FOREX NEWS: FIRST LOOK AT U.S. JOBS DATA – FIRST MAJOR UPSET OF THE WEEK?
EUR/USD
Forex News: Yesterday we saw a clear bounce at the bullish trend line and price moved above the 50 period Exponential Moving Average but the climb proved to be just a retracement as price quickly returned below the line.
Technical Outlook
Now that a bullish pullback is complete, the bears will most likely make another attempt to break the uptrend line and to take price below 1.1215. If these forms of support will reject price again, then we might see an extended move north, into the potential resistance at 1.1450, otherwise 1.1100 is the next destination. Today we get a first look into U.S. jobs data and this will affect the US Dollar’s bias.
Fundamental Outlook
At 12:15 pm GMT, Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change. The report tries to mimic the Government data that comes out 2 days later and usually has a strong impact on the greenback, so more jobs than the forecast 204K (previous 185K) will take the pair lower.
GBP/USD
The Pound suffered yesterday from soft Manufacturing data, allowing the pair to drop below support. The U.S. Manufacturing PMI did not affect much the Dollar, which continued to strengthen against the Pound.
Technical Outlook
After a few attempts to break 1.5330, the bears finally succeeded and now the pair is trading below this support level. The Stochastic is crossed downwards and not oversold but the Relative Strength Index is still close to oversold and is showing bullish divergence (price is making lower lows and the indicator is making higher lows). This suggests that we might be dealing with a false break so if price will move above 1.5330, we are likely to see a stronger retracement to the upside.
Fundamental Outlook
At 8:30 am GMT the last Purchasing Managers’ Index in this week’s series is released: the Construction PMI. The expected value is 57.6, higher than the previous 57.1 and higher numbers can strengthen the Pound but the impact is often mild, especially if the actual number is close to the forecast.
FOREX NEWS: MARIO DRAGHI PREPARES HEAVY-DUTY EURO SWINGS
EUR/USD
Forex News: The pair had a slow day yesterday, with a bearish bias although the ADP Non-Farm Employment Change showed that less jobs were created than analysts’ expected. Weak euro bulls weren’t able to capitalize on the disappointing US data and the pair moved slightly lower.
Technical Outlook
The move south seen yesterday did not break 1.1215 support or the bullish trend line but despite poor US jobs data, the pair continued to drop, showing that the dollar is still stronger than the euro and making us anticipate a break of the support types mentioned earlier. The Stochastic has crossed downwards and the Relative Strength Index shows a descending slope as well, favouring a drop.
Fundamental Outlook
The ECB announces today at 11:45 am GMT the interest rate which is not anticipated to change from the current 0.05%, so the event will not create huge moves (unless a surprise change), but strong movement is expected during Mario Draghi’s press conference scheduled at 12:30 pm GMT. The ECB President will read a prepared speech and then he will answer journalists’ unscripted questions; this second part of the press conference usually creates heavy-duty moves on the euro, so caution is recommended.
GBP/USD
Pound bulls didn’t manage to stage a proper pullback yesterday and the pair remained below 1.5330, but didn’t make serious advances south. Overall we experienced a choppy trading session, especially on the lower time frames.
Technical Outlook
Now that 1.5330 support is broken, the bears will aim for the support zone around 1.5200 but we expect a retracement higher very soon, mostly because the Relative Strength Index has been moving very close to its 30 level for a relatively long period, with only brief climbs. Also, the chances of a climb are increased by the fact that the Stochastic is entering oversold for the second time and no clear bullish pullback was seen. However, keep in mind that the overall bias is bearish so moves down are not out of the question.
Fundamental Outlook
At 8:30 am GMT the British Services PMI is released, showing the opinions of purchasing managers about business conditions in the services sector. Higher numbers than the anticipated 57.6 (previous 57.4) can strengthen the Pound but the impact is often mild.
FOREX NEWS: ADDING FUEL TO THE FIRE: US NON-FARM PAYROLLS
EUR/USD
Forex News: The European Central Bank kept the interest rate unchanged as expected but Draghi’s press conference generated heavy losses for the euro. The ECB President lowered growth and inflation expectations and hinted that the bank will remain on high alert.
Technical Outlook
The dovish stance of the ECB President is likely to bring further euro weakness during the days to come. The bullish trend line and the horizontal support at 1.1215 are clearly broken now and 1.1100 is threatened. After brief retracements to the upside, we expect a break of the mentioned support and an extended move towards 1.1000.
