EUR/USD
Forex News: Although the Unemployment Claims came out with a value close to analysts’ expectations, the US Dollar strengthened against the euro and the pair moved south for the most part of the day. Support was breached and the bears are in control of short term direction.
Technical Outlook
The support at 1.0720 was surpassed during yesterday’s drop and we expect price action to remain bearish throughout the day. As long as the pair remains below 1.0720, the first target is represented by 1.0500 although such a strong move might be too much for a single day. On a four hour chart both oscillators show oversold conditions and this means that we might see bullish moves in the form of retracements.
Fundamental Outlook
The fundamental scene is slow today for both the euro and the US Dollar so price movement will be mainly affected by technical factors.
GBP/USD
As expected the Bank of England didn’t modify the interest rate so the event didn’t generate strong moves but US Dollar strength took the pair lower.
Technical Outlook
Price moved below 1.4830 and then re-tested it from below successfully, a fact which shows that we are dealing with a true break of support. The short term bias remains negative and we expect an encounter with 1.4710 followed by the low at 1.4635. The oscillators don’t show an extreme oversold condition so there is still room for price to move south but some pullbacks are not out of the question.
Fundamental Outlook
The British Manufacturing Production numbers are released today at 8:30 am GMT with an expected change of 0.4% compared with last month’s -0.5%. Such a change would most likely strengthen the Pound.
At 2:00 am GMT an estimate of the British Gross Domestic Product is released, offering hints about the health of the economy. The previous estimate was 0.6% and higher values are seen as bullish for the Pound.
FOREX NEWS: PRICE VOLATILITY SUFFERS FROM A LACKLUSTER FUNDAMENTAL ENVIRONMENT
EUR/USD
Forex News: Friday the bears solidified their control and managed to take price significantly lower although no major economic indicators were released.
Technical Outlook
The current drop seems overextended because price traveled a big distance in a short while. Although on the higher time frames the picture is bearish, we expect small bullish retracements today, considering the oversold condition indicated by the Relative Strength Index and by the Stochastic. Important support is located at 1.0500 and we consider this level to be the pair’s next destination.
Fundamental Outlook
Today price action will be mostly driven by technical factors because no important economic indicators are released by either Europe or the United States.
GBP/USD
The important support at 1.4635 was breached Friday after a successful re-test of the previously broken support (1.4710). The British Manufacturing Production met analysts’ consensus and the release didn’t create strong market movement.
Technical Outlook
After breaching the zone around 1.4635 price returned above it but still remained close to it. If the current bullish move turns out to be a successful re-test of the broken support, we will most likely see further downside movement but both oscillators spent a long time in oversold territory and this increases the chances of a stronger move to the upside. A decisive break of 1.4635 would be a major victory for the bears and would expose the next support, located around 1.4350.
Fundamental Outlook
Similar to the Euro and the Dollar, the Pound has a slow day from a fundamental perspective because no major indicators are released. This might generate a ranging day with choppy price action.
FOREX NEWS: AMERICAN RETAIL SALES – A STEP CLOSER TO A RATE HIKE?
EUR/USD
Forex News: Although the fundamental scene was pretty calm yesterday, the pair had an active session and the greenback continued to strengthen. Price remained below 1.0720 and even threatened the important support at 1.0500.
Technical Outlook
The current run is likely to continue until the key level at 1.0500 is touched but it is important to note that both the Stochastic and the Relative Strength Index are oversold even on a four hour chart. It is true that this doesn’t mean that a price climb is certain but it is a bullish sign or at least a hint that a retracement might come before 1.0500 is broken. The overall picture remains bearish, with a strong dollar and a downwards slope of the 50 period Exponential Moving Average.
Fundamental Outlook
The U.S. Retail Sales are the day’s most important release. Scheduled at 12:30 pm GMT and expected to change 1.1% compared with last month’s -0.6%, sales made at retail stores can strongly affect the US Dollar because they represent the major part of overall consumer spending. A higher than anticipated value is considered bullish for the greenback.
GBP/USD
The pair had mixed direction yesterday and we saw price return above 1.4635 soon after a bearish move below this level.
Technical Outlook
Yesterday’s climb took price into the 50 period Exponential Moving Average which is angled downwards and is providing good resistance. If this dynamic form of resistance is surpassed today, we expect a touch of 1.4710 but otherwise a move below 1.4635 is next. Overall the picture remains bearish and all moves north should be treated as retracements in a downtrend.
