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402

FOREX NEWS: U.S. DOLLAR FAILS TO MEET EXPECTATIONS, FOCUS SHIFTS ON FED FOR RATE ANNOUNCEMENT

EUR/USD

Forex News: The Euro bulls continued their run yesterday and the US Dollar was weak most of the day, despite a slightly better than anticipated value shown by the US Consumer Confidence survey. However, resistance was not broken and the pair bounced lower later in the afternoon.



Technical Outlook

The perfect bounce seen at 1.0870 resistance may be a sign that the sellers are finally preparing for a break of the key support located at 1.0800. The oscillators haven’t reached an extreme condition but are curving downwards, and also price is trading below the 50 period Exponential Moving Average, supporting the idea of a move south, below 1.0800. A bullish break of 1.0870, followed by a re-test from above would suggest that 1.0945 is the next target.

Fundamental Outlook

It’s an important day for the US Dollar as the Fed will announce today at 7:00 pm GMT their decision regarding the interest rate. A change is not expected to happen (current <0.50%) but the Rate Statement released at the same time is likely to contain information about the pace of future rate increases. If this will be the case, the greenback will probably have a strong reaction.

GBP/USD

The pair dipped below 1.4230 yesterday but recovered quickly and continued higher for the rest of the day, moving above the 50 period Exponential Moving Average.


Technical Outlook

The pair is showing strong rejection off of the zone at 1.4200 – 1.4230 and is now trading above the 50 period EMA, threatening the resistance at 1.4350. At the moment we have a higher low and this is a first sign that the downtrend may be coming to an end; however, a stronger confirmation would be given by a move above 1.4350. We expect the pair to touch the resistance at 1.4350 today and the way it behaves there will offer hints about future direction.

Fundamental Outlook

The United Kingdom didn’t schedule major economic releases today but the pair will be directly affected by the U.S. interest rate announcement and Rate Statement.

403

FOREX NEWS: FED KEEPS RATES UNCHANGED, CREATING MIXED IMPACT ON THE CURRENCY MARKET


EUR/USD

Forex News: Yesterday’s price action was mixed ahead of the Fed Interest Rate, and the pair climbed above resistance. The Fed kept the rate unchanged and highlighted that the pace of future rate hikes will remain data dependent; all this created mixed price action at the time of the release, without substantial moves.


Technical Outlook

Although the Fed Meeting didn’t create a strong impact, the pair is siting above 1.0870 which can be considered support now. The ranging period continues and price lacks clear direction but the Stochastic is approaching its 80 level which suggests an overbought condition and thus increases the chances of a move south. Such a move will be confirmed by a bearish break of 1.0870 and of the 50 period Exponential Moving Average.

Fundamental Outlook

Today we get a first look into German Inflation with the release of the German Preliminary Consumer Price Index, scheduled at 1:00 pm GMT. The expected change is 0.4% (previous 0.3%) and higher numbers usually strengthen the Euro.

On the US Dollar side we have the Durable Goods Orders scheduled for release at 1:30 pm GMT. The indicator tracks changes in orders for goods with a life expectancy of at least 3 years and under normal circumstances a higher value is beneficial for the greenback. The forecast is a change of -0.6%, while the previous was 0.0%.

GBP/USD

The pair hit resistance yesterday and bounced perfectly off of it but the Fed offered mixed signals regarding future monetary policy and price is now stalling at support.



Technical Outlook

As seen from yesterday’s price action, resistance is holding and the bears are now struggling to break the support at 1.4230. A break of this level would suggest that the downtrend will continue, headed for 1.4125 and the current overbought condition of the Stochastic is supporting such a move. Our bias is bearish for the day, anticipating a break of support but a lot will depend on the British GDP data released today.

Fundamental Outlook

The British Preliminary Gross Domestic Product is released at 9:30 am GMT and is today’s main event for the Pound. This is the first and most important version out of the three (Preliminary, Second Estimate and Final) and usually has a strong impact on the Pound considering that the GDP is the overall gauge of the economy’s performance. The expected change is 0.5% (previous 0.4%) and higher numbers strengthen the currency.

