Technical News | Daily

Trading Discussion Currencies
362

FOREX NEWS: MIXED ACTION AHEAD OF U.S. DURABLE GOODS, NEW HOME SALES

EUR/USD

Forex News: The pair climbed yesterday when the German IFO survey posted a figure that surpassed analysts’ expectations, but a better than expected value of the American GDP brought the pair lower so overall we had a day driven by the economic releases.


Technical Outlook

The level at 1.0660 was briefly breached yesterday but the pair is showing rejection now and this makes our bias bearish for a touch of 1.0500 support. To the upside, 1.0660 remains good resistance, followed by the 50 period Exponential Moving Average and if price will break these forms of resistance, turning them into support, we are likely to see a move into 1.0790.

Fundamental Outlook

The day’s main event is the release of the U.S. Durable Goods Orders, scheduled at 1:30 pm GMT and expected to show a change of 1.6%, while the previous was -1.2%. These are goods with a life expectancy of at least three years and are usually more expensive so a higher demand for such goods suggests a thriving economy, thus higher numbers usually strengthen the US Dollar.

Later in the day, at 3:00 pm GMT the US New Home Sales come out, with a forecast of 500K, higher than the previous 468K. Since the housing market is very important for the U.S. economy, higher than expected values are beneficial for the greenback.

GBP/USD

The Inflation Report Hearings were overall dovish and the Pound suffered the effects yesterday, weakening and heading significantly lower.


Technical Outlook

The pair touched 1.5155 again and bounced lower, confirming the level as resistance. During yesterday’s sell off, the pair broke the support at 1.5100 and is now headed towards the next support, located at 1.5030. Both the Relative Strength Index and Stochastic are oversold, which is an early warning that a bullish pullback will soon happen; if this is the case, the pair can find resistance at 1.5100.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases for today so the pair’s direction will be mainly affected by the US releases and by the technical side of the market.

363

FOREX NEWS: U.S. BANKS CLOSE THEIR DOORS FOR THANKSGIVING HOLIDAY. US DOLLAR MOVES ERRATICALLY

EUR/USD

Forex News: ECB Vice President Constancio made dovish remarks yesterday about downside risks to economic growth and potentially further action from the ECB at their 4th of December meeting; the euro collapsed through 1.0660 as a result.


Technical Outlook

After a brief move above 1.0660 the pair dropped and we saw the strongest movement of the latest period. The 50 period Exponential Moving Average offered good resistance and now the downtrend is resumed with both oscillators moving downwards, without being oversold. The next target is 1.0500 but today the United States celebrate Thanksgiving so the market is likely to suffer from low liquidity, irregular volatility and possibly choppy movement.

Fundamental Outlook

The Eurozone didn’t schedule major news releases and banks in the United States are closed, celebrating Thanksgiving Day. Caution is recommended, for the reasons outlined above.

GBP/USD

The pound-dollar moved without clear direction yesterday, above and below 1.5100, without being much affected by the US economic data that came out during the day.


Technical Outlook

Price breached 1.5100 to the upside but bounced lower soon afterwards and now the pair is trading below this level, making us anticipate a touch of 1.5030. However, we have to note that the oscillators are exiting oversold areas and on top of that, the bearish momentum seems to be fading. These factors favour a move to the upside, possibly close to 1.5155 but the market signals are mixed and caution is recommended.

Fundamental Outlook

The United Kingdom didn’t schedule important news releases for today but Thanksgiving will affect the US Dollar and consequently the pair’s movement.

364

FOREX NEWS: DOLLAR BULLS RESUME ACTIVITY, VOLATILITY PICKS UP AFTER THANKSGIVING DAY

EUR/USD

Forex News: Yesterday the United States celebrated Thanksgiving Day and as expected, the euro-dollar pair didn’t make significant advances to either side. Also, the economic calendar didn’t contain major news releases, contributing to the slow action.


Technical Outlook

Yesterday’s sideways price action doesn’t change our bearish bias and we are still anticipating a move into 1.0500 support. The 50 period Exponential Moving Average and the level at 1.0660 create a confluence zone which can offer strong resistance if touched from below but on the other hand, a break of this zone would be a sign that the bulls are ready to erase some of the losses and to create a stronger retracement to the upside.

Fundamental Outlook

The only notable event of the day is the release of the Spanish Consumer Price Index, scheduled at 8:00 am GMT and expected to show a change of -0.5% (previous -0.7%). Spanish inflation is important for the Eurozone but we don’t expect to see strong movement at the release time unless the actual figure differs a lot from analysts’ expectations.

