FOREX NEWS: ECB’S LONG TERM REFINANCING OPTION, A MAJOR MARKET MOVER
EUR/USD
Forex News: Yesterday the pair moved above 1.2400 resistance, reversing a previous retracement below this level. The day belonged to the bulls but the action was rather slow, compared with the previous move, probably because economic releases were scarce.
Technical Outlook
Price found support in close vicinity of the 50 period Exponential Moving Average and of 1.2360 support but 1.2455 short term resistance wasn’t touched although the bulls controlled the day’s price action. We expect a move above 1.2455 resistance but if this doesn’t happen today, we are likely to see a return below 1.2360 support. Keep an eye on the Relative Strength Index which is approaching overbought and could trigger reversals.
Fundamental Outlook
At 10:15 am GMT the ECB will announce the value of their Targeted LTRO (Long Term Refinancing Option). This is the total amount of money the ECB will create and loan to European commercial banks in order to boost liquidity. The current value is 82.6B and the forecast is 148.2B but the impact might be difficult to anticipate as market participants can interpret differently the actual value.
The US Retail Sales are announced at 1:30 pm GMT and expected to change 0.4% while last month’s change was 0.3%. Higher values will most likely benefit the greenback because sales made at a retail level represent a hefty part of consumer spending which in turn is a major part of the entire economic activity.
GBP/USD
The pair showed choppy price action for the entire duration of yesterday’s trading session and remained in a tight range. Neither bulls nor bears were in clear control but minor advances north were made.
Technical Outlook
The pair is still trading above the 50 period Exponential Moving Average but important resistance sits in front of rising prices: 1.5750. If this level cannot be breached today, we expect price to start moving towards the support at 1.5590. If this is the case, the Moving Average will be the first area of dynamic support.
Fundamental Outlook
The pair’s direction will be influenced today by the US Retail Sales as the United Kingdom didn’t schedule any major news releases. Keep an eye on the CORE version of this indicator, which excludes automobiles from calculation.
FOREX NEWS: UNITED STATES ECONOMIC INDICATORS – THE DECIDING FACTOR FOR FRIDAY’S PRICE ACTION
EUR/USD
Forex News: The US Dollar strengthened yesterday against the Euro as the American Retail Sales came out with a better than expected value, showing that economic activity in this sector is picking up. ECB’s Targeted LTRO came out with the value of 129.8B, less than the expected 148.2 but the event didn’t create strong moves.
Technical Outlook
After breaking 1.2455 to the upside, the pair became overbought as shown by the Relative Strength Index and this, coupled with the dollar strength generated by the US Retail Sales release, pushed the pair below 1.2400. Currently the pair is retesting the recently broken level from below and we believe this retest will result in another push lower. The first target is the support at 1.2360, followed by 1.2280.
Fundamental Outlook
All major indicators of the day come from the US with the first release being scheduled at 1:30 pm GMT in the form of the Producer Price Index. The indicator tracks changes in prices charged by producers and has inflationary implications because a higher price will be eventually passed on to the consumer. The forecast is -0.1% while the previous was 0.2% and higher values usually strengthen the greenback.
The University of Michigan will release their Consumer Sentiment survey at 2:55 pm GMT. Increased confidence among consumer is usually a leading signal of increased consumer spending and that’s the reason why a higher value than the expected 89.6 is perceived as beneficial for the US Dollar.
GBP/USD
The pair touched 1.5750 resistance yesterday but the bulls failed to take price above and this resulted in an almost picture-perfect bounce lower. The fact that US Retail Sales exceeded analysts’ expectations also played a big role in yesterday’s price action.
Technical Outlook
Although price bounced lower once 1.5750 resistance was touched, the pair couldn’t move below the 50 period Exponential Moving Average and instead it showed rejection once the line was tested. For the time being, the pair’s direction is still not decided and our bias is neutral until either 1.5750 resistance or the 50 period EMA is broken. Next resistance is located at 1.5825 while next support sits at 1.5590.
Fundamental Outlook
The Pound had a slow week in terms of economic releases and today is no exception, so the pair’s direction will be influenced by the technical aspect and by the US releases.
