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789

FOREX NEWS: EURO POSTS MASSIVE GAINS, MOVES PAST 2016 HIGH, BACKED BY DRAGHI’S COMMENTS

EUR/USD

Forex News: As the market expected, the ECB maintained its interest rate unchanged but during the press conference, ECB President Mario Draghi mentioned that a hike in autumn is possible. The Euro responded positively to the comments and the pair rebounded from session lows, breaking resistance.

Technical Outlook

After completing a retracement that almost touched the 50 period Exponential Moving Average, the pair pushed higher, breaking last year’s high at 1.1616 fuelled by Draghi’s comments. The uptrend is now resumed and the pair is headed for the next resistance located around 1.1700 but it won’t move there in a straight line and pullbacks will most likely occur. For today we expect small bounces to the downside or a ranging session with a bullish bias.

Fundamental Outlook

Today the Euro and the US Dollar have a light economic calendar, without any major news releases, so the deciding factor will be the technical aspect.

GBP/USD

The pair had a mixed trading session yesterday, first breaking below the 50 period Exponential Moving Average and then returning to the line. The British Retail Sales came out slightly above expectations but this only created a brief period of volatility.

Technical Outlook

If the pair will break the 50 period Exponential Moving Average to the upside, the outlook will become bullish once again and we will probably see a break of 1.3030, followed by a move into 1.3100 next week. On the other hand, a bounce lower from the 50 EMA will confirm the initial break and will make 1.2900 the first target.

Fundamental Outlook

The United Kingdom didn’t schedule any major economic releases for the final trading day of the week, so the technical side will prevail.

790

FOREX NEWS: EURO HOLDS ABOVE 2016 HIGHS AHEAD OF MANUFACTURING AND SERVICES DATA

EUR/USD

Forex News: Friday the fundamental scene was calm, without any important economic releases and this translated into a choppy session, mostly controlled by the bulls.

Technical Outlook

Friday’s price action shows that the pair is running out of steam and that it’s preparing for a retracement but we don’t expect to see very strong movement today. It is highly likely for the pair to re-test the recently broken resistance at 1.1616 but it will probably remain in a relatively tight range unless the fundamental side offers some surprises. To the upside, resistance sits at 1.1713, which is a level last reached in August 2015 but we don’t expect a break today.

Fundamental Outlook

The Eurozone Manufacturing and Services Purchasing Managers’ Indexes will be released today at 8:00 am GMT. These are surveys that act as leading indicators of economic health, focused on their respective sectors, so higher than anticipated numbers suggest optimism and usually strengthen the Euro. The forecast is 57.3 for the Manufacturing PMI and 55.5 for the Services PMI.

The US Dollar will be affected today by the Existing Home Sales, scheduled for release at 2:00 pm GMT. The indicator shows the annualized number of houses sold, excluding new construction but the impact is usually low-to-medium; however, numbers above the forecast of 5.59 Million can strengthen the greenback.

GBP/USD

The Cable remained in a range Friday, moving above and below the 50 EMA for almost the entire session. All directional moves to one side were quickly reversed and the pair lacked determination.

Technical Outlook

Friday’s price action doesn’t offer a lot of hints for future direction. Currently the pair is in a consolidation phase below 1.3000 and we can see several candles that tried to close above this resistance but failed and resulted in long upper wicks. This is a sign of rejection, so we can expect to see downside movement if price doesn’t move away from the 50 EMA and above 1.3000 key level.

Fundamental Outlook

The British economic scene is calm today, without any notable releases. The technical aspect will be the main deciding factor for direction.

791

FOREX NEWS: US DOLLAR SHOWS TIMID SIGNS OF RECOVERY. U.S. CONSUMER CONFIDENCE EYED FOR NEXT MOVE

EUR/USD

Forex News: Yesterday’s trading session was controlled by the bears for the most part and the pair retraced lower but without threatening the support at 1.1616. European data missed the market consensus and this contributed to the currency’s weakness.

Technical Outlook

The move down seen yesterday is very normal after a strong move up like the one seen last week and we expect current downside momentum to extend into 1.1616. That’s a place where bullish movement could resume and if this is the case, we expect to see a push into the recently formed resistance around 1.1680 – 1.1685. If this resistance is broken, we expect to see a stronger move down when the pair reaches 1.1713, which is a level last visited in August 2015.

Fundamental Outlook

Today’s highlight is the U.S. Consumer Confidence survey, released at 2:00 pm GMT. The survey is derived from the opinions of about 5,000 households regarding business conditions, job availability and economic conditions overall, and acts as a leading indicator of consumer spending, thus higher numbers usually strengthen the US Dollar. Today’s forecast is a reading of 116.2, lower than the previous 118.9.

GBP/USD

The pair maintained a bullish bias throughout yesterday’s trading session and moved above the key psychological level at 1.3000 but was capped by 1.3030 resistance.

