Technical News | Daily

Trading Discussion Currencies
570

FOREX NEWS: FED RATE AND PRESS CONFERENCE: THE MARKET REACHES A BOILING POINT

EUR/USD

Forex News: Yesterday the pair completed a retracement that reached the 50 period Exponential Moving Average and soon after, it started to descend. No major advances were made and price returned below 1.1185.


Technical Outlook

The 50 period EMA offered good resistance yesterday and pushed price lower almost immediately after being touched. This shows us that the bears are in control of short term price action and strengthens our view that 1.1150 support will be touched or even broken in the near future. The oscillators are no longer oversold so the pair is free to move to either side but today we have a cluster of Fed announcements and these will be the main market mover.

Fundamental Outlook

At 6:00 pm GMT the Fed will announce the interest rate which is not expected to change from the current <0.50% and at the same time the FOMC will release a Rate Statement, detailing the reasons that determined the rate vote.

Also at 6:00 pm GMT the FOMC Economic Projections come out, containing economic growth and inflation expectations for the next 2 years. Half an hour later, Fed Chair Janet Yellen will hold a press conference discussing the rate decision and answering journalists’ questions; usually this is the most volatile time of the day because the US Dollar is very responsive to Yellen’s attitude and answers. Often price movement is irregular as traders around the world try to interpret her words, thus caution is recommended.

GBP/USD

After a brief pullback to the upside, the pair continued its travel south and broke the support at 1.3000. This is an important victory for the bears, which solidifies their medium term control and opens the door for additional downside movement.


Technical Outlook

It seems like the next medium term target is the support located around 1.2880 but we must note the oversold condition of both the Stochastic and the Relative Strength Index. This means that we may see a move back up, towards the recently broken 1.3000 but today’s price direction will be mainly decided by the U.S. events so the technical aspect will be secondary to the fundamental.

Fundamental Outlook

The economic calendar doesn’t hold any Pound-affecting indicators today but the Fed meeting and rate announcement will have a direct and strong impact on the pair’s movement.

571

FOREX NEWS: US DOLLAR TAKES A MINOR HIT AFTER FED MEETING


EUR/USD

Forex News: Before the Fed releases the bears were in control but this changed on the back of dovish comments from the Fed Chair Yellen. The rate remained unchanged and the dollar weakened but nothing substantial.


Technical Outlook

The pair touched 1.1130 before the Fed meeting and bounced higher, reaching the 50 period Exponential Moving Average as well as the resistance located at 1.1185. If we will see a close of a 4 hour candle above these two barriers, then we can expect a touch of the resistance at 1.1240 but otherwise the downside will prevail and we will probably see another encounter with 1.1130.

Fundamental Outlook

The day’s only notable event is the speech of ECB president Mario Draghi, at the European Systemic Risk Board annual conference, in Frankfurt. The time of the speech is 1:00 pm GMT and the impact is not known but usually when heads of central banks speak publicly, caution is recommended because the market may have an unpredictable reaction.

GBP/USD

The Pound wasn’t affected by major indicators yesterday and the only notable movement was seen at the time of the Fed releases. The bias remains bearish although the buyers made some advances yesterday.


Technical Outlook

The move up is considered just a normal retracement during a downtrend and doesn’t necessarily suggest that a reversal is in the making. In fact, this retracement is a sign of a “healthy” downtrend and it can open the door for further downside movement; the first bearish target is the support at 1.2945, while to the upside, 1.3070 is the first barrier.

Fundamental Outlook

At 5:00 pm GMT, Bank of England Governor Mark Carney will deliver a presentation in Berlin. We don’t expect the event to generate strong moves but caution is recommended nonetheless.

572

FOREX NEWS: BULLS FIGHT BACK, US DOLLAR ERASES ALL WEEKLY GAINS

EUR/USD

Forex News: Traders showed buying interest yesterday and the pair climbed for almost the entire session, moving strongly above the 50 period Exponential Moving Average and breaking the resistance at 1.1240.



Technical Outlook

The gains obtained by the US Dollar during the previous days were erased and now the pair has returned to a zone where it spent a lot of time ranging in the past. There is no clear trend and although the latest impulse is bullish, we can see a reversal at any time, especially now that the Relative Strength Index and the Stochastic are approaching overbought. These are the main reasons why we expect downside movement today, possibly into the 50 period EMA. However, if 1.1240 turns into support, we may see a touch of 1.1285.