Fundamental Outlook
British inflation data is released today at 8:30 am GMT in the form of the Consumer Price Index. The expected value is the same as the previous: 0.0%. However, a higher percent would most likely strengthen the Pound, taking the pair higher.
FOREX NEWS: EUROPEAN CENTRAL BANK TO REVEAL MONETARY POLICY DIRECTION
EUR/USD
Forex News: American retail sales data disappointed yesterday and as a result the US Dollar weakened significantly. The pair climbed at the time of the release and came in close vicinity of resistance.
Technical Outlook
Price moved upwards and is now approaching the 50 period Exponential Moving Average on a four hour chart as well as the level at 1.0720. This confluence zone created by the EMA and horizontal resistance will be tough to break by the bulls but would be a show of strength if they manage to surpass it. Both oscillators are bullish without being overbought but the overall picture remains bearish.
Fundamental Outlook
Today is an important day for the euro because the European Central Bank will announce the interest rate and ECB President Mario Draghi will hold a Press Conference which is likely to trigger strong euro movement. The rate is not expected to change from the current 0.05% but during the Press Conference journalists will ask questions which are likely to uncover hints about future monetary policy in the Eurozone. The rate announcement is scheduled at 11:45 am GMT and the Press Conference follows 45 minutes later at 12:30 pm GMT.
GBP/USD
The British Consumer Price Index posted the anticipated figure and the release went mostly unnoticed. However the greenback suffered from poor retail sales data and the pair climbed above resistance.
Technical Outlook
Considering the latest climb, the pair is likely to touch 1.4830 again. A bullish break of this level followed by a successful re-test would shift the balance in favor of the buyers but as long as the pair remains below the mentioned level, the medium term bias is bearish. The Relative Strength Index surpassed its 70 level indicating that further bullish movement will be made difficult by an overbought condition.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for today thus the movement of the pair will be mainly affected by the technical side.
FOREX NEWS: BULLS STRUGGLE TO ADVANCE, SELLING PRESSURE STILL PRESENT
EUR/USD
Forex News: Yesterday the pair remained below the 50 period exponential Moving Average and below resistance. As expected the European Central Bank kept the interest rate at record lows (0.05%) but the Press Conference created mixed movement on euro pairs.
Technical Outlook
The fact that yesterday the pair didn’t threaten 1.0720 resistance and remained below the 50 period Exponential Moving Average might be a sign that the bulls are running out of steam already. The Stochastic on a four hour chart is crossing downwards, indicating bearish pressure so the door for 1.0500 is open once again. As long as the Moving Average is pointing down and price is below it, our bias remains bearish.
Fundamental Outlook
At 12:30 pm GMT the U.S. Building Permits are released; this is a gauge of construction activity and higher numbers than the anticipated 1.08M are usually beneficial for the US Dollar. Later in the day, at 2:00 pm GMT the Philly Fed Manufacturing Index is released and expected to post an increase to 6.5 from the previous 5.0. The indicator offers insights into the state of the manufacturing sector and higher numbers strengthen the greenback.
GBP/USD
Yesterday the pair dropped to touch support but bounced higher almost immediately. Overall the day had mixed and somewhat choppy price action.
Technical Outlook
The horizontal support at 1.4710 combined with dynamic support represented by the 50 period Exponential Moving Average proved too strong for the bears to break. The next destination seems to be 1.4830 unless price moves very quickly below 1.4710. A move above 1.4830 followed by a successful re-test would shift the short term balance in favor of the bulls.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases but today is the first day of the G20 Meetings and British officials will participate. The effect of the G20 meetings might extend to other pairs as well.
FOREX NEWS: AMERICAN INFLATION DATA TO “MAKE OR BREAK” THE US DOLLAR TREND
EUR/USD
Forex News: U.S. economic data released yesterday was mostly disappointing and this fact, combined with technical reasons, generated bullish price action. Better than expected Philadelphia Manufacturing data restored some dollar strength and negated a break of 1.0720 resistance.
Technical Outlook
Although price moved above 1.0720 yesterday, the bulls didn’t manage to capitalize on the break and price soon returned below resistance. This shows underlying selling pressure and makes us believe that bearish price action will resume if the 50 period Exponential Moving Average on a four hour chart will be broken to the downside. A lot will depend on the U.S. inflation data released today.