Technical Outlook

The pair is trading above the 50 period Exponential Moving Average and above the important level at 1.3000, without being overbought. All clues point towards an extended move to the north but currently there are signs of rejection around the resistance at 1.3030, so we may see a revisit of 1.3000. Our bias is mostly bearish if resistance cannot be broken with determination.

Fundamental Outlook

Today we don’t have anything major in terms of British economic releases, so the pair’s direction will be decided by technical factors and by the U.S. survey mentioned earlier.

792

FOREX NEWS: VOLATILITY WARNING: FED RATE STATEMENT, BRITISH PRELIMINARY GDP

EUR/USD

Forex News: The US Dollar failed to stage a comeback and yesterday’s trading session was controlled mostly by the Euro bulls. In the afternoon we saw rejection around 1.1713, partly due to better than expected numbers for the U.S. Consumer Confidence survey.

Technical Outlook

After coming within 1 pip of August 2015’s high at 1.1713, the pair started to show rejection and retraced close to the previous high at 1.1685. The Relative Strength Index is close to overbought and is showing bearish divergence (price is making higher highs and the oscillator is making lower highs); on top of that, the last candle shows a long wick, so all these signs point towards a move south. However, it must be noted that an uptrend is still in place and a break of 1.1713 cannot be overruled.

Fundamental Outlook

The FOMC will announce the interest rate (no change expected; currently <1.25%) today at 6:00 pm GMT and will release the Rate Statement, which contains the reasons that determined the rate decision. Usually the rate is priced into the market so it tends to have a muted impact, but the Statement can create strong movement if it contains any hints about future monetary policy.

GBP/USD

The Pound remained above the 50 period Exponential Moving Average and pushed above resistance mostly due to US Dollar weakness early during yesterday. A small recovery was seen later in the afternoon, on the back of positive U.S. data.

Technical Outlook

The pair is trading above the 50 EMA and above 1.3030, which was previously resistance, so the outlook is bullish but as long as price stays between 1.3000 and 1.3100, it can be considered in a range and without clear movement. Today’s direction will be mostly influenced by the fundamental side, as both currencies in the pair will be affected by key releases.

Fundamental Outlook

At 8:30 am GMT we have a very important UK indicator: the Preliminary Gross Domestic Product. This is the main gauge of overall economic performance and the Preliminary is the first in the series of three versions, thus it tends to be the most important. Today’s forecast is a change of 0.3%, while the previous was 0.2%; higher numbers usually strengthen the Pound.

793

FOREX NEWS: US DOLLAR TAKES ANOTHER BLOW FROM THE FOMC RATE STATEMENT

EUR/USD

Forex News: The Fed kept the rate unchanged at <1.25%, as expected but the Rate Statement was interpreted as dovish and the US Dollar weakened at the time of the release as a result.

Technical Outlook

The pair pushed above 1.1685 and approached 1.1713 resistance once again, on the back of a FOMC Rate Statement that was interpreted as dovish by the majority of market participants. However, the US Dollar sell-off is not entirely justified and we may very well see a quick bounce lower, into 1.1616 - 1.1600 area, especially if the pair moves quickly below 1.1685. If 1.1713 is broken to the upside, the pair is in “uncharted territory” because the next notable level is located somewhere around 1.2000 – 1.2050, which is a level last reached in 2012.

Fundamental Outlook

Today’s only notable release is scheduled at 12:30 pm GMT in the form of the U.S. Durable Goods Orders, an indicator that tracks changes in the total value of orders placed for goods with a life expectancy of more than 3 years. A higher change than the forecast 3.5% shows increased economic activity and usually strengthens the US Dollar but if the number comes close to market consensus, the impact is lower.

GBP/USD

The British Gross Domestic Product matched the forecast and the Pound didn’t have a strong reaction to the news but US Dollar weakness took the pair closer to the 1.3100 mark later in the afternoon.

Technical Outlook

The pair is clearly headed towards 1.3100 - 1.3125 resistance and once it gets there, we expect to see some sort of rejection or at least a re-test of the zone from above. As we mentioned a day before, until the resistance at 1.3100 or the support at 1.3000 is broken decisively, we consider the pair in a range, without clear direction.

Fundamental Outlook

There are no major indicators scheduled on the Pound’s economic calendar, so the technical aspect and the U.S. Durable Goods Orders will decide the pair’s direction.

794

FOREX NEWS: ENDING THE WEEK WITH A BANG: GERMAN INFLATION AND U.S. GDP

EUR/USD

Forex News: The Durable Goods Orders posted a much better than anticipated reading yesterday and this was part of the reason why the US Dollar strengthened and took the pair into support. Also, the Euro was overbought and this contributed to the pullback.

