FOREX NEWS: NON-FARM PAYROLLS RESTORE VOLATILITY AND DIRECTION
EUR/USD
Forex News: For the most part of yesterday’s trading session the pair moved south and the bulls failed to extend their advance. The German Factory Orders didn’t meet analysts’ expectations, contributing to euro weakness.
Technical Outlook
The pair descended below 1.1280 but for the time being we don’t consider this a true break or a reversal. The last four hour candle shows a long lower wick which suggests rejection and another potential climb but today the technical aspect will be overshadowed by the NFP release. If 1.1280 is broken, the next support is represented by the 50 period Exponential Moving Average while resistance is located at 1.1450.
Fundamental Outlook
The day’s main event is undoubtedly the release of the U.S. Non-Farm Employment Change scheduled at 12:30 pm GMT. This report is widely considered the most important jobs-related indicator and shows how many new jobs were created during the previous month. The expected number is 227K, a huge increase from last month’s 126K so we expect to see a stronger dollar if analysts’ forecast comes true or if a higher number is posted.
GBP/USD
Yesterday’s price action was choppy and the pair lacked clear direction. As expected, the British Parliamentary Elections had a strong impact on price behavior.
Technical Outlook
The pair met support at the 50 period Exponential Moving Average but no major advances were made by either bulls or bears. The last few candles on a four hour chart show long upper and lower wicks which suggest indecision so our view on the pair remains neutral until the NFP release which will probably bring the pair out of this indecision. First resistance remains 1.5340 while major support is still 1.4980.
Fundamental Outlook
The United Kingdom did it schedule major news releases and center stage will be held by the U.S. Non-Farm Payrolls.
FOREX NEWS: EUROGROUP MEETINGS FOCUSED ON GREEK DEBT. THE SINGLE CURRENCY IN THE SPOTLIGHT
EUR/USD
Forex News: Friday’s trading session was characterized by a lot of reversals generated by the Non-Farm Payrolls release. The last value was revised lower while the current value came very close to analysts’ expectations so we could see both dollar strength and weakness on the lower time frames.
Technical Outlook
The pair is now caped by the resistance at 1.1280 and the support represented by the 50 period Exponential Moving Average on a four hour chart. Given Friday’s extremely choppy movement, our bias is neutral for this pair until a break of either support or resistance occurs. The latest short term momentum is bearish so we anticipate at least a touch of the 50 period Exponential Moving Average.
Fundamental Outlook
The Eurogroup Meetings take place today so we might be in for another day with irregular volatility. Greece’s debt problem will be again the main topic of the meetings and any advances towards solving it would probably be viewed as positive for the euro.
GBP/USD
The US Dollar indecision created mixed movement throughout Friday’s session and made trading difficult at the time of the Non-Farm Payrolls release.
Technical Outlook
After a bounce close to 1.5340 support, the pair is headed towards the resistance located at 1.5550. This level represents an important milestone and a break would solidify the control of the bulls, generating additional moves to the upside. However the picture is mixed, with the Stochastic and Relative Strength Index being close to overbought so we might see ranging price action today or even retracements lower.
Fundamental Outlook
The British Interest Rate is released today at 11:00 am GMT by the Bank of England but no change is expected from the current value of 0.50%. Unless surprises occur, the Pound will not see strong moves at the time of the event.
FOREX NEWS: BULLISH MOMENTUM AHEAD OF GERMAN GDP, BRITISH INFLATION REPORT
EUR/USD
Forex News: Yesterday we had a bullish day although no major economic indicators were released. Price bounced at dynamic support but the pair didn’t move above resistance so the picture is still mixed.
Technical Outlook
Although price initially moved below the four hour 50 period Exponential Moving Average, the bears couldn’t capitalize on the break and yesterday we saw another encounter with 1.1280 resistance. If this level will be surpassed today, we expect a move into the potential resistance located at 1.1390. The Stochastic is bullish, coming out of oversold but the angle of the 50 EMA is not very steep and this shows that control doesn’t clearly belong to either side.
Fundamental Outlook
The German Preliminary Gross Domestic Product is released early at 6:00 am GMT and expected to show a change of 0.5% compared to last month’s 0.7%. Lower values are viewed as detrimental for the single currency.
At 12:30 pm GMT the American Retail Sales are released and anticipated to post a change of 0.3%, worse than last month’s 0.9%. Because sales made at a retail level represent a major part of the economy, higher percentages suggest a thriving economy and usually strengthen the greenback.
