FOREX NEWS: GREEK ISSUE STILL UNSOLVED, FED MEETING MINUTES AHEAD
EUR/USD
Forex News: Yesterday the Euro weakened against the US Dollar in the first part of the session but erased some of the losses once the German ZEW came out with a better value than previous. Although analysts anticipated a stronger climb, it is still the highest in a year and this added some fuel to the single currency.
Technical Outlook
Despite the Euro strength generated by the ZEW value, the bulls couldn’t break 1.1440 and the pair started to move south once again. The Greek debt problem is still not solved and this is one of the reasons why the market is still searching for a clear direction. Today we expect another touch of 1.1360 support but our view is mostly neutral as price direction still remains heavily influenced by the Greek talks.
Fundamental Outlook
The most important event for the US Dollar is the release of the FOMC Meeting Minutes scheduled at 7:00 pm GMT. It will contain details of the Fed’s latest meeting and more importantly, it can offer hints about future monetary policy direction. If this is the case, the market will react swiftly and the greenback will show strong movement.
GBP/USD
The British Consumer Price Index met analysts’ forecast, showing a change of 0.3% and this created mixed reaction. The bulls failed to threaten resistance and the bears are looking stronger for the time being.
Technical Outlook
Current momentum belongs to the bears as they managed to take price below 1.5340 and below the 50 period Exponential Moving Average on an hourly chart. If bearish pressure mounts, today we expect a touch of 1.5260 but 1.5300 could be a strong barrier in front of falling prices. A bounce above 1.5340 would probably generate an extended move into 1.5420.
Fundamental Outlook
At 9:30 am GMT the British Claimant Count Change is released. The anticipated figure is -25.2K and usually lower numbers are beneficial for the currency because the indicator shows how many people applied for unemployment-related benefits. At the same time the Bank of England will announce a breakdown of their latest rate votes but usually this event only creates strong movement if one or more of the MPC members changed their stance.
FOREX NEWS: BREAKOUT IMMINENT. SPEECHES AND TESTIMONIES HOLD THE HEADLINES
EUR/USD
Forex News: The German IFO Business Climate survey posted a value below analysts’ expectations and the euro weakened as a result. However the pair remained in ranging mode and neither support nor resistance was broken.
Technical Outlook
A breakout is imminent but the direction remains uncertain; the important levels for short-term price action remain 1.1440 as resistance and 1.1270 as support. A break of either of them will mark the end of the ranging period but since price came in close vicinity of support and couldn’t break it, we expect a bounce higher which can find resistance at 1.1440. However, until a clear break occurs, our view remains neutral on this pair.
Fundamental Outlook
ECB President Mario Draghi is due to speak today at the official unveiling of the 20 Euro banknote. The event takes place in Frankfurt at 2:00 pm GMT and is followed at 3:00 pm GMT by Fed Chair Yellen’s testimony on the Semi-annual Monetary Policy Report. This testimony is likely to generate more volatility, depending on her altitude and answers. At the same time the U.S. Consumer Confidence survey is released and expected to show a drop to 99.6 from the previous 102.9. Consumer confidence is correlated with consumer spending so a higher than anticipated value will strengthen the US Dollar.
GBP/USD
The British CBI Realized Sales posted a surprisingly low value of 1 while analysts’ expected 42. This initially generated Pound weakness but a remarkable reversal occurred soon after, without any apparent reason.
Technical Outlook
After bouncing at 1.5420 the pair headed into the support located at 1.5340 as expected, but here a near perfect bounce occurred, followed by a climb of more than 100 pips. Currently the bulls are trying to break 1.5460 and if they succeed, the door will be open for an extended move into 1.5540 resistance. The Relative Strength Index is close to overbought, a fact which may hinder further bullish movement for the time being. The first potential support is located at 1.5420.
Fundamental Outlook
At 10:00 am GMT the British Inflation Report Hearings take place. Bank of England Governor and other members of the Monetary Policy Committee will testify before the Parliament’s Treasury Committee on economic growth and inflation. The hearings last a few hours during which volatility may increase and sharp moves can occur so caution is recommended. As always, the U.S. events will have a direct impact on the pair’s movement.
FOREX NEWS: THE MARATHON OF TESTIMONIES CONTINUES. VOLATILITY EXPECTED
EUR/USD
Forex News: Janet Yellen’s testimony yesterday triggered mixed up and down movement as she mentioned that the Fed is expecting inflation to rise to 2% but a rate hike is unlikely to happen during the next two Fed meetings. The range was not broken.
Technical Outlook
The pair is still trading inside the horizontal channel created by 1.1440 resistance and 1.1270 support, with the 50 period Exponential Moving Average and the 2 oscillators moving almost flat on a four hour chart. If price approaches support again and fails to break it, we anticipate a move into 1.1440 resistance but given the sideways movement seen lately, our view remains mainly neutral.