Technical Outlook

The pair was overbought for a long time so a retracement was needed but the uptrend remains strong so overall our bias is bullish, anticipating another climb. A good place for the upside movement to resume is the current level at 1.1685 but if this barrier is broken, we expect to see a drop into the 50 period Exponential Moving Average. The fundamental side will also play an important role today.

Fundamental Outlook

There are two important releases today: the first is the German Preliminary Consumer Price Index, scheduled at 12:00 pm GMT and expected to show a change of 0.2%, same as previous. The second indicator is the U.S. Advance version of the Gross Domestic Product, scheduled at 12:30 pm GMT; the expected change is 2.5%, which is a big increase from the previous 1.4%. This version is the most important out of the three (Advance, Preliminary and Final), so its impact tends to be the highest.

GBP/USD

The bulls made another push yesterday but upside momentum finally faded and the US Dollar got a boost from positive economic data, thus the pair dropped later in the day.

Technical Outlook

Yesterday’s price action established 1.3160 as resistance, so this level will act as a target if bullish action resumes. The bearish break of 1.3100 shows that the balance is tilting towards the US Dollar, at least in the short term. Depending on the U.S. GDP reading, we expect to see a drop into the 50 period Exponential Moving Average, but a quick return above 1.3100 will make 1.3160 the first destination.

Fundamental Outlook

Similar to the rest of the week, the Pound has a light day ahead, without anything notable on the economic calendar, so the pair’s direction will be decided by the technical aspect and by the US Gross Domestic Product.

795

FOREX NEWS: EURO ON THE RISE AHEAD OF INFLATION DATA, US DOLLAR LOOKING TO CHICAGO PMI FOR A BOOST

EUR/USD

Forex News: Despite a better than anticipated U.S. Gross Domestic Product, the US Dollar weakened Friday and the pair closed the week above 1.1700. The climb was helped by the lower than expected change in the price of all goods and services included in the GDP, which came below market expectations (GDP Price Index forecast 1.3%, actual 1.0%).

Technical Outlook

The greenback continues to weaken against most of its counterparts and it seems like market participants are looking for the slightest reason to sell it (even a better than expected GDP doesn’t help). For today we expect to see a touch of 1.1775 (last week’s high) but a break or bounce will probably depend on the Euro and US Dollar data released throughout the day. It’s also possible to see a ranging session, especially if the economic data matches expectations.

Fundamental Outlook

At 9:00 am GMT the Euro will be affected by the release of the European Flash Estimate CPI, which is the main gauge of inflation but because other Eurozone member states have already released inflation data, the impact of this indicator is usually medium, not high. The forecast for today is a change of 1.3%, same as previous.

On the US Dollar side we have the Chicago PMI, which is a survey of purchasing managers from the Chicago area that acts as a leading indicator of economic optimism. The expected reading is 60.8 and usually higher numbers strengthen the greenback but the impact is medium-to-low.

GBP/USD

The latest drop was almost completely erased Friday and the bulls closed the week above the key level at 1.3100. Later in the day we saw a move lower but this could be attributed to end-of-week profit taking.

Technical Outlook

The pair is headed for the resistance at 1.3160 and a break would suggest trend resumption, with higher prices to follow. However, if this barrier cannot be broken, we expect to see a drop into 1.3100 and possibly the start of a ranging period. Mondays are usually slow days and the oscillators are lacking momentum, thus adding to the possibility of a trading session confined in a relatively tight range.

Fundamental Outlook

The Pound has a light economic day ahead, so the U.S. events and the technical aspect will be the main drivers for today’s price action.

796

FOREX NEWS: UPTRENDS STILL IN PLACE BUT OVERBOUGHT LEVELS CALL FOR PULLBACKS

EUR/USD

Forex News: Most of yesterday’s trading session was slow and ranging, as it was somewhat anticipated; the European Consumer Price Index matched analysts’ predictions, so the impact was muted and volatility remained low at the time of release.

Technical Outlook

The pair came in close vicinity of 1.1713 and found new buyers there, so yesterday’s strongest move was bullish. In the first part of today’s session we expect to see an encounter with the resistance 1.1775 but if this level cannot be broken decisively, the sellers will probably take over and take the pair into 1.1713 and possibly into the 50 period Exponential Moving Average over the next days. Keep in mind that the pair is overbought on a Daily and even a Weekly chart and this suggests that a stronger pullback will soon follow.

Fundamental Outlook

The Euro has a non-eventful day ahead and on the US Dollar side, the U.S. Manufacturing PMI will be the main event. This is a survey of purchasing managers from the Manufacturing sector that tries to gauge their opinions regarding business conditions and overall economic situation in the said sector. The time of release is 2:00 pm GMT, the forecast is 56.4 and a higher than anticipated number shows optimism, usually strengthening the US Dollar.

GBP/USD

The pair didn’t reach 1.3160 resistance yesterday and instead returned lower to test support where it bounced slightly higher. Overall the session was slow and without a clear bias.