GBP/USD

The pair continued to reverse all impulses and had another day when it travelled above and below 1.5100, without establishing a clear direction.


Technical Outlook

Price is confined inside a triangle and before we can see any directional movement, this pattern needs to be broken. Once that happens, the first bullish target is 1.5155 and to the downside, 1.5030 remains key support. If the pair will reach either the bullish or the bearish target, we expect it to bounce or stop for a while. Direction will be affected today by the economic data scheduled for release.

Fundamental Outlook

At 9:30 am GMT the United Kingdom releases the Second Estimate Gross Domestic Product which is not anticipated to change from the previous 0.5%. The Preliminary version of the GDP (already released) is the most important, but today’s release can bring strong movement as well, with higher values being beneficial for the Pound.

We hope you had a profitable trading week and we wish you a relaxing weekend.

365

FOREX NEWS: A BUSIER MONDAY THAN USUAL: GERMAN INFLATION, U.S. HOUSING DATA AHEAD

EUR/USD

Forex News: Friday was a pretty slow day, with some bearish price action but the previous low wasn’t broken and no other major advances were made.


Technical Outlook

Price action is mostly sideways and the pair is contracting between 1.0660 and 1.0570 which is now minor support. Usually a contraction period is followed by a breakout and because today Germany releases important economic data, we expect such a breakout to occur, with the direction depending on the actual numbers posted. The 50 period Exponential Moving Average is the first area of resistance and if broken, the bullish movement is likely to continue for the rest of the day.

Fundamental Outlook

Early at 7:00 am GMT the German Retail Sales are released, expected to show a change of 0.3% compared with the previous 0.0%. Because sales made at retail levels represent a major part of the entire economic activity, higher numbers are beneficial for the German economy and thus for the euro. Later in the day, at 1:00 pm GMT, the German Preliminary CPI comes out, with an anticipated value of 0.1% (previous 0.0%); inflation growth could translate in a stronger euro, so look for bullish moves if the forecast comes true or if higher numbers are posted.

On the US Dollar side we have the Pending Home Sales, released at 3:00 pm GMT and expected to show a 1.6% increase (previous -2.3%). The indicator has medium impact but higher values are beneficial for the greenback.

GBP/USD

The pair also had a bearish Friday, breaking below a bullish trend line and touching support. The British GDP matched analysts’ expectations so the release didn’t have a strong impact.


Technical Outlook

We expect the pair to bounce higher at 1.5030 support creating a bullish retracement. The first target of this pullback is the recently broken bullish trend line, followed by the resistance at 1.5100. If 1.5030 support is broken to the downside, the next barrier is represented by 1.4970. The oscillators are still moving downwards, favouring an extended move south but the economic calendar is light today so it’s possible to see slow movement.

Fundamental Outlook

The day ahead is slow for British economic announcements so the pair’s direction will be mostly influenced by the technical aspect and by the U.S. housing data.

366

FOREX NEWS: CRAWLING ALONG SUPPORT. BREAKOUTS ANTICIPATED

EUR/USD

Forex News: The pair had an incredibly slow day, despite worse than expected German Retail Sales which normally would weaken the euro. The support was not broken and price moved mostly sideways.


Technical Outlook

The pair is crawling on 1.0570 support and totally lacks momentum but this behaviour will most likely come to an end today. A breakout and a move outside the range defined by 1.0570 and 1.0660 are expected but the direction of this breakout is difficult to anticipate considering how the pair has been moving lately, so look for a re-test of the broken level and keep in mind that false breaks can occur.

Fundamental Outlook

The United States release the Manufacturing PMI today at 3:00 pm GMT and this is the only potential market mover of the day for the dollar. The survey acts as a leading indicator of economic health but as always the impact will be stronger if the actual number differs from analysts’ forecast (which is 50.6), with higher values strengthening the US Dollar.

GBP/USD

Yesterday the pair managed to break 1.5030 support and touched 1.5000 but soon retraced higher, creating a whipsaw and overall a difficult trading session.


Technical Outlook

The bears failed to capitalize on the break of support and on top of that, a bounce is visible at 1.5000 psychological support. The Stochastic is oversold starting to curve upwards and the Relative Strength Index is showing bullish divergence (oscillator makes higher lows while price prints lower lows). All these factors make us anticipate a move upwards, into 1.5100 resistance. As an alternate scenario, a break of 1.5000 will open the door for a touch of 1.4970.