404

FOREX NEWS: EUROZONE INFLATION AND U.S. GDP – 2 POTENTIAL MARKET SHAKERS

EUR/USD

Forex News: The pair continued its climb yesterday, mostly fuelled by a better than expected value of the German Consumer Price Index. The U.S. Durable Goods Orders disappointed, contributing to the bullish move.


Technical Outlook

The pair is headed towards the resistance at 1.0945 but the Stochastic and Relative Strength Index are approaching overbought and this makes us anticipate a drop once the mentioned level is touched. A break of this level would make 1.0980 the next target but the latter is a stronger resistance and probably by then the oscillators will be clearly overbought, increasing substantially the chances of a drop.

Fundamental Outlook

Today is an important day for both the Euro and the US Dollar: at 10:00 am GMT the Eurozone Flash Estimate CPI comes out, expected to show a change of 0.4% compared to the previous 0.2%. The CPI is the main gauge of inflation, which has been too low for a relatively long period, thus an increase is likely to trigger Euro strength.

The US Dollar will be affected by the release of the Advance Gross Domestic Product which is the most important version out of the three (Advance, Preliminary and Final). The GDP is an economy’s main measurement of performance and higher numbers usually strengthen the currency; however for today the consensus is a change of 0.8% compared to the previous 2.0%. The release is scheduled at 1:30 pm GMT.

GBP/USD

The British Preliminary GDP released yesterday showed a value of 0.5%, better than the previous 0.4% and the Pound reacted by climbing above 1.4350, generating a bullish day.


Technical Outlook

The break above 1.4350 is a major victory for the bulls and if the level turns into support, we are likely to see an extended move towards 1.4475. The pair is also trading above the 50 period Exponential Moving Average and this increases the probability of a continuation to the upside but once the oscillators will reach overbought, we expect bearish movement to resume. A quick move below 1.4350 would show the initial bullish break was false and would make 1.4230 the first target.

Fundamental Outlook

The Pound will not be affected by major economic releases today but the United States GDP will have a direct impact on the pair’s movement.

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

405

FOREX NEWS: CURRENCY WARS: SELLERS MAKE A RUN FOR SUPPORT, BUYERS FIGHT BACK

EUR/USD

Forex News: Friday the control belonged to the sellers, who managed to take the pair in close vicinity of the key support at 1.0800. The economic data that came out was close to analysts’ consensus and the impact was limited


Technical Outlook

The latest bearish momentum is likely to continue through 1.0800 and if this is true, it will be a major victory for the bears. Lately this level rejected price almost immediately after being touched and it has high importance for medium term price action, acting as the lower barrier of the range the pair has been in. A move outside would make the short term bias bearish and would open the door for a touch of 1.0710 during the days to come.

Fundamental Outlook

The day’s highlight is the release of the U.S. Manufacturing PMI, scheduled at 3:00 pm GMT. This is a survey of about 400 purchasing managers from the manufacturing sector who are asked to give their opinions on business conditions and acts as a leading indicator of economic health. Higher values trigger US Dollar strength and today’s forecast is 48.6 while the previous was 48.2.

GBP/USD

The US Dollar erased all losses occurred during the week and even threatened support Friday but still the weekly session ended with a small bounce higher.


Technical Outlook

Although the pair climbed above the resistance at 1.4350, this high price couldn’t be sustained and a move lower followed, possibly showing that the downtrend is ready to resume. The 50 period Exponential Moving Average is broken to the downside and today we expect a move into 1.4125. The direction will also be influenced by the economic data scheduled for release so if the impact will be slim, we might see sideways price action, above and below 1.4230.

Fundamental Outlook

Similar to the U.S., the United Kingdom also releases manufacturing data today, in the form of the Manufacturing PMI. The indicator comes out at 9:30 am GMT and is expected to show a value of 51.8. Higher numbers strengthen the Pound but the impact is higher if the actual figure shows a hefty difference compared to the forecast.

