Technical News | Daily

FOREX NEWS: U.S. CONSUMER PRICE INDEX – THE CATALYST FOR A LONG AWAITED RATE HIKE

EUR/USD

Forex News: Yesterday the dollar extended its gains against the euro and we saw a strong move below the 50 period Exponential Moving Average. The entire session was bearish, with just brief climbs.


Technical Outlook

Now the level at 1.1100 has turned into resistance once again and price is trading below the moving average on a four hour chart so the balance is tipped in the favour of the bears and we anticipate a touch of 1.1000 support. It is important to note that the Stochastic has entered oversold and is moving below its 20 level, hinting about a potential retracement to the upside. If this happens, the first resistance will be provided by the 50 EMA.

Fundamental Outlook

American inflation data is released at 12:30 pm GMT in the form of the Consumer Price Index which is expected to post a value of 0.2%, lower than the previous 0.3%. Current inflation is considered too low so an increase is viewed as beneficial for the US Dollar and could weigh a lot in the Fed’s decision regarding the next rate hike.

Later in the day, at 6:00 pm GMT the Fed will release the Minutes of their latest meeting. The document will offer insights into the reasons that determined their latest vote and clues about a potential rate change.

GBP/USD

British inflation surprisingly increased as shown by yesterday’s CPI and the Pound felt the effects immediately, strengthening and taking the pair on a bull run.


Technical Outlook

The key resistance at 1.5675 was breached once again yesterday but this time the move was a lot more convincing. Currently the pair is pulling back after the strong bullish move and this retracement must be closely watched for signs of continuation or rejection: if the pair will stall around 1.5675 we are likely to see a bounce lower but otherwise, the ranging period might be over and we will probably see a move towards 1.5800.

Fundamental Outlook

There’s nothing important on the British economic calendar for today but the US events will have a strong impact on the pair.

FOREX NEWS: A RETRACEMENT IN THE MAKING

EUR/USD

Forex News: Friday the euro continued its assault on the US Dollar and the pair moved significantly higher, breaking resistance and solidifying the control of the bulls.


Technical Outlook

It is clear that bulls are in control and that we are likely to see further upside movement in the days to come but for now we must note that price moved a substantial distance without showing the slightest hint of retracement. Both the Stochastic and the Relative Strength Index are deep into overbought territory and this increases the chances of bearish retracements. The first target remains the key resistance at 1.1450 but today we might see slow price action, with a bearish bias.

Fundamental Outlook

Eurozone’s Manufacturing PMI (expected 52.4) and Services PMI (expected 54) are released today at 8:00 am GMT. These surveys are based on the opinions of purchasing managers from the respective sectors and act as leading indicators of economic health so higher values are beneficial for the euro but the impact has been known to be medium to low.

GBP/USD

Friday we saw more of the same jagged and choppy movement that the pair has been showing lately and no clear moves have been made by either bulls or bears.


Technical Outlook

The pair is now trading above 1.5675 but this could be very well a false break because usually when price tries several times to break a level and finally succeeds, it starts to move strongly in the direction of the break. As we can see from the chart above, price is just hovering above 1.5675 and shows long wicks on almost all candles; if this is a false break, the pair will drop at least until it reaches the 50 period Exponential Moving Average. A break of this form of support would show that the bullish break was indeed a false one.

Fundamental Outlook

There are no important indicators on today’s schedule so the Pound will be mostly influenced by the technical aspect.

FOREX NEWS: US DOLLAR MELTDOWN?

EUR/USD

Forex News: Following a Chinese shares market drop of more than 7% (the most since 2007), panic set in and most of the pairs started to move erratically. The euro-dollar pair climbed substantially on the back of US Dollar weakness and important resistance was broken.


Technical Outlook

The euro easily broke 1.1450 and is now free of resistance as the next level is far away, above 1.2000. For intra-day trading, yesterday’s high will act as minor resistance and 1.1450 could turn into support but the market is in panic mode so anticipating the next direction is difficult. Both the Relative Strength Index and the Stochastic are deep in overbought territory but for the time being the technical aspect is somewhat secondary.

Fundamental Outlook

The German IFO Business Climate is released at 8:00 am GMT and expected to show a value of 107.6, slightly lower than the previous 108.0. The value is derived from the opinions of about 7,000 businesses regarding a 6-month outlook for the German economy and higher values suggest optimism, thus strengthening the euro.