FOREX NEWS: SLOW MONDAY AHEAD, WITH US DOLLAR UNDER PRESSURE
EUR/USD
Forex News: Friday the Euro gained against the US Dollar as the US Producer Price Index disappointed analysts’ expectations, weakening the greenback. Later in the day, a better than expected value of a Consumer Confidence survey brought the pair slightly lower and triggered mild US Dollar strength.
Technical Outlook
The pair is likely to continue on its current course until 1.2500 resistance is touched but if this happens, the Relative Strength Index will probably become overbought and this might trigger bearish movement. The 50 period Exponential Moving Average will offer support if touched but we don’t expect strong moves today as the economic scene lacks major releases and Mondays are usually slow days.
Fundamental Outlook
At 2:15 pm GMT the US Industrial Production is released but this is considered an event with medium impact on the US Dollar unless surprising numbers are posted. The forecast is 0.8% while the previous was -0.1% and higher than expected values are usually beneficial for the greenback.
GBP/USD
The pair moved mostly sideways for the entire Friday trading session, no substantial advances were made by either bulls or bears and price remained confined between support and resistance.
Technical Outlook
The resistance at 1.5750 was barely touched Friday but the lack of strong momentum brought price back down, without volatility. We expect this slow, ranging movement to continue today and price to remain between 1.5750 and the four hour 50 period Exponential Moving Average. A break of either one would open the door for a move towards 1.5825 resistance or 1.5590 support but we don’t expect these levels to be touched today.
Fundamental Outlook
The day ahead lacks important releases for the Pound and the US event mentioned earlier is the only economic indicator that could generate strong movement.
FOREX NEWS: HEADS-UP FOR THE BOE BANK STRESS TESTS RESULTS AND EUROPEAN PMIS
EUR/USD
Forex News: The pair had a rather slow day yesterday, with the US Dollar gaining against the Euro; however the move wasn’t substantial and support was not threatened.
Technical Outlook
Price moved below the 50 period Exponential Moving Average but the bears weren’t able to continue the move and no significant advances were made. This type of movement is likely to continue today unless surprising numbers are showed by the European economic indicators. Resistance still sits at 1.2500 and support at 1.2360 and we believe resistance might be touched before the bears will make a run for support.
Fundamental Outlook
The French Manufacturing PMI is released at 8:00 am GMT with an anticipated value of 48.7. Since this is a leading indicator of economic health, focused on the manufacturing sector, higher numbers will have a positive impact on the Euro. Half an hour later, at 8:30 am GMT the German indicator with the same name will be released. The forecast is 50.4 and the release usually has a higher impact than the French Manufacturing PMI.
At 10:00 am GMT the German ZEW Economic Sentiment survey comes out with an anticipated increase to 19.8 from the previous 11.5. The survey is derived from the opinions of about 275 German investors and analysts and tries to gauge their optimism regarding economic outlook, thus better numbers usually strengthen the Euro.
GBP/USD
The Pound weakened severely versus the US Dollar yesterday and the pair dropped after another close encounter with 1.5750 resistance.
Technical Outlook
The momentum clearly belongs to the bears as shown by yesterday’s price action and strictly from a technical point of view, we expect the downside to prevail today. First support is located at 1.5590, a level which proved very strong in the past and might reject price higher again if it will be touched, but a break will most likely draw in more sellers; however, the technical aspect will be overshadowed by the fundamental today.
Fundamental Outlook
The Bank of England will make public at 7:00 am GMT the Bank Stress Test results; major UK banks are tested through simulated market conditions to see how they would hold up during a crisis. The market might have a mixed reaction to this stress test so we recommend caution. The Financial Stability Report will be released by the BoE at the same time (7:00 am GMT) and Governor Mark Carney will hold a Press Conference about the report at 9:00 am GMT. At 9:30 the British Consumer Price Index is released and expected to change 1.2% compared with the previous 1.3%, a thing which would further weaken the Pound.
FOREX NEWS: HUGE DAY FOR THE US DOLLAR WITH THE FED MEETINGS IN THE SPOTLIGHT
EUR/USD
Forex News: Yesterday both the German Manufacturing PMI and German ZEW Economic Sentiment surveys showed values which exceeded analysts’ expectations and the single currency strengthened as a result, breaking resistance.