Technical Outlook

We will probably see more of this ranging movement until 1.3100 or 1.3160 is broken decisively. For the moment we expect to see an encounter with 1.3160, considering the nice bounce at 1.3100 support, which indicates bullish pressure. If that level is broken, the next barrier is located at 1.3200 (psychological resistance), followed by 1.3250 (technical resistance).

Fundamental Outlook

The Pound will also be affected by manufacturing data today, in the form of the British Manufacturing PMI. Similar to the U.S. indicator with the same name, this one can strengthen the currency if the actual number comes above forecast, which for today is 54.4.

797

FOREX NEWS: ADP NON-FARM EMPLOYMENT CHANGE – A FIRST LOOK AT U.S. JOBS SITUATION

EUR/USD

Forex News: US Dollar weakness continued and the pair broke decisively above 1.1775, reaching highs last seen in 2015. The US Manufacturing PMI came very close to expectations, thus the impact was low.

Technical Outlook

The recent push above 1.1775 opens the door for a move into 1.1875, which is a level that last acted as support in 2010, when it rejected a strong drop. However, the level was reached more recently, in 2015 but the pair just moved through it without any type of bounce. If this level is reached today, we expect to see rejection there, mostly because the pair is overextended and the Relative Strength Index will probably become overbought by then. Retracements are very possible even before the pair reaches 1.1875.

Fundamental Outlook

Today at 12:15 pm GMT we take a first look at U.S. jobs situation with the release of the ADP Non-Farm Employment Change, which is a report that tracks changes in the total number of employed people, excluding the Government and the farming industry. The forecast is 187K and usually a higher number strengthens the US Dollar but the impact is lower than the Government issued NFP which comes out Friday.

GBP/USD

British Manufacturing PMI fuelled the Pound and took the pair close to the resistance around 1.3250, giving us another session controlled by the bulls.

Technical Outlook

Although the pair is in an uptrend, the resistance at 1.3250 is likely to trigger a pullback lower. The relative Strength Index has been long overbought and is constantly showing bearish divergence (price is making higher highs while the oscillator is making lower highs or double tops). If the pair retraces lower, it may find support around 1.3160 but a lot of today’s movement will depend on the economic data.

Fundamental Outlook

The British Construction PMI will be released today at 8:30 am GMT, showing the opinions of purchasing managers about business and economic conditions in the Construction sector. This is a leading indicator of economic health, but its impact is high only if the actual number differs strongly from expectations. Today’s forecast is 54.2 and a higher number is usually beneficial for the Pound. The pair will also be directly affected by the ADP Non-Farm Employment Change.

798

FOREX NEWS: ALL EYES ON THE POUND: BOE INFLATION REPORT, INTEREST RATE AND GOVERNOR CARNEY’S PRESS CONFERENCE

EUR/USD

Forex News: The pair climbed after the worse than expected ADP Non-Farm Employment Change and spiked very close to 1.1875. However, most of the Dollar losses were erased soon after and now it seems like bullish pressure is fading.

Technical Outlook

Over the last couple of days, price action slowed down considerably and long wicks started to appear. This is a sign that the uptrend is wavering and that the pair is likely to move lower for the end of the week. The main levels to watch are 1.1875 as resistance and 1.1775 as support, followed by the 50 period Exponential Moving Average. Given the latest price action, we expect to see a touch of support but keep in mind that the main trend is bullish.

Fundamental Outlook

The Euro has a light day ahead and for the US Dollar the only notable release is the Non-Manufacturing PMI (also called the Services PMI), scheduled at 2:00 pm GMT. The expected number is 56.9 and usually higher numbers strengthen the USD but the impact is medium, not high.

GBP/USD

The pair had similar behaviour to the EUR/USD, first climbing very close to resistance and then erasing most of the losses. Overall yesterday’s session was choppy and without clear direction.

Technical Outlook

The Pound bulls have tried twice to take the pair above the resistance at 1.3250 but the result wasn’t positive. Now the candles have long wicks, showing rejection and the Relative Strength Index is bouncing at its 70 level, suggesting an overbought condition. Today’s direction will depend mostly on the fundamental side but strictly from a technical standpoint, we expect bearish pullbacks.

Fundamental Outlook

At 11:00 am GMT the Bank of England will release their Inflation Report, will announce the Interest Rate (no change expected) and will release the Monetary Policy Summary. Half an hour later, BOE Governor Mark Carney will hold a press conference discussing the Inflation Report. This cluster of events will most likely trigger increased volatility, so caution is recommended until things calm down and a clear direction emerges.

799

FOREX NEWS: BIG MOVEMENT FOR THE END OF THE WEEK: NON-FARM PAYROLLS TAKE CENTER STAGE

EUR/USD

Forex News: Yesterday’s trading session was rather choppy and price retraced after a spike above 1.1875 resistance. The U.S. Non-Manufacturing PMI showed a disappointing figure and this further weakened the US Dollar, bringing the pair close to resistance.