406

FOREX NEWS: US DOLLAR’S REIGN FALTERED BY DISAPPOINTING U.S. DATA


EUR/USD

Forex News: The pair had a bullish session yesterday after the bears failed to continue Friday’s downside momentum. The U.S. Manufacturing PMI disappointed, showing a value of 48.2, slightly below analysts’ expectations.


Technical Outlook

The bounce higher in close vicinity of the key support at 1.0800 shows that the ranging period is still not over and that we may see another move close to 1.0945 resistance. The level at 1.0870 is starting to lose its strength and cannot be considered at the moment support although the pair is trading above it and almost the same is true for the 50 period Exponential Moving Average that is moving sideways. We expect choppy price action until a clear breakout occurs and our bias is neutral.

Fundamental Outlook

The German Unemployment Change is released today at 8:55 am GMT and expected to show a change of -7K compared to the previous -14K. The indicator is not especially important but can strengthen the Euro if lower than expected numbers are posted because less unemployed people shows a thriving economy.


GBP/USD

The Pound benefited from a better than expected Manufacturing PMI while the greenback suffered from a lower value of the indicator with the same name and thus the first day of the week was controlled by the bulls.


Technical Outlook

The pair is testing the resistance at 1.4350 again but this may very well be the start of a ranging period if volatility drops near this zone. Also, the bears are starting to lose their grip on the pair and the downtrend is now severely weakened. A move above 1.4350 followed by a re-test from above and a bounce would suggest that we will see the pair touch 1.4475 in the near future.

Fundamental Outlook

At 9:30 am GMT the British Construction PMI comes out, showing the opinions of about 170 purchasing managers about the business conditions in the construction sector. The forecast is 57.6 and usually higher numbers strengthen the Pound because the survey also acts as a leading indicator of economic health.

407

FOREX NEWS: FIRST LOOK AT U.S. EMPLOYMENT DATA MAY REVEAL UNDERLYING US DOLLAR STRENGTH

EUR/USD

Forex News: The European economic data released yesterday gave the Euro a boost and the pair continued to climb towards resistance, generating another bullish day.


Technical Outlook

The pair travels from support to resistance and vice-versa lately so if this behaviour continues, we are likely to see a reversal when the zone around 1.0945 is touched. A move into 1.0980 would probably make both the Stochastic and Relative Strength Index overbought, a fact that would increase the chances of a bounce lower. Today’s price direction will be affected by the U.S. employment data, but the candles are already showing signs of rejection so we may see bearish price action even if the data is neutral.

Fundamental Outlook

The day’s main event is the release of the ADP Non-Farm Employment Change, scheduled at 1:15 pm GMT. This report is put together by a privately owned company and doesn’t have the huge impact of the Non-Farm Payrolls that come out 2 days later, but nonetheless it offers a first look into United States employment and can create strong volatility. Usually, higher numbers than the forecast 193K are beneficial for the US Dollar and take the pair lower.

GBP/USD

The pair had a mixed session yesterday as the British Construction PMI disappointed, weakening the Pound. However, the bears lacked the strength to take price below support and a bounce higher followed.


Technical Outlook

The pair bounced at 1.4350 as showed by a four hour candle with a long wick, thus now we can consider this level support. A move below it should be treated like a break of support and should be only traded on the re-test but our short term bias is bullish for a touch of 1.4475. However, the upside movement should be limited by the overbought condition of the Stochastic. Both the Pound and the US Dollar will be affected by economic indicators today so the technical side will be somewhat secondary.

Fundamental Outlook

The British Services PMI is released at 9:30 am GMT, showing the opinions of purchasing managers from the services sector about business conditions in the said sector and acting as a leading indicator of economic health. The survey has a medium impact on the Pound but nonetheless, a higher value than the forecast 55.4 can strengthen the Pound.