Fundamental Outlook
Today at 3:00 pm GMT Fed Chair Yellen will testify again, this time before the House Financial Services Committee. The speech and the questions she will receive are likely to generate strong and even mixed market reaction so we recommend caution. At 4:30 pm GMT ECB President Mario Draghi will testify before the European Parliament on the ECB Annual Report 2013. All his public speeches can easily create volatility but price direction is usually determined by his attitude and answers.
GBP/USD
The British Inflation Report hearings went mostly unnoticed yesterday and the strongest movement was seen at the time of Yellen’s testimony.
Technical Outlook
The resistance at 1.5460 is still holding but so is the minor support at 1.5420. A move outside this 40 pips range is very likely to occur today and considering that price made several unsuccessful attempts to break resistance, we consider that the chances of a bullish break have decreased. If the pair can move below 1.5420, we expect a touch of the support at 1.5340.
Fundamental Outlook
The British Bankers’ Association will release today at 9:30 am GMT the Mortgage Approvals. This indicator offers insights into the British house market and usually higher numbers than the forecast 36.2K are beneficial for the Pound. Half an hour later BoE Governor Mark Carney will deliver a public speech at the launch of the One Bank Research Agenda but the impact on the currency market is likely to be mild.
FOREX NEWS: AMERICAN INFLATION DATA AND U.K. GDP – THE DAY’S MAIN MARKET MOVERS
EUR/USD
Forex News: The testimonies of Yellen and Draghi did not create the anticipated volatility and the pair had another slow, choppy day. Both support and resistance are still intact and the ranging period is still not over.
Technical Outlook
Although it’s mostly flat, the 50 period Exponential Moving Average seems to offer a minimum of resistance as seen from yesterday’s price action. However, the pair is moving sideways and lately it isn’t even trying to break the resistance at 1.1440 or the support at 1.1270. Until a clean break of the mentioned levels occurs, the pair’s movement will remain choppy and unpredictable.
Fundamental Outlook
American inflation data will be today’s main event. The US Consumer Price Index, which is the primary gauge of inflation will be released at 1:30 pm GMT and is expected to change -0.6%, compared with the previous -0.4%. Fed Chair Yellen mentioned during a previous testimony that inflation is expected to grow towards 2.0%, but so far the numbers are still dropping; if today we see another dip, the US Dollar is likely to be negatively affected.
GBP/USD
The British Bankers’ Association Mortgage Approvals came out close to the anticipated value but the Pound continued to strengthen throughout the day and major resistance was touched.
Technical Outlook
The resistance located at 1.5540 was touched yesterday and price quickly reacted by moving lower; the Relative Strength Index was overbought and this contributed to the bounce. Today we expect price to remain between 1.5540 resistance and the 50 period Exponential Moving Average but a break of either of them will probably determine the next medium term direction. Another bounce at resistance would imply that lower prices will follow.
Fundamental Outlook
At 9:30 am GMT the second estimate of the British Gross Domestic Product is released (forecast 0.5%) and can have a strong impact on the Pound since the GDP is an economy’s main performance gauge; however, this is the second version of the indicator and tends to have a lower impact than the Preliminary version.
FOREX NEWS: TRADERS’ ATTENTION SHIFTS TOWARDS GERMAN INFLATION AND AMERICAN GDP AS BEARS REGAIN CONTROL
EUR/USD
Forex News: Yesterday the pair finally broke out of the range it was confined in. American inflation increased as shown by the Core version of the CPI indicator. The Durable Goods Orders also showed an increase, contributing to US Dollar strength.
Technical Outlook
The break of 1.1270 support will play a major role for future price action if the bears can keep the pair below this level. Clearly the recent momentum belongs to the bears and we anticipate further movement south but a re-test of the broken level is very possible, considering that the Relative Strength Index is close to its 30 level, indicating oversold. Our current bias is bearish after brief retracements, with 1.1270 acting as potential resistance and 1.1100 as support.
Fundamental Outlook
The focus will shift today towards German inflation data which is released at 1:00 pm GMT. A hefty increase from the previous -1.1% to 0.6% is expected and if this forecast comes true, the euro will most likely strengthen. Half an hour later the U.S. Preliminary Gross Domestic Product comes out; the anticipated change is 2.1% while the previous was 2.6%. Although the first version (Advance) is the most important, the Preliminary also has the potential to strongly move the currency; higher percentages are beneficial for the greenback.
GBP/USD
British Gross Domestic Product matched analysts’ expectations and the event didn’t have a massive impact but the US data generated a sharp fall which broke several support levels.