Fundamental Outlook
The most important U.S. jobs report is released today at 12:30 pm GMT: the Non-Farm Payrolls. The indicator shows how many new jobs were created during the previous month and usually has a huge impact on the dollar, with more jobs strengthening it and the opposite for fewer jobs. The anticipated number is 217K, close to the previous 215K.
GBP/USD
The pound weakened yesterday as the Services PMI showed a disappointing value, missing analysts’ forecast by a long stretch. This generated another bearish day, with the pair trading below 1.5330.
Technical Outlook
A retracement is long overdue as the oscillators have spent another day in oversold territory, but now the level at 1.5330 has turned into resistance and can reject climbing price. The dollar and implicitly the pair will be heavily affected by the U.S. jobs data so the direction will be dictated by this event.
Fundamental Outlook
The United Kingdom didn’t schedule any important news releases so traders will focus on the Non-Farm Payrolls release and on the technical aspect.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: SLOW MONDAY AS U.S. BANKS CLOSE FOR LABOR DAY
EUR/USD
Forex News: Friday’s headline was the NFP release which showed that fewer jobs were created during the previous month than analysts expected. This generated a huge spike up, which was quickly reversed, mostly because the US Unemployment Rate dropped from 5.3% to 5.1%.
Technical Outlook
Movement was choppy Friday and price bounced at 1.1100 after a second attempt to break this level. These failed attempts and the fact that the oscillators are starting to move upwards make us believe that today we will see bullish price action but it should be noted that the euro is still weak from Mario Draghi’s comments and dovish attitude, so the extent of a climb should be limited. Resistance is located at 1.1215 and support at 1.1100.
Fundamental Outlook
The United States celebrate Labor Day, so banks will be closed and no economic indicators will be released. The German Industrial Production numbers come out at 6:00 am GMT with an anticipated change of 1.2% from the previous -1.4%. Higher values are beneficial for the euro but the indicator often lacks strong impact.
GBP/USD
After a bullish spike generated by the worse than expected NFP, the pair continued to move south, with a major role being played by the drop in the U.S. Unemployment Rate.
Technical Outlook
The pair continues to move downwards despite multiple oversold signals. A pullback against the main direction is still expected but the Pound is weak so even if this retracement occurs, we don’t expect it to be strong. First potential resistance is located at 1.5200 while support sits around 1.5100 but we don’t expect the pair to touch support before a retracement occurs.
Fundamental Outlook
No major macroeconomic indicator were scheduled for today by the United Kingdom and US banks are closed, thus we expect a day with irregular volatility.
FOREX NEWS: EURO BREAKS OUT OF THE RANGE, POUND FINALLY SHOWS STRENGTH
EUR/USD
Forex News: Yesterday price action was choppy and lacked volatility as U.S. banks were closed celebrating Labor Day and no other major events took place.
Technical Outlook
Yesterday’s movement doesn’t change the picture much; 1.1215 remains resistance and 1.1100 is support. Our bias remains bearish overall but it’s very possible to see an encounter with the 50 period Exponential Moving Average or the resistance mentioned earlier. A downtrend resumption may be signalled first by the oscillators curving downwards.
Fundamental Outlook
We have another slow day ahead of us, with the Revised Euro Zone Gross Domestic Product being the only notable release. The expected value is 0.3%, same as the previous and the scheduled time is 9:00 am GMT. Although this version if the GDP is the least important, a higher value is considered beneficial for the euro.
GBP/USD
A much needed bullish retracement finally occurred yesterday and the pair moved above 1.5200. Almost the entire day was controlled by the bulls but the overall picture is still bearish.
Technical Outlook
Considering the position of the oscillators and the lack of a proper retracement since the pair started to drop, the current move north may extend into the resistance at 1.5330 or into the 50 period Exponential Moving Average. The moving average will descend below the mentioned resistance so it will become the first zone of interest. This would make a good place for more sellers to enter the market or to reopen their positions, thus generating another drop.
Fundamental Outlook
The day lacks major news releases from the United Kingdom, so the pair’s direction will be mainly decided by price action.
FOREX NEWS: POUND SOARS, MANUFACTURING DATA TO DECIDE NEXT DIRECTION
EUR/USD
Forex News: The Revised version of the Euro Zone GDP showed a better than expected value, resulting in euro strength and an encounter with resistance but the bulls failed to successfully break the level.