At 2:00 pm GMT the U.S. Consumer Confidence survey comes out, with an anticipated value of 92.8, higher than last month’s 90.9. Considering the latest drop of the US Dollar, the impact of the indicator could create mixed movement but under normal circumstances, increased consumer confidence brings a stronger dollar.

GBP/USD

The greenback weakened against the Pound as well and the pair rose to touch resistance, showing the strongest movement in a long while.


Technical Outlook

The resistance at 1.5800 was touched yesterday but price showed an almost perfect bounce soon after and the dollar erased some of the losses. The oscillators don’t show an extreme condition so they don’t offer a lot of hints about future movement but the fact that price bounced at resistance could mean that a move lower is next. Another attempt to break 1.5800 would mean that the US Dollar is weakening for the long term and would open the door for a touch of 1.5930.

Fundamental Outlook

The United Kingdom didn’t schedule any macroeconomic releases for the day so investors will keep an eye on China markets and American indices because these will most likely influence the direction of the US Dollar.

FOREX NEWS: THE GREENBACK IS BACK WITH A VENGEANCE

EUR/USD

Forex News: Yesterday the euro gave back some of the gains as the pair retraced lower after establishing a multi-month high at 1.1713. The US Consumer Confidence survey posted a better than anticipated value, and played an important role to the move south.


Technical Outlook

Currently the pair is re-testing from above the previously broken resistance located at 1.1450. If this level triggers a bounce higher, it will turn into support and will possibly reject falling prices in the future; also, this would suggest that the bulls are ready to make another attempt to break the high established at 1.1713. Notice that both oscillators are showing strong bearish momentum and are coming down, moving out of overbought. A move below 1.1450 would make the 50 period Exponential Moving Average the next target.

Fundamental Outlook

The US Durable Goods Orders (goods with a life expectancy of at least 3 years) are released at 12:30 pm GMT and expected to show a change of -0.5% compared with the previous 3.4%. However, the CORE version of the indicator, which excludes transportation items is expected to show an increase from the previous 0.6% to 0.3%. Under normal circumstances, higher than anticipated values strengthen the greenback.

GBP/USD

Yesterday the pair breached 1.5800 again but the bulls couldn’t close above the level and a positive US Consumer Confidence survey helped the US Dollar to bring the pair south.


Technical Outlook

The pair made two attempts to break 1.5800 but both resulted in moves lower and now positive U.S. data is strengthening the US Dollar, making us believe that 1.5675 is the next target for the pair. The 50 period Exponential Moving Average is in close vicinity of this potential support level so we are dealing with a confluence zone that is likely to push price higher once and if reached.

Fundamental Outlook

The British Bankers’ Association will release the Mortgage Approvals at 8:30 am GMT; the indicator offers insights into the British housing market and can strengthen the Pound if it will show a reading above the forecast 46.0K but the impact is usually low.

FOREX NEWS: AMERICAN GDP – MORE FUEL TO THE FIRE?

EUR/USD

Forex News: The bulls couldn’t push price higher yesterday and the US Dollar rebounded, taking the pair lower. Price is now below 1.1450 which did not turn into support.


Technical Outlook

Most of the gains were erased but the pair is still trading above the 50 period Exponential Moving Average so the latest drop could be considered a good opportunity to join the uptrend. However, keep in mind that the oscillators are moving down and show bearish momentum so the current move might extend into the moving average where will probably find support.

Fundamental Outlook

At 12:30 pm GMT a major U.S. indicator is released: the Preliminary Gross Domestic Product. This is the main gauge of overall performance of the economy and a higher change than the anticipated 3.2% (previous 2.3%) could bring US Dollar strength.

The Kansas City Federal Reserve Bank will hold today the Jackson Hole Symposium that will be attended by central bankers, finance ministers and important figures from across the world. The symposium is closed to the press but participants sometimes talk to journalists during the day. Speeches of the participants can influence the Forex market strongly so caution is recommended.

GBP/USD

The US Dollar was strengthened by a positive value of the Durable Goods Orders (as well as the CORE version of the indicator) and the pair dropped for most of yesterday.


Technical Outlook

The pair dropped heavily and breached 1.5500. This level is likely to offer some support and if this is true, today we will see a retracement higher. The chances of a retracement are also increased by the fact that price dropped too fast a big distance and this usually creates some sort of rubber band effect but the overall picture is bearish.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases but British representatives will participate in the Jackson Hole Symposium and the pound will react depending on their attitude and matters discussed.