GBP/USD
The British economic data released yesterday was better than analysts initially anticipated, generating Pound strength and a surge above 1.5550.
Technical Outlook
The last couple of days were strongly bullish and both the Relative Strength Index and the Stochastic remained above their respective overbought levels. Usually after a strong directional move a retracement occurs and this is what we expect to happen today. Of course the fundamental scene will play an important role and will decide the day’s direction but the levels to watch are 1.5550 as support and 1.5790 as resistance.
Fundamental Outlook
The British Claimant Count Change is released today at 8:30 am GMT; the indicator tracks changes in the number of unemployed people and lower values than the expected -20.1K are beneficial for the Pound. Bank of England Governor Mark Carney will hold a press conference starting at 9:30 am GMT. The main topic will be the Inflation Report which is released at the same time, containing inflation expectations and economic growth projections for the next 2 years.
FOREX NEWS: U.S. DOLLAR KEEPS LOSING GROUND AGAINST ITS MAJOR COUNTERPARTS
EUR/USD
Forex News: Germany’s Gross Domestic Product came out lower than expected and the same is true for the U.S. Retail Sales. However, the disappointing value of the American indicator weighted more and the greenback weakened considerably, allowing the pair to climb.
Technical Outlook
US Dollar weakness took the pair above 1.1280 resistance and put the bulls in control of short term price action. Despite all this, the pair is still facing strong resistance ahead, represented by 1.1390 and followed by 1.1450. The Relative Strength Index and the Stochastic don’t show overbought conditions and the pair stands above the dynamic support represented by the 50 period Exponential Moving Average so we expect a move into the resistance zone mentioned earlier.
Fundamental Outlook
The greenback will be affected today by the release of the Producer Price Index, an indicator which shows changes in the price charged by producers for their goods. A higher value has inflationary implications because an increase of producer price will be eventually passed on to the consumer. The forecast is 0.1% and the time of the release is 12:30 pm GMT.
Swiss, French and German banks will be closed today in observance of Ascension Day.
GBP/USD
The pair had a choppy day yesterday, mostly due to mixed data which came out of the United Kingdom and the United States.
Technical Outlook
The Relative Strength Index and the Stochastic remained overbought but the pair kept climbing after a consolidation period. The lower time frames were difficult to trade due to sharp reversals generated by the fundamental scene. The current bullish momentum is expected to continue today, with 1.5790 being the first target. If this level will be reached, we expect a deeper retracement to the downside.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for the day so price direction will be mostly dictated by the technical side.
FOREX NEWS: END OF WEEK PROFIT TAKING BRINGS PRICE LOWER
EUR/USD
Forex News: Yesterday the euro extended its gains against the greenback although the climb was visibly slower than previous days. The American Producer Price Index posted a worse than expected value, weakening the US Dollar.
Technical Outlook
After climbing very close to 1.1450 resistance, the pair rebounded slightly lower and overall the euro seems to be losing steam. Both the Stochastic and the Relative Strength Index reached overbought levels and are now curving downwards suggesting that a deeper retracement is due. The level at 1.1390 may offer some support, followed by the more important 1.1280.
Fundamental Outlook
At 2:00 pm GMT the University of Michigan will release their Consumer Sentiment Survey; its importance comes from the positive correlation between a confident consumer and a high level of retail sales so higher values than the forecast 96.5 will most likely strengthen the US Dollar.
GBP/USD
The pair continued to climb yesterday and resistance was tested. The day lacked major news releases and overall we had a trading session without reversals.
Technical Outlook
Although the pair is in an uptrend from a medium term perspective, we expect a bearish retracement today. The Relative Strength Index and the Stochastic are long overbought now and price moved strongly to the upside without a clear pullback. All this combined with the resistance at 1.5790 will probably generate the retracement we mentioned. A strong break of resistance would probably bring in more buyers but the climb should be limited.
Fundamental Outlook
Price action throughout the day will be influenced mainly by the U.S. release and by the technical aspect because the United Kingdom didn’t schedule news releases.
We hope you had a profitable trading week and we wish you a relaxing weekend.
EUR/USD
Friday an American survey showed that consumer sentiment declined more than analyst’s predicted, negatively affecting the US Dollar and driving the pair into resistance.