Technical Outlook
The resistance at 1.1215 proved too strong for the pair and we saw a move lower after a bounce here. The 50 period Exponential Moving Average is in close vicinity of the mentioned level, creating a confluence zone and adding extra resistance value so we expect price to head lower, towards the support at 1.1100.
Fundamental Outlook
The day lacks major releases for the euro or dollar and this makes the technical aspect the main focus of the day.
GBP/USD
The Pound strengthened more than expected and yesterday the pair continued to climb, breaking 1.5330 and the 50 period Exponential Moving Average.
Technical Outlook
Although the pound exhibits strength, the overall picture is still bearish and we anticipate another descent which will have 1.5330 as first target. The Relative Strength Index and the Stochastic have reached their respective overbought levels, thus increasing the chances of a move south.
Fundamental Outlook
The British Manufacturing Production numbers come out today at 8:30 am GMT but no change is expected from the previous 0.2%. Since manufacturing is a big part of the British economy, higher numbers are beneficial for the pound and suggest increased economic activity.
The NIESR Gross Domestic Product is released later in the day, at 2:00 pm GMT and can also have a strong impact on the pair. The previous value was 0.7% and higher numbers usually strengthen the Pound because this estimate proved to have a high accuracy.
FOREX NEWS: THE BANK OF ENGLAND AND THE STORY OF THE STERLING
EUR/USD
Forex News: Yesterday the euro and the dollar weren’t affected much by macroeconomic releases and the pair bounced again at resistance, but failed to meet support and overall had a slow session.
Technical Outlook
The resistance at 1.1215 was touched again and price bounced lower, confirming that 1.1100 is the most probable destination. The mentioned resistance combined with the 50 period Exponential Moving Average create a confluence zone which will be hard for the bulls to break; the Stochastic is also crossed downwards, increasing the chances of a move lower and we maintain our bearish bias as long as the pair is trading below 1.1215.
Fundamental Outlook
The only notable release of the day is the U.S. Unemployment Claims scheduled at 12:30 pm GMT. A larger number of people without jobs can negatively affect retail sales and consumer spending, so a higher value than the forecast 279K can weaken the US Dollar, driving the pair higher.
GBP/USD
British Manufacturing numbers disappointed yesterday and so did the NIESR GDP Estimate but despite all this, the pair just briefly dipped lower and did not manage to break support.
Technical Outlook
The first form of support for the pair is now the 50 period Exponential Moving Average and possibly 1.5330 (although this level is not confirmed as support). A move below these barriers will suggest that the medium term downtrend will resume and the pair will make another attempt to break 1.5200, but a bounce at support will open the door for a touch of 1.5500 during the days to come.
Fundamental Outlook
At 11:00 am GMT the Bank of England will announce their interest rate decision which is not expected to change from the current 0.50%. However, the more important announcement is the breakdown of the votes of the MPC members. If they have changed their stance regarding a rate increase or decrease, then the Pound will move strongly and we will no doubt see huge moves on the pair.
FOREX NEWS: A BATTERED US DOLLAR SEEKS AID FROM THE CONSUMER SENTIMENT SURVEY
EUR/USD
Forex News: The euro dollar pair continued to climb without conviction but failed to move decisively above the barrier at 1.1215. The lack of macroeconomic releases contributed to the choppy movement seen yesterday.
Technical Outlook
The pair’s next move is unclear as lately it has been drifting and neither side was in control. As long as 1.1215 is not broken and then re-tested from above, it remains resistance and our bias remains bearish. A bullish break of 1.1215 would open the door for the next level of interest which is located at 1.1320 and could reject price lower.
Fundamental Outlook
The fundamental scene is busier today: the first potential market mover is the German Final Consumer Price Index which is expected to show a value of 0.2%, same as previous. However, a higher value would suggest that inflation picks up and could bring euro strength. The time of the announcement is 6:00 am GMT.
The University of Michigan will release at 2:00 pm GMT the Consumer Sentiment survey which is tightly correlated with consumer spending, so a higher value than the anticipated 91.8 could mean that spending among consumers will increase in the near future. Higher than anticipated values are beneficial for the greenback.
GBP/USD
The Bank of England didn’t make any changes to the interest rate and the members’ votes came out as anticipated (only one member voted for a rate increase). The release initially generated a bullish spike which was quickly reversed, but the pair then climbed again so trading was difficult on the lower time frames.