Technical Outlook
The bulls tried to take price above 1.5540 – 1.5550 resistance but failed to do so and this was a sign that their strength is fading. The pair is now trading comfortably below the 50 period Exponential Moving Average and below 1.5460 but 1.5420 is not clearly broken yet. We expect price to move below this level, towards 1.5340 but before that can happen, a retracement higher is needed; adding to this opinion is the position of the Relative Strength Index which is signaling an oversold condition.
Fundamental Outlook
The United Kingdom didn’t schedule important economic data releases today so price direction will be influenced by the U.S. events and by the technical aspect.
FOREX NEWS: SHORT TERM MOMENTUM FAVORS THE BEARS, EUROPEAN INFLATION TO DECIDE NEXT MOVE
EUR/USD
Forex News: Friday the pair was mostly controlled by the bears as the U.S. Gross Domestic Product exceeded analysts’ expectations, but some euro strength was also seen. The main reason for bullish moves was the German CPI which showed an increase.
Technical Outlook
The pair’s direction for the day will be influenced by European inflation numbers but if no surprises occur, we expect further downside movement after brief bullish pullbacks. Both the Relative Strength Index and the Stochastic are moving slightly below their oversold levels and this increases the chances of upwards price action. First potential resistance is represented by Friday’s high located at 1.1245.
Fundamental Outlook
The European Consumer Price Index is scheduled for release today at 10:00 am GMT and the expected change is -0.5%, better than the previous -0.6%. Current European inflation is considered too low compared with ECB’s target of just below 2.0% so another decrease would be detrimental for the single currency while an increase would strengthen the euro.
U.S. Manufacturing PMI is released at 3:00 pm GMT and expected to post a figure of 53.4, almost unchanged from the previous 53.5. This is a survey of about 400 purchasing managers which acts as a leading indicator of optimism regarding the business conditions in the manufacturing sector; higher values are beneficial for the US Dollar but the impact is not always strong.
GBP/USD
Friday price climbed back between support and resistance and overall we had a choppy session, with control shifting between bulls and bears.
Technical Outlook
The pair is confined between 1.5460 resistance and 1.5420 support but we expect this to change today. Price hit the 50 period Exponential Moving Average several times Friday but failed to surpass it and this shows that the bulls have run out of steam. Price direction for the day will be influenced by the U.S. and British data but we expect descent below 1.5420 en route to Friday’s low; a clean break above 1.5460 would decrease the chances of such a descent.
Fundamental Outlook
At 9:30 am GMT the British Manufacturing PMI comes out, showing the opinions of about 600 purchasing managers about business conditions in the manufacturing sector. The expected figure is 53.5 and numbers above that can strengthen the Pound.
FOREX NEWS: BULLS FADING AS SHORT TERM RESISTANCE GENERATES MOVES SOUTH
EUR/USD
Forex News: European inflation showed improvement yesterday and the single currency reacted accordingly by strengthening when the data came out. However, the second part of yesterday’s trading session belonged to the bears.
Technical Outlook
The pair climbed to touch Friday’s high located at 1.1245 but the level offered good resistance and price soon bounced lower. This adds to our bearish bias and we consider the next destination to be the support zone near 1.1100. The fact that the Stochastic is below 30 and the Relative Strength Index is also moving close to oversold could invalidate this scenario and could generate some bullish movement; however, if price does move north but 1.1270 is not broken, the chances of a move into 1.1100 will increase.
Fundamental Outlook
The Spanish Unemployment numbers are released at 8:00 am GMT and this will be the day’s main event. The indicator tracks changes in the number of unemployed people compared with the previous month and usually creates strong movement only if big differences are posted. For today’s release analysts expect a drop from the previous 78.0K to 10.5K and this would strengthen the euro because fewer unemployed people are beneficial for the economy.
GBP/USD
The British Manufacturing PMI came out slightly better than analysts anticipated and this triggered some mild Pound strength but soon after the release, the US Dollar erased the small Pound gains and the pair started to move south.
Technical Outlook
The pair moved below 1.5420 once again and then returned for a perfect re-test which resulted in a bounce lower; the 50 period Exponential Moving Average is above price and the momentum belongs to the bears so we anticipate a touch of 1.5340 support. If the Relative Strength Index will become oversold by the time price reaches support, we expect small bullish bounces; the extent of these bounces is likely to be limited.
Fundamental Outlook
The British Construction PMI is scheduled at 9:30 am GMT and expected to slightly decrease from the previous 59.1 to 59.0. This is a leading indicator of economic health which usually has a medium impact on the currency but higher numbers are considered beneficial. Half an hour later, at 10:00 am GMT, Governor Mark Carney will testify before the Treasury Select Committee and the impact on the currency market could be strong, depending on his attitude and answers. Caution is recommended.