Fundamental Outlook

At 7:00 am GMT the Bank of England will release the Financial Stability Report, along with the results of the Bank Stress Tests. Two hours later, at 9:00 am GMT, BOE Governor Mark Carney will hold a press conference, discussing the results of the Stress Tests and the Stability Report. This will probably be the most volatile time of the day, with strong moves and possibly sharp turns.

At 9:30 am GMT the British Manufacturing PMI comes out, expected to show a value of 53.7. Higher numbers are beneficial for the Pound but this release is likely to be eclipsed by Mark Carney’s press conference mentioned earlier.

367

FOREX NEWS: PREPARE FOR VOLATILITY: FIRST LOOK AT U.S. JOBS SITUATION AND EUROPEAN INFLATION DATA

EUR/USD

Forex News: U.S. Manufacturing data came out worse than expected yesterday and the greenback felt the consequences, weakening against most of its counterparts and triggering a bullish day for the euro-dollar pair.


Technical Outlook

The bullish retracement is likely to extend higher if the current resistance zone can be surpassed. Initial short term resistance is located at 1.0640, followed by 1.0690 and the 50 period Exponential Moving Average will play an important role because it can become support if the pair closes a full candle above it. We favour the upside but we are in a downtrend so a clean break of 1.0560 can trigger additional movement south.

Fundamental Outlook

At 10:00 am GMT the Eurozone Flash Estimate CPI is announced, expected to show a change of 0.2% compared to the previous 0.1%. Since this is the main gauge of inflation, which is currently to low, higher numbers will strengthen the euro, potentially having a strong impact.

Later in the day, at 1:15 pm GMT Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change. The indicator doesn’t have the huge impact of the NFP which is released two days later but nonetheless, it offers a first look into U.S. employment situation, thus higher numbers than the expected 191K will strengthen the US Dollar.

GBP/USD

Mark Carney’s speech was rescheduled yesterday one hour earlier than initially programmed and overall his attitude was hawkish, expressing optimism about the economic outlook and the Bank Stress Tests results.


Technical Outlook

The pound reacted to Carney’s comments by rallying higher against the greenback and hitting 1.5100 zone of resistance. Now it is showing rejection at the 50 period Exponential Moving Average and has moved back below 1.5100 so for today we anticipate another attempt to break 1.5000 key support. A lot will depend on the economic data released throughout the day so the technical aspect might be secondary.

Fundamental Outlook

The first event that will affect the pair’s movement is the British Construction PMI, a survey of about 170 purchasing managers who will offer their opinion on the health of the construction sector. The release is scheduled at 9:30 am GMT, the expected number is 58.4 and figures above it will most likely strengthen the Pound. Later in the day, the pair will be affected by the U.S. jobs indicator mentioned earlier.

368

FOREX NEWS: A BIG DAY FOR THE EURO – ECB ANNOUNCES INTEREST RATE, TALKS ABOUT INCREASED STIMULUS

EUR/USD

Forex News: Inflation in the Eurozone decreased as showed by yesterday’s CPI release and across the ocean, the jobs situation has improved. All this created an overall bearish trading session but support is still holding.


Technical Outlook

Although yesterday’s movement wasn’t huge, we expect the dollar strength created by positive jobs data and the euro weakness created by disappointing inflation numbers to bring more downside pressure for the pair. The first barrier in front of the bears is the horizontal support at 1.5060 and the next target is the more important level at 1.0500. A move up will encounter resistance at 1.0640 but we favour the short side.

Fundamental Outlook

It’s a big day for the euro as the ECB announces their rate decision today at 12:45 pm GMT. There is no change expected (currently 0.05%) but there has been speculation about increased quantitative easing (QE) so the press conference that follows at 1:30 pm GMT will be even more important than usual. During this conference, ECB President Mario Draghi will discuss the rate decision and a possible increase of the QE but will also answer journalists’ questions so we expect strong movement and we recommend caution during the day.

GBP/USD

The British Construction sector showed a worse than expected number, while the greenback benefited from the jobs data, creating a strongly bearish session yesterday and breaking key support.


Technical Outlook

The support levels at 1.5000 and 1.4970 were broken decisively yesterday and although the downtrend is now renewed, we expect a rubber band effect and a move higher. This move will likely find resistance around 1.4970 and should be considered just a consequence of the fact that price travelled too low, too fast. In other words, a retracement higher is due, followed by another dip lower; however a close of a four hour candle above 1.5000 could suggest that the downtrend is exhausted.