Fundamental Outlook

At 7:30 am GMT, Germany will release their Manufacturing and Services Purchasing Managers’ Indexes and although these are not high-impact indicators, they are the only notable ones for today so we may see some movement generated. The former indicator is expected to show a value of 53.2, the latter, 52.2 and higher numbers usually strengthen the Euro.

GBP/USD

The US Dollar weakness seen after the Fed Meeting extended throughout yesterday’s trading session and the Pound bulls managed to take price above resistance, keeping control for most of the day.


Technical Outlook

Now the pair is testing the 50 period Exponential Moving Average and the way price behaves here will determine the next direction. A close above the EMA will possibly trigger a move into the next potential resistance, located at 1.3175, while a bounce lower will likely take price into 1.3070 again. The Stochastic has crossed its 80 mark, showing signs of overbought and this increases the chances of a move south.

Fundamental Outlook

The entire week has been slow in terms of economic releases that can affect the Pound directly and today is no exception, thus the technical side will be the most important.

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

573

FOREX NEWS: ECB’S DRAGHI TO TESTIFY BEFORE THE EUROPEAN PARLIAMENT. EURO PREPARES FOR MAJOR SWINGS


EUR/USD

Forex News: German Manufacturing and Services data released Friday was mixed, with the former showing a better than expected value, while the latter disappointed. The pair dropped, then erased the loss but couldn’t surpass resistance.


Technical Outlook

Friday we saw an almost perfect bounce at the 50 period Exponential Moving Average and this shows that there’s buying interest and that price may surpass 1.1240. If this is the case, the climb may extend into the next resistance, located at 1.1285 but otherwise, 1.1185 will be the probable destination. Mario Draghi’s testimony may have a strong impact on today’s price action and it’s possible to see ranging movement ahead of the event.

Fundamental Outlook

We have a busier Monday than usual, with 2 important events: at 8:00 am GMT the German IFO Business Climate comes out, with an expected value of 106.3, little changed from the previous 106.2. This survey has a huge sample size of about 7,000 German businesses and asks respondents to give their assessment of current economic conditions as well as a 6-month outlook. Higher numbers usually strengthen the Euro.

At 3:05 pm GMT, ECB President Mario Draghi will testify before the Committee on Economic and Monetary Affairs of the European Parliament. This is a high-impact speech and depending on his attitude and answers, the event may trigger strong movement thus we recommend caution if trading at the time.

GBP/USD

Friday the bears stepped in and erased all previous Pound gains, thus confirming that the pair is in a short-to-medium term downtrend. Support is still holding for the time being.


Technical Outlook

After piercing the 50 period Exponential Moving Average the pair bounced and moved 200 pips lower, breaching the support at 1.2945. This shows that we are still in a downtrend but the 4-hour candle that breached support shows a long lower wick, which is a clear sign of rejection. This is a good enough reason to believe that price is likely to climb into the zone around 1.3000 but overall, our bias is bearish.

Fundamental Outlook

We don’t have anything major on today’s Pound calendar so the technical aspect will prevail.

574

FOREX NEWS: TIMID ADVANCES AND INDECISION AHEAD OF U.S. CONSUMER CONFIDENCE SURVEY

EUR/USD

Forex News: The Euro got an early boost yesterday from a better than anticipated German IFO Business Climate Survey (forecast 106.3, actual 109.5) and the pair managed to break 1.1240. However, volatility remained low and the pair didn’t travel a long distance in terms of pips. Draghi’s testimony was shifted one hour earlier but it didn’t have a huge impact on the Euro.


Technical Outlook

The current move is likely to extend into the resistance at 1.1285 but if the oscillators will become overbought by that time, we expect the pair to reverse and move back into 1.1240. Although the direction is pretty well defined, the distance travelled is small and this means that the move is fragile, thus a reversal is more likely; however, as long as the pair remains above the 50 period Exponential Moving Average, our bias is bullish.

Fundamental Outlook

At 2:00 pm GMT the U.S. Consumer Confidence survey is released, showing the opinions of about 5,000 households regarding economic conditions in general. Usually, numbers above the forecast 98.6 strengthen the US Dollar but the impact is not very high.

GBP/USD

Yesterday the pair moved again below the support at 1.2945 but the bears couldn’t make any substantial advances and overall we had a ranging trading session.