Technical Outlook
The pair bounced at the 50 period Exponential Moving Average and is trading above 1.5330 so the short term bias is bullish. The first potential resistance is located at 1.5500, while support will be offered by the moving average, followed by 1.5330. The Relative Strength Index is approaching overbought for the second time in a short while and this can increase the chances of a move south.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for today so traders will focus on the U.S. releases and on the technical aspect.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: A LACKLUSTRE FUNDAMENTAL SCENE AHEAD OF THE MOST ANTICIPATED EVENT OF THE YEAR
EUR/USD
Forex News: U.S. data disappointed Friday as the Consumer Sentiment survey posted a much lower than expected value and the US Dollar reacted accordingly, weakening against the euro and allowing the pair to climb.
Technical Outlook
Last week ended close to 1.1320 resistance and both oscillators are showing an overbought condition. The bullish trend line broken a while back can also offer resistance and all these factors make us believe that price is likely to head lower today. If this is the case, the 50 period Exponential Moving Average will provide the first support barrier but considering the lack of financial releases, we might have a slow day.
Fundamental Outlook
At 9:00 am GMT the Euro Zone Industrial Production numbers are released, with an anticipated change from the previous -0.4% to 0.3%. Such a difference may strengthen the euro but the impact is usually mild. This is the only notable release of the day, so traders will focus more on the technical aspect.
GBP/USD
Friday’s price action was slow, with a bearish bias but the down move lacked strong momentum and overall no substantial advances were made by either side.
Technical Outlook
Friday’s price action shows that the bulls are starting to fade and possibly to make room for the bears to take over. The Relative Strength Index touched the 70 level twice in a short time and the Stochastic is showing bearish divergence; these facts make us anticipate a session controlled by the bears, with the moving average as target, but the lack of economic indicators may translate in a slow day.
Fundamental Outlook
As mentioned, there are no releases scheduled today for the Pound or the US Dollar so the technical factors will prevail.
FOREX NEWS: CLASH WITH SUPPORT. HOW STRONG THE BULLS REALLY ARE?
EUR/USD
Forex News: Yesterday’s price action was stronger than anticipated, but no major developments took place and the pair slowly descended below resistance.
Technical Outlook
Price has found resistance at the bullish trend line and started to move south, below 1.1320 which remains resistance. The Relative Strength Index and the Stochastic are moving down after reaching overbought and the balance is slowly tilting in favour of the bears, making the 50 period Exponential Moving Average the first potential target. If the bears cannot break this support quickly, we are likely to see another attempt to move above 1.1320.
Fundamental Outlook
The German ZEW Economic Sentiment survey is the day’s first important release, scheduled at 9:00 am GMT and expected to show a strong drop to 18.3 from the previous 24.0. This survey of 275 German professional investors and analysts acts as a leading indicator of economic health and higher than expected numbers are usually beneficial for the euro.
The United States will release the Retail Sales numbers at 12:30 pm GMT. The indicator usually has a hefty impact on the US Dollar and higher values than the forecast 0.4% (previous 0.6%) are beneficial for the currency.
GBP/USD
The bulls faded yesterday and the pair started to move south for a touch of the 50 period Exponential Moving Average. The day lacked major news announcements or special events.
Technical Outlook
The move lower encountered support at the 50 period Exponential Moving Average on a four hour chart and price is likely to push higher before breaking this form of dynamic support. However, a move above 1.5500 is not very probable, unless we see solid numbers for today’s British economic data. A break of the moving average will make 1.5330 the first destination for the pair.
Fundamental Outlook
At 8:30 am GMT the British Consumer Price Index is released and expected to show a value of 0.0% (previous 0.1%). The CPI is an important gauge of inflation and higher numbers are considered bullish for the Pound, so we may see a climb for the pair if the actual number will surpass analysts’ expectations. Later in the day, the pair will be influenced by the U.S. retail sales data.
FOREX NEWS: U.S. INFLATION TAKES CENTRE STAGE AS WE APPROACH FED’S DECISION
EUR/USD
Forex News: Although the US Dollar was affected by soft Retail Sales data, the pair didn’t move much yesterday and instead ranged for the most part of the day, moving almost sideways.
Technical Outlook
We are still anticipating a move south, towards the 50 period Exponential Moving Average but yesterday’s price action doesn’t hold many clues about future movement. After a period of sideways movement, price is likely to shoot strongly but the direction is hard to anticipate so keep an eye for any breakouts during the day. The levels of importance remain 1.1320, 1.1215 and the moving average.