Technical Outlook

Currently the pair is testing 1.1875 resistance for the second time is a short while, with the Relative Strength Index showing an overbought condition. A deeper pullback is long overdue and the uptrend is overextended so we may see a move into 1.1775 and possibly into the 50 period Exponential Moving Average if 1.1885 barrier is not broken decisively. However, the main catalyst for today’s price action will be the U.S. jobs data and before the release we may experience choppy movement.

Fundamental Outlook

All eyes will be on the US Dollar today for the release of the U.S. Non-Farm Employment Change (also known as the Non-Farm Payrolls). This report is widely regarded as the most important jobs data for the United States and its release triggers strong movement almost all the time. More employed people means that consumer spending is likely to increase in the near future and this in turn strengthens the US Dollar. The time of release is 12:30 pm GMT and the expected change is 181K (previous 222K).

GBP/USD

The Bank of England kept the rate unchanged as expected but lowered inflation expectations and Governor Mark Carney was dovish during the press conference that followed. These were the main reasons why the pair posted a strongly bearish session yesterday.

Technical Outlook

The pair dropped into the 50 period Exponential Moving Average but the current candle shows a long wick in its lower part, suggesting rejection. If price remains below the 50 EMA and below 1.3160, we can expect a touch of 1.3100, but the technical aspect will be secondary to the U.S. employment data released today.

Fundamental Outlook

There are no major events on the Pound’s calendar for today, so the pair’s direction will be mainly influenced by the U.S. Non-Farm Payrolls and to a lesser extent, by the technical aspect.

800

FOREX NEWS: BEARISH MOMENTUM ON THE RISE, US DOLLAR BOOSTED BY THE NON-FARM PAYROLLS

EUR/USD

Forex News: Friday’s highlight was without a doubt the release of the U.S. Non-Farm Payrolls report, which posted a number of 209K new jobs, better than the anticipated 182K. This gave a breath of fresh air to the US Dollar and created a strongly bearish session.

Technical Outlook

After failing to break 1.1875 several times, the pair dropped below the 50 period Exponential Moving Average on the back of positive U.S. employment data. This is a much needed pullback as the Relative Strength Index was overbought on a Daily chart and is still overbought on a Weekly chart, so we expect the current downside momentum to extend throughout today’s session and the pair to remain below the 50 EMA.

Fundamental Outlook

The Sentix Investor Confidence is today’s only notable release, albeit it’s a low impact indicator. This is a survey of about 2,800 investors, which tries to gauge the respondents’ opinion regarding a 6-month outlook for the Eurozone economy. Usually, a higher than anticipated number suggests optimism and strengthens the Euro, but as mentioned before, the impact is limited. The time of release is 8:30 am GMT and the expected number is 27.8.

GBP/USD

Friday the pair continued the momentum started a day before and dropped about 130 pips on the back of US Dollar strength generated by the positive NFP reading.

Technical Outlook

The latest impulse is definitely bearish but price has reached support at 1.3030 and the Relative Strength Index has descended into its 30 level, which suggests that the pair is becoming oversold. A more important level is located at 1.3000, where we expect to see some sort of bounce higher; a break of this level will open the door for 1.2930 but we don’t expect that mark to be reached today. To the upside, the first barrier is located at 1.3100.

Fundamental Outlook

The United Kingdom didn’t schedule important economic releases for today, so the technical aspect will be the deciding factor for the pair’s direction.

801

FOREX NEWS: SUPPORT THREATENED AS THE US DOLLAR GAINS SOME TRACTION

EUR/USD

Forex News: Yesterday price action slowed down but overall the pair had a slightly bullish bias, climbing above 1.1775 resistance. The economic scene was calm, without a major impact on direction.

Technical Outlook

Today we expect to see a continuation of the bearish momentum started Friday by the better than expected Non-Farm Payrolls report and we consider yesterday’s price action just a normal retracement after a strong move. If the pair descends below 1.1775, the first target will become 1.1713 – 1.1700 but it must be noted that an uptrend is still in place, so if 1.1775 rejects price, we may see a move closer to 1.1875.

Fundamental Outlook

The day ahead is light in terms of economic releases, with the only notable indicator being the U.S. JOLTS Job Openings, scheduled at 2:00 pm GMT. As the name suggests, this report shows the number of open jobs, excluding the farming sector but its impact is usually low-to-medium; however, a higher number shows increased economic activity and strengthens the US Dollar. Today’s forecast is 5.66 Million, very similar to the previous 5.67 Million.

GBP/USD

After a small bounce, the pair moved lower and approached the psychological level at 1.3000. The trading session was slower but it looks like the US Dollar is winning the short term battle.