Technical Outlook
On an hourly chart the pair has become overbought as signaled by the Relative Strength Index and this suggests that price might move below the level of 1.2500, for a touch of the 50 period Exponential Moving Average. If the current test of recently broken resistance turns into a bounce higher, the first target is located at 1.2575.
Fundamental Outlook
We have an important day for the greenback: the first event is the release of the Consumer Price Index, scheduled at 1:30 pm GMT and expected to change -0.1% while last month we saw a change of 0.0%. Usually an increase in inflation is viewed as beneficial for the US Dollar and could take the pair lower.
In the evening we have a cluster of events which will most likely have a tremendous impact on the greenback: at 7:00 pm GMT the FOMC will announce the interest rate (no change expected from the current <0.25%), together with the FOMC Economic Projections for the next 2 years and a Rate Statement which will contain insights into the reasons which determined the rate decision. Half an hour later, at 7:30 pm GMT, Fed Chair Janet Yellen will hold a Press Conference which might be the biggest market mover of the day so extra caution is recommended.
GBP/USD
The British CPI dropped to 1.0%, a fact which only weakened the Pound briefly before the bulls took over, taking the pair above resistance.
Technical Outlook
The break of 1.5750 couldn’t be sustained and price soon moved below the level, showing rejection on a four hour chart. The pin bar created right on resistance suggests that price encountered a strong level which cannot be broken decisively at least for the moment, but we have a day filled with important news releases and we are likely to see strong moves which will decide the next medium term direction.
Fundamental Outlook
United Kingdom’s Claimant Count is released at 9:30 am GMT with an expected change of -19.8K while last month’s number was -20.4K. The indicator shows the change in the number of people who applied for unemployment related social help and a higher number suggests that the jobs market is contracting so the Pound will be negatively affected by a rise in jobless claims. At the same time, a breakdown of the MPC votes on the latest interest rate is released and this is a good opportunity for traders to see if the BOE is changing its stance on the interest rate. The US events will have a direct and strong impact on the pair’s movement.
EUR/USD
Forex News: The Euro continued to weaken against the US Dollar during yesterday’s trading session and the pair touched 1.2280 support. Both the German and American economic indicators posted readings close to analysts’ expectations and this dampened their impact.
Technical Outlook
The pair moved easily below 1.2360 and continued south to touch 1.2280 although the Relative Strength Index was trading close to oversold territory for the most part of the day. At the moment price is showing rejection off of 1.2280 support and the Relative Strength Index is starting to move upwards so we anticipate a day with bullish movement which may find resistance at the 50 period Exponential Moving Average. A clear break of support may bring in additional sellers.
Fundamental Outlook
The day ahead lacks major news events for the Euro and the US Dollar, so price direction will be mainly driven by the technical aspect.
GBP/USD
British Retail Sales posted a surprising 1.6% increase while analysts’ expectations were just 0.3%. This created Pound strength and a bullish day.
Technical Outlook
After moving below the support at 1.5590 and coming very close to 1.5540 support, the pair started to move north, back above 1.5590. The Relative Strength Index touched the 30 level, becoming oversold and this played a major role from a technical point of view. Today we expect mixed price action, without significant advances; if the Relative Strength Index will become overbought during the day, the sellers might take the pair lower, with 1.5590 being the first target.
Fundamental Outlook
AT 9:30 am GMT, UK’s Public Sector Net Borrowing is announced. This is the amount of new debt held by the central and local governments and a higher number is viewed as detrimental for the Pound; the expected value is 14.8B while last month the debt was at 7.1B.
FOREX NEWS: A LACKLUSTER FUNDAMENTAL SCENE BRINGS CHOPPY PRICE ACTION
EUR/USD
Friday the bears continued to take price lower, breaking 1.2280 support on the back of a stronger US Dollar. Overall we saw unidirectional price action, without whipsaws or sudden reversals.