Fundamental Outlook
The last major release ahead of the Fed Interest Rate is scheduled today at 12:30 pm GMT in the form of the US Consumer Price Index which is an important gauge of overall inflation in the United States. A small drop is expected, from the previous 0.2% to 0.1% and if this forecast comes true, we are likely to see dollar weakness.
GBP/USD
The British Consumer Price Index showed the anticipated value, which was lower than previous and the Pound felt the effects, weakening and moving lower throughout the day.
Technical Outlook
After a brief climb, the pair has pierced through the 50 period Exponential Moving Average and the bears seem to take control of price action on the back of disappointing British economic data. Both oscillators agree with a continued move lower so if the pair won’t bounce strongly at the moving average, we expect a touch of 1.5330.
Fundamental Outlook
At 8:30 am GMT the British Claimant Count is released, showing the change in the number of people who asked for unemployment related aid. Higher levels of unemployment point towards a contracting economy and a potentially weaker Sterling so higher numbers than the expected -5.1K are usually detrimental for the currency.
FOREX NEWS: TO INCREASE OR NOT? THAT IS THE QUESTION!
EUR/USD
Forex News: Yesterday’s main event was the release of the American Consumer Price Index which showed a worse than anticipated value, reversing a previous drop seen earlier in the day.
Technical Outlook
The pair touched 1.1215 target and bounced almost perfectly immediately after, mostly because of the disappointing U.S. inflation numbers. Today the markets are faced with an almost historical event – Fed’s rate announcement – so during the day, price direction will present irregular behaviour and possibly sharp turns, with the technical aspect being almost entirely overshadowed. Extreme caution is recommended throughout the day and especially at release time.
Fundamental Outlook
The Fed will announce their decision today at 6:00 pm GMT. Earlier during this week, the majority of analysts expected an increase from 0.25% to 0.50% but now opinions are mixed: some expect a rise to 0.38%, while others expect the rate to remain unchanged. Nonetheless, the event will create a lot of volatility and probably substantial movement. At 6:30 pm GMT Fed Chair Janet Yellen will hold a press conference, offering details about the decision.
GBP/USD
The pair dropped to touch 1.5330 support and then bounced strongly although the British Claimant Count Change showed a worse than expected value. The climb can be mostly attributed to a surprise announcement of the British Inflation Report Hearings, which came just a few hours before the event.
Technical Outlook
The resistance at 1.5500 is now standing in front of rising price and the bulls are struggling to break it. Due to the fact that price has travelled a long distance in a short while, we anticipate a bearish pullback before the next move but during the day, direction will be heavily influenced by the Fed Rate and, same as with the EUR/USD, the technical aspect will be secondary to the fundamentals.
Fundamental Outlook
The British Retail Sales numbers come out at 8:30 am GMT, expected to show a change of 0.2% compared with the previous 0.1%. Because sales made at a retail level represent a major part of the entire economic activity, higher numbers can strengthen the Pound, but the impact will probably be low compared to the Fed Rate announcement.
Yesterday price action was slow until the huge Fed event and once the decision to maintain the rate unchanged hit the markets, the US Dollar weakened substantially against most of its peers. However, Fed Chair Yellen mentioned that an October hike is not out of the question if overall economic and especially labor-market conditions improve.
Technical Outlook
The minor resistance at 1.1320 was easily breached and now price is approaching 1.1450, but the US Dollar weakness generated by the Fed decision is likely to push the pair above this level. The oscillators are moving upwards, without showing an extreme condition, increasing the chances of a continued move north. Keep in mind that the Fed mentioned a hike is approaching and this might generate dollar strength although the initial impulse was bearish for the greenback.
Fundamental Outlook
Today there are no major economic indicators released by either the Euro Zone or the United States, so we expect a day driven mostly by the negative sentiment surrounding the US Dollar and by the technical factors.
GBP/USD
Similar to the euro-dollar pair, this pair had a choppy session ahead of the Fed rate announcement but dollar weakness generated a strong move up which is now threatening resistance.
Technical Outlook
It is very likely that we will see more upside movement but it is also important to note that both the Relative Strength Index and the Stochastic are overbought and this might generate a bearish pullback. First support is located at 1.5500 (such a move is less likely), while resistance is located at 1.5675 but before this level can be touched, the mentioned correction is likely to occur.