Fundamental Outlook
Today’s headline is the release of the U.S. Consumer Price Index scheduled at 12:30 pm GMT. This is a very important gauge of inflation and plays a vital role in Fed’s rate decision. The expected change is 0.2%, same as last month but usually higher numbers are beneficial for the greenback.
GBP/USD
Yesterday the pair moved above key resistance and continued to move north for the better part of the day. U.S. economic data disappointed and this contributed to the climb.
Technical Outlook
Price moved above 1.4830 and then successfully re-tested it from above, confirming the break. This makes 1.4980 the next important level but the Relative Strength Index warns about an overbought condition of the market so we expect a bearish move even if 1.4980 will be touched afterwards. It’s a busy day for both the Pound and the greenback so the technical aspect will be somewhat secondary.
Fundamental Outlook
The British Claimant Count Change is released at 8:30 am GMT, showing the change in the number of people who asked for unemployment related social aid. A lower number than the forecast -29.0K is considered beneficial for the Pound. Later in the day, at 2:00 pm GMT the University of Michigan will release a Consumer Sentiment survey which is expected to increase to 93.8 from the previous 93.0. Since consumer sentiment is tightly correlated with consumer spending, a higher number has the potential to strengthen the US Dollar.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: TIGHT RANGE ON THE BACK OF A LACKLUSTER FUNDAMENTAL SCENE
EUR/USD
Forex News: Friday the pair remained above the 50 period Exponential Moving Average but movement was choppy and no substantial advances were made. U.S. data was slightly better than analysts expected and this generated some selling pressure in the second part of the session.
Technical Outlook
The pair is above the Moving Average on a four hour chart and above 1.0720 which is now support. The bullish movement is likely to extend into 1.0900 resistance but the Relative Strength Index and the Stochastic are approaching overbought and this suggests that price will bounce lower if resistance is touched. A move below 1.0720 would open the door for a touch of 1.0500 key support during the days to come.
Fundamental Outlook
The day lacks major news releases so the focus will be on the technical aspect. Ranging price action is possible because usually Mondays are slow if the fundamental scene is calm.
GBP/USD
Price climbed smoothly Friday although British unemployment data was worse than expected. However the day finished on a bearish note, with price traveling back below 1.4980.
Technical Outlook
Lately the Relative Strength Index and the Stochastic reached overbought several times on an hourly chart but the pair kept climbing. The break of 1.4980 resistance followed by the quick move below it might be a sign that this time we will see a bigger move south but for this to happen, the 50 period Exponential Moving Average must be broken. If this occurs, the next destination is 1.4830 but this is not likely to happen today.
Fundamental Outlook
Similar to the euro and the dollar, the sterling will not be affected by major economic releases today and this is one of the reasons why we don’t expect huge movement.
FOREX NEWS: GERMAN ZEW TO DETERMINE THE NEXT EURO MOVE
EUR/USD
Forex News: Yesterday the pair moved south and trading was smooth for the most part. No major data came out and this contributed to the calm trading session.
Technical Outlook
The bulls failed to continue Friday’s climb and the pair returned into the 50 period Exponential Moving Average and the support at 1.0720. The oscillators are moving downwards coming from the top of their range and this increases the bearish pressure but we are dealing with a “bounce or break” scenario at the moment. If the confluence zone created by the 50 period EMA and 1.0720 can be broken quickly then we are likely to see a drop close to 1.0500; otherwise 1.0900 remains the next medium term destination.
Fundamental Outlook
The German ZEW Economic Sentiment survey is released today at 9:00 am GMT and is expected to show a value of 56.0 compared to last month’s 54.8. This survey shows the opinions of about 275 professional investors and analysts and usually is a strong mover for the euro; higher values are usually beneficial for the single currency.
GBP/USD
Price remained below resistance for the entire day and even broke the 50 period Exponential Moving Average in the second part of the session.
Technical Outlook
The fact that the bulls couldn’t continue the climb after breaking 1.4980 and instead price quickly returned below the mentioned level, makes us believe that further downside movement is next. The 50 period EMA on an hourly chart will now provide resistance if touched again but a move above it would imply that we will see another encounter with 1.4980.