Fundamental Outlook

At 9:30 am GMT the Services PMI comes out, expected to show an increase to 55.1 from the previous 54.9. The indicator measures optimism among purchasing managers from the services sector but usually has a medium impact; higher than expected values are beneficial for the Pound.

Later in the day, at 3:00 pm GMT, Fed Chair Janet Yellen will testify before the Joint Economic Committee, with the topic being monetary policy. Depending on her attitude, the event may create volatility, thus caution is recommended.

369

FOREX NEWS: CURRENCY WARS CONTINUE. FOCUS SHIFTS ON U.S EMPLOYMENT DATA FOR ANOTHER WILD DAY

EUR/USD

Forex News: The ECB decided to cut the deposit rate by 10 basis points, in an attempt to raise inflation in the Eurozone. During the press conference that followed ECB President Mario Draghi mentioned that ECB’s measures will “ensure accommodative monetary conditions”.


Technical Outlook

The euro soared against most of its counterparts and the greenback was no exception. The pair climbed dramatically yesterday, breaking several resistance levels in a move that extended more than 350 pips but the next direction will be heavily dependent on the U.S. jobs situation and a potential rate hike later this month. Such a huge move is likely to retrace lower after a bounce at 1.0900 but considering yesterday’s movement, almost anything is possible so use caution throughout the day.

Fundamental Outlook

The technical aspect will be overshadowed today by the release of the U.S. Non-Farm Payrolls scheduled at 1:30 pm GMT and expected to show a number of 201K new jobs compared to the previous 271K. The Fed is closely watching employment levels for their decision to raise rates and this makes today’s release more important than usual, with higher numbers strengthening the US Dollar.

GBP/USD

British Services PMI came out higher than expected, strengthening the Pound but the massive move seen on the pair yesterday wasn’t entirely generated by this report.


Technical Outlook

The pair moved north through several levels but it appears to have found resistance at the 50 period Exponential Moving Average on a four hour chart. Same as with the EUR/USD, the next move will depend on the result of the NFP report but strictly from a technical perspective, we expect a move lower, which can find support at 1.5000. If here price shows rejection, we are likely to see a bounce higher, above the 50 period EMA.

Fundamental Outlook

Today the United Kingdom didn’t schedule major news releases but the U.S Non-Farm Payrolls will be the highlight of the day, potentially triggering strong moves.

We hope you had a profitable trading week and we wish you a relaxing weekend.

370

FOREX NEWS: DELAYED IMPACT OF THE NFP RESULTS. THE US DOLLAR HITS BACK

EUR/USD

Forex News: Friday’s most anticipated event failed to deliver the volatility we expected and although the NFP report showed that 211K new jobs were created during the past month (forecast 201K), the US Dollar didn’t strengthen substantially.


Technical Outlook

The pair did retrace lower on the back of limited US Dollar strength but movement was choppy and difficult to trade. For today we expect slow price action, confined between 1.0825 support and 1.0900 resistance. It is possible that we will see a test of the high created last Thursday (1.0980) but we don’t expect this level to be broken today.

Fundamental Outlook

Today the Eurogroup Meetings take place, attended by political and financial figures from the European Union member states. The event is closed to the press but sometimes participants talk to journalists during the day and once the meetings have concluded, an official statement is released. Increased volatility is possible, depending on the matters discussed.

GBP/USD

Choppy movement was seen on the pound-dollar pair as well and the better than expected U.S. employment data didn’t affect much the greenback. Indecision is present as the market searches for the next direction.


Technical Outlook

Price stopped close to the level at 1.5100, which now acts as some form of support but a couple of candles closed below it and the rest show long wicks, suggesting indecision. The latest down move is considered just a retracement to the strong up move seen Thursday but a drop below 1.5100 and below the 50 period Exponential Moving Average would suggest that the effects of the better than expected NFP report are starting to show, making 1.5030 the next target.

Fundamental Outlook

At 3:00 pm GMT the Governor of the Bank of England will testify before the Committee on Economic and Monetary Affairs of the European Parliament. The exact impact is not known but a hawkish attitude will generate Pound strength and a dovish attitude will weaken the currency, bringing the pair lower.

371

FOREX NEWS: MOVING TIMIDLY LOWER. SUPPORT STILL IN THE WAY

EUR/USD

Forex News: The effects of the better than expected NFP report were seen during yesterday’s trading session and the pair moved lower in what is still a retracement to the big move seen last week.