Fundamental Outlook
Bank of England Chief Economist Andy Haldane will speak today at 11:05 am GMT in Northern Ireland at the Portadown Chambers of Commerce. The speech may bring Pound strength if his attitude is more hawkish than expected but we don’t anticipate major moves.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: MOVING SOUTH: RETRACEMENTS OR REVERSALS?
EUR/USD
Forex News: Friday the bulls gave back most of the gains obtained a day before and the entire session was bearish, following a touch of resistance.
Technical Outlook
The rejection at 1.1450 shows that market participants are still optimistic about a Fed rate hike this year and that the US Dollar is still not ready to surrender. If the 50 period Exponential Moving Average can be broken to the downside during the early hours of the day, we expect price to head towards 1.1215 where will probably pause. The oscillators are moving downwards, supporting bearish price action, but a move above 1.1320 will invalidate a bearish scenario and would possibly trigger a move up or a ranging session.
Fundamental Outlook
The euro will be affected today by the Greek Parliamentary Elections held Sunday and the US Dollar will be influenced by the Existing Home Sales, released at 2:00 pm GMT and expected to show 5.50M compared with the previous 5.59M (annualized numbers). Higher values suggest a thriving house-market and could bring US Dollar strength, although the extent may be limited.
GBP/USD
Similar to the euro, the Sterling gave back most of the gains triggered by the Fed decision to maintain rates and the pair travelled south for almost the entire duration of Friday’s trading session.
Technical Outlook
We expect to see some bullish price action once 1.5500 support is touched, but both the Stochastic and the Relative Strength Index are moving lower, coming from overbought territory and this suggests that we may see an extended move south even if price will bounce slightly higher at the mentioned level. If 1.5500 is breached, the 50 period Exponential Moving Average will become the first target, followed by the bullish trend line visible on the chart above but such a move is probably too strong for a quiet day like Monday.
Fundamental Outlook
The pound-dollar pair will be influenced today just by the U.S. Existing Home Sales and by the technical aspect since the United Kingdom didn’t schedule any news releases.
FOREX NEWS: US DOLLAR PUSHING HARD, BREAKING SUPPORT
EUR/USD
Forex News: The greenback quickly shook off the weakness created by the Fed decision and yesterday we had a bearish session as a result. A small bullish pullback was seen but it found resistance at 1.1320 and the pair started to drop.
Technical Outlook
Now we have confirmed resistance at 1.1320 and the pair is heading strongly towards the support at 1.1215. The bullish trend line visible on the chart above is broken, price is trading below the 50 period Exponential Moving Average and the oscillators are heading south, without being oversold, so all things point towards a break of 1.1215, followed by a move lower. A bullish break of 1.1320 resistance would invalidate such a scenario for the time being.
Fundamental Outlook
The only notable indicator of the day is the Euro Zone Consumer Confidence survey released at 2:00 pm GMT. Numbers above zero indicate optimism regarding financial conditions and suggest that consumer spending is likely to increase but for today’s release the expected value is -7 (same as previous). A higher number is beneficial for the single currency but the impact is often mild.
GBP/USD
The US Dollar strengthened against the Pound as well but no substantial advances were made and the pair is still trading above support.
Technical Outlook
Although yesterday’s trading session was bearish, the resistance at 1.5500 is not yet broken and the pair is still trading above the 50 period Exponential Moving Average, so bullish price action can still be expected. Once (and if) these two forms of support are broken, we anticipate a touch of the bullish trend line seen on the chart above.
Fundamental Outlook
At 8:30 am GMT the British Public Sector Net Borrowing comes out, showing the amount of debt held by public corporations and the government. A higher value than the forecast 8.7B is detrimental for the Sterling and will probably take the pair lower.
FOREX NEWS: DRAGHI TESTIFIES, US DOLLAR RUNNING ON ALL ENGINES
EUR/USD
Forex News: The greenback continued its run yesterday and managed to break support, generating another day controlled by the bears. The Euro Zone Consumer Confidence survey came out with the expected value and didn’t affect the pair much.
Technical Outlook
The dollar is going strong and the pair is trading below 1.1215, heading for 1.1100 but the Stochastic and the Relative Strength Index are approaching extreme territory, thus a bullish retracement is in order. We believe this pullback will occur before 1.1100 can be broken and that it will find resistance somewhere around 1.1215. If this level holds as resistance, we will most likely see a break of 1.1100 during the days to come.