Fundamental Outlook
The United Kingdom didn’t schedule major economic news releases for the day and this means that the technical aspect will take center stage.
EUR/USD
Forex News: Yesterday the pair reversed an early morning decline generated by a worse than expected German ZEW survey and price quickly moved above 1.0720 after an initial break to the downside.
Technical Outlook
The latest move above 1.0720 is likely to find resistance at the bearish trend line visible on the chart above, especially if the 50 period Exponential Moving Average can be surpassed. If both these areas of resistance are broken, we will most likely see a touch of 1.0900. On the other hand, a quick return below 1.0720 would invalidate the bullish scenario and would shift the balance in favor of the bears.
Fundamental Outlook
The U.S. Existing Home Sales announcement scheduled at 2:00 pm GMT is the only notable event of the day. This indicator offers insights into the state of the American house market (excluding new construction) but usually has a medium to low impact. The expected figure is 5.04M which is higher than last month’s 4.88M; numbers above forecast are considered beneficial for the U.S. Dollar.
GBP/USD
Yesterday the pair moved back above the 50 period Exponential Moving Average and most of the day was controlled by the bulls. No major economic releases took place and the climb way mostly technical.
Technical Outlook
The buyers are fighting to regain control of the pair and to continue the short term uptrend but the important resistance at 1.4980 might hinder their efforts. In the past this level proved very strong, rejecting rising price several times so we don’t expect to see a bullish break if a fundamental event doesn’t substantiate the move. Support will be offered by the 50 period Exponential Moving Average, followed by 1.4830.
Fundamental Outlook
The Bank of England will make public the votes on the latest interest rate decision at 8:30 am GMT. Last month all 9 members of the Monetary Policy Committee voted to keep the rate at current levels and no change is expected today but if a surprise occurs we will probably see huge movement for the Pound.
FOREX NEWS: ALL EYES ON GERMAN MANUFACTURING DATA AND BRITISH RETAIL SALES
EUR/USD
Forex News: The pair is lately showing signs of indecision and almost all moves are quickly reversed. Yesterday’s trading session was no exception and we witnessed a false break of the trend line and a consequent move lower.
Technical Outlook
After moving above the bullish trend line the pair returned at 1.0720 support and is currently trying to break it to the downside. Neither side is in clear control so our bias is neutral until either support or resistance is broken and successfully re-tested afterwards. The fundamental scene is busier today than in previous days and this might bring the pair out of its indecision.
Fundamental Outlook
Early at 7:00 am GMT the French Manufacturing PMI is released and anticipated to show a value of 49.4. Half an hour later the German Manufacturing PMI comes out with an expected value of 53.1. Both indicators are derived from the opinions of purchasing managers regarding their respective sectors and better values are usually beneficial for the euro.
The US Dollar will be affected by the release of the Unemployment Claims scheduled at 12:30 pm GMT and expected to post a reading of 288K. Lower values for this indicator usually strengthen the greenback but the impact is often mild because this release occurs each week.
GBP/USD
The details of the interest rate votes showed that all members voted to hold the rate unchanged and the event, combined with technical reasons took the pair higher for the most part of the day.
Technical Outlook
The resistance at 1.4980 was clearly broken yesterday and this makes the short term outlook bullish. First potential resistance is located at 1.5165 but even if this level will be touched, we believe that price will first move lower, considering that both the Stochastic and the Relative Strength Index on an hourly chart are overbought. However, on a four hour chart there is still room for the oscillators to move to the upside so the signals are mixed. The level at 1.4980 will probably act as support if touched.
Fundamental Outlook
At 8:30 am GMT the British Retail Sales come out; this is an indicator which usually creates strong moves because the retail sector represents a major part of the entire economic activity. The expected change is 0.4%, lower than last month’s 0.7% and higher values are beneficial for the Pound.
FOREX NEWS: A GREEK EXIT LOOMS. MARKETS IN TURMOIL
EUR/USD
Forex News: Yesterday’s trading session was controlled by the bulls and the pair remained above resistance for the entire day although European manufacturing data was disappointing.
Technical Outlook
Price is trading above the 50 period Exponential Moving Average and above the support at 1.0720; this means that currently the bias is bullish and we expect a touch of short term resistance located at 1.0850. A break of this level would open the door for the next resistance which is located at 1.0900 but today the technical aspect will be overshadowed by the fundamental scene.
