FOREX NEWS: FOMC MEETING MINUTES TO BE RELEASED, HEAVY US DOLLAR MOVEMENT EXPECTED
EUR/USD
Forex News: The market showed indecision yesterday, moving down when the U.S. posted better than expected inflation data and then making a complete 180 degree turn, heading higher above resistance.
Technical Outlook
The level at 1.1335 acts as good resistance so far, with several candles bouncing off of it and this makes it an important level for short term price action. A bullish break will most likely extend above the 50 period Exponential Moving Average and into 1.1385, while a bearish bounce will open the door for a move into 1.1250 support. The oscillators still favour a move up but don’t show strong momentum and could turn at any moment.
Fundamental Outlook
The FOMC Meeting Minutes are released today at 6:00 pm GMT and this will be the day’s main event. The document shows details of the latest FOMC meeting and often contains hints about future rate changes. If this is the case, we expect heavy movement on all US Dollar related pairs.
GBP/USD
The British CPI released yesterday disappointed, showing just a 0.3% change (forecast 0.5%) and as a result the Pound gave back some of the earlier gains.
Technical Outlook
Price moved above the 50 period Exponential Moving Average, found resistance at 1.4525 and then bounced lower. Currently it is testing the moving average from above and the two oscillators are starting to turn downwards. All this makes us anticipate a bearish trading session, with 1.4350 as target. On the other hand, if the pair remains above the 50 EMA, we are likely to see another attempt to break 1.4525.
Fundamental Outlook
The British Claimant Count Change is scheduled for release today at 8:30 am GMT. This indicator tracks changes in the number of unemployed people that asked for social help and usually, higher numbers than the anticipated 4.0K are detrimental for the Pound because they suggest a future decrease in consumer spending and economic activity.
FOREX NEWS: FED MINUTES HINT ABOUT A JUNE RATE HIKE. THE US DOLLAR STRENGTHENS
EUR/USD
Forex News: The euro-dollar pair showed mixed direction ahead of the FOMC Meeting Minutes but the greenback strengthened once they were released. Most of this came from increased optimism that a June rate hike is a distinct possibility.
Technical Outlook
The hints about a potential rate hike are likely to generate further US Dollar strength and thus a break of 1.1210. If this is the case, the next support zone is located at 1.1150 and may be reached even during today’s trading session. The fact that the Relative Strength Index and the Stochastic are approaching oversold may play against this scenario, pushing price higher once 1.1210 is touched; however, for the time being we favour the short side.
Fundamental Outlook
At 12:30 pm GMT the Philly Fed Manufacturing Index comes out, offering details about the health of the manufacturing sector in the Philadelphia district. This survey has a medium impact on the US Dollar but usually, higher numbers than the anticipated 3.2 (previous -1.6) are beneficial for the greenback.
GBP/USD
The Pound soared yesterday, following a poll that showed that 55% of surveyed individuals are against a potential Brexit and only 37% wanting to leave. The FOMC Minutes erased some of the Pound gains but nothing substantial.
Technical Outlook
The resistance at 1.4650 was threatened yesterday but the US Dollar is likely to continue to draw strength from optimism about a June rate hike. Also, the oscillators are both overbought, showing that the pair travelled too far, too fast and thus increasing the chances of a bearish move. If 1.4565 can be broken soon, we expect the pair to head into the 50 period Exponential Moving Average, otherwise the battle for 1.4650 is still on.
Fundamental Outlook
The British Retail Sales are released today at 8:30 am GMT, showing changes in the total volume of sales made through retail stores. This is considered a high-impact indicator because retail sales represent a major part of the entire consumer spending. Higher values than the anticipated 0.6% (previous -1.3%) usually trigger Pound strength and the opposite is true for lower figures.
FOREX NEWS: FINANCE LEADERS GATHER AS THE G7 MEETINGS START
EUR/USD
Forex News: The US Dollar continued to strengthen throughout yesterday’s trading session and the pair dropped below 1.1210 support,
Technical Outlook
The break of 1.1210 is an important victory for the bears and opens the door for 1.1150 support but now price has moved above the level so we may be dealing with a false break. If this is the case, we will likely see an extended retracement to the upside, probably into 1.1250. This scenario is supported by the oversold condition of the Stochastic and Relative Strength Index.