Technical Outlook
The resistance level located at 1.1450 was touched and pierced Friday on the back of weak U.S. data but the bulls didn’t manage to close the week above it. We expect price to move above the level today but the extent of the climb should be limited. A false break or a rebound lower could bring the pair into the bullish trend line seen on the chart if this scenario takes place, we expect another climb after a bounce at the mentioned support or at the 50 period Exponential Moving Average.
Fundamental Outlook
Both the dollar and euro have a slow day ahead in terms of economic news releases so price action will be mainly driven by the technical aspect.
GBP/USD
The US Dollar was weak throughout last week but especially Friday the climb slowed and the bears managed to take price slightly lower after another bounce at resistance.
Technical Outlook
It seems like bearish pressure is starting to accumulate as the pair made two attempts to break the resistance zone around 1.5800 but both resulted in moves lower. The Relative Strength Index and the Stochastic have spent a long time above their respective overbought levels and now are heading south, increasing the bearish pressure. The first form of support will be offered by the 50 period Exponential Moving Average but a touch is less likely to happen today.
Fundamental Outlook
Similar to the single currency and the Dollar, the Pound will not be affected by major news releases today.
FOREX NEWS: GERMAN ZEW, BRITISH INFLATION DATA – THE MARKET MOVERS OF THE DAY
EUR/USD
Forex News: The US Dollar showed signs of recovery yesterday and resistance proved too strong for the bulls to break. Price action was mostly bearish, following a bounce at resistance.
Technical Outlook
The medium term trend remains bullish and the current move can be considered just a normal retracement generated by overextended price. Bullish action is likely to resume if the pair will touch the trend line (visible on the chart above) or the 50 period Exponential Moving Average on a four hour chart. If these forms of support are broken, the next one is represented by the level at 1.1280 and a move below it, could mean that we are dealing with a reversal.
Fundamental Outlook
The day’s main event on the euro side is the release of the German ZEW Economic Sentiment scheduled at 9:00 am GMT. This is a survey of about 275 professional investors and analysts who are asked to present a six month outlook for the German economy. Usually the survey has a strong impact on the euro, strengthening it if better values than the forecast 48.9 are posted.
The greenback will be mildly affected by the U.S. Building Permits released at 12:30 pm GMT and expected to show a value of 1.06M (previous value 1.04M). Higher numbers suggest increased economic activity and a stronger dollar.
GBP/USD
The pair had a pretty slow day with mostly bearish price action. No major support or resistance level was broken and no substantial advances were made.
Technical Outlook
Similar to the euro, the pound bounced at resistance and is now headed towards the 50 period Exponential Moving Average. Both the stochastic and the Relative Strength Index were long overbought before the current bearish move occurred so we expect the pair to keep moving south until the support at 1.5550 is touched or at least until the 50 period Exponential Moving Average is tested.
Fundamental Outlook
The Pound will be strongly affected by the release of the British CPI which is the main gauge of inflation. The scheduled time of the release is 8:30 am GMT and the anticipated change is 0.0%; however, a higher percentage will most likely generate Pound strength.
FOREX NEWS: DOLLAR SET FOR AN EPIC COMEBACK AHEAD OF FOMC MEETING MINUTES
EUR/USD
Forex News: The German ZEW Economic Sentiment survey failed to meet analysts’ expectations while American Building Permits posted a higher than expected reading, strengthening the US Dollar. All this generated a strong bearish day.
Technical Outlook
The pair broke all immediate support (bullish trend line, the level at 1.1280 and the 50 period Exponential Moving Average) and is now headed towards the support zone at 1.1100. The Relative Strength Index and the Stochastic are approaching oversold territory so we expect price to pause or retrace higher if the mentioned support is hit but the current momentum is definitely bearish so we are likely to see further downside movement after the said retracement.
Fundamental Outlook
The greenback will be strongly affected today by the release of the FOMC Meeting Minutes scheduled at 6:00 pm GMT. Rumors about a Fed rate hike have been circulating for quite a while and this document might contain details about the Fed’s next course of action regarding the monetary policy and interest rates. Almost always the release has a huge effect on the greenback so caution is recommended if trading at the time.
GBP/USD
British CPI numbers showed that inflation might become a worrying issue in the future and this, combined with positive US data generated a sharp selloff for the pair.
Technical Outlook
Although the bears scored a major victory by taking price below the 50 period Exponential Moving Average, a turning point is ahead: the confluence zone created by the support at 1.5500 and the bullish trend line. All this, combined with the fact that the oscillators are below their respective oversold levels might generate a bullish push which is likely to find resistance at the 50 period Exponential Moving Average.