Fundamental Outlook
Representatives of the Eurogroup will meet today to discuss a solution to the Greek debt crisis. This can strongly affect the direction of the pair so we expect a volatile day, with irregular movement. A separation of Greece from the European Union has been speculated but so far these are just rumors and a distant solution.
The U.S. Durable Goods Orders are released at 12:30 pm GMT and are expected to show a change of 0.7% while last month’s value was -1.1%. Increased demand for such goods shows a thriving economy and usually a stronger US Dollar.
GBP/USD
A worse than expected value of the British Retail Sales weakened the Pound during the first part of yesterday’s trading session. However support proved too tough to break and the pair bounced higher.
Technical Outlook
Price bounced at 1.4980 which is now support and we expect the current direction to continue throughout the day. First potential resistance is located at 1.5165 but before this level will be hit we expect bearish retracements, considering that both the Stochastic and the Relative Strength Index are trading in the upper part of their range.
Fundamental Outlook
The Greek talks are likely to affect the Pound-Dollar pair as well so we recommend caution throughout the day. The United Kingdom didn’t schedule important news releases.
FOREX NEWS: BULLISH MOMENTUM DAMPENED BY HEAVY RESISTANCE
EUR/USD
Forex News: Friday’s trading session was characterized by mixed price action and a lot of reversals on the lower time frames. The Eurogroup Meetings were tense and a clear solution was still not reached.
Technical Outlook
The pair is now confined between 1.0850 support and 1.0900 resistance; both levels were touched Friday but a breakout didn’t occur. Today we expect another touch of 1.0900 resistance but a break of the bullish trend line seen on the chart above might generate downside pressure and an extended move south. If this occurs, the 50 period Exponential Moving Average will offer the first form of support.
Fundamental Outlook
The day ahead lacks important European and American news releases so price action will be mainly affected by the technical aspect.
GBP/USD
Price moved north Friday or the back of US Dollar weakness following a bounce at 1.4980, which is now confirmed support.
Technical Outlook
The pair is now sitting above 1.5160 and shows bullish momentum but this level needs to be re-tested from above for it to turn into support. Also, the Stochastic and the Relative Strength Index are moving above their respective overbought levels and this increases the chances of bearish movement during the day. If price moves below 1.5160 it can find support at the bullish trend line seen or the chart above.
Fundamental Outlook
At 10:00 am GMT the Confederation of British Industry (CBI) will release the Industrial Order Expectations. This is a medium impact survey and attempts to measure the expected volume of orders for the next three months; higher values than the forecast 4 are usually beneficial for the Pound.
FOREX NEWS: POUND CONTINUES TO MOVE UPHILL. BRITISH GDP IN THE SPOTLIGHT
EUR/USD
Forex News: For the most part of yesterday’s trading session the pair moved in a tight range before finally starting to move upwards in the second part of the day. For the time being resistance is still holding.
Technical Outlook
After a bounce at the 50 period Exponential Moving Average, price started to move upwards and came very close to 1.0900 resistance but at the time of writing a break didn’t occur. The picture remains unclear as long as the pair is confined between support (50 EMA) and resistance (1.0900) but we consider that a break of either one will generate an extended move in that direction.
Fundamental Outlook
The dollar will be affected today by the release of the Consumer Confidence survey scheduled at 2:00 pm GMT and expected to show a value of 102.6, better than last month’s 101.3. This survey acts as a leading indicator of retail sales volume because usually a confident consumer is likely to spend more. The impact on the US Dollar is strong under normal circumstances and better values strengthen the greenback.
GBP/USD
Most of the day was controlled by the bulls and 1.5160 resistance was clearly broken after a bounce in close vicinity of the trend line visible on the chart.
Technical Outlook
The short term outlook is bullish and as long as price is trading above 1.5160 we expect further advances north. The Stochastic is clearly overbought and the Relative Strength Index is close to its 70 level so it is very possible for the pair to descend into 1.5160 for another re-test; this level together with the 50 period Exponential Moving Average will offer support if touched.
Fundamental Outlook
At 8:30 am GMT the British Preliminary Gross Domestic Product is released, with an anticipated change of 0.5% compared with last month’s 0.6%. The Gross Domestic Product is an economy’s main gauge of performance and usually has a strong impact on the currency. Higher than anticipated values are considered bullish for the Pound.