Fundamental Outlook
Today the Group of Seven (G7) Meetings start and will last throughout the weekend. These meetings are attended by central bankers and finance ministers from the 7 member states and can have a strong impact on the financial markets but the effect cannot be anticipated, thus caution is recommended during the day.
GBP/USD
The Pound continued to strengthen, helped by a better than expected reading of the British Retail Sales (actual 1.3%, forecast 0.6%), but bounced lower after a failed attempt to break 1.4650.
Technical Outlook
The bearish bounce seen around 1.4650 combined with the overbought condition of the Stochastic and Relative Strength Index is likely to trigger an extended move south, with 1.4565 as first target, followed by 1.4525. Both the Pound and the US Dollar are strong at the moment and this may generate a stalemate, where price remains between 1.4650 and 1.4565.
Fundamental Outlook
British personalities will attend the G7 Meetings and this may trigger increased volatility on Pound related pairs but as mentioned before, the effect is hard to anticipate and will depend on the matters discussed.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: BEARS CONTINUE THEIR ATTACK, LIMITED UPSIDE CORRECTIONS EXPECTED
EUR/USD
Forex News: Friday’s price movement was mixed and the pair stayed close to 1.1200, bouncing above and below it. The economic calendar lacked major events and this contributed to the slow movement.
Technical Outlook
The pair lacks clear direction and lingers around 1.1200 while investors decide the next move. The latest trend is bearish and we expect a continuation after the current retracement is complete but the Stochastic is just exiting oversold, heading up and so is the Relative Strength Index; this favours a move into 1.1250 but we don’t expect this barrier to be broken to the upside today.
Fundamental Outlook
The economic calendar is light but two notable events are the release of the Eurozone Manufacturing PMI (forecast 51.9) and Services PMI (forecast 53.3), both scheduled at 8:00 am GMT. These surveys are leading indicators of economic health, so higher numbers usually strengthen the Euro but the impact is often mild if the actual value matches the forecast or comes very close.
GBP/USD
The US Dollar continued to strengthen against the Pound Friday and the pair descended below 1.4525; overall the session was bearish, without any significant upside movement.
Technical Outlook
Today’s highlight will be the battle for the 50 period Exponential Moving Average: if the bears manage to break it, we will probably see a move close to 1.4400 and otherwise we will likely see a move towards 1.4565 (probably these targets will not be reached during the course of one day). The Stochastic and Relative Strength Index show good downwards momentum, favouring a break of the 50 period EMA.
Fundamental Outlook
The Pound’s direction will be mainly affected by the technical aspect as the United Kingdom didn’t schedule major news releases for today.
FOREX NEWS: GERMAN ZEW, EUROGROUP MEETINGS, BRITISH INFLATION REPORT HEARINGS – VOLATILITY GUARANTEED
EUR/USD
Forex News: European data came out close to analysts’ expectations, thus the impact on the market was moderate; nonetheless, the pair showed bearish movement, breaking immediate support.
Technical Outlook
Price broke the support at 1.1210 and now seems to be headed towards the next bearish target: 1.1150. The Stochastic attempts to a bearish crossover and the Relative Strength Index is also heading south, increasing the chances of a move into support but a quick move above 1.1210 would invalidate such a scenario and would make 1.1250 the likely destination for the day.
Fundamental Outlook
The German ZEW Economic Sentiment Survey is released today at 9:00 am GMT, showing the opinions of about 275 German analysts and professional investors regarding a 6-month outlook. Due to their jobs, they are well informed and this makes their opinions matter more so a higher value than the forecast 12.1 will likely strengthen the Euro. Also, the Eurogroup Meetings start today and this is another reason for increased volatility.
GBP/USD
The pair showed choppy movement yesterday, trying to breakout but failing on several occasions. For now price is still between support and resistance but a true breakout is more probable.
Technical Outlook
Price bounced lower at 1.4525 and higher at 1.4475, moving above and below the 50 period Exponential Moving Average, so the next direction is not decided yet. The Stochastic is crossing upwards below its 20 level, hinting about a potential move up but the Relative Strength Index is still in the middle of the range, without clear direction. All this makes our bias neutral until a strong breakout occurs; if the recently broken level will be tested from the other side, resulting in a bounce, this will further confirm the break.
Fundamental Outlook
The Inflation Report Hearings take place today at 9:00 am GMT; during these hearings, Bank of England Governor Mark Carney will testify on inflation and economic outlook before the Treasury Committee of the Parliament. The event can generate strong movement, but especially so if the discussions touch the currency market topic.