FOREX NEWS: FIRST U.S. EMPLOYMENT DATA OF THE WEEK DECIDES DIRECTION
EUR/USD
Forex News: The Spanish unemployment numbers came out better than analysts expected but the event did not produce euro strength and the day had mixed price action, with no side being in clear control.
Technical Outlook
On an hourly chart it can be seen that price created minor support at 1.1155 and this level now represents the first obstacle in front of falling prices. Currently the pair is trapped between the mentioned support and the 50 period Exponential Moving Average which is angled downward, suggesting that we will see further bearish action. If price moves above the moving average, we will most likely see a touch of 1.1245; otherwise the target remains the zone around 1.1100.
Fundamental Outlook
Europe will release its Retail Sales numbers today at 10:00 am GMT; a small decrease from the previous 0.3% to 0.2% is expected and this would weaken the euro but the event is not always a huge market mover. Later in the day, at 1:15 pm GMT the ADP Non Farm Employment is released, showing the change in the number of employed people according to Automatic Data Processing, Inc. (ADP) which is a privately owned company. Although the impact is not as strong as the one of the Government data which comes out 2 days later, higher numbers than the anticipated 219K can strengthen the US Dollar.
GBP/USD
A better than anticipated value of the British Construction PMI didn’t have a strong bullish impact on the Pound and yesterday price came in close vicinity of support before bouncing higher.
Technical Outlook
Similar to the euro, the sterling is trapped between horizontal support and the 50 period Exponential Moving Average. If the moving average will be surpassed, price will find resistance at 1.5420, followed by 1.5460 but the pair is under bearish pressure and this increases the chances of a break of 1.5340 support. Since the technical picture is not very clear, a lot will depend on the economic data released today.
Fundamental Outlook
At 9:30 am GMT the British Services PMI is released, showing the opinions of purchasing managers regarding business conditions in the services sector. The indicator can have a mild impact especially if the actual number will be close to analysts’ expectations of 57.6. The U.S. employment data is likely to have a stronger impact on the pair than the Services PMI.
FOREX NEWS: BEARS IN CONTROL. BUCKLE UP FOR DRAGHI’S PRESS CONFERENCE
EUR/USD
Forex News: The bears scored a major victory yesterday and took price significantly lower, below the last important support. The economic data released had little impact on price action.
Technical Outlook
The support zone around 1.1100 was broken decisively yesterday and this means that price will not encounter notable support until 1.0765 is reached (visible on a Monthly chart). This level was last touched in 2003 so its importance cannot be assessed; the fact that it is far away from price also makes it less important at the moment. For the time being the bears are in control and we expect further downside movement after brief retracements.
Fundamental Outlook
The ECB will announce the interest rate at 12:45 pm GMT but because no change is anticipated (0.05%), the Press Conference which follows 45 minutes later will be the day’s main event. Mario Draghi will discuss the reasons which determined the rate decision and will probably offer insights into the bond buying program. The single currency is likely to have a strong reaction to Draghi’s comments so caution is recommended.
GBP/USD
The Pound also weakened against the US Dollar and support was broken; a weaker British Services PMI also contributed to the drop.
Technical Outlook
Price moved through 1.5340 and 1.5300 with ease before pausing at 1.5260, making the medium term outlook bearish. We expect further downside movement after a brief stall at the current level. The Relative Strength Index is oversold and this increases the chances of bullish price action but the extent should be limited.
Fundamental Outlook
At 12:00 pm GMT the Bank of England will announce the interest rate (no change expected); the last few rate announcements didn’t create a lot of volatility for the Pound, mainly because nobody is expecting a rate change and the BoE is not hinting towards such a change. We expect the same for today’s release but beware of any surprises.
FOREX NEWS: ALL EYES ON THE UNITED STATES FOR THE NON FARM PAYROLLS RELEASE
EUR/USD
Forex news: The euro had another rough day yesterday on the back of Mario Draghi’s comments. The interest rate remained unchanged so the event went mostly unnoticed but the ECB press conference generated strong moves; the euro was initially strengthened by improved economic projections but soon after it dropped to fresh lows.
Technical Outlook
The bullish impulse seen at the beginning of the press conference took the pair into the level at 1.1114 which has now turned into resistance, considering that price bounced there. The bears remain in control and the pair is still under pressure, with support located at 1.1000. This is a psychological level (big round number), but also a technical support because yesterday’s drop stopped there. Today’s direction will be mostly dependent on the U.S. Employment numbers.