Fundamental Outlook
At 8:30 am GMT the Bank of England will publish the votes on the latest interest rate decision. Although no change in the members’ stance is expected, the event has the potential to be a strong market mover if surprises occur.
FOREX NEWS: DOLLAR IS POUNDING ON SUPPORT. UNCERTAINTY PRESENT
EUR/USD
Forex News: Ahead of the FOMC Meeting Minutes release, the US Dollar continued to erase its previous losses but movement wasn’t substantial. The opinions of Fed officials were not one sided, with some of them expecting inflation to rise more than it did, so the greenback had mixed reactions at the release time.
Technical Outlook
The pair is struggling to break 1.1100 support zone but if a break doesn’t occur early during the day, we expect the euro bulls to take over price action and to drive the pair higher. The first bullish target is represented by the 50 period Exponential Moving Average and considering that both oscillators are oversold, an encounter with the mentioned resistance is the more favored scenario.
Fundamental Outlook
At 7:30 am GMT the German Manufacturing PMI is released, showing the opinions of purchasing managers about business conditions in the manufacturing sector. A higher value than the anticipated 51.9 is considered bullish for the euro. Later in the day, at 11:30 am GMT the ECB will publish the Monetary Policy Meeting Accounts which is a detailed record of their latest meeting regarding the interest rate (the document outlines the reasons which generated the latest decision on where to set interest rates). A hawkish attitude is beneficial for the euro but the ECB started to release this document in early 2015 so its impact is not yet fully established.
GBP/USD
Before the FOMC announcement the pair touched the bullish trend line and the dollar showed signs of strength but the mixed stance of the FOMC members generated choppy movement.
Technical Outlook
Currently the pair is trapped between the 50 period Exponential Moving Average, the support at 1.5500 and the bullish trend line. A break of either one of these technical barriers will generate an extended move in the direction of the break. For the time being our bias is neutral for this pair.
Fundamental Outlook
The Pound will be strongly affected today by the release of the British Retail Sales numbers scheduled at 8:30 am GMT. Such sales represent a major part of the entire economic activity thus a higher change than the forecast 0.4% (previous -0.5%) would strengthen the Pound, taking the pair higher.
FOREX NEWS: END OF WEEK SUPER FIGHT: DRAGHI VS. AMERICAN INFLATION DATA VS. CARNEY
EUR/USD
Forex News: Yesterday price action continued to be extremely choppy and characterized by single impulses which were quickly reversed. The economic data released by Europe and the United States was mixed and contributed to the day’s lack of direction.
Technical Outlook
On a four hour chart the last few candles show long wicks in both their upper and lower parts, suggesting indecision. Usually after a period of indecision price moves strongly when it finally decides a direction so if today that direction will be chosen, we expect strong moves. The main barriers to watch today are 1.1100 support and the 50 period Exponential Moving Average as resistance. The Stochastic is moving out of oversold, suggesting a bullish push.
Fundamental Outlook
The first event of the day is the release of the German IFO Business Climate survey which acts as a leading indicator of economic health. The scheduled time is 8:00 am GMT and the forecast is 108.3; a higher value has the potential to strengthen the Euro.
The most important event of the day however is the release of American inflation data in the form of the Consumer Price Index. The anticipated change is 0.1% and higher percentages will most likely strengthen the US Dollar, especially because Fed officials mentioned they expected higher inflation levels. The scheduled time is 12:30 pm GMT and an hour later, ECB President Mario Draghi will participate in a discussion titled “Inflation and Unemployment in Europe”. Considering that these topics have a high impact on the currency market, we recommend caution during his speech.
GBP/USD
The British Retail Sales were yesterday’s headline for the Pound-Dollar pair. A much better than expected value was posted, triggering substantial Pound strength and a move north.
Technical Outlook
The pair broke the 50 period Exponential Moving Avenge to the upside and it seems like the balance is tilting in the favor of the bulls. Also, the Stochastic lines are nicely spread apart, showing good momentum so we expect price to touch 1.5800 resistance once again; however it remains to be seen if today’s events will have enough impact to take price into that zone.