Technical Outlook

The bears are struggling to break 1.0825 support, with the Relative Strength Index and the Stochastic coming out of overbought. If this barrier can be broken, the pair will most likely head towards the 50 period Exponential Moving Average where it will probably start to move up again. On the other hand, a bounce above 1.0825 would suggest a continuation of the move started last Thursday and at least a touch of 1.0900.

Fundamental Outlook

The ECOFIN Meetings are the day’s main event. These are attended by finance ministers from the European Union member states and usually the volatility isn’t much affected, unless some very important talks take place; nonetheless, caution is recommended.

GBP/USD

The pair moved lower yesterday, but no major moves occurred and although support was breached, this cannot be considered a clear break.


Technical Outlook

The support at 1.5075 was broken yesterday but price did not move lower once this happened. Movement is slow and it doesn’t look like the bears have enough strength to reach 1.5000 or even 1.5030. A full candle closed below the 50 period Exponential Moving Average could tilt the balance in favour of the short side and a full candle closed above it would put the bulls in short term control, aiming for 1.5160.

Fundamental Outlook

The British Manufacturing Production numbers are released today at 9:30 am GMT, expected to show a change of -0.1% compared with the previous 0.8%. The manufacturing sector is of major importance to the British economy, so a drop might weaken the Pound.

Later in the day, at 3:00 pm GMT the NIESR Gross Domestic Product Estimate is released. The previous number was 0.6% and higher values are beneficial for the Pound but the extent is sometimes limited.

372

FOREX NEWS: ECONOMIC DATA IS SCARCE, OSCILLATORS OFFER MIXED SIGNALS, TECHNICAL SIDE PREVAILS

EUR/USD

Forex News: The pair showed a bullish bias yesterday, bouncing at support and heading into resistance. The day lacked major news announcements and overall we had a calm trading session.


Technical Outlook

The bounce at 1.0825 support shows that the bulls are preparing to make another run for 1.0980. For that to happen, 1.0900 resistance must be broken but this is not a major level so if the bullish pressure continues, we are likely to see it broken soon. The Relative Strength Index is approaching overbought again, but the Stochastic is not showing the same behaviour so the signals are mixed and not very reliable.

Fundamental Outlook

The day ahead lacks major economic news announcements for both the Euro and the US Dollar so we expect a day when price direction will me mainly influenced by the technical aspect.

GBP/USD

The British Manufacturing Production numbers showed a worse than expected value and this was the main reason for the drop below support seen yesterday.


Technical Outlook

Although the pair moved below 1.5030 and 1.5000 on the back of disappointing economic data, later in the afternoon it erased most of the losses, climbing back into 1.5000. If price will bounce lower here, the level will turn into resistance and we will probably see a move into 1.4895 support during the days to come. The Stochastic is oversold and the Relative Strength Index is approaching the same condition so the oscillators favour a move up, above 1.5000.

Fundamental Outlook

The United Kingdom also has a slow day in terms of economic releases so the technical side will be the primary focus of traders around the globe.

373

FOREX NEWS: BANK OF ENGLAND TAKES CENTRE STAGE FOR THE RATE AND STATEMENT RELEASE


EUR/USD

Forex News: Yesterday was a good day for the euro as it showed strength, taking the pair into the highs seen during the ECB press conference that took place last week.



Technical Outlook

Price is likely to bounce lower around 1.0980 resistance, considering that both the Stochastic and Relative Strength Index are moving in overbought territory. Also, the pair moved almost 200 pips to the upside without even the smallest retracement and this increases the chances of a bounce lower, with 1.0900 as target. Keep in mind that 1.1000 represents a psychological resistance so that would be another good place for a retracement to start. Overall the picture remains bullish so we expect further upside price action after the said pullback.

Fundamental Outlook

The U.S. Unemployment Claims are the day’s only notable event, scheduled at 1:30 pm GMT and expected to show a number of 266K compared to the previous 269K. A larger number of unemployed individuals is detrimental for the economy so it may weaken further the US Dollar.

GBP/USD

The Pound also had a strong day against the US Dollar, moving strongly above 1.5075 resistance and threatening 1.5160.


Technical Outlook

From a technical perspective the resistance at 1.5160 is key for medium-to-short term price movement and the way price behaves here will probably reveal the next direction. Although the price is now moving with strong momentum to the upside, we expect it to bounce lower but a lot of today’s price action will be heavily influenced by the Bank of England and their rate decision so the technical aspect will be somewhat secondary.