Technical Outlook

For today we expect to see a touch of the key support located at 1.3000 but after that, the chances of a move up will increase because the Relative Strength Index is approaching its 30 level for the second time in a very short while. A break of 1.3000 would mean a great victory for the bears but even if it happens today, the extent of the move down should be limited and followed by a retracement that will clear the oversold condition of the RSI.

Fundamental Outlook

We don’t have any important economic indicators on the Pound’s calendar, so the pair’s direction will be mainly decided by the technical aspect and the U.S. data.

802

FOREX NEWS: PAIRS ROLLING DOWNHILL, US DOLLAR BACK IN THE DRIVER’S SEAT

EUR/USD

Forex News: Price action was very slow until the release of the U.S. JOLTS Job Openings that posted a number of 6.16 Million, better than the anticipated 5.74 Million. This brought a wave of positive momentum to the US Dollar and the pair descended below support.

Technical Outlook

The pair has breached the support at 1.1775 on the back of positive U.S. economic data and it appears like the US Dollar is gaining momentum. If the bears can keep price below the 50 period Exponential Moving Average and below 1.1775, we expect to see a move into 1.1713 and possibly 1.1700. Our bias is bearish but we acknowledge the fact that an uptrend is still in place and this means that a bounce at the next support is very possible.

Fundamental Outlook

We have yet another slow economic day ahead, with the only notable indicator being the U.S. Preliminary Unit Labor Costs, scheduled for release at 12:30 pm GMT. The indicator shows the annualized change in the price paid by businesses for labor, excluding the farming sector. It has inflationary implications and usually a higher than expected value can strengthen the US Dollar but the impact is limited, especially if the actual number comes close or matches analysts’ forecast, which for today is a change of 1.1%.

GBP/USD

Bearish momentum continued throughout yesterday’s trading session, mostly fuelled by better than expected U.S. economic data. The key psychological level at 1.3000 was broken decisively and this is likely to trigger additional downside movement.

Technical Outlook

The pair is under heavy selling pressure and the break of the support at 1.3000 suggests that we will soon see a touch of 1.2930. However, it must be noted that the Relative Strength Index is entering oversold for the third time in a short period and this is an early warning that a bounce higher will soon follow. A good place for this bounce is 1.2930 but if price turns up before that, we expect 1.3000 to provide resistance.

Fundamental Outlook

The United Kingdom didn’t schedule any economic releases for today, thus price direction will be decided by the technical aspect and the U.S. Labor Costs mentioned earlier.

803

FOREX NEWS: POLITICAL TENSIONS ON THE RISE. IRREGULAR PRICE ACTION EXPECTED

EUR/USD

Forex News: The pair had a mixed trading session yesterday, fist descending below the 1.1700 mark and then climbing above the level. Political tensions between the United States and North Korea contributed to the choppy movement.

Technical Outlook

As long as the pair is trading below the 50 period Exponential Moving Average and below the resistance at 1.1775, our short-to-medium term bias is bearish, anticipating another move below 1.1713 – 1.1700. Over the last months the US Dollar lost the battle with the Euro, so it’s clear that underlying bullish pressure still exists and now the latest candles show rejection, thus increasing the chances of a move up. We recommend caution because the US Dollar may be affected by surprise comments coming from American and/or North Korean politicians.

Fundamental Outlook

At 12:30 pm GMT the United States Producer Price Index comes out, showing changes in the price that producers charge for their goods. It is considered a high-impact indicator, with inflationary implications because eventually a higher producer price translates into a higher consumer price. The expected change is 0.1% and usually a higher than anticipated value strengthens the greenback.

GBP/USD

The US Dollar gave back some of the gains yesterday, mostly due to disappointing economic data, but the pair found resistance at 1.3000 and bounced lower later in the afternoon.

Technical Outlook

The oversold condition of the Relative Strength Index was an early warning that a retracement will follow and this happened yesterday. The move up found good resistance at 1.3000 where it bounced lower, so we can expect this level to play an important role for future price action. Today’s direction will be mostly decided by the fundamental side but our bias is bearish as long as price stays below 1.3000. Keep in mind that the US Dollar may be affected by the political environment and by tensions between the U.S. and North Korea.

Fundamental Outlook

The Pound had a slow economic week so far and we can say that today is the busiest day of the week, with the British Manufacturing Production released at 8:30 am GMT. The indicator measures the change in the total value of goods produced by the manufacturing sector and usually has a high impact on the currency, with better than expected numbers strengthening it. Today’s forecast is a change of 0.0%, while the previous was -0.2%.

804

FOREX NEWS: U.S. CONSUMER PRICE INDEX: THE WEEK’S FINAL MARKET MOVER

EUR/USD

Forex News: Yesterday’s session was characterized by bounces at support and resistance, without a clear bias. The U.S. Producer Price Index missed expectations and this weakened the US Dollar in the afternoon.