FOREX NEWS: U.S. GROSS DOMESTIC PRODUCT AND FED INSIGHTS ON RATE HIKE MIGHT SHAKE THE MARKET
EUR/USD
Forex News: The bulls maintained their control over the pair and price moved higher for most of yesterday. The U.S. Consumer Confidence survey posted a worse than expected value, weakening the US Dollar and contributing to the pair’s climb.
Technical Outlook
The 50 period Exponential Moving Average offered good support and price bounced off of it again yesterday; 1.0900 is now clearly broken and 1.1000 is threatened but the Relative Strength Index and the Stochastic are both overbought on an hourly chart. This doesn’t necessary mean that a reversal is coming but retracements are expected. The resistance zone around 1.1000 proved to be strong in the past so be careful if you are holding long positions.
Fundamental Outlook
At 12:00 pm GMT the German Consumer Price Index is released. Being the main gauge of inflation, this indicator has a strong impact on the pair, and better numbers than the forecast 0.4% usually strengthen the euro.
At 12:30 pm GMT the U.S. Advance version of the Gross Domestic Product is released and anticipated to show a change of 1.0% compared with the previous 2.2%. Such a decrease would be detrimental for the greenback. Later in the day, at 6:00 pm GMT the Fed will announce the interest rate. Although no change is expected today, the Statement that accompanies the rate decision is likely to contain clues about the next rate hike. Rumors have been circulating about a June or July increase but so far it’s just speculation.
GBP/USD
The British Gross Domestic Product showed a disappointing value yesterday but this only weakened the Pound for a short while and soon after the pair continued its upwards direction.
Technical Outlook
Price is moving north and it looks like not even bad British data can stop the bullish advance. The current level at 1.5340 had some importance in the past so maybe we will see a reaction again considering that both oscillators are oversold on a four hour chart. The bullish trend line will offer support if touched and a move above 1.5340 would open the door for a touch of 1.5550.
Fundamental Outlook
The United Kingdom has a slow economic day ahead but the pair’s movement will be strongly affected by the U.S. events.
FOREX NEWS: EMERGENCY FUNDING INCREASES. EURO SOARS
EUR/USD
Forex News: Yesterday we saw a huge climb generated mostly by the fact that the ECB increased the emergency funding available to Greek banks. On top of that the American Gross Domestic Product showed economic slowdown by posting a disappointing value and this weekend the US Dollar.
Technical Outlook
The strong climb seen yesterday is likely to affect today’s price action and we will probably see a push close to 1.1280 resistance. Currently the pair is re-testing 1.1100 which will turn into support if the bears cannot keep price below it. The next potential resistance is too far away to be reached in one day and the oscillators are overbought so we expect at least a pause of the climb before the bulls can take price higher.
Fundamental Outlook
The main event of the day is the European Consumer Price Index scheduled at 9:00 am GMT and expected to show a change of 0.0% compared to the previous -0.1%. This is the main gauge of inflation and because current values are considered too low, further decreases would weaken the euro.
GBP/USD
The US Dollar weakened against the Pound as well and this allowed the pair to climb for almost the entire day. The Fed kept the rate unchanged but the Statement briefly strengthened the US Dollar bringing the pair lower.
Technical Outlook
The resistance at 1.5550 is very close and although the Relative Strength Index and the Stochastic are overbought, we expect price to touch this level. The last encounter with 1.5550 triggered a huge drop so we expect it to have some sort of impact this time too (assuming the bulls can indeed take price there). The medium term outlook is bullish and all moves lower should be treated as retracements in an uptrend.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases so price direction will be mainly affected by the technical aspect.
FOREX NEWS: LABOR DAY CELEBRATIONS TRANSLATE TO IRREGULAR PRICE ACTION
EUR/USD
Forex News: Daring the first part of yesterday’s trading session the euro continued to strengthen against the greenback but a lower value of the U.S. Unemployment Claims showed that the jobs market is recovering and this brought back some dollar strength.
Technical Outlook
The resistance at 1.1280 still remains the first target and a touch is expected during the day. The bears have made a few attempts to take price below support but unsuccessful so far and the short term bias is still bullish. A clean break of 1.1280 would open the door for 1.1450 but the oscillators spent a long time in overbought territory and this suggests that we might see a reversal or deeper retracement if 1.1280 is reached.