Technical Outlook

The pair bounced twice at 1.2915, so this level can now be considered short term support and we can expect it to reject price in the future. For today we expect bullish price action, with 1.3000 as target; this bias is given by the fact that the bears are having difficulties breaking 1.2915 and the oscillators are close to oversold, turning upwards. If 1.3000 holds or if price starts to move downwards before that level is reached, we expect a touch of 1.2880 during the days to come.

Fundamental Outlook

The United Kingdom didn’t prepare any major economic releases for today so the focus will be on the technical side and the U.S. Consumer survey.

575

FOREX NEWS: BUCKLE UP: FED CHAIR YELLEN TESTIFIES

EUR/USD

Forex News: The US Dollar showed signs of strength yesterday and reversed the bullish bias of the pair, taking it below the 50 period Exponential Moving Average. This was in part due to a better than expected U.S. Consumer Confidence survey but the move started even before that release.


Technical Outlook

The current move will probably reach 1.1185, which is a minor level because price showed just small reaction when it touched it in the past. The more important level is 1.1150 followed by 1.1130 but the Euro has been strong lately so we may see bounces higher at one of these levels, especially if one or both oscillators become oversold. As long as the pair remains below the 50 EMA our bias is bearish and we expect a break of support.

Fundamental Outlook

At 12:30 pm GMT the U.S. Durable Goods Orders come out, with a forecast change of -1.0% from the previous 4.4%. This indicator has a moderate impact on the greenback but numbers above expectations usually strengthen it. The more important event is Fed Chair Yellen’s testimony, scheduled at 2:00 pm GMT. She will testify on regulation and supervision before the Committee on Financial Services and we expect strong movement during the event. Caution is recommended.

GBP/USD

The pair had a pretty slow day yesterday and overall price ranged but showed a slightly bullish bias, touching the resistance at 1.3000.


Technical Outlook

The pair is in a short term range, confined between 1.3000 and 1.2945 so our bias is neutral until one of the barriers is broken. From a wider perspective, we are still in a downtrend and as long as the pair is trading below the 50 period Exponential Moving Average, we expect that trend to continue so we slightly favor the downside.

Fundamental Outlook

Today we have a light economic calendar for the Pound, same as the rest of the week. Janet Yellen’s testimony will have a direct and potentially strong impact in the pair so, as always, we recommend caution.

576

FOREX NEWS: GERMAN INFLATION, U.S. GDP – VOLATILITY RESTORED?

EUR/USD

Forex News: Surprisingly, Fed Chair Yellen’s testimony didn’t generate a lot of action yesterday and the pair remained confined in a small range. Support was touched and price bounced immediately but the up move soon faded.


Technical Outlook

The pair remains in a range and neither bulls nor bears seem interested to take clear control and to break a notable level. The bounce seen at 1.1185 that failed to continue through 1.1240 resistance confirms the indecision we talked about. For today we expect some downside movement, following the failed attempt to break resistance but if 1.1185 is not broken decisively, we expect another move up.

Fundamental Outlook

At 12:00 pm GMT we take an early look into German inflation with the release of the Preliminary version of their Consumer Price Index. This is considered a high impact indicator and usually numbers above the forecast 0.0% change are beneficial for the Euro.

Half an hour later, at 12:30 pm GMT the Final version of the U.S. Gross Domestic Product comes out, expected to show a change of 1.3% (previous 1.1%). This is an overall gauge of economic performance but the Final version is the least important so the impact may be limited; usually numbers above expectations trigger US Dollar strength.

GBP/USD

Yesterday we had another uneventful trading session, with price confined in a tight range. The pair moved almost sideways, between 1.3000 and the 50 period Exponential Moving Average.


Technical Outlook

The last few four-hour candles show wicks in both their upper and lower parts, which is a clear sign of indecision but this type of behaviour is often followed by a strong breakout. The Stochastic is slowly approaching overbought and the 50 period EMA offers some resistance so far; these are bearish signs and if today the bulls cannot break the moving average, we expect a bounce lower, possibly into 1.2945.

Fundamental Outlook

Same as the entire week so far, the economic calendar for the Pound is light today so traders will turn their attention towards the technical side and the U.S. GDP.

577

FOREX NEWS: BREAKOUTS EXPECTED DURING THE LAST DAY OF THE TRADING WEEK

EUR/USD

Forex News: Yesterday both the German Consumer Price Index and the U.S. GDP showed slightly better than expected values but the impact was mild and the pair remained inside a narrow range, with relatively low volatility.