FOREX NEWS: BEARS SHARPEN THEIR CLAWS, EXTENDING GAINS

EUR/USD

Forex News: The US Dollar benefited yesterday from a better than expected value of the American Gross Domestic Product and the pair continued its decent for almost the entire day.


Technical Outlook

The pair breached the 50 period Exponential Moving Average and is now headed towards the potential support located at 1.1215. Here, we are likely to see some form of retracement higher but current bearish momentum is strong, so it is possible that we’ll soon see a break of the mentioned level. If price bounces quickly on 1.1215 and moves above the 50 EMA, it could mean that it is headed towards 1.1450 again, resuming the previous bullish impulse.

Fundamental Outlook

The German Consumer Price Index is released today at 12:00 pm GMT and expected to drop from the previous 0.2% to 0.1%. This is the main gauge of inflation and because the current value is considered too low, a further drop would weaken the euro, allowing the pair to travel south. The Jackson Hole Symposium will enter its second day so sharp and unexpected movement can still occur.

GBP/USD

US Dollar strength was seen against the pound as well yesterday and the pair continued to drop heavily, breaking 1.5500 support without any real difficulty and returning just briefly for a re-test.


Technical Outlook

The bearish move is overextended as price travelled too fast for too long, so we anticipate a retracement higher but the current drop might extend into the support at 1.5330. Note that both oscillators are oversold and this will increase the chances of a bullish pullback but a lot will depend on the British economic data that is released today.

Fundamental Outlook

At 8:30 am GMT the Second Estimate of the British Gross Domestic Product (year over year) is released and anticipated to show a change of 2.6%, same as the previous release. Robust numbers for the GDP show a thriving economy which usually means a strong currency so the Pound will probably react strongly to the release, especially if the actual value is different than the forecast.

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

FOREX NEWS: EUROPEAN INFLATION AND THE FATE OF THE EURO

EUR/USD

Forex News: The German Preliminary CPI released Friday showed small improvements in inflation and the euro reacted by edging slightly higher before dropping below the support at 1.1215, keeping the pair on a bearish path.


Technical Outlook

After the initial touch of 1.1215 the pair retraced higher and found resistance at the 50 period Exponential Moving Average. The drop that followed, took price below 1.1215 and it looks like the current move can extend into 1.1100. If the pair will reach this destination, we expect it to pull back higher, considering that the Stochastic has crossed bullish in oversold territory, but this scenario will depend on the European inflation data released today.

Fundamental Outlook

At 9:00 am GMT the European Consumer Price Index Flash Estimate is released, showing changes in inflation which has been stagnating for a long while; a lower value than the expected 0.2% will most likely hurt the euro, allowing the pair to drop further. Keep an eye on the CORE version of the indicator (excludes food, energy, tobacco and alcohol from calculation), released at the same time.

GBP/USD

The Second Estimate of the British Gross Domestic Product, released Friday, didn’t show any improvement so the Pound didn’t strengthen and the pair continued to drop, almost reaching 1.5330 support.


Technical Outlook

The support at 1.5330 is important for medium term outlook and we expect a bounce higher around this level. Supporting this bias is also the position of the Stochastic and Relative Strength Index which are both oversold for a few days; however, the short term bias is clearly bearish and this means that after retracements, the bearish movement should resume.

Fundamental Outlook

The British banks will be closed today, celebrating Summer Bank Holiday so there are no economic indicators scheduled for release and the pair may suffer from irregular volatility and choppy movement.

FOREX NEWS: BEARS STILL IN ATTACK-MODE, BULLS GET STRONGER

EUR/USD

Forex News: European inflation remained flat as showed by yesterday’s CPI release (forecast 0.2%, actual 0.2%) and the pair moved below 1.1215 after a brief retracement higher.


Technical Outlook

Although it slowed down, price is on a downwards path and our bias is bearish as long as the pair is trading below the 50 period Exponential Moving Average. The next potential support and destination is 1.1100 but the Stochastic is just coming out of oversold, meaning that we may see bullish price action in the form of retracements. Also, price has reached a bullish trend line that is likely to offer support, pushing it higher; a break of this trend line would make a touch of 1.1100 more viable.