Fundamental Outlook
Bank of England Governor Mark Carrey will also participate in the discussion mentioned above and titled “Inflation and Unemployment in Europe”. The event is scheduled at 1:30 pm GMT and we expect it to have a strong impact on the currency market.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: DOLLAR FLEXES ITS MUSCLES. DOWNTREND RESUMPTION AHEAD?
EUR/USD
Forex News: Friday’s trading session belonged to the bears on the back of better than anticipated US inflation data. The greenback strengthened and the pair dropped below support.
Technical Outlook
After a near-perfect bounce at the 50 period Exponential Moving Average, the pair moved easily through the support at 1.1100 but stopped at 1.1000. It is very possible that price stopped here simply because the market closed Friday evening but there is also a possibility that 1.1000 is too strong to be broken in the first attempt. Probably an answer will be found today but a lot of major banks will be closed due to holidays so we might be in for a choppy trading session. Our bias remains slightly bearish.
Fundamental Outlook
Swiss, French and German banks are closed today in observance of Whit Monday. US banks will also be closed, celebrating Memorial Day and all this could translate into choppy movement, without clear direction.
GBP/USD
Similar to the euro, the Pound succumbed to US Dollar strength, which took the pair south. Support was tested but not clearly broken.
Technical Outlook
The Dollar is showing clear signs of strength but the Pound cannot be overlooked especially because 1.5500 is not yet broken. However the pair broke the bullish trend line and is now trading below the 50 period Exponential Moving Average on a four hour chart so the latest momentum clearly favors the bears, increasing the chances of an extended move down. A bullish bounce will encounter resistance at the trend line combined with the 50 EMA.
Fundamental Outlook
The United Kingdom didn’t schedule news releases for today and British banks will be closed celebrating Spring Bank Holiday.
FOREX NEWS: TRUE MARKET DIRECTION TO BE REVEALED TODAY
EUR/USD
Forex News: Memorial Day in the U.S. and the rest of the Holidays in Europe generated an almost flat day of trading, without any special developments or substantial advances.
Technical Outlook
The pair moved below the support level located at 1.1000 but given the circumstances we cannot consider this move a real breakout. Price moved slowly below the level, mostly due to low volatility and lack of trading activity, not necessarily because of dollar strength. That being said, probably today the real direction of the market will be revealed: if the bears can keep price below 1.1000 we are dealing with a true break and the level will probably turn into resistance. Otherwise, we are likely to see a move close to 1.1100.
Fundamental Outlook
Two important US events will be today’s headlines: at 12:30 pm GMT the Durable Goods Orders are released, with an expected change of -0.4% compared to last month’s 4.7%. Such a drop would suggest economic slowdown and would be detrimental to the US Dollar. Later in the day at 2:00 pm GMT the US Consumer Confidence is released and expected to post a figure of 95.3, almost unchanged from the previous 95.2. High levels of confidence among consumers suggest that spending will pick up in the near future and that’s why a higher value usually strengthens the greenback.
GBP/USD
Similar to the euro-dollar, the Cable remained below support but the trading session lacked major advances and price was mostly flat.
Technical Outlook
Because yesterday’s price action doesn’t offer hints about future direction, our bias for the pair is mostly neutral. If 1.5500 will turn into resistance, we favor the short side but the Stochastic is below its 20 level, suggesting oversold and a potential climb. If this is the case, the first resistance is represented by the 50 period Exponential Moving Average.
Fundamental Outlook
The United Kingdom didn’t schedule important news releases so price action will be driven by the technical aspect and by the U.S. events.
FOREX NEWS: EURO TUMBLES, DOLLAR REGAINS KING STATUS?
EUR/USD
Forex News: The euro lost its appeal to investors as concerns about the Greek debt crisis intensified. Also, the US Dollar benefited from the Durable Goods Orders release and the pair moved south for the entire day.
Technical Outlook
The pair is set for a bullish pullback considering the oversold condition of the Relative Strength Index and the Stochastic but the bias is bearish as long as price remains below the resistance zone created between 1.1100 and 1.1000. The first potential support and target for the bears is located at 1.0820 while bullish pullbacks can find resistance at the bearish trend line or 1.1000.
Fundamental Outlook
Central bankers and finance ministers from seven industrialized nations will attend the Group of Seven (G7) Meetings today and during the next 2 days. Although the meetings are closed for the press, some information usually leaks during the day and this can have a strong impact on the currency market so caution is recommended.
GBP/USD
The greenback won the battle against the Pound as well and the pair remained below 1.5500 which turned into resistance. Some bullish retracements were seen later in the day on the lower time frames.