Technical Outlook
We are entering Christmas Week and Mondays are known to be slow days, especially if no major news is released. The Relative Strength Index has been moving for an extended period close to the 30 level which suggests oversold and the current bear run seems a bit overextended so we expect bullish retracements. However, keep in mind the pair is in a clear downtrend from a short and long term perspective so further downside action is not out of the question.
Fundamental Outlook
The US Existing Home Sales are announced at 3:00 pm GMT and this is the day’s only notable release. An increase in home sales suggests a thriving economy and usually strengthens the greenback but the indicator has a medium impact on price action. Today’s forecast is 5.21M and higher values will probably trigger limited dollar strength.
GBP/USD
The US Dollar gained against the Pound as well but the pair’s descent wasn’t as substantial as seen in the EUR/USD pair and support was not broken.
Technical Outlook
The pair is trading below the 50 period Exponential Moving Average on an hourly chart but 1.5590 support sits in front of falling prices. Today we anticipate another encounter with the mentioned level but if this happens, the Relative Strength Index might move below the 30 level, suggesting an oversold condition. Considering the pair is not in a strong trend from a short term perspective, we anticipate a bounce higher towards the 50 period EMA if 1.5590 is not clearly broken.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for the day so price action will be driven by technical factors and by the US house market data.
FOREX NEWS: IRREGULAR PRICE ACTION WITH BOTH PAIRS UNDER PRESSURE
EUR/USD
Forex News: The pair moved north yesterday on the back of a disappointing value of the US Existing Home Sales but also because the short term downtrend was overextended and in need of a retracement.
Technical Outlook
Price is likely to continue on a bullish path until 1.2280 is touched but we don’t believe this resistance will be broken today and instead we expect a bounce lower. If the bounce occurs, the first support is represented by the level of 1.2220. The 50 period Exponential Moving Average will also provide dynamic resistance but keep in mind that winter holidays usually generate irregular movement and technical analysis is not reliable.
Fundamental Outlook
The US Durable Goods Orders are released today at 1:30 pm GMT with an expected change to 3.0% from last month’s 0.3%. Such an increase would suggest an expanding economy and would strengthen the US Dollar, taking the pair lower.
GBP/USD
Price reversed yesterday after an initial climb above the 50 period Exponential Moving Average and we saw choppy price after for the rest of the day but immediate support was not breached.
Technical Outlook
The pair is under pressure and there’s a distinct possibility of a drop below 1.5590 support but we don’t expect price to travel for an extended distance in one direction. Volatility will probably alternate during the day and we expect price action to be choppy and irregular but a clear break of 1.5590 could take price in close vicinity of 1.5540.
Fundamental Outlook
The British Current Account is announced today at 9:30 am GMT; this indicator shows the difference between imported and exported goods and a higher value than the expected -21.1B is considered beneficial for the Pound. At the same time the British Bankers’ Association announces the Mortgage Approvals; the indicator offers insights into the housing market and a higher number than the forecast 37.3K suggests that more houses will be bought in the near future with the help of a mortgage, a fact which normally strengthens the Pound.
FOREX NEWS: PRICE ACTION SLOWS DOWN FOR CHRISTMAS EVE
EUR/USD
Forex News: The pair dropped substantially yesterday as the US Dollar continued to strengthen and the Euro weakened on the back of speculation that Greece may be headed towards early elections.
Technical Outlook
Short term support at 1.2220 was broken after two small bounces and once this happened, more sellers joined the renewed downtrend. The latest momentum belongs to the bears and the pair is trading well below the 50 period Exponential Moving Average but the Relative Strength Index is showing an oversold condition and this makes us believe that price will retrace higher. Keep in mind that today is Christmas Eve and the market will tend to present irregular behavior.
Fundamental Outlook
The US Unemployment Claims are the single notable release of the day, scheduled at 1:30 pm GMT. The expected number is 291K and an increase in unemployment would suggest that the economy is slowing down and this usually weakens the US Dollar.
GBP/USD
United Kingdom’s Current Account disappointed yesterday, showing that the deficit increased and the Pound responded quickly by weakening against the greenback.