Fundamental Outlook

The U.S. Manufacturing PMI is released today at 2:00 pm GMT, showing the opinions of purchasing managers regarding business and economic conditions. The expected figure (52.6) is very close to the previous (52.7) so if this forecast comes true, the event will probably go mostly unnoticed but higher numbers are beneficial for the US Dollar.

GBP/USD

British banks were closed yesterday so the Pound wasn’t affected by any news releases but US Dollar strength was seen especially during the second part of the day and the pair moved lower, without establishing a new low.


Technical Outlook

Bearish price action picked up yesterday afternoon and erased a bullish retracement but the support at 1.5330 was not threatened. The Stochastic cleared its oversold condition and the Relative Strength Index is still close to oversold so we anticipate that a touch of 1.5330 will result in a bounce higher and that the level will not be broken on the first attempt. However, the bias is bearish so a break of 1.5330 is likely to happen eventually.

Fundamental Outlook

The British Manufacturing PMI is released at 8:30 am GMT but no change is anticipated from the previous 51.9. Same as in the case of the American indicator we talked about earlier, higher values are beneficial for the currency but its impact depends on the gap between forecast and actual numbers.

FOREX NEWS: FIRST LOOK AT U.S. JOBS DATA – FIRST MAJOR UPSET OF THE WEEK?

EUR/USD

Forex News: Yesterday we saw a clear bounce at the bullish trend line and price moved above the 50 period Exponential Moving Average but the climb proved to be just a retracement as price quickly returned below the line.


Technical Outlook

Now that a bullish pullback is complete, the bears will most likely make another attempt to break the uptrend line and to take price below 1.1215. If these forms of support will reject price again, then we might see an extended move north, into the potential resistance at 1.1450, otherwise 1.1100 is the next destination. Today we get a first look into U.S. jobs data and this will affect the US Dollar’s bias.

Fundamental Outlook

At 12:15 pm GMT, Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change. The report tries to mimic the Government data that comes out 2 days later and usually has a strong impact on the greenback, so more jobs than the forecast 204K (previous 185K) will take the pair lower.

GBP/USD

The Pound suffered yesterday from soft Manufacturing data, allowing the pair to drop below support. The U.S. Manufacturing PMI did not affect much the Dollar, which continued to strengthen against the Pound.


Technical Outlook

After a few attempts to break 1.5330, the bears finally succeeded and now the pair is trading below this support level. The Stochastic is crossed downwards and not oversold but the Relative Strength Index is still close to oversold and is showing bullish divergence (price is making lower lows and the indicator is making higher lows). This suggests that we might be dealing with a false break so if price will move above 1.5330, we are likely to see a stronger retracement to the upside.

Fundamental Outlook

At 8:30 am GMT the last Purchasing Managers’ Index in this week’s series is released: the Construction PMI. The expected value is 57.6, higher than the previous 57.1 and higher numbers can strengthen the Pound but the impact is often mild, especially if the actual number is close to the forecast.

FOREX NEWS: MARIO DRAGHI PREPARES HEAVY-DUTY EURO SWINGS

EUR/USD

Forex News: The pair had a slow day yesterday, with a bearish bias although the ADP Non-Farm Employment Change showed that less jobs were created than analysts’ expected. Weak euro bulls weren’t able to capitalize on the disappointing US data and the pair moved slightly lower.


Technical Outlook

The move south seen yesterday did not break 1.1215 support or the bullish trend line but despite poor US jobs data, the pair continued to drop, showing that the dollar is still stronger than the euro and making us anticipate a break of the support types mentioned earlier. The Stochastic has crossed downwards and the Relative Strength Index shows a descending slope as well, favouring a drop.

Fundamental Outlook

The ECB announces today at 11:45 am GMT the interest rate which is not anticipated to change from the current 0.05%, so the event will not create huge moves (unless a surprise change), but strong movement is expected during Mario Draghi’s press conference scheduled at 12:30 pm GMT. The ECB President will read a prepared speech and then he will answer journalists’ unscripted questions; this second part of the press conference usually creates heavy-duty moves on the euro, so caution is recommended.

GBP/USD

Pound bulls didn’t manage to stage a proper pullback yesterday and the pair remained below 1.5330, but didn’t make serious advances south. Overall we experienced a choppy trading session, especially on the lower time frames.