Fundamental Outlook

At 12:00 pm GMT the Bank of England will announce their official bank rate along with the Monetary Policy Summary which will outline the reasons behind the rate decision. At the same time a breakdown of the MPC members’ votes is released, showing how each member voted; however, no change is expected, either for the rate (0.50%) or for the members’ stance, but this cluster of events is likely to trigger volatility nonetheless.

374

FOREX NEWS: FED RAISES RATES. WHAT’S NEXT?


EUR/USD

Forex News: As expected, the pair showed slow and mostly sideways price action yesterday ahead of the Fed announcement but once the rate was raised to 0.50% as expected, the pair started to pick up speed. It seems like the rate hike was priced in the market and participants needed something more from Fed Chair Yellen but she mentioned that further rate increases will not be abrupt, a fact considered dovish by most traders.


Technical Outlook

At rate time the pair briefly went below 1.0900 but Yellen’s dovish speech at the press conference triggered US Dollar weakness and a move into 1.1000. Nonetheless, we must keep in mind that the rate was raised and further tightening will follow so we are likely to see downside action in the near future. The support zone created by 1.0900 and the 50 period Exponential Moving Average represents the first bearish target, while resistance sits at 1.1040.

Fundamental Outlook

At 9:00 am GMT the German IFO Business Climate survey comes out, expected to show a value of 109.2. The survey is based on the opinions of about 7,000 businesses regarding current economic conditions and outlook for the next 6 months; the large sample size of the survey is mostly why it has a big impact on the market. Higher than expected values usually trigger euro strength.

GBP/USD

The pair was a bit more energetic than the euro-dollar but still, direction until the U.S. rate was unclear. Movement remained irregular even after the rate announcement and press conference.


Technical Outlook

Price is still confined inside the channel created by 1.5075 resistance and 1.5000 support and the direction of the breakout will probably decide the path of the pair for the medium term. We expect to see US Dollar strength and a clean break of 1.5000, followed by a move into 1.4955.

Fundamental Outlook

The Pound will be affected today by the British Retail Sales, which come out at 9:30 am GMT and are expected to post a change of 0.6% compared with the previous -0.6%. Increased numbers show a thriving economy and usually strengthen the Sterling.

375

FOREX NEWS: US DOLLAR GAINS AS THE EFFECTS OF THE RATE HIKE BECOME CLEARER

EUR/USD

Forex News: The effects of the Fed decision to raise the interest rate to 0.50% became clearer yesterday and we saw US Dollar strength throughout the day. Movement wasn’t very fast but the pair moved down nonetheless.


Technical Outlook

The pair is pausing in close vicinity of the support located at 1.0825 but it is now clearly trading below the 50 period Exponential Moving Average. The Fed decision didn’t create the huge movement that most market participants were expecting but we will most likely see further downside action once 1.0825 is broken. Keep in mind that the Stochastic is showing signs of oversold, thus moves north are a distinct possibility.

Fundamental Outlook

Both the Euro and the US Dollar have a light economic calendar today as no major economic data is scheduled for release.

GBP/USD

Although the British Retail Sales showed a change of 1.7%, much better than anticipated, the Pound showed just brief surges of power and the rest of the day belonged to the bears who managed to take the pair lower.


Technical Outlook

The move south broke through 1.4955 and is now testing 1.4895 but this is a key level for medium term price action and we expect to see some form of retracement to the upside. Note that both the Stochastic and Relative Strength Index are moving below their respective oversold levels, increasing the chances of bullish pullbacks. If the pair starts to move to the upside, the first resistance and place where downside movement can resume is located at 1.4955, followed by 1.5000.

Fundamental Outlook

Similar to the Euro and the US Dollar, the Sterling has a light economic calendar ahead as the United Kingdom didn’t schedule important news releases.

We hope you had a profitable trading week and we wish you a relaxing weekend.

376

FOREX NEWS: BEARS STRUGGLE TO REGAIN CONTROL. IRREGULAR PRICE ACTION


EUR/USD

Forex News: Friday the pair took another short dive but then soon returned above support. The day lacked major news announcements or substantial developments.



Technical Outlook

The support at 1.0825 was briefly breached but the pair stopped at 1.0800 and started to move to the upside. Today we expect a touch of the 50 period Exponential Moving Average and possibly 1.0900 but it’s less likely to see a break of these forms of resistance and instead we expect price to resume movement south once the mentioned zones are hit. Movement is likely to be slow throughout the day because the economic calendar is light and no major events are scheduled.

Fundamental Outlook

The entire week is slow in terms of economic data releases and today is no exception. The German Producer Price Index is the only notable indicator, which shows changes in the price charged by producers for their goods and services. The scheduled time is 7:00 am GMT and the expected change is -0.2% but the impact is most times limited; nonetheless, higher values are usually beneficial for the single currency.