Technical Outlook
The pair remained under the level at 1.5590 which turned into resistance as showed by the touch from below which resulted in a bounce lower. The important support at 1.5540 was also broken and this might suggest the end of the ranging period, but the approaching of Christmas might nullify the effect of this break and it wouldn’t be out of the ordinary to see a return back above 1.5540. The Relative Strength Index is also oversold and this may add to the probability of bullish pullbacks.
Fundamental Outlook
The United Kingdom didn’t schedule any news releases for the day and we expect irregular price action, with alternating volatility.
FOREX NEWS: CHRISTMAS BRINGS PRICE ACTION TO A HALT
EUR/USD
Forex News: As expected price action yesterday was slow and the economic releases didn’t have a lot of impact. The pair retraced higher and touched short term resistance but a break didn’t occur and instead price bounced lower.
Technical Outlook
Today price action will come to a stop due to the fact that a large part of the world is celebrating Christmas. When the market will open, the pair may present gaps and probably irregular volatility.
Fundamental Outlook
Many important banks around the world (including American and European banks) will be closed today, celebrating Christmas Day and no economic indicators will be released for either the Euro or the US Dollar.
GBP/USD
Similar to our other pair, the GBP/USD retraced higher, following an oversold condition of the Relative Strength Index. For the most part of the day price traded above and below 1.5540, without significant advances.
Technical Outlook
As mentioned before, the market is taking a breather today and trading will be suspended. Depending on the world’s time zones, price movement will resume sooner or later and once it does, we expect irregular movement.
Fundamental Outlook
United Kingdom’s Banks are closed due to the Christmas Holiday and no economic releases are scheduled.
We wish a Mary Christmas to those of you who celebrate this Holiday!
Technical Outlook
Even though the market is open today, we still expect price action to be irregular and choppy. The short term resistance at 1.2220 is holding and price bounced lower once it touched it so we expect some downside price action, with 1.2165 being the first minor support.
Fundamental Outlook
Many banks around the world are still closed and no economic indicators are released, a fact which contributes to the day’s low volume and irregular volatility.
GBP/USD
The pair stopped yesterday and no movement was seen as many people around the world celebrated the Christmas Holiday.
Technical Outlook
Wednesday price moved above the level at 1.5540 but we cannot consider this to be a true break as it could be generated by low volume and might not be a real attempt of the bulls to take control of the pair. The main levels to watch today are located at 1.5540 and 1.5590 but keep in mind that price action could be characterized by sharp turns and alternating volatility.
Fundamental Outlook
The United Kingdom didn’t schedule any news releases and British banks are closed today, a fact which will add to the day’s irregular price action.
FOREX NEWS: IRREGULAR PRICE ACTION ON THE BACK OF A LACKLUSTER FUNDAMENTAL ENVIRONMENT
EUR/USD
Forex News: Friday the market resumed movement after being paused for Christmas and the pair moved lower, following a bounce on resistance. Overall we had a slow session, with price traveling in a single direction.
Technical Outlook
For the time being price is confined between 1.2165 support and 1.2220 resistance and a break of either one may trigger and extended move in that direction but considering the approaching of the New Year and the lack of economic releases, we may also see false breaks. It’s possible for price to move outside one of the levels but then to run out of steam and return inside, so extra caution is recommended if you are going to trade breakouts.
Fundamental Outlook
The day lacks important news releases and we expect choppy price action, with low volume and irregular volatility.
GBP/USD
The pair had a very slow day Friday, with price moving very close to the 50 period Exponential Moving Average which remained flat for the entire day.
Technical Outlook
Today we will probably see either a bounce higher off of 1.5540, or a bearish break and a consequent move towards the minor support at 1.5485. However, the first move is likely to be reversed, so wait for a re-test before trading if a break does occur. Keep in mind that price is flat and Friday’s movement doesn’t show a lot about future direction.
Fundamental Outlook
The United Kingdom didn’t schedule any economic releases for the day, contributing to the lackluster fundamental scene.
FOREX NEWS: US CONSUMER CONFIDENCE SURVEY HOLDS CENTER STAGE
EUR/USD
Forex News: Yesterday, after bouncing higher off of 1.2165 support, the pair headed higher and touched short term resistance but price remained confined inside the horizontal channel for the entire day.