Technical Outlook

Now that 1.5330 support is broken, the bears will aim for the support zone around 1.5200 but we expect a retracement higher very soon, mostly because the Relative Strength Index has been moving very close to its 30 level for a relatively long period, with only brief climbs. Also, the chances of a climb are increased by the fact that the Stochastic is entering oversold for the second time and no clear bullish pullback was seen. However, keep in mind that the overall bias is bearish so moves down are not out of the question.

Fundamental Outlook

At 8:30 am GMT the British Services PMI is released, showing the opinions of purchasing managers about business conditions in the services sector. Higher numbers than the anticipated 57.6 (previous 57.4) can strengthen the Pound but the impact is often mild.

FOREX NEWS: ADDING FUEL TO THE FIRE: US NON-FARM PAYROLLS

EUR/USD

Forex News: The European Central Bank kept the interest rate unchanged as expected but Draghi’s press conference generated heavy losses for the euro. The ECB President lowered growth and inflation expectations and hinted that the bank will remain on high alert.


Technical Outlook

The dovish stance of the ECB President is likely to bring further euro weakness during the days to come. The bullish trend line and the horizontal support at 1.1215 are clearly broken now and 1.1100 is threatened. After brief retracements to the upside, we expect a break of the mentioned support and an extended move towards 1.1000.

Fundamental Outlook

The most important U.S. jobs report is released today at 12:30 pm GMT: the Non-Farm Payrolls. The indicator shows how many new jobs were created during the previous month and usually has a huge impact on the dollar, with more jobs strengthening it and the opposite for fewer jobs. The anticipated number is 217K, close to the previous 215K.

GBP/USD

The pound weakened yesterday as the Services PMI showed a disappointing value, missing analysts’ forecast by a long stretch. This generated another bearish day, with the pair trading below 1.5330.


Technical Outlook

A retracement is long overdue as the oscillators have spent another day in oversold territory, but now the level at 1.5330 has turned into resistance and can reject climbing price. The dollar and implicitly the pair will be heavily affected by the U.S. jobs data so the direction will be dictated by this event.

Fundamental Outlook

The United Kingdom didn’t schedule any important news releases so traders will focus on the Non-Farm Payrolls release and on the technical aspect.

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

FOREX NEWS: SLOW MONDAY AS U.S. BANKS CLOSE FOR LABOR DAY

EUR/USD

Forex News: Friday’s headline was the NFP release which showed that fewer jobs were created during the previous month than analysts expected. This generated a huge spike up, which was quickly reversed, mostly because the US Unemployment Rate dropped from 5.3% to 5.1%.


Technical Outlook

Movement was choppy Friday and price bounced at 1.1100 after a second attempt to break this level. These failed attempts and the fact that the oscillators are starting to move upwards make us believe that today we will see bullish price action but it should be noted that the euro is still weak from Mario Draghi’s comments and dovish attitude, so the extent of a climb should be limited. Resistance is located at 1.1215 and support at 1.1100.

Fundamental Outlook

The United States celebrate Labor Day, so banks will be closed and no economic indicators will be released. The German Industrial Production numbers come out at 6:00 am GMT with an anticipated change of 1.2% from the previous -1.4%. Higher values are beneficial for the euro but the indicator often lacks strong impact.

GBP/USD

After a bullish spike generated by the worse than expected NFP, the pair continued to move south, with a major role being played by the drop in the U.S. Unemployment Rate.


Technical Outlook

The pair continues to move downwards despite multiple oversold signals. A pullback against the main direction is still expected but the Pound is weak so even if this retracement occurs, we don’t expect it to be strong. First potential resistance is located at 1.5200 while support sits around 1.5100 but we don’t expect the pair to touch support before a retracement occurs.

Fundamental Outlook

No major macroeconomic indicator were scheduled for today by the United Kingdom and US banks are closed, thus we expect a day with irregular volatility.

FOREX NEWS: EURO BREAKS OUT OF THE RANGE, POUND FINALLY SHOWS STRENGTH

EUR/USD

Forex News: Yesterday price action was choppy and lacked volatility as U.S. banks were closed celebrating Labor Day and no other major events took place.


Technical Outlook

Yesterday’s movement doesn’t change the picture much; 1.1215 remains resistance and 1.1100 is support. Our bias remains bearish overall but it’s very possible to see an encounter with the 50 period Exponential Moving Average or the resistance mentioned earlier. A downtrend resumption may be signalled first by the oscillators curving downwards.