408

FOREX NEWS: HUGE DAY FOR THE POUND AS BOE ANNOUNCES MONETARY POLICY DIRECTION

EUR/USD

Forex News: The euro made a quick and strong run towards the resistance zone between 1.1040 – 1.1060, staging a breakout of the range it has been in for the last months. The US Dollar wasn’t strongly affected by the ADP employment report which came out better than expected but still lower than previous.


Technical Outlook

The current move is likely to extend above the zone around 1.1040 – 1.1060 but once the impulse calms down, we expect a pullback lower, towards the mentioned zone. Usually strong moves like the one seen yesterday are followed by a counter move or by a period of sideways movement. Once the pullback is complete, we expect the upside action to continue, with the first target being 1.1100.

Fundamental Outlook

ECB President Mario Draghi speaks today at 8:00 am GMT at a Lecture in Frankfurt. Depending on the topics discussed and his attitude, the Euro may have a reaction but the extent is likely to be limited. Nonetheless, caution is advised, as always during the speeches of heads of Central Banks.

GBP/USD

After successfully establishing 1.4350 as support, the pair continued higher in yesterday’s trading session and is now trading above 1.4565.



Technical Outlook

Although the short term bias is bullish, price is likely to stall or even bounce lower before it can continue higher. Both the Relative Strength Index and the Stochastic are overbought but this is not a reason on it’s own for a potential move down; however it shows that the pair travelled too far, too fast, thus increasing the chances of bearish price action.

Fundamental Outlook

The Bank of England will announce today at 12:00 pm GMT their decision regarding the interest rate (no change expected), as well as a Monetary Policy Statement and a breakdown of the MPC members’ votes on the rate. At the same time the Inflation Report comes out, containing an outlook for the economy and inflation for the next 2 years. Later, at 12:45 pm GMT, BoE Governor Mark Carney will hold a press conference, discussing the contents of the Inflation Report. All these events will most likely generate another high-volatility day for the Pound and will probably overshadow the technical aspect.

409

FOREX NEWS: A WILD NFP RELEASE TO END A WILD WEEK

EUR/USD

Forex News: After a brief period of sideways movement, yesterday the Euro bulls continued their climb and the assault on resistance reversed at 1.1210, a level better seen on a daily chart.


Technical Outlook

The pair shows strong rejection around 1.1210 zone, with both oscillators overbought and this suggests that today we will see bearish price action, at least to some extent. However, price was stuck in a range for a relatively long while and now it finally broke out so it’s possible for the current up move to extend into the zone near 1.1300. A lot of today’s direction will be decided by the U.S. employment data which will overshadow the technical aspect.

Fundamental Outlook

The Non-Farm Employment Change, which is the most important and anticipated report focused on United States employment is released today at 1:30 pm GMT. Analysts expect a hefty drop from last month’s 292K to 189K and if this prediction comes true, we are likely to see further upside movement for the pair, on the back of US Dollar weakness. This report usually creates very strong volatility, sometimes even sharp reversals or whipsaws, so caution is recommended.

GBP/USD

The Bank of England kept interest rates unchanged but this time all members voted the same way, while previously, one of the nine voted to raise rates. This generated mixed movement at the time of the announcement.



Technical Outlook

The most recent candles show long wicks and the bullish momentum faded around 1.4650. On top of that, the oscillators are both overbought and all this makes us anticipate a move lower, which may find support at 1.4475. A break above 1.4650, followed by a re-test and bounce would make 1.4830 the next target but a lot will depend on today’s NFP release.

Fundamental Outlook

The United Kingdom didn’t schedule any economic indicators for the day but the U.S. Non-Farm Payrolls will directly influence the pair, potentially creating strong volatility.

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

410

FOREX NEWS: SECOND PART OF FED’S YELLEN TESTIMONY AHEAD, US DOLLAR ON SHAKY GROUND

EUR/USD

Forex News: Yesterday the pair made a sharp turn after edging above 1.1310 resistance, and overall we had a bearish day. Fed Chair Yellen’s testimony brought some bearish price action after she mentioned that economy is in many ways close to normal.


