenario.

Fundamental Outlook

At 2:00 pm GMT the US Dollar will be affected by the release of the ISM Non-Manufacturing PMI, which is a survey that acts as a leading indicator of economic health and optimism. The forecast is 57.3 and usually, higher numbers strengthen the currency.

Today German and French banks will be closed due to Whit Monday and this may affect volatility, possibly creating choppy price movement.

GBP/USD

For the entire last week price was trapped inside a horizontal channel and Friday was no exception. The US Dollar weakness generated by the NFP release took the pair back into the upper part of the channel but a breakout didn’t materialize.

Technical Outlook

The bounce at 1.2850 was generated by the disappointing NFP numbers and the move is likely to extend past the resistance at 1.2900. The short term bias is bullish but last week ended with price very close to the 50 period EMA which is flat, thus confirming that the pair is in a ranging state. Our bias is neutral but a break of 1.2900 could generate an extended move in that direction.

Fundamental Outlook

At 8:30 am GMT the British Services PMI is released, showing the opinions of purchasing managers from the services sector about business conditions and overall economic health of the said sector. The forecast is 55.1 and higher numbers are beneficial for the Pound.

FOREX NEWS: BRITISH ELECTION SCENE HEATS UP – CONSERVATIVES BACK IN THE LEAD

EUR/USD

Forex News: Price action was slow yesterday and the fact that some European banks were closed due to Whit Monday contributed to the lack of movement. The U.S. Non-Manufacturing PMI came very close to analysts’ expectations, so the impact was low.

Technical Outlook

The pair retraced into 1.1240 which was the previous resistance, now turned support and here the next move will be probably decided. A bounce would confirm 1.1240 as strong support and would make 1.1340 the next target, while a break would take the pair into the 50 period Exponential Moving Average and if this dynamic support is broken, we will probably see a stronger move down, with 1.1170 as target. The pair is still in an uptrend but bearish pressure has increased.

Fundamental Outlook

The day ahead lacks major economic releases, with the only notable one being the U.S. JOLTS Job Openings, an indicator that tracks the number of available jobs during the previous month, excluding the farming industry. Today’s forecast is 5.65 Million and usually a higher number strengthens the US Dollar but the impact is often limited; the time of the release is 2:00 pm GMT.

GBP/USD

The Pound dropped after the Services PMI disappointed (forecast 55.1, actual 53.8) but then found new buyers after a poll showed that May’s Conservative Party is back in the lead. This took the pair above the resistance at 1.2900 and created a bullish session.

Technical Outlook

The break of the horizontal channel that confined the pair for almost a week will probably trigger a stronger move upwards, making 1.2990 – 1.3000 the next likely destination. However, it must be noted that price action is still choppy and heavily influenced by Election polls or even by speculation about their outcome and this means the pair can move strongly to either side, without warning. All this makes our bias mostly neutral for the days to come and we recommend caution.

Fundamental Outlook

The Pound will not be affected today by major economic indicators, so the technical aspect will prevail, assuming there are no surprises coming from the Election scene.