Fundamental Outlook

We have another slow day ahead of us, with the Revised Euro Zone Gross Domestic Product being the only notable release. The expected value is 0.3%, same as the previous and the scheduled time is 9:00 am GMT. Although this version if the GDP is the least important, a higher value is considered beneficial for the euro.

GBP/USD

A much needed bullish retracement finally occurred yesterday and the pair moved above 1.5200. Almost the entire day was controlled by the bulls but the overall picture is still bearish.


Technical Outlook

Considering the position of the oscillators and the lack of a proper retracement since the pair started to drop, the current move north may extend into the resistance at 1.5330 or into the 50 period Exponential Moving Average. The moving average will descend below the mentioned resistance so it will become the first zone of interest. This would make a good place for more sellers to enter the market or to reopen their positions, thus generating another drop.

Fundamental Outlook

The day lacks major news releases from the United Kingdom, so the pair’s direction will be mainly decided by price action.

FOREX NEWS: POUND SOARS, MANUFACTURING DATA TO DECIDE NEXT DIRECTION

EUR/USD

Forex News: The Revised version of the Euro Zone GDP showed a better than expected value, resulting in euro strength and an encounter with resistance but the bulls failed to successfully break the level.


Technical Outlook

The resistance at 1.1215 proved too strong for the pair and we saw a move lower after a bounce here. The 50 period Exponential Moving Average is in close vicinity of the mentioned level, creating a confluence zone and adding extra resistance value so we expect price to head lower, towards the support at 1.1100.

Fundamental Outlook

The day lacks major releases for the euro or dollar and this makes the technical aspect the main focus of the day.

GBP/USD

The Pound strengthened more than expected and yesterday the pair continued to climb, breaking 1.5330 and the 50 period Exponential Moving Average.


Technical Outlook

Although the pound exhibits strength, the overall picture is still bearish and we anticipate another descent which will have 1.5330 as first target. The Relative Strength Index and the Stochastic have reached their respective overbought levels, thus increasing the chances of a move south.

Fundamental Outlook

The British Manufacturing Production numbers come out today at 8:30 am GMT but no change is expected from the previous 0.2%. Since manufacturing is a big part of the British economy, higher numbers are beneficial for the pound and suggest increased economic activity.

The NIESR Gross Domestic Product is released later in the day, at 2:00 pm GMT and can also have a strong impact on the pair. The previous value was 0.7% and higher numbers usually strengthen the Pound because this estimate proved to have a high accuracy.

FOREX NEWS: THE BANK OF ENGLAND AND THE STORY OF THE STERLING

EUR/USD

Forex News: Yesterday the euro and the dollar weren’t affected much by macroeconomic releases and the pair bounced again at resistance, but failed to meet support and overall had a slow session.


Technical Outlook

The resistance at 1.1215 was touched again and price bounced lower, confirming that 1.1100 is the most probable destination. The mentioned resistance combined with the 50 period Exponential Moving Average create a confluence zone which will be hard for the bulls to break; the Stochastic is also crossed downwards, increasing the chances of a move lower and we maintain our bearish bias as long as the pair is trading below 1.1215.

Fundamental Outlook

The only notable release of the day is the U.S. Unemployment Claims scheduled at 12:30 pm GMT. A larger number of people without jobs can negatively affect retail sales and consumer spending, so a higher value than the forecast 279K can weaken the US Dollar, driving the pair higher.

GBP/USD

British Manufacturing numbers disappointed yesterday and so did the NIESR GDP Estimate but despite all this, the pair just briefly dipped lower and did not manage to break support.


Technical Outlook

The first form of support for the pair is now the 50 period Exponential Moving Average and possibly 1.5330 (although this level is not confirmed as support). A move below these barriers will suggest that the medium term downtrend will resume and the pair will make another attempt to break 1.5200, but a bounce at support will open the door for a touch of 1.5500 during the days to come.

Fundamental Outlook

At 11:00 am GMT the Bank of England will announce their interest rate decision which is not expected to change from the current 0.50%. However, the more important announcement is the breakdown of the votes of the MPC members. If they have changed their stance regarding a rate increase or decrease, then the Pound will move strongly and we will no doubt see huge moves on the pair.

FOREX NEWS: A BATTERED US DOLLAR SEEKS AID FROM THE CONSUMER SENTIMENT SURVEY

EUR/USD

Forex News: The euro dollar pair continued to climb without conviction but failed to move decisively above the barrier at 1.1215. The lack of macroeconomic releases contributed to the choppy movement seen yesterday.