Technical Outlook

Despite the release of important economic indicators, volatility is not restored and price is still trapped inside a range that’s less than 50 pips. Resistance is located at 1.1240 and support at 1.1185, while the 50 period Exponential Moving Average is traveling flat, confirming the lack of determination from either side. Our bias is neutral until a break is confirmed but keep in mind that after a period of inactivity, usually a strong move follows.

Fundamental Outlook

At 9:00 am GMT we take a look at the Eurozone inflation with the release of the Consumer Price Index. The expected change is 0.4% from the previous 0.2% and if this number (or higher) is posted we may see increased volatility, with Euro strength.

GBP/USD

The 50 period Exponential Moving Average appeared to be broken but the better than expected value of the U.S. GDP brought mild strength to the US Dollar and currently support is being tested. Volatility remained low and movement was mixed yesterday.


Technical Outlook

Price breached the 50 period EMA but the bulls failed to capitalize on the break and the pair returned below this dynamic form of resistance. This shows that bearish pressure still exists and, coupled with the overbought condition of the Stochastic, may bring the pair below 1.3000. However, movement remains without clear bias so we don’t exclude a move above the 50 EMA and into the resistance at 1.3070.

Fundamental Outlook

The British Current Account is today’s main event for the Pound; the indicator comes out at 8:30 am GMT and shows the difference between imported and exported goods. A higher value than the forecast -30.5B (previous -32.6) is usually beneficial for the Pound.

At the same time the Final version of the British GDP is released but this is the least important of the three (Preliminary, Second Estimate and Final) so we don’t expect major movement; however, higher values than the expected 0.6% usually strengthen the Pound.

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

578

FOREX NEWS: DEUTSCHE BANK SETTLEMENT SPECULATION DRIVES SHORT TERM PRICE ACTION

EUR/USD

Forex News: Friday’s strong move was generated by a possible settlement between Deutsche Bank and the U.S. Department of Justice over a fine for mortgage-backed bonds. The initial settlement sum was reported to be 14 billion US Dollars but later in the day a news agency reported that the sum is likely to be around 5 billion US Dollars.


Technical Outlook

The move into 1.1150 was generated by news that Deutsche Bank is likely to pay a 14 billion USD settlement and the bounce up that followed was triggered by the announcement that only 5.4 billion USD will be possibly paid. From a technical standpoint we note that 1.1150 support rejected price higher as soon as it was touched and also that 1.1240 stopped bullish momentum. Today we will see if price stopped because it encountered resistance or simply because the trading week came to an end; if 1.1240 holds, we will likely see a move into 1.1185, otherwise we expect a climb into the zone around 1.1285.

Fundamental Outlook

Today the calendar is light for the Euro, mostly because German banks will be closed, celebrating German Unity Day.

The US Dollar will be affected by the release of the U.S. Manufacturing PMI, scheduled at 2:00 pm GMT and expected to show a reading of 50.4 (previous 49.4). This survey is derived from the opinions of about 400 purchasing managers and acts as a leading indicator of economic health, thus values above expectations usually are beneficial for the US Dollar.

GBP/USD

The pair reacted to Deutsche Bank news Friday but the effect was almost opposite: the pair initially climbed, just to fall soon after, erasing all gains.


Technical Outlook

The last trading session shows that 1.2945 support is still rejecting falling prices and 1.3000 resistance still rejects rising prices so the pair is mostly ranging. The pair also bounced on the 50 period Exponential Moving Average, which together with the level at 1.3000, creates a strong confluence zone and tilts our balance slightly towards the short side.

For today we anticipate another touch of 1.2945 but the Stochastic is crossing upwards and this may generate some bullish action; however, this is not a strong enough reason to believe that we will have a bullish trading session.

Fundamental Outlook

At 8:30 am GMT the British Manufacturing PMI comes out, expected to show a value of 52.1. Numbers above this forecast indicate optimism among purchasing managers and usually strengthen the Pound but the impact differs from release to release.

579

FOREX NEWS: BREXIT BACK IN FOCUS, POUND TAKES A BLOW

EUR/USD

Forex News: Yesterday’s trading session started slow and remained that way until the release of the U.S. Manufacturing PMI which showed a value of 51.5, better than the forecast 50.4. Some US Dollar strength was seen at the time but overall volatility was very low.


Technical Outlook

The latest price action shows that 1.1240 still acts as resistance and now the pair is trying to move below the 50 Period Exponential Moving Average. If the rejection at 1.1240 sends price through the 50 EMA and a full candle closes below the line, we expect to see an extended move south, probably back towards 1.1150. As an alternate scenario, a break of 1.1240 will tilt the balance in favour of the bulls, making 1.1285 the first target.