Fundamental Outlook
The U.S. Non Farm Payrolls are scheduled for release at 1:30 pm GMT and are expected to post a change of 240K compared with last month’s 257K. Job creation is tightly correlated with spending levels and that’s why rising employment is considered bullish for the US Dollar. The release creates strong volatility more often than not, thus caution is recommended.
GBP/USD
The Pound-Dollar had a quiet day; the Bank of England kept the interest rate at 0.50% and this contributed to the lack of strong movement.
Technical Outlook
The pair moved and remained below 1.5260 which is now short term resistance. The Relative Strength Index is moving above its 30 level, coming from overbought territory and this favors bullish pullbacks but we don’t expect the bulls to show a lot of strength unless the U.S. Non Farm Payrolls offer surprises. The first support is located at 1.5200 but the day’s bias depends on the U.S. employment data.
Fundamental Outlook
The United Kingdom didn’t schedule major economic or financial news releases so the main event comes from the United States in the form of the Non Farm Payrolls.
FOREX NEWS: EUROGROUP MEETINGS TO AFFECT THE EURO AS U.S. DOLLAR STRENGTH CONTINUES
EUR/USD
Forex News: Friday the Non Farm Payrolls showed an increase to 295K while analysts’ consensus was 240K thus the US Dollar strengthened substantially against the euro and the pair experienced a sharp selloff.
Technical Outlook
Although the bears are in complete control of the pair and 1.1000 support was broken, we expect bullish pullbacks mainly because the current move seems overextended and both the Relative Strength Index and the Stochastic are deep in oversold territory. The main bias is of course bearish so we will probably see further downside movement after brief retracements; 1.0765 is the next potential support level.
Fundamental Outlook
Important political and financial personalities will attend today the Eurogroup Meetings. The Greek bailout will be one of the topics thus euro volatility might be present. Other than this, the fundamental scene is slow and no major economic indicators are released.
GBP/USD
The US Dollar strengthened across the board and the Pound-Dollar pair dropped for more than 200 pips Friday on the back of a strong U.S. Non Farm Payrolls report.
Technical Outlook
The recent strength exhibited by the US Dollar is likely to continue throughout the week but bullish pullbacks are a distinct possibility today; however the extent of these bullish moves should be limited. Notable resistance is located at 1.5200 while support sits at 1.4830 but both levels are far away from current price so we don’t expect either of them to be touched today; support and resistance levels should be identified on lower time frames (i.e. 15 minutes chart) but these are less reliable.
Fundamental Outlook
There are no major economic releases scheduled for today so price action will be mostly influenced by technical factors.
EUR/USD
Forex News: The euro posted modest gains against the US Dollar during the first part of yesterday’s trading session after hitting its lowest level since September 2003. However, in the second part of the session, the Dollar regained most of its strength.
Technical Outlook
Yesterday’s climb cleared the oversold condition of the Relative Strength Index on an hourly chart and this allows further bearish movement, with 1.0820 being the first support zone. The bias remains negative for a break of the mentioned support, while first resistance is represented by the 50 period Exponential Moving Average; a move above it would suggest that the bulls are staging a deeper retracement but would not make the overall trend bullish.
Fundamental Outlook
The ECOFIN meetings take place today, attended by Finance Ministers from the European Union member states. The impact of the meetings on the euro may be mild but surprises can occur, so caution is always recommended when this type of events take place.
GBP/USD
The Pound gained yesterday against the greenback and overall we had a bullish day but the downtrend remained intact and the climb was just a much-needed pullback.
Technical Outlook
Although the bulls took price higher yesterday, the pair remains in a clear downtrend and we anticipate the bearish movement to resume. The first target is located at 1.5030, which is now minor support; the overbought condition of the Stochastic (11, 6, 6) indicator will increase the chances of moves south. The 50 period Exponential Moving Average represents the first resistance and a place where downwards movement may resume.
Fundamental Outlook
Bank of England Governor Mark Carney will testify before the Lords Economic Affairs Committee. The testimony is scheduled at 10:35 am GMT and the impact is unclear, depending on the matters discussed during the meeting and on the Governor’s attitude.
FOREX NEWS: DOWNTREND PAUSES BEFORE ANOTHER PUSH SOUTH
EUR/USD
Forex News: The US Dollar outperformed the euro for yet another day and important support was breached. Brief bullish pullbacks were seen but overall the bears are in clear control.
Technical Outlook
The level at 1.0765 was last touched in 2003 but it seems price is reacting to it because, as we saw yesterday, the pair traded above and below it successively. The main strength belongs to the bears and we expect the downtrend to continue but the first barrier in front of falling prices is located at 1.0720 (this is minor support and we expect it to be broken). A move back above 1.0765 would suggest that price is likely to move higher, close to the 50 period Exponential Moving Average.