FOREX NEWS: CURRENCY WARS: US DOLLAR GAINS AGAINST EURO, LOSES AGAINST POUND
EUR/USD
Forex News: The Euro weakened yesterday, mostly due to a much worse than expected German ZEW Survey. The session was bearish and the 1.1150 target was reached.
Technical Outlook
The Relative Strength Index has been showing bullish divergence (price is making lower lows while the RSI is just bouncing on its 30 level) for a long time and this makes us anticipate a bullish session. However, if moves up occur, this should be considered just a correction, not a trend reversal as long as the pair is still trading below 1.1210. If the pair continues lower, the next target is the support at 1.1085.
Fundamental Outlook
The main event of the day is the release of another German survey: the IFO Business Climate. About 7,000 businesses are asked to give their assessment regarding economic conditions as well as a 6 month outlook. Because of its large sample, this survey is highly respected and higher numbers than the anticipated 106.9 strengthen the Euro; the time of release is 8:00 am GMT.
GBP/USD
The Pound strengthened on the back of improved inflation expectations as shown by the Inflation Report Hearings, so the pair had a bullish session, breaking key resistance.
Technical Outlook
The resistance at 1.4565 was clearly broken yesterday and the two oscillators show good upside momentum so we can expect to see further movement north, probably into 1.4650. If by the time the said resistance is reached, the oscillators enter overbought, we expect to see a bounce lower. If 1.4650 is broken, the next destination is the high at 1.4765 but this will probably take more than one day.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for today thus price direction will me mostly decided by the technical aspect.
FOREX NEWS: POUND BREAKS RESISTANCE, CORRECTIONS EXPECTED AHEAD OF BRITISH GDP DATA
EUR/USD
Forex News: The pair had a very choppy day yesterday, without any substantial advances to either side; this was mostly due to a lacklustre fundamental environment and the fact that the only notable indicator of the day showed a figure close to forecast.
Technical Outlook
The pair hovered above and below 1.1150 for almost the entire day and this is a sign that the bulls and bears are taking a breather and don’t show much interest. We still maintain our view that a bullish retracement is coming, because the pair has travelled too far without a proper correction and both the Relative Strength Index and Stochastic are oversold. If the correction occurs, we are likely to see a move close to 1.1210, otherwise 1.1085 remains the target.
Fundamental Outlook
The main event of the day is the release of the U.S. Durable Goods Orders, scheduled at 12:30 pm GMT. The indicator tracks changes in the total value of orders placed for goods with a life expectancy of more than 3 years and higher figures than the forecast 0.3% (previous 0.8%) show increased economic activity, potentially strengthening the US Dollar.
GBP/USD
The Pound continued its advance, scoring another victory against the greenback and breaking 1.4650 with authority.
Technical Outlook
The break seen yesterday will probably draw in more buyers who in turn will take price higher in the long run. However, at the moment both the Relative Strength Index and Stochastic are overbought, calling for a bounce lower. The key resistance at 1.4765 sits in front of rising price and this combined with the position of the oscillators, will probably trigger a move lower.
Fundamental Outlook
The only notable event for the Pound today is the release of the Second Estimate Gross Domestic Product, scheduled at 8:30 am GMT and expected to show a change of 0.4%, same as previous. This version of the GDP has less importance than the Preliminary and more than the Final version, but usually, numbers above expectations strengthen the Pound.
FOREX NEWS: US DOLLAR FIGHTS BACK, FUELED BY U.S. GDP DATA
EUR/USD
Forex News: The release of the Durable Goods orders whipsawed the market and we saw US Dollar weakness although the indicator posted much better than expected numbers. The pair’s climb was partly due to technical reasons as well.
Technical Outlook
Price breached the resistance at 1.1210 and almost touched the 50 period Exponential Moving Average but is already showing signs of weakness. Downside movement is likely to resume but a close above 1.1210 and the 50 EMA will show that the retracement is still not over and that we will probably see a move into 1.12500. When the oscillators will start to turn south, the probability of a move lower will increase.
Fundamental Outlook
At 12:30 pm GMT the U.S. Preliminary Gross Domestic Product is released, offering an assessment of the entire economic performance in the United States. Higher numbers than the expected 0.8% usually trigger strength for the US Dollar but as seen from yesterday’s release, caution is recommended because market participants may interpret things differently. Also today, the G7 (Group of Seven) Meetings start in Kashiko Island and this is another reason for increased volatility and possibly irregular movement.