Technical Outlook

The pair’s next move is unclear as lately it has been drifting and neither side was in control. As long as 1.1215 is not broken and then re-tested from above, it remains resistance and our bias remains bearish. A bullish break of 1.1215 would open the door for the next level of interest which is located at 1.1320 and could reject price lower.

Fundamental Outlook

The fundamental scene is busier today: the first potential market mover is the German Final Consumer Price Index which is expected to show a value of 0.2%, same as previous. However, a higher value would suggest that inflation picks up and could bring euro strength. The time of the announcement is 6:00 am GMT.

The University of Michigan will release at 2:00 pm GMT the Consumer Sentiment survey which is tightly correlated with consumer spending, so a higher value than the anticipated 91.8 could mean that spending among consumers will increase in the near future. Higher than anticipated values are beneficial for the greenback.

GBP/USD

The Bank of England didn’t make any changes to the interest rate and the members’ votes came out as anticipated (only one member voted for a rate increase). The release initially generated a bullish spike which was quickly reversed, but the pair then climbed again so trading was difficult on the lower time frames.


Technical Outlook

The pair bounced at the 50 period Exponential Moving Average and is trading above 1.5330 so the short term bias is bullish. The first potential resistance is located at 1.5500, while support will be offered by the moving average, followed by 1.5330. The Relative Strength Index is approaching overbought for the second time in a short while and this can increase the chances of a move south.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases for today so traders will focus on the U.S. releases and on the technical aspect.

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

FOREX NEWS: A LACKLUSTRE FUNDAMENTAL SCENE AHEAD OF THE MOST ANTICIPATED EVENT OF THE YEAR

EUR/USD

Forex News: U.S. data disappointed Friday as the Consumer Sentiment survey posted a much lower than expected value and the US Dollar reacted accordingly, weakening against the euro and allowing the pair to climb.


Technical Outlook

Last week ended close to 1.1320 resistance and both oscillators are showing an overbought condition. The bullish trend line broken a while back can also offer resistance and all these factors make us believe that price is likely to head lower today. If this is the case, the 50 period Exponential Moving Average will provide the first support barrier but considering the lack of financial releases, we might have a slow day.

Fundamental Outlook

At 9:00 am GMT the Euro Zone Industrial Production numbers are released, with an anticipated change from the previous -0.4% to 0.3%. Such a difference may strengthen the euro but the impact is usually mild. This is the only notable release of the day, so traders will focus more on the technical aspect.

GBP/USD

Friday’s price action was slow, with a bearish bias but the down move lacked strong momentum and overall no substantial advances were made by either side.


Technical Outlook

Friday’s price action shows that the bulls are starting to fade and possibly to make room for the bears to take over. The Relative Strength Index touched the 70 level twice in a short time and the Stochastic is showing bearish divergence; these facts make us anticipate a session controlled by the bears, with the moving average as target, but the lack of economic indicators may translate in a slow day.

Fundamental Outlook

As mentioned, there are no releases scheduled today for the Pound or the US Dollar so the technical factors will prevail.

FOREX NEWS: CLASH WITH SUPPORT. HOW STRONG THE BULLS REALLY ARE?

EUR/USD

Forex News: Yesterday’s price action was stronger than anticipated, but no major developments took place and the pair slowly descended below resistance.


Technical Outlook

Price has found resistance at the bullish trend line and started to move south, below 1.1320 which remains resistance. The Relative Strength Index and the Stochastic are moving down after reaching overbought and the balance is slowly tilting in favour of the bears, making the 50 period Exponential Moving Average the first potential target. If the bears cannot break this support quickly, we are likely to see another attempt to move above 1.1320.

Fundamental Outlook

The German ZEW Economic Sentiment survey is the day’s first important release, scheduled at 9:00 am GMT and expected to show a strong drop to 18.3 from the previous 24.0. This survey of 275 German professional investors and analysts acts as a leading indicator of economic health and higher than expected numbers are usually beneficial for the euro.

The United States will release the Retail Sales numbers at 12:30 pm GMT. The indicator usually has a hefty impact on the US Dollar and higher values than the forecast 0.4% (previous 0.6%) are beneficial for the currency.