Fundamental Outlook

The technical aspect will drive the market today because Europe and the United States didn’t schedule important indicators.


GBP/USD

The Pound was severely weakened by talks about a potential deadline for the Brexit, set for March next year. This triggered a strong drop that broke several support levels and took the pair 130 pips lower.


Technical Outlook

The pair is approaching the key level at 1.2796, which is the lowest point reached since the Brexit referendum took place. We expect small retracements to the upside before the level is reached and once price gets there, we expect a stronger move up, based on the fact that both oscillators will be deeply oversold by then. Potential resistance is located at 1.2880.

Fundamental Outlook

At 8:30 am GMT the British Construction PMI comes out, showing the opinions of purchasing managers about business conditions in the construction sector. The survey acts as a leading indicator of economic health and usually, numbers above the forecast 49.1 strengthen the Pound but given the current situation, the impact may be muted.

580

FOREX NEWS: POUND SINKS TO 31-YEAR LOW, SMALL BOUNCE EXPECTED

EUR/USD

Forex News: Yesterday action picked up and the sellers managed to take the pair back into the support at 1.1150. Overall we had a bearish session but price is still in a range.


Technical Outlook

Although the bears advanced into the support at 1.1150, this level is not yet broken so we still consider the pair is in a range and that a move up could very well follow. However, the short term control belongs to the sellers and the oscillators are not oversold so the downside may continue; if this is the case, we expect a break of 1.1130 and a move into 1.1100.

Fundamental Outlook

Today at 12:15 pm GMT we take a first look at U.S. employment situation with the release of the ADP Non-Farm Employment Change. This report is less important than the government data that comes out Friday, but higher values than the forecast 166K can strengthen the US Dollar nonetheless.

GBP/USD

Fears regarding a “hard” Brexit early next year created another bearish session and the pair reached levels last seen in 1985, breaking the low generated by the Brexit referendum.


Technical Outlook

At the time of writing the pair had reached a low at 1.2736 but it’s very likely to see further downside by the time you read this. After such a strong drop, we expect a bounce higher and the oversold position of the Relative Strength Index and Stochastic supports such a view. A retracement higher is likely to find resistance at the previous level of 1.2796.

Fundamental Outlook

At 8:30 am GMT the last PMI in the series comes out: the Services PMI. Given the current situation, we don’t expect the release to have a huge impact but under normal circumstances, numbers above the anticipated 52.1 strengthen the Pound.

581

FOREX NEWS: EURO STILL RANGE BOUND, POUND PRONE FOR ANOTHER DIP

EUR/USD

Forex News: Yesterday the pair stayed inside 1.1150 – 1.1240 channel and bounced from the bottom of the range all the way up. Now rejection is seen at the top of the range.


Technical Outlook

The pair remains in indecision mode and all moves to one side are quickly reversed. It’s very likely that this behaviour will change Friday when the NFP report comes out but today we don’t expect a clean breakout. The 50 period Exponential Moving Average is flat again and the oscillators are going nowhere so for now the pair should be considered in range-mode, capped by 1.1240 resistance and 1.1150 support.

Fundamental Outlook

The economic calendar is light for both the US Dollar and the Euro and this means that price direction will be decided mostly by the technical aspect.

GBP/USD

The pair bottomed at 1.2685, which is the lowest point in over three decades of trading. Small retracements were seen yesterday but the oscillators are still deep in oversold territory.


Technical Outlook

The pair is in a clear downtrend but due to the overextended condition of price, we consider that a move up is next. This potential move up should be regarded as a normal retracement and may be followed by further downside. For now support sits at 1.2685 and potential resistance around 1.2800; our overall bias is bearish and we don’t exclude another drop without a retracement beforehand.

Fundamental Outlook

Just like the United States and the rest of Europe, the United Kingdom didn’t schedule major indicators for today so traders will focus on the technical side.

582

FOREX NEWS: BRACE FOR IMPACT: NFP REPORT AHEAD


EUR/USD

Forex News: Yesterday the pair remained inside the channel created by 1.1240 resistance and 1.1150 support, with low volatility and overall a bearish bias. Price is still in range mode be we expect this to change with today’s NFP release.



Technical Outlook

Price is trading below the 50 period Exponential Moving Average and this slightly tilts the balance towards the short side. Keep in mind that the pair is still in range-mode so after the bounce at the upper part of the range, it’s very possible to see a touch of the lower part. The technical aspect will be overshadowed by the NFP release but the levels to watch remain 1.1240 and 1.1150.