GBP/USD
The British Second Estimate Gross Domestic Product released yesterday, matched analysts’ expectations and the event went mostly unnoticed. The entire day lacked strong movement and the pair retreated slightly.
Technical Outlook
The bull run seems exhausted now with both Stochastic and Relative Strength Index curving downwards and coming out of overbought. This doesn’t necessarily mean that we will see a strong drop but certainly increases the chances of such a move. The first lower barrier is located at 1.4650, while to the upside 1.4765 remains strong resistance.
Fundamental Outlook
The economic calendar doesn’t hold anything important for the Pound, so the pair’s direction will be affected by the G7 Meetings and of course, by the technical aspect.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: U.S. BANKS CLOSED, GERMAN CPI STEALS THE SHOW
EUR/USD
Forex News: Friday the bears scored another victory and took price below support; the U.S. Gross Domestic Product showed the anticipated change of 0.8%, which was better than the previous and this helped the US Dollar.
Technical Outlook
We expect the current move to continue until 1.1085 is touched but the Relative Strength Index is just entering oversold so a bounce higher is highly probable if the mentioned support is reached. To the upside, 1.1150 is the first potential resistance but today we are likely to have a slow day if the German inflation data doesn’t show a substantial difference compared to the forecast.
Fundamental Outlook
At 12:00 pm GMT the German Prelim Consumer Price Index is announced and this will be the main event of the day. It measures changes in inflation and higher values than the expected 0.3% (previous -0.4%) will likely strengthen the Euro. U.S. banks are closed in observance of Memorial Day and no economic indicators are released.
GBP/USD
The positive change posted by the U.S. Gross Domestic Product showed its effect and the pair descended Friday below the immediate support at 1.4650, generating a bearish session.
Technical Outlook
We anticipate a slow day, with price trapped between the resistance at 1.4650 and the support at 1.4565. A break of these technical barriers is less likely because banks in the United Kingdom and the United States are closed due to holidays and this will trigger irregular price action and possibly alternating volatility. If price does move above or below the levels, we may be dealing with a false break, followed by a move back inside.
Fundamental Outlook
Today the UK celebrates Spring Bank Holiday and because of this, no major economic announcements are made; it’s also possible that we will see choppy, irregular movement.
FOREX NEWS: BULLISH PRESSURE MOUNTS AHEAD OF EUROPEAN CPI, U.S. CONSUMER CONFIDENCE
EUR/USD
Forex News: The pair showed a bullish session yesterday, with the German CPI posting an optimistic figure that aided the climb. Resistance was not threatened but price came close to it.
Technical Outlook
The resistance at 1.1150 is still intact and the bulls haven’t made any clear attempts to break it. The current retracement may extend above the mentioned resistance and in this case, we expect the 50 period Exponential Moving Average to stop bullish momentum. However, if the EMA does not reverse the bullish action, we are likely to see an end of the medium term downtrend.
Fundamental Outlook
At 9:00 am GMT more inflation data comes out, this time in the form of the Eurozone Flash Estimate Consumer Price Index. The indicator measures changes in the price that consumers pay for their products across Europe and under normal circumstances, higher values than the anticipated -0.1% strengthen the Euro.
On the US Dollar side we have the Consumer Confidence survey, released at 2:00 pm GMT and expected to show a 96.1 value, compared to the previous 94.2. The survey is derived from the opinions of about 5,000 households, regarding job availability and economic environment in general. Usually a higher than expected value is beneficial for the US Dollar because it acts as a leading indicator of consumer spending levels.
GBP/USD
Banks were closed yesterday in the US as well as in the UK so the economic calendar was blank and the pair had a choppy session.
Technical Outlook
Although price action was choppy, we can clearly see a bullish bounce at the 50 period Exponential Moving Average, with both oscillators curving upwards. This sets the stage for a break of 1.4650 but if this resistance pushes price lower, we expect a break of the 50 period EMA and another run for 1.4565 support. Until one of the two barriers is broken decisively, we are likely to see continued choppiness.
Fundamental Outlook
The Pound has a lacklustre economic calendar today, without major releases so the main focus will be on the technical aspect and on the U.S. survey.