Technical Outlook
Under normal market conditions we would expect a move outside the horizontal channel created by 1.2220 resistance and 1.2165 support but given the fact that volume is low and price action irregular, we consider that any breakouts will turn out to be false. In other words, after a move outside the channel, price is likely to return inside it, but keep in mind that technical analysis is less efficient during this period.
Fundamental Outlook
The only notable event of the day is the release of the American Consumer Confidence survey scheduled at 3:00 pm GMT. The expected figure is 94.6, an increase from last month’s 88.7 and usually such a climb would strengthen the US Dollar because increased consumer confidence often means that consumer spending will increase in the near future.
GBP/USD
The Pound came close to 1.5590 resistance yesterday before starting to drop. Currently the pair is trading below 1.5540 and the bears have won the short term battle.
Technical Outlook
Although price moved below the short term support at 1.5540, we might easily see a return above it, or at least a re-test if price is indeed headed south. If the re-test results in a bounce lower, the first support is located at 1.5485 but keep an eye out for any oversold condition signaled by the Relative Strength Index as this could generate a move higher. The 50 period Exponential Moving Average will offer dynamic resistance if touched from below.
Fundamental Outlook
There are no important economic or financial indicators released by the United Kingdom, so price action will be decided by the technical aspect and by the US Consumer Confidence survey.
EUR/USD
Forex News: Yesterday’s price action was rather slow, a fact determined by the approaching of the New Year’s Eve and by US consumer confidence data which posted a reading close to analysts’ expectations.
Technical Outlook
Today is the last day of the year and trading will be heavily influenced by this fact. We expect sudden drops and surges in volatility, with potentially sharp whipsaws on the back of low volume. The levels to watch are 1.2220 as resistance and 1.2125 as potential support. Price behavior around the current level of 1.2165 will most likely determine the next short term direction.
Fundamental Outlook
German Banks will be closed today, celebrating the New Year’s Eve and the US Dollar will be somewhat affected by the release of the Unemployment Claims scheduled at 1.30 pm GMT and expected to rise to 287K from the previous 280K. A higher value is detrimental for the US Dollar under normal conditions.
GBP/USD
Yesterday’s price action was mainly controlled by the bulls and the pair managed to climb back above 1.5540. Overall it was a normal trading session, without major developments.
Technical Outlook
Price is trading above 1.5540 and above the 50 period Exponential Moving Average, meaning that the short term bias is bullish. However, we believe that an overbought condition of the Relative Strength Index will probably generate another bearish move, with 1.5540 being the first target.
Fundamental Outlook
The British fundamental scene lacks major releases and we expect irregular price movement, mostly due to the New Year’s Eve.
We hope your year was profitable and we look forward to trading together during 2015. Have a Happy New Year!
EUR/USD
Forex News: Yesterday the fundamental scene was rather calm and the US Unemployment Claims release didn’t generate a lot of volatility. For almost the entire day price remained in a tight range, with a bearish bias.
Technical Outlook
The support at 1.2125 was breached yesterday and it looks like the pair is headed for 1.2040 if the bears can maintain their control. Today the market is closed, celebrating the first day of the New Year and price movement will be suspended.
Fundamental Outlook
Most banks around the world are closed today and no economic indicators will be released.
GBP/USD
The pair tested 1.5590 resistance yesterday but the break couldn’t be sustained and the bears quickly brought price below the mentioned level.
Technical Outlook
For the time being the pair shows rejection around 1.5590 but today no movement will be seen as the world celebrates the New Year. Once the market re-opens, we expect further downside advances.
Fundamental Outlook
As mentioned before, banks will be closed and no financial or economic indicators will be released today. Happy New Year!
FOREX NEWS: TRADING RESUMES. LOW VOLUME IS STILL PRESENT
EUR/USD
Forex News: Yesterday the market was closed as the world celebrated the first day of the New Year so price didn’t show any movement. Today the market resumes normal movement but low volume is likely to still be present.