GBP/USD

The bulls faded yesterday and the pair started to move south for a touch of the 50 period Exponential Moving Average. The day lacked major news announcements or special events.


Technical Outlook

The move lower encountered support at the 50 period Exponential Moving Average on a four hour chart and price is likely to push higher before breaking this form of dynamic support. However, a move above 1.5500 is not very probable, unless we see solid numbers for today’s British economic data. A break of the moving average will make 1.5330 the first destination for the pair.

Fundamental Outlook

At 8:30 am GMT the British Consumer Price Index is released and expected to show a value of 0.0% (previous 0.1%). The CPI is an important gauge of inflation and higher numbers are considered bullish for the Pound, so we may see a climb for the pair if the actual number will surpass analysts’ expectations. Later in the day, the pair will be influenced by the U.S. retail sales data.

FOREX NEWS: U.S. INFLATION TAKES CENTRE STAGE AS WE APPROACH FED’S DECISION

EUR/USD

Forex News: Although the US Dollar was affected by soft Retail Sales data, the pair didn’t move much yesterday and instead ranged for the most part of the day, moving almost sideways.


Technical Outlook

We are still anticipating a move south, towards the 50 period Exponential Moving Average but yesterday’s price action doesn’t hold many clues about future movement. After a period of sideways movement, price is likely to shoot strongly but the direction is hard to anticipate so keep an eye for any breakouts during the day. The levels of importance remain 1.1320, 1.1215 and the moving average.

Fundamental Outlook

The last major release ahead of the Fed Interest Rate is scheduled today at 12:30 pm GMT in the form of the US Consumer Price Index which is an important gauge of overall inflation in the United States. A small drop is expected, from the previous 0.2% to 0.1% and if this forecast comes true, we are likely to see dollar weakness.

GBP/USD

The British Consumer Price Index showed the anticipated value, which was lower than previous and the Pound felt the effects, weakening and moving lower throughout the day.


Technical Outlook

After a brief climb, the pair has pierced through the 50 period Exponential Moving Average and the bears seem to take control of price action on the back of disappointing British economic data. Both oscillators agree with a continued move lower so if the pair won’t bounce strongly at the moving average, we expect a touch of 1.5330.

Fundamental Outlook

At 8:30 am GMT the British Claimant Count is released, showing the change in the number of people who asked for unemployment related aid. Higher levels of unemployment point towards a contracting economy and a potentially weaker Sterling so higher numbers than the expected -5.1K are usually detrimental for the currency.

FOREX NEWS: TO INCREASE OR NOT? THAT IS THE QUESTION!

EUR/USD

Forex News: Yesterday’s main event was the release of the American Consumer Price Index which showed a worse than anticipated value, reversing a previous drop seen earlier in the day.


Technical Outlook

The pair touched 1.1215 target and bounced almost perfectly immediately after, mostly because of the disappointing U.S. inflation numbers. Today the markets are faced with an almost historical event – Fed’s rate announcement – so during the day, price direction will present irregular behaviour and possibly sharp turns, with the technical aspect being almost entirely overshadowed. Extreme caution is recommended throughout the day and especially at release time.

Fundamental Outlook

The Fed will announce their decision today at 6:00 pm GMT. Earlier during this week, the majority of analysts expected an increase from 0.25% to 0.50% but now opinions are mixed: some expect a rise to 0.38%, while others expect the rate to remain unchanged. Nonetheless, the event will create a lot of volatility and probably substantial movement. At 6:30 pm GMT Fed Chair Janet Yellen will hold a press conference, offering details about the decision.

GBP/USD

The pair dropped to touch 1.5330 support and then bounced strongly although the British Claimant Count Change showed a worse than expected value. The climb can be mostly attributed to a surprise announcement of the British Inflation Report Hearings, which came just a few hours before the event.


Technical Outlook

The resistance at 1.5500 is now standing in front of rising price and the bulls are struggling to break it. Due to the fact that price has travelled a long distance in a short while, we anticipate a bearish pullback before the next move but during the day, direction will be heavily influenced by the Fed Rate and, same as with the EUR/USD, the technical aspect will be secondary to the fundamentals.

Fundamental Outlook

The British Retail Sales numbers come out at 8:30 am GMT, expected to show a change of 0.2% compared with the previous 0.1%. Because sales made at a retail level represent a major part of the entire economic activity, higher numbers can strengthen the Pound, but the impact will probably be low compared to the Fed Rate announcement.