Technical Outlook

The move below 1.1200 is likely to extend into the 50 period Exponential Moving Average and possibly into 1.1110. The Relative Strength Index and the Stochastic are both moving out of overbought, coming down and increasing the chances of a stronger move to the downside but the overall trend is bullish so a quick move and a close of a full candle above 1.1210 would invalidate a bearish scenario.

Fundamental Outlook

Fed Chair Yellen will testify again today at 3:00 pm GMT on the Semi-annual Monetary Policy Report but this time before the Senate Banking Committee. As always, this type of speeches and Q&A sessions should be treated with caution because a strong impact on the markets is possible.

Also today the Eurogroup Meetings take place and although these are closed to the press, sometimes participants talk to journalists during the day, generating increased volatility. Once the meetings have concluded, a formal statement will be made.


GBP/USD

The British Manufacturing Production showed a lower value than anticipated but still better than the previous and the Pound made another run for 1.4565. However, resistance was not broken and the pair bounced lower.


Technical Outlook

Although the pair moved higher yesterday, the bulls failed to break the resistance at 1.4565 and now price is close to the minor support at 1.4475. Neither side is in clear control at the moment and probably the next direction will be decided by a break of either 1.4475 or 1.4565. The oscillators don’t show a lot of momentum and are not in extreme territory so they paint a blurry picture too, suggesting that it would be safe to wait for a clear breakout.

Fundamental Outlook

The Pound is not affected by major indicator releases today so the main focus will be Fed Chair Yellen’s testimony and the technical aspect.

411

FOREX NEWS: U.S. RETAIL SALES, GERMAN GDP – THE CATALYSTS THAT FUEL TODAY’S PRICE ACTION

EUR/USD

Forex News: The pair showed signs of indecision yesterday but moved higher, above the resistance at 1.1310. Yellen’s testimony before the Senate Banking Committee didn’t create the strong volatility we anticipated and the greenback remained mostly unaffected.



Technical Outlook

Although wavering, the current uptrend is advancing, making higher highs and higher lows and moving above resistance. If the bulls can sustain price above 1.1310 we are likely to see a move into the zone near 1.1400 but we must note the fact that the Relative Strength Index is moving downwards, making lower highs. This shows bearish divergence and thus weakness for the current move up, so it’s possible to see a move towards 1.1200 today, depending also on the economic data released by Europe and the United States.

Fundamental Outlook

At 7:00 am GMT the German Prelim Gross Domestic Product is released, showing the overall performance of the German economy. No change is expected from the previous 0.3% but if a higher number is posted, the Euro is likely to strengthen.

The U.S. Retail Sales come out at 1:30 pm GMT, with a forecast change of 0.1% (previous -0.1%). Sales made at retail levels represent a major part of economic activity, thus higher numbers are beneficial to the US Dollar. The last important economic indicator of the week is the University of Michigan Consumer Sentiment, a survey of about 500 consumers regarding their opinion on current and future economic environment. The release is scheduled at 3:00 pm GMT and the forecast is 92.6, slightly better than the previous 92.0. Higher values usually strengthen the US Dollar.

GBP/USD

Yesterday the pair descended again below 1.4475 but didn’t continue lower into support, showing that neither side is in clear control.



Technical Outlook

The recent drop took price below the 50 period Exponential Moving Average and below 1.4475 so the short term bias is slightly bearish now, as long as price remains below the mentioned technical levels. Near support is located at 1.4350 and a break of this level would imply that further downside will follow; on the other hand, a move above 1.4475 would make 1.4565 the next target.

Fundamental Outlook

The United Kingdom didn’t prepare any major economic news releases for today so all eyes will be on the United States for the indicators mentioned earlier.

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

412

FOREX NEWS: ECB PRESIDENT DRAGHI TESTIFIES ON MONETARY POLICY. HOW WILL THE EURO REACT?