FOREX NEWS: BULLS FADE AWAY, MARKING THE END OF THE RETRACEMENT
EUR/USD
Forex News: European inflation data showed the expected reading so the event didn’t create strong movement; on the other hand, the US Consumer Confidence survey showed a disappointing value but shortly after the initial impact, the pair moved lower.
Technical Outlook
The pair showed bullish action in the first part of yesterday’s trading session, moving above the resistance at 1.1150 and close to the 50 period Exponential Moving Average. The oscillators are showing good upwards momentum so it’s very possible to see a break of the EMA and a consequent move into 1.1210; however, a bearish cross of the Stochastic would be an early warning that the bears are trying to regain control. If the pair stays below 1.1150, we expect a touch of 1.1085.
Fundamental Outlook
The most notable event of the day is the release of the U.S. Manufacturing PMI, scheduled at 2:00 pm GMT. The survey shows the opinions of purchasing managers from the manufacturing sector regarding business conditions and overall activity in the said sector, acting as a leading indicator of economic health. Higher numbers than the anticipated 50.5 usually trigger US Dollar strength.
GBP/USD
The pair had a mixed day yesterday, bouncing perfectly at support and then failing to move past resistance and moving lower again.
Technical Outlook
The bounce close to 1.4730 and then the failure to move again above 1.4650 shows clear bearish pressure, so today we expect to see a move into 1.4525, followed by 1.4475. The Stochastic is starting to curve downwards, same as the Relative Strength Index and the bulls showed several times they lack the strength to move the pair above key resistance. All this makes our bias for the day bearish.
Fundamental Outlook
At 8:30 am GMT British manufacturing data comes out in the form of the Manufacturing PMI. Same as the same indicator for the United States, this one acts as a leading indicator of economic performance and is derived from the opinions of surveyed purchasing managers form said sector. Higher numbers than the forecast 49.6 are beneficial for the Pound and can take the pair higher.
FOREX NEWS: BUCKLE UP FOR THE ECB RATE ANNOUNCEMENT AND PRESS CONFERENCE!
EUR/USD
Forex News: The pair moved on a bullish path for most of yesterday’s trading session but better than expected U.S. Manufacturing data brought dollar strength later in the afternoon, generating another bounce at the 50 period Exponential Moving Average.
Technical Outlook
Price lacks a clear bias and market participants seem reluctant to commit to a direction but if the pair remains above 1.1150, we are likely to see a break of the 50 period EMA and a move into 1.1210. The oscillators show mixed signals so the entire picture is blurry, probably because the ECB interest rate decision is approaching and traders wait for the result as well as for Mario Draghi’s press conference.
Fundamental Outlook
At 11:45 am GMT the ECB will announce their decision regarding the interest rate. No change from the current 0.00% is expected but the event will surely generate market volatility. Soon after the release, at 12:30 pm GMT, Mario Draghi, the President of the ECB will hold the usual press conference during which he answers journalists’ questions. This conference is likely to generate even stronger movement than the rate announcement so caution is recommended.
At 12:15 pm GMT we take a first look into the U.S jobs situation with the release of the ADP Non-Farm Employment Change, an indicator that shows changes in the number of employed people, excluding the farming industry and government. Higher numbers than the forecast 177K usually strengthen the greenback.
GBP/USD
The bears continued their assault and the pair dropped, breaking immediate support levels. The British Manufacturing PMI came out better than anticipated but the difference was insignificant and the Pound did not have a strong reaction.
Technical Outlook
The current bearish move is in need of a retracement as shown by the oversold condition of the Stochastic and Relative Strength Index. If the current support level at 1.4400 is broken, we don’t expect the same to happen to 1.4350 and instead the chances of a bounce north will be increased once or if price gets there.
Fundamental Outlook
British construction data comes out at 8:30 am GMT in the form of the Construction PMI, a survey of about 170 purchasing managers who are asked to rate the level of business conditions and the overall health of the said sector. Usually, numbers above the forecast 51.9 bring Pound strength but if the actual number is close to analysts’ expectations, we may see a muted impact.
FOREX NEWS: IT’S NFP DAY! THE US DOLLAR PREPARES FOR STRONG SWINGS
EUR/USD
Forex News: Yesterday the ECB decided to maintain the interest rate at 0.00% and the pair showed irregular movement at the time of release as well as during Mario Draghi’s press conference.