Technical Outlook
The pair is oversold on a four hour time frame as showed by the Relative Strength Index and the Stochastic, so the chances of bullish movement have increased. However, as long as price remains below the 50 period Exponential Moving Average and below 1.5500, the picture is bearish and we anticipate further downside movement.
Fundamental Outlook
The United Kingdom is a member of the Group of Seven so British representatives will participate in the Meetings but no major news releases are scheduled for today.
FOREX NEWS: GREEK DEBT CRISIS BOILS OVER, DOLLAR EXPLOITS THE OPPORTUNITY
EUR/USD
Forex News: During yesterday’s session of the G7 Meetings it became pretty clear that Greece will fail to meet a debt deadline scheduled at the end of May. The euro responded by weakening substantially against the US Dollar, generating another push down.
Technical Outlook
After a brief bullish retracement the pair continued on its downward path and touched the support at 1.0820. Although lately the control belongs to the bears, we must note that the pair is showing rejection at 1.0820 support and both the Stochastic and the Relative Strength Index are still in oversold. All these signs show there are increased chances of a bullish bounce but if Greek concerns will escalate further, the pair is likely to drop below the mentioned support.
Fundamental Outlook
The G7 Meetings continue today and apart from that, the U.S. Unemployment Claims are the most notable event on the Dollar side. The numbers are released at 12:30 pm GMT and the forecast is 272K, close to the previous 274K (a lower number is considered beneficial for the greenback).
At 2:00 pm GMT the U.S. Pending Home Sales are released and anticipated to post a change of 0.8% compared to the previous 1.1%. For this indicator a higher than anticipated value is considered bullish for the US Dollar.
GBP/USD
The pound-dollar pair moved on a downwards path after a shallow bullish pullback; however, support was not reached but this is normal considering that the first important level is still far away.
Technical Outlook
The medium-to-short term bias remains negative as long as the pair is trading below 1.5500 and below the 50 period Exponential Moving Average but the oversold condition of the oscillators warns about a potential move up. Today price will be strongly affected by the fundamental side which will overshadow the technical.
Fundamental Outlook
At 8:30 am GMT the Second Estimate of the British Gross Domestic Product is released. Usually this indicator has a strong impact on the Pound, strengthening it if the actual value surpasses the forecast of the analysts. Today’s expected change is 0.4% while the previous was 0.3% (quarter over quarter numbers).
FOREX NEWS: GDP DATA TO “MAKE OR BREAK” TODAY’S US DOLLAR TREND
EUR/USD
Forex News: The pair retraced higher yesterday but movement was slow and the euro didn’t show a lot of strength. Later in the day, the better than expected value of the U.S. Pending Home Sales restored the downward motion.
Technical Outlook
Our bias for today remains bearish as the pair is standing below a bearish trend line, below the 50 period Exponential Moving Average and below 1.1000 resistance. We expect another touch of 1.0820 support but before that can happen, the trend line might be touched considering that the Stochastic is showing bullish momentum.
Fundamental Outlook
Early at 6:00 am GMT the German Retail Sales are released and expected to post a change of 1.1% compared to last month’s -2.3%. Germany’s economy is an important pillar of the European Union economy and that’s why a higher figure for today’s release might bring euro strength.
The more important release of the day is the U.S. Preliminary Gross Domestic Product which is the main gauge of an economy’s performance. The scheduled time is 12:30 pm GMT and a drop to -0.8% from the previous 0.2% is forecast. Such a number (or lower) would have a negative impact on the US Dollar. The G7 meetings continue for their third day.
GBP/USD
The British Second Estimate GDP showed a lower than expected value which combined with good U.S. data, generated a bearish day.
Technical Outlook
The pair is moving closer to 1.5100 support and the 50 period Exponential Moving Average has a good downward angle. This suggests that bearish movement is likely to continue today but a lot depends on the value showed by the American GDP which will have a strong impact on the US Dollar. The Relative Strength Index is “crawling” near its 30 level (which suggests oversold) so a climb is not out of the question, especially if US data disappoints.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases so all eyes will be pointed towards the U.S. GDP release.
FOREX NEWS: GERMAN CPI, U.S. MANUFACTURING DATA TO DECIDE WHICH CURRENCY WINS TODAY’S BATTLE
EUR/USD
Forex News: Friday price action was choppy as the U.S. Gross Domestic Product showed a value close to analysts’ expectations but lower than previous. This created some mixed movement but overall the US Dollar lost ground against the single currency.