Fundamental Outlook
ECB President Mario Draghi will speak today at a Conference organized in Frankfurt by the Center of Financial Studies. The early hour of the speech (8:00 am GMT) could cause limited impact on the currency market, but surprises can occur so caution is recommended nonetheless.
GBP/USD
Yesterday’s price action was mixed; the bears managed to take price into short-term support but they ran out of steam before being able to break it. This might be a sign that the downtrend is stalling.
Technical Outlook
The pair formed a double bottom at 1.5030. This is a bullish chart pattern and suggests that further upside movement might follow but the 50 period Exponential Moving Average is likely to offer resistance and to push price lower if touched. The first horizontal resistance is located at 1.5130 but keep in mind the overall bias is bearish.
Fundamental Outlook
The British Manufacturing Production is released today at 9:30 am GMT with an expected change of 0.2% compared with the previous 0.1%. The manufacturing sector is a major part of the British economy and increases could lead to a stronger Pound. Later in the day, at 3:00 pm GMT, an estimate of U.K.’s Gross Domestic Product is released; the previous estimate was 0.7% and again, higher numbers are beneficial for the Pound.
FOREX NEWS: CAN THE U.S. RETAIL SALES CHANGE THE SHORT-TERM BIAS?
EUR/USD
Forex News: Yesterday the decline continued and the pair dropped more than 140 pips, moving below 1.0600. This is one of the sharpest falls since the pair’s “birth” and the bulls have no answer for it so far.
Technical Outlook
Both the Relative Strength index and the Stochastic are oversold but that is not news anymore and if a bounce higher occurs, it will not be because of this condition of the oscillators. Price paused yesterday at 1.0560 so this level will represent minor support, while psychological support sits at 1.0500. In early 2003 price bounced higher from the mentioned level but we cannot be certain how it will react this time. The bias remains negative.
Fundamental Outlook
At 12:30 pm GMT, the United States will release the Retail Sales numbers, which are usually very important for US Dollar strength because sales made at retail level represent the biggest part of overall consumer spending. The expected change is 0.5%, a hefty increase from last month’s -0.8% and higher than anticipated values will be beneficial for the greenback.
GBP/USD
The British Manufacturing Production numbers disappointed yesterday and this, coupled with US Dollar strength, generated another sharp selloff and a break of support.
Technical Outlook
The double bottom formed at 1.5030 was broken yesterday and the pair remained below the 50 period Exponential Moving Average so the main picture remains bearish. However, this does not exclude some sort of retracements higher but a touch of the first potential resistance (1.5030) is not likely to happen today unless surprises occur. The next support is the important level at 1.4830.
Fundamental Outlook
Bank of England Governor Mark Carney is due to speak today at 12:45 pm GMT at the Advanced Manufacturing Research Center. The speech is not expected to have huge impact but be cautious nonetheless.
FOREX NEWS: BOTH PAIRS REMAIN UNDER PRESSURE, TARGETING NEW LOWS
EUR/USD
Forex News: Yesterday the pair posted the biggest rally in a month, after an almost perfect bounce off 1.0500 support. The U.S. Retail Sales showed a slowdown and this contributed to the bullish movement seen yesterday.
Technical Outlook
For the first time in a long while the Stochastic oscillator went above its 80 level, suggesting the pair is overbought. On top of this, the 50 period Exponential Moving Average seems to offer good resistance so far and these factors combined with the strength of the downtrend will most likely trigger another drop. The first tested support is located at 1.0500 while potential support sits at 1.0560.
Fundamental Outlook
The most important economic indicators come from the United States today as well: at 12:30 pm GMT, the Producer Price index comes out, showing potential changes in the price charged by manufacturers for their goods. The indicator has inflationary implications (a higher price charged by producers will be eventually paid by the client) and that is why values above the forecast 0.2% are viewed as beneficial for the greenback.
At 2:00 pm GMT, the University of Michigan will release the Consumer Sentiment survey, which is expected to post a reading of 95.6. Higher numbers will probably strengthen the US Dollar because consumer sentiment is tightly correlated with consumer spending.
GBP/USD
The Pound also strengthened against the greenback but the bulls could not sustain the climb and all gains were erased once resistance was touched.
Technical Outlook
So far the level at 1.5030 was considered potential resistance but the way price bounced yesterday, turns it into tested resistance thus we might see additional rejections if the pair climbs to touch it again. Minor support is located at 1.4890 but we expect it to be broken today and the pair to continue on its way to 1.4830 major support. The first potential resistance is represented by the 50 period Exponential Moving Average.
Fundamental Outlook
Because the United Kingdom did not schedule important news releases for today, the movement of the pair will be mainly affected by the U.S. events mentioned earlier.