GBP/USD

Similar to the euro-dollar, this pair didn’t show a lot of determination Friday and moved mostly sideways, above and below support.


Technical Outlook

The support at 1.4895 is key for short term price action and we expect it to play a major role in today’s price direction. A break of this level would probably take price into 1.4830 (weekly chart support) and a bounce will make 1.4955 the immediate target. The Stochastic and Relative Strength Index have reached oversold and are now curving upwards, a fact that increases the chance of bullish moves.

Fundamental Outlook

The United Kingdom didn’t schedule any notable indicators for today and this will probably contribute to a slow day in terms of price action.

377

FOREX NEWS: THE WINTER HOLIDAYS START TO MAKE THEIR PRESENCE KNOWN WITH LOW VOLATILITY

EUR/USD

Forex News: Yesterday the economic calendar was light and no major economic data came out but the pair moved slowly to the upside, touching immediate resistance, without breaking it.


Technical Outlook

The current move is likely to reach 1.0925 but the extent of the climb should be limited, mostly because the Stochastic is entering overbought and price lacks strong upside momentum. Overall we still favour the bears and we expect to see US Dollar strength today, with 1.0825 being the first target. A move below the 50 period Exponential Moving Average would confirm this bias and would increase the chances of reaching the mentioned target.

Fundamental Outlook

The Final version of the United States Gross Domestic Product is released today at 1:30 pm GMT and expected to show a change to 1.9% from the previous 2.1%. Although the Final version is the least important, it can still generate strong moves; as a rule of thumb, higher than expected values for this indicator trigger US Dollar strength.

The U.S. Existing Home Sales are released at 3:00 pm GMT but the impact of this indicator is medium-to-low; nonetheless, higher numbers than the forecast 5.32M are usually beneficial for the greenback.

GBP/USD

For the most part of yesterday the pair drifted sideways, without clear direction and showing very choppy movement.


Technical Outlook

The pair is stalling at 1.4895 and neither side is in control but this stall at support shows that the strength of the bears is starting to fade. This fact combined with the positions of the Stochastic and Relative Strength Index (which are exiting oversold and moving upwards) makes us believe that today we will see a move into 1.4955; however, a break of 1.4895 followed by a re-test from below would invalidate such a scenario.

Fundamental Outlook

At 9:30 am GMT the British Public Sector Net Borrowing numbers are released and this is the only notable indicator of the day. The forecast is 11.9B (previous 7.5B) and higher numbers are detrimental for the Pound because they show a higher budget deficit; the indicator usually has a low impact.

378

FOREX NEWS: U.S. DURABLE GOODS ORDERS, NEW HOME SALES – LAST MAJOR INDICATORS AHEAD OF CHRISTMAS EVE

EUR/USD

Forex News: Despite a better than expected value shown by the US Gross Domestic Product, the pair climbed for the most part of yesterday’s trading session and resistance was easily broken.


Technical Outlook

Now that the level at 1.0925 is broken, we expect the pair to touch the minor resistance located at 1.1010. If this level is broken, a stronger resistance is in close vicinity, at 1.1040 but we don’t expect the latter to be broken, mainly because the Stochastic is already overbought and the Relative Strength Index is rapidly approaching its 70 level. If 1.1010 is reached, we expect the pair to begin a downwards trajectory.

Fundamental Outlook

The U.S. Durable Goods Orders come out at 1:30 pm GMT and are expected to show a change of -0.6% compared to the previous 3.0%. Goods with a life expectancy of at least 3 years are considered “durable” and more orders are usually beneficial for the US Dollar.

Later in the day, at 3:00 pm GMT the U.S. New Home Sales come out, with an anticipated number of 507K (annualized). The previous was 495K and numbers higher than forecast strengthen the US Dollar but sometimes the impact is mild.


GBP/USD

The pound-dollar pair moved opposite to the euro-dollar and travelled south yesterday but the move was not spectacular.


Technical Outlook

Once price was free of 1.4895, it travelled to the next support, located at 1.4830 but the chances of a real break of this level are slim. It is possible to see a brief move below the current support but afterwards, we expect the pair to return above it. Both the Stochastic and Relative Strength Index are oversold and this increases the chances of bullish moves.

Fundamental Outlook

The only notable event for the Pound is the release of the British Current Account scheduled at 9:30 am GMT. The indicator shows the difference between imported vs. exported goods and services; under normal circumstances a higher value than the forecast -21.3B is beneficial for the Pound.