Fundamental Outlook
The French Manufacturing PMI is released at 7:00 am GMT, expected to show a value of 48.6 and half an hour later the same indicator for the German economy is released, with a forecast of 52.8. These surveys act as leading indicators of economic health and higher than anticipated numbers have a positive impact on the euro.
ECB President Mario Draghi will testify on monetary policy before the European Parliament today at 1:00 pm GMT and this will probably be the most important event of the day. His attitude and answers will dictate the next euro direction so caution is recommended during his speech.
GBP/USD
The British Public Sector Net Borrowing showed more debt than anticipated and the Pound suffered the effects, weakening against the greenback for almost the entire day.
Technical Outlook
The bullish trend line we mentioned yesterday is now clearly broken and 1.5330 support is now threatened, with the bears being in clear control of short term price action. However, price has travelled too far and too fast and the oscillators are entering oversold, increasing the chances of a move north in the form of a pullback. When this move occurs, it should be treated as a simple retracement, not a reversal and once it is complete, we expect a break of 1.5330 support.
Fundamental Outlook
The United Kingdom didn’t schedule major news announcements for today so centre stage will be held by the technical factors.
FOREX NEWS: US DOLLAR CONTINUES TO DEFY SUPPORT. RETRACEMENTS AHEAD
EUR/USD
Forex News: The euro-dollar pair continued to move lower yesterday and came in close vicinity of the support at 1.1100. A hawkish attitude adopted by ECB President Mario Draghi pushed the pair higher in the afternoon.
Technical Outlook
The current move up is likely to continue until 1.1215 is touched but once this important level is reached, we expect a bounce lower that will take the pair below 1.1100. This level is key for short term movement and a break would be a substantial victory for the bears but note the oversold condition of the Stochastic and the fact that both oscillators have already started to move higher; these facts will favour a move north but we don’t expect a clear break of 1.1215.
Fundamental Outlook
At 8:00 am GMT the German IFO Business Climate survey is released, showing the opinions of about 7,000 businesses about economic conditions as well as an outlook for the next 6 months. Due to its large sample, this survey has a hefty impact on the euro and higher numbers than the expected 107.8 can take the pair higher.
On the US Dollar side we have the Durable Goods Orders, scheduled for release at 12:30 pm GMT and expected to show a change of -2.0%, much lower than the previous 2.2%. Such a substantial drop would weaken the US Dollar, allowing the pair to climb.
GBP/USD
The pair moved lower for almost the entire day, without any sort of retracement to the upside, just a brief period of sideways movement, seen on the lower time frames.
Technical Outlook
A bullish pullback is still expected, considering the long distance travelled in one direction and the oversold condition of both the Stochastic and the Relative Strength Index. Once this retracement is complete and downside movement resumes, we expect a break of 1.5200 but a move above 1.5330 would invalidate such a scenario for the moment.
Fundamental Outlook
AT 8:30 am GMT the British Bankers’ Association release the Mortgage Approvals which offer insights into the housing market. The indicator is not exceptionally important and the impact is usually low but higher numbers than the expected 46.3K can bring some strength for the Pound.
Forex News: The euro benefited from better than expected data yesterday while the US Dollar was weakened by a worse than previous value of the Durable Goods Orders thus the pair climbed for most of yesterday.
Technical Outlook
The pair moved to the upside more than expected and now it is heading towards the resistance located at 1.1320. The bullish trend line broken a while back and visible on the chart above can also offer some resistance, creating a confluence zone combined with 1.1320. This resistance area is likely to push the pair lower and if this is true, the 50 period Exponential Moving Average will become the first support which needs to be broken, followed of course by 1.1215.
Fundamental Outlook
Today at 12:30 pm GMT the Final version of the United States Gross Domestic Product is released and although this is the least important out of the three (Advance, Preliminary and Final), it still can create strong movement, especially if the actual value shows a big difference compared to analysts’ forecast. The expected number is 3.7%, same as previous and a higher value suggests a thriving economy and could strengthen the US Dollar, taking the pair lower.
GBP/USD
After a perfect touch of support, the pair bounced higher, completing a much needed retracement. Yesterday price action was choppy and difficult to trade especially on the lower time frames.