FOREX NEWS: U.S. DOLLAR SLOWS ITS ASSAULT: POSSIBLE TREND CONSOLIDATION TO FOLLOW
EUR/USD
Forex News: Although the U.S economic data released Friday disappointed somewhat, the pair continued to descend and the greenback extended its gains against the euro.
Technical Outlook
The important support level at 1.0500 was broken Friday and now price has returned to re-test it from below. If the current encounter will result in a bounce lower, 1.0500 will become resistance, with the potential to reject price in the future. A move above the current level will probably find resistance at the 50 period Exponential Moving Average, which combined with the level at 1.0560 will create a confluence zone.
Fundamental Outlook
The U.S. Industrial Production numbers are released at 1:15 pm GMT but this indicator usually has a strong impact on the greenback only if a hefty difference between forecast and actual number is shown. The forecast for today’s release is 0.3% while last month’s value was 0.2%.
At 6:45 pm GMT, ECB President Mario Draghi will deliver a speech at the SZ Finance Day 2015 “The Future of the Finance Industry – Between Growth and Regulation” summit. The impact on the single currency may be strong but it all depends on the subjects under discussion and Draghi’s attitude. Caution is recommended if trading during his speech.
GBP/USD
Similar to the euro, the sterling posted big losses against the greenback and the pair had another strong bearish day, dropping for almost 200 pips.
Technical Outlook
Price paused around 1.4710 after a sharp fall but this minor support is likely to be broken today given the massive bear strength exhibited lately. However, the chances of bullish retracements have increased because price traveled a long distance south in a very short period. The oscillators are moving upwards, coming out of oversold territory but this does not suggest a reversal, just brief pullbacks, probably followed by further downside movement.
Fundamental Outlook
We have a slow day ahead in terms of British economic news releases and this fact might generate slow, ranging price action.
FOREX NEWS: BULLISH RETRACEMENTS COMPLETE, BEARS MIGHT TAKE OVER AGAIN
EUR/USD
Forex News: Yesterday the downtrend took a breather and the bulls managed to take the pair above the 50 period Exponential Moving Average. Despite yesterday’s climb, the downtrend remains intact.
Technical Outlook
If the break above the 50 period Exponential Moving Average can be sustained, the bulls will encounter the first resistance at 1.0640, followed by 1.0720. However, we must keep in mind that a strong downtrend is still in place and this makes a new encounter with 1.0500 highly probable; the Relative Strength Index and the Stochastic are both close to their respective overbought levels, a fact that increases the possibility of bearish movement.
Fundamental Outlook
At 10:00 am GMT, the German ZEW Economic Sentiment survey is released, showing the opinions of about 275 German analysts and professional investors about the state of the economy. The forecast is 58.9, an increase from the previous 53.0 and usually higher values are beneficial for the euro.
The United States release the Building Permits at 12:30 pm GMT, an indicator that shows the state of the construction sector because any new building requires a permit. Higher numbers than the anticipated 1.07M usually strengthen the US Dollar.
GBP/USD
Similar to the euro, the Pound gained against the greenback yesterday but resistance was not broken and the climb was not accompanied by strong momentum.
Technical Outlook
The important level at 1.4830 sits in front of price but it wasn’t yet tested as resistance; in other words, it can become resistance but for the time being it is simply a place where price might reverse. However, this level combined with the 50 period Exponential Moving Average creates a confluence zone which will be hard to break to the upside considering the strength of the downtrend. The overall bias remains bearish and we consider that further downside movement will soon follow, with 1.4700 zone as target.
Fundamental Outlook
The Pound will have another lackluster day in terms of economic and financial news releases thus price action will be mainly driven by the US events and by the technical aspect.
FOREX NEWS: FOMC MEETING EYED FOR HINTS ON POTENTIAL RATE HIKE
EUR/USD
Forex News: Although the German ZEW Economic Sentiment survey disappointed, the euro climbed yesterday, reaching resistance. Once that happened, bearish pressure started to mount and rejection was shown.
Technical Outlook
Price remained above the 50 period Exponential Moving Average for almost the entire day but the resistance at 1.0640 couldn’t be surpassed. Both oscillators are in the upper part of the range and some rejection candles were formed (pin bar on a four-hour chart), so we expect a new leg of the downtrend to begin. The first barrier is represented by the 50 Period Exponential Moving Average and once this support is broken, we expect the pair to reach 1.0500 support rather fast. A move above the current resistance would open the door for touch of 1.0720.