Technical Outlook
Price bounced perfectly at 1.1210 resistance and moved back below the 50 period Exponential Moving Average, currently testing the support at 1.1150. Today’s price action will be heavily influenced by the fundamental aspect but from a strictly technical perspective we expect a break of nearby support (1.1150) and a move into 1.1085; this view is supported by the position of the Stochastic (overbought), the direction of the Relative Strength Index and by the fact that the downtrend is intact.
Fundamental Outlook
The most anticipated U.S. jobs report is released today at 12:30 pm GMT: the Non-Farm Employment Change, also known as the Non-Farm Payrolls. The report tracks the change in the number of new jobs created during the previous month and almost always triggers huge movement. More jobs are indicative of increased levels of consumer spending in the near future and that’s why higher numbers than the forecast 159K usually bring US Dollar strength.
GBP/USD
British Construction data was lower than analysts had anticipated but the difference was not substantial and the pair bounced at support, retracing higher.
Technical Outlook
The bounce at 1.4400 should be considered just a retracement, generated by the oversold condition of the Stochastic and Relative Strength Index. We expect downwards movement to resume soon, especially if the barrier at 1.4475 cannot be breached to the upside. The U.S. jobs data will have a strong impact and we believe the technical aspect will be secondary today.
Fundamental Outlook
The final survey in the series of three is released today at 8:30 am GMT: the Services PMI. This survey is derived from the opinions of purchasing managers from the services sector regarding overall business conditions and acts as a leading indicator of economic health. The forecast is 52.5 and under normal circumstances, the Pound is positively affected by higher values.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: “RUBBER BAND” EFFECT IN PLAY, US DOLLAR FIGHTS BACK
EUR/USD
Forex News: Friday’s highlight was of course the release of the Non-Farm Employment Change report that showed only 38K new jobs, while the forecast was 159K. This huge difference weakened the US Dollar and elevated the pair for more than 200 pips.
Technical Outlook
The effects of the NFP release will be seen throughout today’s session but usually a strong move like the one seen Friday is followed by a retracement lower or at least a period of sideways movement. The Relative Strength Index is deep in overbought and the Stochastic will soon follow (this indicator is slower than the RSI and that’s the reason why it is not yet overbought) so we expect a bounce lower once or if 1.1385 is reached. This potential dip should be regarded as a retracement, not a reversal.
Fundamental Outlook
Early at 6:00 am GMT the German Factory Orders come out, showing changes in the value of orders placed with manufacturers. The indicator doesn’t create strong movement usually but as a rule of thumb, higher values than the forecast -0.4% (previous 1.9%) strengthen the Euro.
Later in the day, at 4:30 pm GMT, Fed Chairwoman Janet Yellen will speak at a luncheon in Philadelphia on the topics of monetary policy and economic outlook. As always, caution is recommended during speeches of heads of central banks, because the respective currency can show irregular movement.
GBP/USD
The Pound also benefited from a worse than expected NFP and the pair climbed on the back of a weak Dollar; however, the move up was not as drastic as the one seen on EUR/USD.
Technical Outlook
After breaching 1.4565 the pair retraced lower and is now currently testing the 50 period Exponential Moving Average. This is a clear sign of weakness and shows that even with disappointing U.S. data, the Pound cannot make substantial advances above key levels. If the pair remains below the 50 period EMA and below 1.4525, we expect to see a move closer to 1.4475.
Fundamental Outlook
The economic calendar is blank for the Pound today so the main focus will be on the technical aspect. Keep an eye on Yellen’s speech as this can also affect the pair’s movement.
Forex News: Yesterday was a slow day, without any substantial advances to either side and this was mostly because the pair was in need of a breather after the huge rally seen Friday.
Technical Outlook
The pair moved sideways for most of yesterday but we expect this behavior to change and the upside movement to resume. The greenback is still suffering from the effects of the disappointing NFP report and currently cannot drag the pair lower. However, the Relative Strength Index and Stochastic are overbought and price did not retrace after the massive climb, so we may see a move below 1.1335. If this support holds, we expect price to move above 1.1385.
Fundamental Outlook
The day ahead is slow and the only notable economic indicator is the German Industrial Production, released early at 6:00 am GMT. This indicator tracks changes in the total value of output generated by mines, manufacturers and utilities. The expected change is 0.8% compared to the previous -1.3% and higher values usually strengthen the Euro but the impact is often muted.
GBP/USD
The focus shifted yesterday towards the Pound as Brexit fears escalated. Polls showed that more people favor a separation of the United Kingdom from the European Union and this triggered a drop that erased all of Friday’s gains.