Technical Outlook
The pair is trading below 1.2125 and below the 50 period Exponential Moving Average so the bias is bearish but the relative Strength Index is trading below the 30 level, a fact which indicates an oversold condition. This makes us believe that today we will see bullish movement but keep in mind that volume is still not back to normal so we might see irregular price action.
Fundamental Outlook
At 3:00 pm GMT the US Manufacturing PMI is released, with an expected value of 57.6, a small decrease from the previous 58.7. An even smaller value would probably weaken the US Dollar but the market might overlook this release considering it’s the first trading day of the New Year.
GBP/USD
No movement was seen yesterday and price remained confined between 1.5590 resistance and the 50 period Exponential Moving Average.
Technical Outlook
If price will have trouble breaking the 50 period Exponential Moving Average, we will probably see a move above the resistance at 1.5590 but a break of the mentioned EMA will most likely take the pair below 1.5540 support. Our bias is neutral and we consider that an extreme condition of the Relative Strength Index (above 70 or below 30) will generate a reversal move.
Fundamental Outlook
The United Kingdom will release the Manufacturing PMI at 9:30 am GMT. The forecast is 53.7, a small increase from last month’s 53.5 and higher values are usually beneficial for the Pound as this indicator is a measure of optimism among purchasing managers and acts as a leading signal of economic health.
FOREX NEWS: OVEREXTENDED PRICES CALL FOR A BULLISH PULLBACK
EUR/USD
Forex News: Friday the US Dollar continued to strengthen against most of its peers on speculation that the Fed might raise interest rates during the first part of 2015. The entire day was controlled by the bears and the pair moved below support.
Technical Outlook
Although price action is bearish and 1.2040 support was broken, we expect the pair to move on a bullish path today. This is based on the fact that the Relative Strength Index is trading below the 30 level for a long period and price is overextended to the south. However, keep in mind that we are in a strong downtrend and the pair is under pressure, so it is likely to see further advances south after a bullish pullback.
Fundamental Outlook
At 1:00 pm GMT the German Preliminary Consumer Price Index is released and expected to rise to 0.1% from the previous 0.0%. The indicator shows the change in the price of goods and services and acts as the main gauge of inflation; usually numbers that exceed expectations are beneficial for the currency.
GBP/USD
The Pound weakened tremendously Friday as the British economy is showing signs of slowing down and the United States move closer to a potential interest rate hike.
Technical Outlook
The huge drop seen Friday is likely to generate a pullback to the upside. The extreme oversold condition of the Relative Strength Index adds to this prediction but the strength of the bears is undeniable so we expect price to continue to move south after this retracement is complete. Potential resistance is located at 1.5420 while support sits at 1.5260.
Fundamental Outlook
The British Construction Purchasing Managers’ Index is released today at 9:30 am GMT. The indicator gauges optimism among purchasing managers form the construction sector and acts as a leading indicator of economic health. Higher numbers than the anticipated 59.2 will most likely strengthen the Pound, taking the pair higher.
FOREX NEWS: THE MARKET REMAINS OVERSOLD. RETRACEMENTS STILL EXPECTED
EUR/USD
Forex News: The market opened with a big gap and the Euro took a big hit yesterday as concern about a potential Greek separation from the European Union escalated. Speculation about ECB purchasing bonds on a large scale added to the bearish momentum.
Technical Outlook
The sudden drop seen at market open yesterday was stopped by the support at 1.1875. We expect this level to be tested again today but bullish retracements are still a distinct possibility so we might see a touch of the 50 period Exponential Moving Average on an hourly chart. On a four hour chart both the Relative Strength Index and the Stochastic (11,6,6) are moving upwards, coming from oversold territory.
Fundamental Outlook
The U.S. Non-Manufacturing PMI is released today at 3:00 pm GMT with an expected change to 58.2 from the previous 59.3. This survey is based on the opinions of about 400 purchasing managers outside of the manufacturing industry and tries to gauge their optimism regarding business and economic conditions. It acts as a leading indicator of economic health and that’s why numbers that exceed expectations are considered beneficial for the US Dollar.
GBP/USD
The pair had a huge drop which took price below 1.5260 support; the weekly gap was closed by a quick bullish move but then price dropped again on the back of a worse than expected value of the British Construction PMI.