Technical Outlook
The bounce at 1.5200 shows that the bulls are starting to fight back and both oscillators are in oversold territory, starting to move upwards. This means that we may see an extended move to the upside but it’s important to note the last few candles show long upper wicks, which is a sign of rejection and a hint that price may be ready to move south again. Short term resistance is located at 1.5285.
Fundamental Outlook
Similar to the rest of the week, today is slow as far as economic releases are concerned and the United Kingdom didn’t schedule major indicator announcements. The pair’s direction will be affected by the U.S. GDP and by the technical factors.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: GREENBACK STEALS THE SHOW AS RATE HIKE SPECULATION SPURS VOLATILITY
EUR/USD
Forex News: Friday’s price action was mixed, with the bears making another failed attempt to move the pair below 1.1100; instead the bulls gained control and took the pair into resistance. However, no important levels were broken.
Technical Outlook
The 50 period Exponential Moving Average and the level at 1.1215 are now the first resistance zone in front of rising prices. Recently we saw a bullish move above 1.1215 which couldn’t be sustained and price soon dropped so the same scenario might occur today unless we see a successful re-test after a potential bullish break. The oscillators don’t offer important hints about the next direction so we are dealing with a classic bounce-or-break scenario with 1.1215 as the main star of the play.
Fundamental Outlook
At 12:30 pm GMT Wall Street Journal’s Jon Hilsenrath will interview FOMC voting member William Dudley. The topic is the always important inflation and interest rate so the event may trigger increased volatility and strong movement. Later in the day, at 2:00 pm GMT the U.S. Pending Home Sales are released, expected to show a change of 0.4% compared to the previous 0.5%; higher values point towards a thriving economic environment and usually strengthen the greenback to some extent.
GBP/USD
Friday the pair dropped below support and then returned to re-test it but the market closed before the outcome of the re-test could be known.
Technical Outlook
The support at 1.5200 was breached and currently a re-test is in progress but it is important to note the extreme oversold condition signaled by both the Stochastic and the Relative Strength Index. The oscillators have spent a long period below their respective oversold levels and this drastically increases the chances of a bullish move above 1.5200. The greenback will be affected by the interview given by FOMC member Dudley and this event is likely to decide the pair’s next move.
Fundamental Outlook
All eyes will be on the US Dollar today for the events mentioned before as the United Kingdom didn’t schedule major news announcements.
FOREX NEWS: BOUNCE-OR-BREAK SCENARIO STILL IN PLAY AHEAD OF GERMAN INFLATION, U.S. CONSUMER CONFIDENCE
EUR/USD
Forex News: Yesterday’s movement was slow and mixed for most of the session but in the afternoon the US Dollar suffered from much worse than expected Pending Home Sales, so the pair moved higher. Although Federal Reserve Bank of New York President William Dudley expressed his belief that a rate hike will come later in the year, the greenback didn’t show a strong reaction.
Technical Outlook
Given yesterday’s slow movement, the outlook remains almost the same: the bounce-or-break scenario is still in play, with the confluence zone created by 1.1215 and the 50 period Exponential Moving Average offering the first resistance. A bullish break should be confirmed by a re-test from above while a successful bounce will probably take the pair into the first support, located at 1.1100.
Fundamental Outlook
Today’s direction will be affected by German inflation numbers released at 12:00 pm GMT in the form of the Consumer Price Index. The expected value is 0.1% (previous 0.2%) and a drop would be another blow dealt to an already weak euro so we are likely to see bearish movement if the forecast comes true.
At 2:00 pm GMT an U.S. Consumer Confidence survey comes out, expected to drop to 96.2 from the previous 101.5. Because consumer confidence is tightly correlated with consumer spending, a lower value usually weakens the greenback.
GBP/USD
The bulls attempted yesterday to take price above 1.5200 but did not succeed and the pair is now trading below this level. Overall the session was choppy on the lower time frames.
Technical Outlook
A bullish pullback is still expected but the Pound seems to be weak and 1.5200 acts as a strong resistance zone. A close of a strong bullish four-hour candle above this level will probably trigger a retracement to the upside and 1.5285 will become the first potential target. The oscillators still haven’t cleared their oversold condition and this will increase the chances of a move north but keep in mind that overall the picture is bearish.
Fundamental Outlook
At 7:40 pm GMT, Bank of England Governor Mark Carney will deliver a speech at Lloyds of London. A more hawkish than expected attitude will generate pound strength and hints about the nearing of a rate hike will bring strength to the currency as well.