Technical Outlook
The week opened with a gap and usually gaps are closed (meaning that price will move back to where the gap originated) but the time period needed for that cannot be known in advance. Also the pair bounced at 1.4350 support and the US Dollar is weak so it’s very possible to see a move into 1.4475 and the 50 period Exponential Moving Average. However, price direction will continue to be affected by Brexit talks so extra caution is recommended because as we can see, movement is very mixed.
Fundamental Outlook
There are no major economic indicators on the schedule today so price direction will depend on the technical aspect and on the Brexit situation.
FOREX NEWS: EURO PREPARES BREAKOUTS, POUND IN LIMBO AFTER ‘FAT FINGER’ SPECULATION
EUR/USD
Forex News: The pair had another choppy trading session, with price confined between 1.1385 resistance and 1.1335 support; the German Industrial Production numbers matched analysts’ expectations so the impact was minimal.
Technical Outlook
The pair bounced at 1.1385 resistance and now appears to be headed lower, with both the Stochastic and Relative Strength Index favouring such a scenario. Keep in mind that periods of small, ranging movements are often followed by strong breakouts and the bulls have the latest momentum so it’s very possible to see a move above 1.1385.
Fundamental Outlook
The day ahead is very slow for both the Euro and the US Dollar in terms of economic releases so the main focus will be the technical aspect.
GBP/USD
Early yesterday the Pound-Dollar experienced a massive spike up but a clear reason is not yet known. The move is attributed to a so called “fat finger” (human error in introducing the right position size) or a trading algorithm failing to work as intended.
Technical Outlook
It’s a weird time for this pair and extra caution should be used because the combination of Brexit talks and sudden spikes without apparent reason can wipe out stops in an instant. So far the resistance at 1.4650 is still holding but 1.4565 was broken several times; to the downside we have 1.4525 as immediate support, followed by the 50 period Exponential Moving Average. If the latter is touched, we expect a bounce higher and a move above 1.4565, which will open the door for 1.4650 once again.
Fundamental Outlook
At 8:30 am GMT the Pound will be affected by the release of the British Manufacturing Production, which is an indicator that tracks changes in the overall output generated by the manufacturing sector. Since this sector is a key part of the British economy, higher numbers than the forecast 0.1% usually strengthen the Pound.
FOREX NEWS: EURO JITTERY AS ECB’S DRAGHI DUE TO SPEAK IN BRUSSELS
EUR/USD
Forex News: Yesterday the pair finally picked up some speed and we experienced a bullish break of 1.1385. This opens the door for 1.1450 and prepares us for more upside movement.
Technical Outlook
The Relative Strength Index is still overbought and this calls for a move south. Of course, the bulls just managed to break 1.1385 after a period of sideways movement and this means that the next target is the resistance at 1.1450 but once this level is reached, we expect a stronger retracement to the downside, which will probably clear the overbought condition of the oscillator.
Fundamental Outlook
At 7:00 am GMT, ECB President Mario Draghi will speak at the Brussels Economic Forum and this will be the only major event of the day. The speech will have a higher impact if the President will touch on the topic of the financial markets but either way, volatility may rise so, as always during such speeches, caution is advised.
GBP/USD
The Pound continued its jerky movement and created a whipsaw yesterday when the Manufacturing Production was released (forecast 0.0%, actual 2.3%).
Technical Outlook
The move below 1.4525 couldn’t be sustained and the pair found support on the 50 period Exponential Moving Average, bouncing higher after touching it. This shows some bullish pressure but as we can see, part of the move was reversed so the control doesn’t clearly belong to either side. If price stays above 1.4565 we expect it to reach 1.4650 during the days to come, otherwise we will probably see another move into the 50 period EMA.
Fundamental Outlook
The British Goods Trade Balance is released today at 8:30 am GMT and is expected to show a figure of -11.1B (previous -11.2B). This indicator shows the value difference between imported and exported goods and usually a higher number is beneficial for the currency but often the impact is small.
Forex News: Price reversed sharply yesterday, after a brief climb above 1.1385 that couldn’t be sustained. The pair was in need of a deeper retracement and that’s what we are seeing now.
Technical Outlook
The bearish momentum is strong, with full and long candles and both oscillators coming out of overbought. That’s why we believe the move will extend into the 50 period Exponential Moving Average and possibly even below it. If the moving average is broken we expect a move into 1.1240 but we must not forget that the bulls still have underlying strength and price may start to move up once the 50 EMA is touched so look for signs of rejection in that area.