Technical Outlook
The pair broke the bearish trend line but stopped at 1.1000 resistance. The 50 period Exponential Moving Average is in close vicinity of the current level, creating a confluence zone which will be tough to break for the bulls. All this, combined with the overbought position of the Stochastic makes us anticipate a descent towards 1.0820 support.
Fundamental Outlook
The German Consumer Price Index is released today at 12:00 pm GMT but no change is expected (forecast 0.0%, previous 0.0%); because the CPI is the main gauge of inflation and the German economy affects the Euro Zone economy, higher values will most likely strength the euro.
At 2:00 pm GMT the US Manufacturing PMI is released, offering insights into the opinions of purchasing managers about the state of the American manufacturing sector. Higher numbers than the anticipated 52.9 strengthen the US Dollar under normal circumstances.
GBP/USD
The pair moved south Friday but the descent was slow and no major advances where made. The Pound wasn’t affected by news announcements so the short term downtrend prevailed.
Technical Outlook
The current leg of the move south seems exhausted and both the Stochastic and the Relative Strength Index show signs that a move up is needed. Support is located at 1.5100 while resistance is provided by the 50 period Exponential Moving Average but both are still far away from price so it’s very possible that today we won’t see a touch of either one. The Pound and the Dollar are affected by news releases today and probably the economic data will decide price direction.
Fundamental Outlook
At 8:30 am GMT the British Manufacturing PMI is released and expected to show a value of 52.7. Because this is a leading indicator of economic health, higher numbers strengthen the Pound.
FOREX NEWS: EUROPEAN INFLATION: FAR AWAY FROM TARGET, BUT CAN IT IMPROVE?
EUR/USD
Forex News: The euro had a brief moment of strength yesterday when a better than expected value of the German CPI came out, but the dollar erased all euro gains on the back of good manufacturing data. Overall the day belonged to the bears once again.
Technical Outlook
The pair remained below the 50 period Exponential Moving Average and below the level at 1.1000 which has now turned into resistance. On a four hour chart we have a bearish pin bar (candle with a long upper wick) which suggests that further downside will follow. On top of this, the Stochastic is coming out of overbought with good momentum (lines widely spread apart) so we expect the current move to extend into 1.0820 support.
Fundamental Outlook
Euro Zone inflation is the day’s main market mover. Released at 9:00 am GMT, the European Consumer Price Index (main gauge of inflation) is expected to show a change of 0.2% compared with the previous 0.0%. This value is way below the ECB’s target of just below 2.0% and an even lower number would have a negative impact on the euro. Keep an eye on the CORE version of the CPI which is released at the same time and expected to change 0.7% from the previous 0.6%. This version excludes energy and foods from calculation.
GBP/USD
The pair had another bearish day yesterday, mostly because British Manufacturing data was worse than expected and American data for the same sector was better than expected. Major support was not touched but advances were made.
Technical Outlook
The Stochastic lacks momentum and doesn’t offer a lot of hints about future direction but the Relative Strength Index has spent a lot of time bouncing on the 30 level which means the pair is oversold and this suggests that we might see a climb in the form or a retracement today. However, a lot depends on the fundamental data released during the day. First resistance is located at the moving average while support sits at 1.5100.
Fundamental Outlook
The British Construction PMI is released at 8:30 am GMT and is expected to show a value of 55.1 (previous 54.2). This survey of purchasing managers acts as a leading indicator of economic health (focused on the construction sector) and that’s why higher numbers usually strengthen the Pound, taking the pair higher.
FOREX NEWS: MARIO DRAGHI’S PRESS CONFERENCE – A RIPPLE EFFECT ACROSS THE CURRENCY MARKET
EUR/USD
Forex News: European inflation showed signs of recovery yesterday and talks between Greece’s creditors and Greek representatives showed that a solution to the debt crisis might be reached soon. All this generated a strong rally which brought the pair above resistance.
Technical Outlook
The resistance zone between 1.1000 and 1.1100 was broken decisively yesterday and now price is trading above the 50 period Exponential Moving Average, making the short term bias bullish. The current move is likely to extend into the next resistance, located at 1.1280 but the ECB interest rate decision and Draghi’s press conference will decide the day’s direction.