Fundamental Outlook

The highlight of the day is the release of the U.S. Non-Farm Employment Change report, also known as the Non-Farm Payrolls (NFP). The indicator tracks changes in the total number of jobs created during the previous month and is widely considered the most important U.S. employment data. Higher numbers strengthen the US Dollar under normal circumstances, thus anything above today’s forecast of 171K, will probably take the pair lower. The time of the release is the usual 12:30 pm GMT.


GBP/USD

After a very small retracement, the pair took another dive and travelled more than 130 pips to the downside, solidifying the control of the bears.


Technical Outlook

The retracement to the upside wasn’t strong enough to clear the overextended condition of the pair so we expect a bigger climb. The overall bias is clearly bearish and the probability of another move south is very high. The pair is in “uncharted” territory (these levels weren’t seen for more than 30 years) so currently there is no clear support level; minor resistance sits around 1.2760.

Fundamental Outlook

At 8:30 am GMT the British Manufacturing Production is released, showing changes in the total value of goods produced by the manufacturing sector. The forecast is 0.4% (previous -0.9%) and under normal circumstances, higher numbers strengthen the Pound. The NFP release will also have a strong impact on the pair’s movement.

583

FOREX NEWS: US DOLLAR SUFFERS SHORT TERM WEAKNESS, POUND AT HISTORICAL LOWS


EUR/USD

Forex News: The U.S. employment data released Friday disappointed as the NFP report showed that only 156K new jobs were created during the last month (forecast 171K). The pair bounced higher as a result, on the back of temporary US Dollar weakness.


Technical Outlook

The greenback took a blow from the NFP report but the actual value wasn’t disastrous so the move up is likely to be reversed. The 50 period Exponential Moving Average is now sitting in front of rising price and if we don’t see a bullish break soon, we expect the pair to return to the zone around 1.1150. A break of the 50 period EMA will open the door for a move into 1.1240 resistance but we don’t expect the climb to extend past that level.

Fundamental Outlook

Europe didn’t schedule major indicators today and United States banks will be closed in observance of Columbus Day so the US Dollar will not be affected by major releases either.

GBP/USD

The Pound was hit hard by a “flash crash” and the pair dropped to historical levels. The sudden move was attributed in part to fears about a difficult Brexit and a potential loss of access to the European single market.


Technical Outlook

Most of the move was reversed and now the pair is trading between 1.2480 and 1.2227. These can be considered levels of resistance and support respectively but the next move for the pair is uncertain. It looks like the pair has calmed down and is likely to move inside the channel for a while but the Pound is definitely vulnerable right now and the possibility of another drop cannot be ruled out. Caution is recommended!

Fundamental Outlook

Same as the rest of the week, the economic calendar is light for the United Kingdom and we don’t have any notable releases today.

584

FOREX NEWS: MPC MEMBER TESTIFIES. POUND PRONE TO SUDDEN MOVES

EUR/USD

Forex News: Yesterday we saw the pair bounce at the 50 period Exponential Moving Average and drop into the support at 1.1150. The economic calendar was light and overall volatility remained low.


Technical Outlook

The pair is still in range mode, with low volatility; so far the 50 EMA offered good resistance and the bias is slightly bearish as long as price is trading below it. We expect a break of 1.1150 and 1.1130 soon, followed by another move into the next support, located at 1.1100. Today’s price action will be influenced by the German ZEW survey but lately the impact of this indicator has diminished.

Fundamental Outlook

As mentioned above, the day’s most notable release is the German ZEW Economic Sentiment, scheduled at 9:00 am GMT. This is a survey of about 275 German analysts and institutional investors and reflects their optimism regarding a 6-month outlook for German economy. Higher numbers than the forecast 4.2 (previous 0.5) usually strengthen the Euro.

GBP/USD

As it was expected, the pair remained between 1.2480 resistance and 1.2227 support yesterday and no major developments took place.


Technical Outlook

The direction remains uncertain and the pair is mostly affected by overall sentiment rather than technical factors. The main bias is bearish and we expect a move closer to 1.2227 support but for the time being we recommend caution because the Pound is prone to unexpected and sudden moves. The Stochastic is overbought, while the Relative Strength Index is oversold, thus showing mixed signals and adding to the overall uncertainty.