Fundamental Outlook
European banks are closed today, celebrating Labor Day and this will probably translate in choppy price action and irregular volatility. The US Dollar will be affected by the release of the Manufacturing PMI scheduled at 2:00 pm GMT and expected to post a value of 52.1, better than last month’s 51.5. This is a leading indicator of economic health and usually better numbers are beneficial for the US Dollar but the impact is sometimes mild, especially if the actual number is close to analysts’ forecast.
GBP/USD
The bulls didn’t manage to take price into resistance and the dollar strengthened on jobs data, generating a drop into immediate support.
Technical Outlook
Currently the pair is re-testing 1.5340; if this touch results in a bounce higher, the chances of an encounter with 1.5550 will increase. However, the Stochastic and the Relative Strength Index are coming down from overbought territory and they show strong bearish momentum so a break of 1.5340 is not out of the question. If this is the case, the bullish trend line and the 50 period Exponential Moving Average will create the first support zone.
Fundamental Outlook
British Manufacturing data is released at 8:30 am GMT in the form of the Purchasing Managers’ Index which is a survey of about 600 purchasing managers and acts as a gauge of performance for the manufacturing sector. Higher numbers than the anticipated 54.6 usually strengthen the Pound.
FOREX NEWS: EURO AND POUND LOSE MOMENTUM. DOLLAR STAGES A COMEBACK
EUR/USD
Forex News: Friday the pair touched resistance but the bulls ran out of steam and a quick drop followed. The American Manufacturing PMI posted a lower than expected value but the dollar continued to strengthen, showing the bears still have underlying power.
Technical Outlook
The bounce at 1.1280 coincides with an overbought condition of the Relative Strength Index and the Stochastic, making us believe that the current bearish move will extend further. The first possible destination and support is located at 1.1100 followed by the 50 period Exponential Moving Average which will probably continue to climb to touch price. Once the pair finds support, we expect bounces higher.
Fundamental Outlook
The German Final Manufacturing PMI is released at 7:55 am GMT and expected to show a value of 51.9, same as the previous. Higher numbers are beneficial for the euro but the indicator usually has a mild impact on price action.
The U.S. Factory Orders are released at 2:00 pm GMT; the forecast is a big change of 2.1% from the previous 0.2%. The indicator shows fluctuations in the total value of orders placed with manufacturers and acts as a leading indicator of production thus higher figures are beneficial for the US Dollar.
GBP/USD
The pair experienced a sharp selloff Friday and the bears managed to erase all the advances made during the week.
Technical Outlook
All immediate forms of support were broken during Friday’s drop: 1.5340 horizontal support, the bullish trend line and the dynamic support represented by the 50 period Exponential Moving Average. This shows tremendous bearish pressure and makes us believe that we will see further downside movement during the days to come. However, it’s very possible that after such a drop, price will retrace higher to touch the Moving Average from below.
Fundamental Outlook
British banks are closed today, celebrating May Day. No major news releases are scheduled for the day and this might generate slow and potentially choppy price action.
EUR/USD
Forex News: German Manufacturing data came out with the anticipated value so the release didn’t create strong moves. The U.S. Factory Orders also met analysts’ expectation but the figure was much better than the previous and the greenback benefited from it.
Technical Outlook
On an hourly chat the pair descended below the 50 period Exponential Moving Average but 1.1100 support wasn’t reached; the medium term outlook is bullish so we expect price to start rising once and if the mentioned support is reached. If 1.1100 is broken to the downside, the next support is located at the 50 period EMA on a four hour chart, followed by 1.1000. Resistance is still located at 1.1280.
Fundamental Outlook
At 12:30 pm GMT the U.S. Trade Balance is released; the indicator shows the difference in value between imported and exported goods and is expected to post a value of -41.2B compared to last month’s -35.4B. Higher numbers show a thriving economy and usually strengthen the US Dollar.
Later at 2:00 pm GMT the Non-Manufacturing PMI comes out, showing the opinions of American purchasing managers about business conditions and the overall state of the manufacturing sector. Higher values than the forecast 56.2 are beneficial for the greenback.