Technical Outlook

It looks like the zone between 1.1700 and 1.1713 acts as good support because lately we’ve seen two failed attempts to move bellow it. Also, the pair found solid resistance at 1.1775 and the Moving Average, so the bias is neutral until a clear break of either support or resistance. The U.S. inflation data will play an important role for today’s direction.

Fundamental Outlook

A very important economic indicator is released today at 12:30 pm GMT: the U.S. Consumer Price Index, which is one of the main gauges of inflation and measures changes in the price that consumers pay for the goods and services they purchase.

Today’s forecast is a change of 0.2% compared to the previous 0.0% and usually a higher change strengthens the US Dollar. Keep an eye on the CORE version of the CPI (excludes food and energy from calculation), released at the same time and expected to show a change of 0.2% from the previous 0.1%.

GBP/USD

An initial drop was reversed yesterday by the worse than anticipated American PPI and afterwards, volatility dimmed and price remained close to 1.3000. Neither side was in clear control but now it seems like the pair has found good support at 1.2950.

Technical Outlook

During the last few days the pair has bounced twice at 1.2950 and the Relative Strength Index is hovering near the oversold level. These are signs that the bearish momentum is fading and that the buyers are likely to step in sooner rather than later. If 1.3000 can be clearly broken, we expect a move into the 50 period Exponential Moving Average but a lot will depend on the value posted by the U.S. Consumer Price Index.

Fundamental Outlook

The Pound has a lacklustre fundamental environment today, without major economic releases, thus the U.S. CPI and the technical aspect will decide the pair’s direction.

805

FOREX NEWS: LACKLUSTER ECONOMIC SCENE CALLS FOR RANGING PRICE ACTION

EUR/USD

Forex News: Friday’s price action was controlled by the bulls, mostly because the US Dollar was hit by worse than anticipated Consumer Price Index: actual 0.1%, forecast 0.2%. The CORE version of the indicator also disappointed (actual 0.1%, forecast 0.2%).

Technical Outlook

The US Dollar weakness seen Friday took the pair above 1.1775 resistance and above the 50 period Exponential Moving Average, making the short term bias bullish. However, today we expect to see a ranging session, capped by 1.1875 and by the 50 EMA, mostly because the economic scene is quiet and Mondays are usually slow days. The last candles also show long wicks in the upper side, which is a sign of rejection and possibly an indication that price will return to retest 1.1775.

Fundamental Outlook

Both the Euro and the US Dollar have an uneventful day today, without important economic releases, so the pair’s direction will be decided by the technical aspect.

GBP/USD

After several failed attempts to break the support at 1.2950, Friday the pair started to move north and reached the resistance at 1.3030, mostly fuelled by worse than expected U.S. inflation data.

Technical Outlook

The support at 1.2950 rejected price several times so it will play an important role in future price action. Another important level is 1.3030, which acted as resistance Friday and today we will probably see another encounter with it. The way price behaves here will decide the next short term direction: a break of 1.3030 and the 50 period EMA will make 1.3100 the first target, while a bounce will take the pair back towards 1.2950. However, we don’t expect these targets to be reached today, mainly due to the lack of economic indicators.

Fundamental Outlook

The United Kingdom didn’t schedule any economic releases for today, similar to the rest of Europe and the United States.

806

FOREX NEWS: U.S. RETAIL SALES, BRITISH INFLATION: ALL THE INGREDIENTS FOR WILD SWINGS

EUR/USD

Forex News: Yesterday the control belonged to the bears mostly, and the pair returned to re-test 1.1775. Overall movement was slow, mostly due to a lacklustre economic scene.

Technical Outlook

Price action has created a minor resistance around 1.1840, so if the pair bounces at the current support, that level will become the first target for today. The 50 period Exponential Moving Average is flat, signalling that the pair may be entering a ranging period but the Stochastic and Relative Strength Index show bearish momentum and this suggests that a break of 1.1775 and the 50 EMA will bring the pair down towards 1.1713.

Fundamental Outlook

French and Italian banks will be closed today in observance of Assumption Day, so we can expect a choppy European session. On the US Dollar side we have a very important release: the Retail Sales, scheduled at 12:30 pm GMT. The indicator tracks changes in the total value of sales made through retail outlets and usually has a high impact on the currency because retail sales represent the majority of consumer spending. The anticipated change is 0.4%, while the previous was -0.2%.

GBP/USD

The Dollar showed some strength against the Pound and took the pair towards support after a bounce at 1.3030 resistance. Overall yesterday’s session was bearish but the pair is still inside a range.

Technical Outlook

Lately the pair moves above and below the psychological level at 1.3000 and is trapped inside the horizontal channel created by 1.3030 and 1.2950, so the short term bias doesn’t clearly belong to either side. A break of support will send the pair into 1.2930, followed by 1.2900 but a lot will depend on the US and UK data released throughout the day.