Fundamental Outlook

Michael Saunders, a member of the Bank of England Monetary Policy Committee will testify before the Treasury Select Committee today at 9:00 am GMT. His speech may generate irregular movement or may go mostly unnoticed; either way, use caution.

585

FOREX NEWS: US DOLLAR GAINS GROUND AHEAD OF FOMC MINUTES, MPC MEMBER TESTIFIES ON BREXIT EFFECT

EUR/USD

Forex News: The German ZEW Economic Sentiment survey released yesterday posted a better than expected value but the impact on the Euro was minimal and instead the pair had a bearish day, breaking support.


Technical Outlook

The support at 1.1100 was finally broken and the pair now sits on 1.1075, with both the Stochastic and Relative Strength Index in oversold territory. It looks like the bears are taking control of the pair’s short term movement but it’s very likely to see a bounce higher here because price is still moving a low amount of pips each day, without clear determination. Our bias is bearish after small retracements, anticipating a move into 1.0960 during the days to come.

Fundamental Outlook

The day is slow on the Euro’s side but at 6:00 pm GMT the FOMC will release the Minutes of their latest meeting regarding interest rates. We expect this to affect strongly the US Dollar, especially if the document will contain hints about a potential rate hike later this year.

GBP/USD

Yesterday the pair grinded lower, towards support but didn’t threaten it and the testimony of MPC Member Saunders did not have a huge impact on the Pound.


Technical Outlook

Price is approaching the support at 1.2227 and once it gets in that zone, we expect a bounce higher. The Relative Strength Index is deep in oversold territory and this will probably contribute to a future move up but the Stochastic is still heading downwards with good momentum so the signals offered by the two oscillators are still mixed. We continue to recommend caution as the Pound is still prone to sudden moves.

Fundamental Outlook

Another MPC member, Jon Cunliffe, will testify today at 9:00 am GMT before the Financial Affairs Sub-Committee. Because the topic is Brexit’s effect on the financial scene, we expect this speech to create a higher impact than Saunders’ testimony that took place yesterday. Also, the FOMC Meeting Minutes will have a direct impact on the pair’s movement.

586

FOREX NEWS: US DOLLAR STRENGTHENED BY FOMC MINUTES, BEARS MAINTAIN CONTROL

EUR/USD

Forex News: The US Dollar strengthened ahead of the FOMC Meeting minutes and once the document was released, price action became mixed. According to the Minutes, the FOMC members see a rate hike sooner rather than later, so we expect to see more US Dollar strength in the near future.


Technical Outlook

The pair is hovering around the minor support at 1.1025, with both the Stochastic and Relative Strength Index in oversold territory. Also, price travelled a long distance without a retracement so we expect small moves up, followed by another drop that will likely reach the support at 1.0960. The hawkish stance of the FOMC strengthens this bias.

Fundamental Outlook

The only notable indicator released today is the U.S. Unemployment Claims, scheduled at 12:30 pm GMT. It shows the number of people who asked for unemployment related benefits during the previous week but because it’s frequency is high (weekly), its impact is often mild. Nonetheless, numbers above the forecast 252K are usually detrimental for the US Dollar.

GBP/USD

The pair broke immediate support and then retraced higher ahead of the FOMC release, which didn’t generate a clear direction. Overall the Pound is still vulnerable and under bearish pressure.


Technical Outlook

Even if the US Dollar strength generated by the hawkish tone of the FOMC Minutes was not immediately seen, we expect the effect to kick in and to drive the pair lower. For now we have another low created at 1.2090, which will act as support and target for today’s price action. If the pair moves above 1.2227 (1.2230), more bulls will probably join in and will take price higher; however, for the time being our bias remains bearish and moves north are regarded as retracements, not reversals.

Fundamental Outlook

Bank of England Governor Mark Carney will deliver a speech today, at a forum in Birmingham but the exact time of the event is not yet known. This is definitely an event that could spark volatility on Pound related pairs and the lack of information regarding the scheduled time makes it even more “dangerous”.

587

FOREX NEWS: U.S. RETAIL SALES IN THE FOCUS, POUND STILL VULNERABLE

EUR/USD

Forex News: Yesterday the pair retraced higher, mostly due to technical reasons; the fundamental scene was calm and no major indicators affected price action.



Technical Outlook

The pair found minor support at 1.0985 and bounced higher; the Stochastic and Relative Strength Index are just exiting oversold, so the current push up may extend into the potential resistance at 1.1075 or even 1.1100. However, after this retracement is complete, we expect downside movement to resume and the pair to touch or even break 1.0960.