Technical Outlook
The Relative Strength Index is struggling to move out of oversold territory but the Pound is weakening. If price doesn’t move above 1.5260 soon, we expect further downside movement but otherwise, the first target is represented by 1.5320 short term resistance. This level and the 50 period Exponential Moving Average will probably create a confluence zone which will be hard to break if price touches it.
Fundamental Outlook
At 9:30 am GMT the British Services PMI is announced; the forecast is 58.9, a small increase from last month’s 58.6. The indicator tries to measure optimism among purchasing managers from the Services sector and usually, higher than anticipated values strengthen the Pound.
FOREX NEWS: US EMPLOYMENT DATA AND FOMC MEETING MINUTES IN THE SPOTLIGHT
EUR/USD
Forex News: Yesterday the pair continued to move south after a small retracement higher. Overall price action was controlled by the bears but immediate support couldn’t be broken.
Technical Outlook
Price came in close vicinity of 1.1875 support and showed rejection at this level. Both the Relative Strength Index and the Stochastic reached oversold territory and these facts make us believe that a move higher is in order. The first barrier is the 50 period Exponential Moving Average and if this resistance can be broken, the next target is 1.2040. The pair is still in a downtrend so moves south cannot be ruled out.
Fundamental Outlook
At 10:00 am GMT the European Consumer Price Index is announced and expected to change 0.0% while last month’s value was 0.3%. The CPI is the main gauge of inflation and a higher value is usually beneficial for the Euro because current inflation levels are considered too low by the ECB.
The ADP Non Farm Employment Change is released at 1:15 pm GMT and shows the change in the number of new jobs created during the previous month. However, today’s version is released by a privately owned company, not by the US Government so the impact is usually lower. The expected number is 227K, an increase from last month’s 208K and higher numbers strengthen the US Dollar. Later in the day, at 7:00 pm GMT the FOMC Meeting Minutes are released, offering details about the latest Fed Meeting.
GBP/USD
Resistance couldn’t be broken yesterday and the pair dropped on the back of Pound weakness generated by a worse than anticipated value of the Services PMI.
Technical Outlook
The bulls failed to take price above 1.5260 resistance and the rest of the day belonged to the bears. Price action created minor support around 1.5165 and a break of this level would probably take the pair into the next support, located at 1.5100. The Relative Strength Index moving upwards, coming from below 30 and this favors bullish movement.
Fundamental Outlook
The United Kingdom didn’t schedule major economic releases today so price direction will be mainly influenced by the U.S. indicators and by the technical aspect.
FOREX NEWS: MULTI-YEAR LOWS REACHED AS THE DOLLAR CONTINUES ITS RUN
EUR/USD
Forex News; Yesterday we’ve seen that European inflation is still dropping and as a result the downtrend extended further. The US employment report posted better than anticipated numbers and this added to the bears’ strength.
Technical Outlook
The FOMC Meeting Minutes created mixed reaction as the Fed mentioned that a rate hike is unlikely before April but overall price action was bearish for most of the day, moving below 1.1875. If a bullish retracement will occur, the mentioned level will probably turn into resistance and the chances of further bearish movement will be increased near this level. Immediate support sits at 1.1800.
Fundamental Outlook
European Retail Sales are released today at 10:00 am GMT with an expected change of 0.3% compared with last month’s 0.4%. Sales made at a retail level are crucial for an economy because consumer spending represents an important part of overall economic activity, thus higher numbers will generate some Euro strength.
GBP/USD
The pair broke the important support at 1.5100 and continued to move lower for most of the day. The US Dollar had mixed behavior at the time of the Meeting Minutes release.
Technical Outlook
After moving below 1.5100, the pair retraced to test the recently broken level. Now price action around this potential resistance will determine the next short term direction: a bounce will open the door for further downside action, while a move above it will probably take the pair into the immediate resistance created by the hourly 50 period Exponential Moving Average. The next psychological and technical support sits at 1.5000.
Fundamental Outlook
The Bank of England will announce the interest rate today at 12:00 pm GMT but no change is expected from the current 0.50% so, unless a huge surprise happens, the event will not create a lot of volatility.