Fundamental Outlook
At 11:45 am GMT the ECB announces the interest rate but no change is expected (currently 0.05%); however, the main market mover of the day is the press conference held by ECB President Mario Draghi at 12:30 pm GMT. His attitude and answers will have a strong impact on the euro thus caution is recommended.
At 12:15 pm GMT, Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change report which offers an early look into the American jobs market. Although this indicator is not as important as the Government data released 2 days later, higher numbers than the anticipated 200K can still strengthen the US Dollar.
GBP/USD
The Pound benefited from positive economic data, which combined with dollar weakness generated a bullish move that lasted almost all of yesterday’s trading session.
Technical Outlook
The Relative Strength Index has spent a lot of time near its 30 level and this suggested that a bullish move will follow sooner or later. Yesterday we had a bullish day which was more or less a consequence of this oversold condition but the move didn’t take price above the 50 period Exponential Moving Average. This means that we might very well see a move down if the EMA offers good resistance. A bounce here would probably push price into 1.5100 support and a break would make 1.5500 the next target.
Fundamental Outlook
The British Services PMI is released at 8:30 pm GMT and is expected to show a value of 59.2. This is a leading indicator of economic health derived from the opinions of purchasing managers from the services sector regarding economic and business conditions but usually has a medium impact on the Pound. Nonetheless, a higher value strengthens the British currency under normal circumstances.
FOREX NEWS: FOCUS SHIFTS TOWARDS THE BANK OF ENGLAND RATE DECISION. A RATE HIKE IN SIGHT?
EUR/USD
Forex News: The European Central Bank didn’t modify the interest rate (0.05%) but ECB President Mario Draghi showed his optimism regarding the implementation of the quantitative easing program, creating a rally due to euro strength.
Technical Outlook
The resistance located at 1.1280 was reached yesterday but not broken; however if today this barrier can be broken, the pair is likely to reach 1.1450 during the days to come. As an alternate scenario, we could see a bounce lower considering the fact that the Relative Strength Index and the Stochastic have now reached overbought territory; if this is the case, first potential support is located at 1.1100.
Fundamental Outlook
The day ahead is calm compared with the previous ones and the release of the U.S. Unemployment Claims is the only notable event for the dollar. The scheduled time is 12:30 pm GMT, the expected number is 280K and lower values are considered bullish for the US Dollar.
GBP/USD
The British Services PMI showed a disappointing value, weakening the Pound and driving the pair lower; however the Pound erased some of the losses later in the day.
Technical Outlook
The 50 period Exponential Moving Average provided good resistance yesterday and pushed the pair lower after the first touch. Currently price returned near the EMA for a re-test and a possible break. If this is the case and the pair indeed moves above this dynamic resistance, we are likely to see an extended climb which will most likely find resistance at 1.5500.
Fundamental Outlook
At 11:00 am GMT the Bank of England will announce the interest rate decision. No change is expected (currently 0.50%) but if the BoE will offer any hints about a near-future increase, the Pound is most likely to soar against the US Dollar.
FOREX NEWS: THE US DOLLAR GETS A BOOST OR TAKES A HIT FROM THE NFP REPORT
EUR/USD
Forex News: The pair had a mixed trading session yesterday, first climbing above resistance and then returning below it as the bulls ran out of steam.
Technical Outlook
Although 1.1280 resistance was broken during the day, the pair didn’t continue to move north and reversed before 1.1450 could be reached. This false break combined with the overbought condition showed by the Relative Strength Index and the Stochastic, suggests that a move down will follow. However the importance of the NFP release will probably overshadow the technical aspect.
Fundamental Outlook
At 12:30 pm GMT the most anticipated report of the week is released: the U.S. Non-Farm Payrolls. This indicator shows how many we jobs were created during the previous month and is widely considered the most important jobs related report. Numbers above the forecast 226K suggest a thriving economy and usually strengthen the US Dollar.
GBP/USD
The Bank of England maintained the rate unchanged and didn’t offer hints about future increases, so yesterday’s session was characterized by indecision and reversals on the lower time frames.
Technical Outlook
The pair is hovering near the 50 period Exponential Moving Average without showing strong momentum on either side. This state of latency is likely to be over once the American jobs report is released and we are likely to see strong movement for the pound-dollar pair. The moving average is the first potential support while 1.5500 remains resistance.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases but the NFP will have a heavy influence on the pair.
We hope you had a profitable trading week and we wish you a relaxing weekend.