379

FOREX NEWS: CHRISTMAS EVE SLOWS DOWN THE MARKETS

EUR/USD

Forex News: Home sales in the United States were lower than analysts’ expected and the Durable Goods Orders came out as forecast but the US Dollar still managed to take the pair down. However, no special developments took place.


Technical Outlook

The pair started to move lower without touching the minor resistance at 1.1010 but 1.0900 support couldn’t be broken decisively yesterday. For today we expect irregular movement, with a slightly bearish bias but the markets will be heavily affected by Christmas Eve which is celebrated in many parts of the world. The key zone for today’s price action remains 1.0925 – 1.0900 and a move to either side could generate additional strength but to a limited extent.

Fundamental Outlook

German banks are closed today in celebration of Christmas Eve and on the US Dollar side the only notable indicator is the Unemployment Claims, released at 1:30 pm GMT and expected to show a number of 270K. Usually, higher numbers are detrimental for the US Dollar but today’s release is likely to have a mild impact.

GBP/USD

As expected the pound-dollar pair broke support yesterday but soon after returned above it and touched resistance.


Technical Outlook

The oversold condition of both oscillators contributed to the climb seen yesterday and now the pair is struggling to break 1.4895 which has turned into resistance. The oscillators are moving upwards with good momentum so we are likely to see a break of the current resistance and a move into 1.4955. However, keep in mind that irregular price action is a distinct possibility due to Christmas Eve.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases for today so the technical aspect will determine price direction but the markets will be affected by low liquidity.

380

FOREX NEWS: RESISTANCE AND OVERBOUGHT LEVELS AHEAD – US DOLLAR PREPARES A COMEBACK

EUR/USD

Forex News: The market was closed Friday due to Christmas Day so today we will pick off from Thursday’s closing price.



Technical Outlook

Price action will be slow today and direction hard to anticipate. The first barrier to the upside is located at 1.0980, followed by 1.1010 and first support is located at 1.0870 but we don’t anticipate a break of either of these levels. If price does move past one of them, we expect it to return inside the range. The 50 period Exponential Moving Average will also act as support as long as price stays above it.

Fundamental Outlook

The economic calendar doesn’t offer any type of economic releases today so price action will be entirely ruled by the technical aspect but more so by the low liquidity characteristic for this period.


GBP/USD

Thursday the pair climbed and touched the 50 period Exponential Moving Average so there was some Pound strength but to a limited extent.


Technical Outlook

The fact that we saw Pound strength Thursday doesn’t mean that today the impulse will continue and instead it’s very possible to see a move lower after a bounce at the 50 period Exponential Moving Average. The Stochastic has reached its 80 level on a four hour chart and this suggests that we might see a move lower which will probably touch 1.4895.

Fundamental Outlook

British banks are closed today, celebrating Boxing Day and no economic indicators are scheduled for release, thus we anticipate irregular price movement.

381

FOREX NEWS: VOLATILITY DECREASES AS THE END OF THE YEAR APPROACHES

EUR/USD

Forex News: Yesterday’s trading session was not very active, mainly because the market is still “recovering” after the Christmas Holiday but also because no major economic indicators were released.


Technical Outlook

The pair slowly climbed above 1.0980 resistance but we cannot consider this a true break and on top of that, the Stochastic is already overbought, thus we anticipate a move lower next. The first target is the 50 period Exponential Moving Average where we expect a bounce higher. If the pair will break 1.0980, the next potential turning point is 1.1010, followed by the more important 1.1040. Keep in mind that the market will be affected by irregular volatility for the whole week.

Fundamental Outlook

At 3:00 pm GMT the CB Consumer Confidence survey comes out, expected to show a value of 93.9, a hefty increase from the previous 90.4. This survey is derived from the opinions of about 5,000 U.S. households regarding economic conditions and usually a higher than expected number strengthens the US Dollar to a limited extent.

GBP/USD

British banks were closed yesterday in observance of Boxing Day and the pair traveled slowly lower, breaching the first support.


Technical Outlook

The US Dollar strengthened yesterday and the pair breached 1.4985 support but this level is not broken decisively and a move above it is still possible. However, we favor the short side, anticipating a move into 1.4830, especially if the current support will turn into resistance. If rejection at the current level is shown, then the pair will most likely travel into the level located at 1.4955.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases and in fact the entire week lacks important economic indicators so price action will be dictated by the technical aspect.