Fundamental Outlook

Today’s main event is the release of the U.S. Retail Sales, scheduled at 12:30 pm GMT and expected to show a change of 0.6% compared to the previous -0.3%. Sales made at retail levels represent a major part of the entire consumer spending and usually, higher numbers strengthen the US Dollar.

Later in the day, at 2:00 pm GMT the University of Michigan will release their Consumer Sentiment survey, which tries to gauge consumers’ opinion about current and future economic conditions. Higher numbers than the forecast 92.1 strengthen the greenback under normal conditions.

GBP/USD

The pair remained below 1.2227 yesterday and price action was mostly ranging, without special developments.


Technical Outlook

Price action stalled yesterday and it looks like the bulls don’t have enough strength to take the pair above 1.2230. As long as the pair is trading below the 50 period Exponential Moving Average, our bias is bearish, anticipating a move into 1.2090, but we still recommend caution on this pair because it’s moving on “shaky” ground.

Fundamental Outlook

The United Kingdom didn’t schedule major events for today, thus the pair’s direction will be influenced by the technical aspect and by the U.S. events mentioned above.

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

588

FOREX NEWS: EUROPEAN FINAL CPI – TODAY’S PRICE ACTION CATALYST

EUR/USD

Forex News: The U.S. economic data released Friday was mostly positive and helped the US Dollar to strengthen against the Euro, generating a bearish move after a small retracement.


Technical Outlook

The retracement seen Friday confirmed 1.1060 as resistance and now we expect the pair to move into 1.0955 and maybe 1.0900 later in the week. Once price gets to 1.0955, it’s very likely to see another bounce higher because the Relative Strength Index is already oversold, but this potential climb should be followed by another drop; 1.0985 may turn into minor resistance.

Fundamental Outlook

The final version of the European Consumer Price Index comes out today at 9:00 am GMT, with an anticipated change of 0.4%. This is the main gauge of inflation but the Final version tends to have the lowest impact. Nonetheless, higher numbers can strengthen the Euro to a limited extent.

GBP/USD

Friday the pair continued to move sideways and remained inside a horizontal channel. Volatility was lower than the previous days and it seems like price is about to enter a ranging period.


Technical Outlook

The horizontal channel created by 1.2325 resistance and 1.2090 support is likely to contain today’s price action. However, if the channel is broken to the upside, then the 50 period Exponential Moving Average will offer resistance and will probably push the pair lower. If the pair breaks 1.2090 we don’t have any immediate support so price is likely to stop once the oscillators become oversold again.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases today so we expect price action to be mainly influenced by the technical aspect.

589

FOREX NEWS: U.S. AND U.K CPI RELEASES GUARANTEE VOLATILITY ON POUND AND US DOLLAR

EUR/USD

Forex News: The Final version of the European CPI matched analysts’ expectations, thus the event didn’t bring a lot of volatility. Yesterday’s session belonged to the bulls but overall the picture is still bearish.


Technical Outlook

Yesterday the pair climbed back above 1.0985, without touching the support at 1.0955 but our bias remains bearish, anticipating a touch of the mentioned support. The oscillators are still close to oversold so the current move up might extend further but we don’t expect a touch of 1.1060 resistance unless surprising developments take place.

Fundamental Outlook

Today’s main event for the pair is the release of the United States Consumer Price Index, scheduled at 12:30 pm GMT. The CPI shows changes in the price paid by consumers for the products they purchase and is considered the main gauge of inflation. Higher numbers than the forecast 0.3% (previous 0.2%), usually strengthen the US Dollar. Keep an eye on the CORE version of the CPI (excludes food and energy from calculation), released at the same time and expected to show a 0.2% change.

GBP/USD

The pair had a very slow yesterday, mostly due to the lack of economic releases. Price remained inside the horizontal channel and movement was mostly sideways.


Technical Outlook

Price is squeezing inside the horizontal channel created by 1.2325 resistance and 1.2090 support and lacks direction from a short term perspective. Usually a strong breakout follows after a period of low volatility and sideways movement but the direction is hard to anticipate. We recommend caution if trading any Pound related pairs.

Fundamental Outlook

Today’s direction is likely to be determined by the release of the British Consumer Price Index, scheduled at 8:30 am GMT. As mentioned before, the CPI is the main gauge of inflation, thus higher numbers than today’s forecast 0.9% (previous 0.6%) will most likely strengthen the Pound.