Fundamental Outlook

At 8:30 am GMT, British inflation data comes out in the form of the Consumer Price Index. The indicator shows changes in the price paid by consumers for the goods and services they purchase and usually has a high impact because inflation levels are closely watched by the central bank when deciding the next rate hike. Today’s forecast is 2.7% while the previous was 2.6%.

807

FOREX NEWS: US DOLLAR BOOSTED BY RETAIL SALES. KEY SUPPORT THREATENED

EUR/USD

Forex News: The U.S. Retail Sales posted a change of 0.6%, better than the anticipated 0.3%, while the CORE version posted a 0.5% change (anticipated 0.3%). This strengthened the US Dollar throughout yesterday’s trading session and the pair broke support.

Technical Outlook

The uptrend showed signs of weakness when it failed to make another higher high and instead printed a lower high at 1.1840. This fact combined with yesterday’s break of 1.1713, suggests that the pair might be entering a bearish phase (not necessarily a downtrend) and makes us anticipate a touch of 1.1650 in the near future. Keep in mind that the last candle on the chart above shows a long wick, which is a sign of rejection and the Relative Strength Index is approaching oversold, so a move to the upside is not out of the question.

Fundamental Outlook

At 9:00 am GMT we take a look at the state of Eurozone’s economy with the release of the Flash version of the Gross Domestic Product. This is the second version in a series of three, so the impact is medium, but it shouldn’t be overlooked. The forecast is a change of 0.6% and usually a higher value strengthens the currency, showing a thriving economy.

On the US Dollar side we have the FOMC Meeting Minutes, scheduled at 6:00 pm GMT. The document contains details of the latest FOMC meeting, but also insights into the reasons that determined the latest rate decision. Sometimes the document also contains hints about future rate changes, and that’s when the impact is the highest.

GBP/USD

Yesterday the British inflation numbers missed the market consensus of 2.7%, posting a reading of 2.6%. This fact combined with US Dollar strength generated by the U.S. Retail Sales, triggered a strong drop into key support.

Technical Outlook

After the break of the horizontal channel formed by 1.3030 resistance and 1.2950 support, the pair continued to move strongly south, reaching the key support at 1.2850. We expect to see a bounce/retracement around this area considering that the Relative Strength Index is already oversold and that price travelled a long distance. The bias is bearish but the sellers are facing an important support at 1.2770 if 1.2850 is broken.

Fundamental Outlook

At 8:30 am GMT the British Average Earnings Index is released, showing the changes in the price paid by businesses for labor. The indicator has inflationary implications because if businesses pay more, they will probably charge more for their goods and services to cover the cost of labor. The forecast is 1.8% and usually a higher value strengthens the Pound.

808

FOREX NEWS: US DOLLAR WEAKENS ACROSS THE BOARD AFTER FOMC MINUTES. RESISTANCE STILL STANDS

EUR/USD

Forex News: The pair dropped below support but price action was irregular and characterized by quick reversals in the first part of the day. The FOMC Minutes didn’t show any major surprises but the US Dollar weakened and the pair climbed into the 50 period Exponential Moving Average.

Technical Outlook

Yesterday’s climb took the pair into a confluence zone created by the 50 period EMA and 1.1775; this resistance will be tough to break but if the bulls can take price above it, this will show US Dollar weakness and will possibly trigger a move into 1.1840. On the other hand, a bounce from the current zone will show that the move up was just an impulsive market reaction and will make 1.1713 the immediate target, followed by 1.1650.

Fundamental Outlook

At 9:00 am GMT the Final version of the European Consumer Price Index is released, showing changes in the price that consumers pay for the goods and services they purchase. The CPI is the main gauge of inflation and a higher number usually strengthens the currency but the Final version tends to be the least important. Today’s forecast is a change of 1.3%, same as previous.

Later in the day the U.S. Industrial Production is released, showing changes in the value of output generated by mines, utilities and manufacturers. The impact of the indicator is medium, with higher numbers than the forecast 0.3%, strengthening the US Dollar.

GBP/USD

The pair had a choppy session ahead of the FOMC Minutes release, hovering close to 1.2850 support after a bounce at resistance. The Dollar weakened across the board when the Minutes were released but resistance was not broken.

Technical Outlook

It is clear now that 1.2850 is strong support and this fact combined with the oversold condition of the Relative Strength Index and the FOMC Minutes triggered a jump higher. However, this is just noise until a key level is broken (in this case, 1.2900). As long as price remains below the mentioned resistance, our bias is bearish, anticipating a break of 1.2850.

Fundamental Outlook

The Pound will be affected today by the release of the British Retail Sales, scheduled at 8:30 am GMT. The indicator shows changes in the total value of sales made through retail outlets and generally has a high impact. Today’s expected value is 0.2% and numbers above that usually strengthen the currency.