Fundamental Outlook
At 2:00 pm GMT the University of Michigan will release their Consumer Sentiment survey, which asks about 500 consumers to give their opinions on current and future economic conditions. A higher consumer confidence often suggests that consumer spending will pick up in the near future and that’s why numbers above the predicted 94.1 usually strengthen the US Dollar.
GBP/USD
The Pound-Dollar reversed once again yesterday and broke the 50 period Exponential Moving Average to the downside. The pair continues to be driven by uncertainty and movement is choppy.
Technical Outlook
Although the 50 period EMA is broken, price may very well return above it so we cannot treat this as a bearish market. Movement is still jerky and most moves are quickly reversed but as long as price stays below the moving average, we slightly favor the short side for a slide towards 1.4400. If upwards momentum resumes, we expect to see a touch of 1.4565.
Fundamental Outlook
There are no major releases on the Pound’s schedule so we expect the technical aspect and the U.S. survey to determine price direction.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: US DOLLAR GAINS ON THE BACK OF MORE BREXIT DRAMA
EUR/USD
Forex News: The last 2 days of last week belonged to the bears and we saw the US Dollar strengthen Friday even if the University of Michigan Consumer Sentiment survey showed a value close to analysts’ forecast.
Technical Outlook
On a four hour chart the pair has clearly moved below the 50 period Exponential Moving Average, making the short term bias bearish. However, it must be noted that the Relative Strength Index is close to oversold and the Stochastic has already entered that territory, so we may see a move up today. Adding to the probability of this scenario is the fact that 1.1240 is very close so all this may trigger a bullish retracement that will probably find resistance at the 50 EMA.
Fundamental Outlook
The day doesn’t hold any major indicator releases, thus the main focus will be the technical aspect unless unscheduled events take place.
GBP/USD
Polls showed Friday that more citizens are now likely to vote for Britain to leave the European Union and this was the main cause of the huge drop. News about a potential Brexit will likely continue to overshadow economic releases and technical levels.
Technical Outlook
The pair moved through support levels like a hot knife through butter but this doesn’t mean it cannot reverse direction just as quick. The levels to watch are 1.4230 where rejection was seen Friday (long wick in the lower part of the candle) and 1.4320 (1.4350) as potential resistance; the oscillators are oversold and this favours a bounce higher but the technical indicators are secondary if Brexit comes back into focus.
Fundamental Outlook
The Pound’s direction will not be affected by major economic releases and similar to the Euro and US Dollar, price direction will be determined by technical analysis unless we get unexpected Brexit news.
FOREX NEWS: THE VOLATILE PERIOD CONTINUES WITH THE RELEASE OF U.S. RETAIL SALES, BRITISH CPI
EUR/USD
Forex News: Yesterday we had a slow day from an economic perspective as no major indicators were released, so price was influenced mainly by the technical aspect.
Technical Outlook
The pair bounced almost perfectly at 1.1240 support and is now testing the 50 period Exponential Moving Average, trying to break it to the upside. The oscillators are agreeing with a break and if this comes true, we are likely to see a push into the potential resistance at 1.1335. If the bulls don’t manage to break the 50 EMA, the pair is headed towards the zone around 1.1200.
Fundamental Outlook
The U.S. Retail Sales numbers are released today at 12:30 pm GMT, showing changes in the total value of sales made through retail outlets. This type of sales represent the main part of the entire consumer spending, which is the main reason why this indicator has a high impact; values above the forecast 0.4% (previous 1.3%) usually strengthen the US Dollar.
GBP/USD
The pair continued its highly volatile movement characterized by fast whipsaws and showed a strong reversal after initially moving lower.
Technical Outlook
After last week’s big drop, a bullish retracement was a likely scenario but the next move remains uncertain, considering the fundamental environment and the fact that the Brexit referendum is drawing closer. The current move may extend into 1.4350 but there we expect bearish action to resume; if the pair moves quickly below 1.4230, the next target will be represented by the minor support created at 1.4115.
Fundamental Outlook
Important British inflation data is released today at 8:30 am GMT in the form of the Consumer Price Index. Current inflation is considered too low and a higher reading for today’s indicator would bring Pound strength; the forecast is a 0.4% change while the previous was 0.3%.