Fundamental Outlook
Today’s important events come from the United States: at 6:00 pm GMT the Fed will announce the Interest Rate (no change expected) and will publish the Monetary Policy Statement together with the FOMC Economic Projections. Half an hour later, at 6:30 pm GMT, Fed Chair Janet Yellen will hold a Press Conference which is expected to be the day’s biggest market mover, especially if she will offer hints about the next rate change. During such speeches, caution is recommended because the market can react wildly.
GBP/USD
The pair dropped for almost the entire day after making another attempt to break the level at 1.4830. The drop wasn’t influenced by major fundamental events and was mostly technical.
Technical Outlook
The level at 1.4830 is now tested resistance and we can expect price to bounce lower if it will touch it again. For the time being it looks like the bears regained control and the possibility of a break of 1.4700 support zone has increased. However the Stochastic and the Relative Strength Index are moving close to oversold and this could mean that price will climb briefly before breaking support. If this is true, the first resistance will be offered by the 50 period Exponential Moving Average on an hourly chart.
Fundamental Outlook
The British unemployment numbers (Claimant Count Change) come out at 9:30 am GMT. The indicator shows the fluctuation in the number of people that applied for unemployment related benefits during the previous month and usually has a strong impact on the Pound. Lower numbers than the anticipated -30.6k are normally beneficial for the British currency.
At the same time the Bank of England will announce the votes on the latest Interest Rate but no change is expected so the event is likely to go mostly unnoticed.
FOREX NEWS: YELLEN SHAKES THE MARKET. RETRACEMENTS EXPECTED
EUR/USD
Forex News: Yesterday the pair showed the first strong climb in a long while as Fed Chair Janet Yellen expressed concerns about low inflation, given the Dollar’s strength. The Fed kept the rate unchanged but Yellen also mentioned that a rate hike remains possible after the April meeting.
Technical Outlook
Price broke through both 1.0640 and 1.0720 levels of resistance and further bullish action is a distinct possibility, with 1.0900 as target. However we must keep in mind that a strong downtrend is still in place and on top of that, the Relative Strength Index is deep in overbought territory. This makes us believe that price will return to re-test the recently broken level at 1.0720 before it can head higher. A bearish break of this level could mean the up move is exhausted and the sellers might regain control.
Fundamental Outlook
The ECB will announce today at 10:15 am GMT their Targeted LTRO (Long Term Refinancing Option) which is the amount of money they will create and use as loans to European Banks. The expected sum is 40.0 Billion and the impact of the release is not yet known.
At 2:00 pm GMT the Philly Fed Manufacturing Index is released and expected to show an increase to 7.2 from the previous 5.2. Such a value or a higher one will generate additional US Dollar strength.
GBP/USD
The pair also moved north during Yellen’s speech but the British economic data released previously during the day was disappointing and this could mean the up move will be short-lived.
Technical Outlook
The resistance at 1.4830 was broken easily yesterday and the same is true for the level at 1.4890 but this was mostly due to Dollar weakness, not Pound strength. Today we expect an encounter with 1.4890 considering the overbought condition of the Relative Strength Index and the fact that strong bullish moves in a downtrend are bound to retrace before a new direction can be decided. First resistance is located at 1.5030.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for the day, hence price action will be mainly influenced by the technical aspect and by the US releases.
FOREX NEWS: UNCERTAINTY SETTLES IN, CHOPPY PRICE ACTION CONTINUES
EUR/USD
Forex News: The pair continued to climb yesterday during the Asian session but the start of the European session marked the beginning of a new bearish move which lasted for almost the entire day. Volatility is high and the pair is prone to irregular movement.
Technical Outlook
After moving up through several resistance levels, the pair broke them all to the downside before finally coming to a stop on the support located at 1.0640. Volatility is high and price action is choppy as seen from yesterday’s sharp reversal. The picture is unclear but the Stochastic is oversold and price is struggling at support so another move north is not out of the question. On the other hand, a break of the current level might take price into the next support which is located around 1.0580.
Fundamental Outlook
Today is the second day of the EU Economic Summit but other than that, the fundamental scene is calm and no major news comes out, so we might see a calm end to a wild trading week.
GBP/USD
The Pound-Dollar pair had a wild day as well, moving through several S/R levels with ease. The Dollar losses were almost completely erased and the bears showed they still have enough underlying strength which shouldn’t be underestimated.
Technical Outlook
The support around 1.4700 prevents the pair from dropping further for the time being. However, we expect the level to be broken today and price to continue to move south towards the low at 1.4635. Keep in mind that price action is choppy and a trend is not present on the lower and medium time frames. Usually in a ranging environment price reacts to oversold /overbought conditions better than in a strong trend so look for bullish movement if the oscillators will descend below their lower levels.
Fundamental Outlook
The United Kingdom didn’t schedule any important news releases for the day so we expect price action to be driven by the technical side.