GBP/USD
The Pound-Dollar pair continued to drop after a brief bullish pullback but yesterday’s trading session was very slow and without substantial moves, mostly because British banks were closed.
Technical Outlook
We expect the pair to climb until the 50 period Exponential Moving Average is touched either on an hourly or four hour chart. Once this happens, watch for a bounce lower which will probably push price close to 1.4980 support. A bullish break of the 50 period EMA will be a sign that the medium term uptrend is resuming and will make 1.5340 the first target.
Fundamental Outlook
The British Construction PMI is released today at 8:30 am GMT and expected to show a value of 57.6. Since this is a leading indicator of economic health, better than expected numbers have the potential to strengthen the Pound. As always, the U.S. indicators will have a direct impact on price action.
FOREX NEWS: PRICE ACTION INFLUENCED BY FIRST LOOK AT U.S. JOBS SITUATION
EUR/USD
Forex News: The U.S. Trade Balance disappointed yesterday, showing a worse than expected reading and weakening the US Dollar. The pair moved north after a false break of 1.1100.
Technical Outlook
The bounce at support shows that the medium term uptrend is likely to continue and that 1.1280 is probably the next target. The 50 period Exponential Moving Average on a four hour chart is angled upwards, the Stochastic is coming out of oversold territory and the Relative Strength Index is also pointing upwards. All these are signs which back up our bullish bias. A quick descent below 1.1100 would invalidate this scenario.
Fundamental Outlook
At 12:15 pm GMT we will get a first look at the U.S. employment situation as Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change. The forecast in an increase to 192K from the previous 189K but the indicator doesn’t have the huge impact of the Government data which is released two days later. Nonetheless, higher numbers have the tendency to strengthen the greenback.
At 1:15 pm GMT, Fed Chair Janet Yellen will deliver a speech at a conference on Finance and Society organized by the Institute for Economic Thinking. The impact on the US Dollar in not known but as a rule of thumb, all her public speeches should be treated with caution.
GBP/USD
Yesterday the pair broke out of its latent state exhibited Monday and the Pound strengthened although the Construction PMI didn’t meet analysts’ expectations.
Technical Outlook
On a four hour chart the pair is touching the 50 period Exponential Moving Average which might act as resistance but the Stochastic is just coming out of oversold and this suggests that we will see further upside movement. These are mixed signals which determine us to have a neutral bias for this pair. Price direction will be mostly decided by the British and American economic indicators released during the day.
Fundamental Outlook
Apart from the U.S. events already mentioned, the pair will be affected by the release of the British Services PMI scheduled at 8:30 am GMT. The expected value is 58.6, a small decrease from the previous 58.9; a lower value would weaken the Pound but the impact is not always strong especially if the actual number is close to the forecast value.
FOREX NEWS: POUND PRICE ACTION GOVERNED BY BRITISH PARLIAMENTARY ELECTIONS
EUR/USD
Forex News: The employment report released by Automatic Data Processing Inc. showed that fewer jobs were created last month (actual 169K, expected 199K), a fact which weakened the US Dollar and allowed the pair to climb substantially.
Technical Outlook
The decisive break of 1.1280 resistance is a clear sign of dollar weakness and also suggests that we will probably see higher prices in the near future. Usually after a fast climb price retraces lower due to profit taking; if this is the case, we will probably see a descent close to the recently broken level, followed by another bounce. The first potential resistance is located at 1.1450 but both oscillators are approaching overbought, suggesting a retracement before the mentioned level is reached.
Fundamental Outlook
Early at 6:00 am GMT the German Factory Orders are released and expected to show a change of 1.6% compared to last month’s -0.9%. This is a leading indicator of economic health, which offers insights into the activity of manufacturers (more orders suggest increased activity); a higher than anticipated value usually strengthens the euro but the indicator is not considered to have a high impact.
GBP/USD
A better than expected value of the British Services PMI combined with disappointing U.S. jobs data generated bullish price action throughout yesterday’s trading session. The pair moved above dynamic resistance.
Technical Outlook
Today’s price action will be heavily influenced by the British Parliamentary Elections so an accurate technical analysis is difficult. First resistance is located at 1.5340 while support will be represented by the 50 period Exponential Moving average. We recommend caution throughout the day.
Fundamental Outlook
As stated above, the Pound’s movement will be driven by the political scene. The results of the elections will be probably known late in the evening.