EUR/USD

Forex News: Friday belonged to the sellers who managed to take price below 1.1310 and to touch 1.1210 on the back of a better than expected value of the U.S. Retail Sales, which strengthened the US Dollar.



Technical Outlook

The pair bounced higher after a touch of 1.1210 which has now turned into support but this level is likely to be tested once again today. A break of the said level would open the door for an encounter with the 50 period Exponential Moving Average and a move into the next minor support located at 1.1160. The Relative Strength Index is making lower highs while price is showing higher highs and this is indicative of bearish divergence, which increases the chances of an extended move south but keep in mind the bulls are still in control of medium term price action.

Fundamental Outlook

Banks in the United States are closed, celebrating Presidents’ Day and no indicators are released today, so volatility might be affected, especially in the New York session. The Euro will be influenced by the testimony of ECB President Mario Draghi before the Economic and Monetary Affairs Committee of the European Parliament, scheduled at 2:00 pm GMT. The topic is monetary policy so the impact on the currency markets will be strong but the direction depends on the President’s attitude and answers.

GBP/USD

The pair had a choppy session Friday, similar to the rest of the week, with price bouncing between support and resistance without clear direction.


Technical Outlook

Lately the level at 1.4450 acts as good support, pushing the pair higher and this gives it more importance for today’s price action. We anticipate another touch of the said level but our bias is mostly neutral as we wait for a breakout and a move above 1.4565 or below 1.4450. Considering that U.S. banks are closed and no major indicators will affect the Pound, it is possible to see another choppy trading day, inside the mentioned range.

Fundamental Outlook

There are no major indicators scheduled by the United Kingdom for today so price direction will be mainly affected by the technical aspect.

413

FOREX NEWS: BULLS START TO LOSE GROUND AHEAD OF GERMAN ZEW, BRITISH CPI

EUR/USD

Forex News: ECB head Mario Draghi hinted during Monday’s testimony that more easing is likely to be implemented at ECB’s March meeting thus the Euro reacted by weakening and dropping below short-term support.


Technical Outlook

The pair is trading below the 50 period Exponential Moving Average and below 1.1160 which acted previously as short term support. The latest bearish move is likely to find some support and to bounce higher at 1.1100, or at least to stall there for a while. The chances of this happening are increased by the fact that both the Stochastic and Relative Strength Index are approaching oversold territory and the bullish side of the market still has underlying strength. To the upside, the 50 period EMA is an important resistance that can reject a possible move up; on the other hand, a breakout above it would imply that the bearish move is exhausted.

Fundamental Outlook

The German ZEW Economic Sentiment comes out at 10:00 am GMT, showing the opinions of about 275 German professional analysts and investors regarding a 6-month economic outlook. The survey is well respected, mostly because respondents are well informed about economic matters by virtue of their occupation, and usually higher numbers strengthen the Euro, while the opposite is true for lower numbers. The forecast for today’s release is 0.1, a big drop from the previous 10.2.

GBP/USD

Although U.S. banks were closed, the US Dollar gained against the Pound yesterday and the bears managed to take the pair below 1.4450 minor support.


Technical Outlook

If the sellers can keep price below 1.4450 and below the 50 period Exponential Moving Average, we will probably see a move into the more important level located at 1.4350. A break of the latter would show that the balance of power is shifting towards the short side and that the bears are starting to regain control of the pair. However, until either 1.4350 or 1.4565 is clearly broken, our bias remains neutral; adding to this view is the lack of momentum showed by both oscillators.

Fundamental Outlook

Today we take a look at British inflation with the release of the Consumer Price Index, scheduled at 9:30 am GMT. This is the main gauge of inflation in the UK and it has been showing disappointing numbers for a long while. Any change above the anticipated 0.3% (previous 0.2%) is likely to trigger Pound strength and thus a move into higher territory.

414

FOREX NEWS: BEARS MAKE THEIR PRESENCE KNOWN; SUPPORT BROKEN, MORE DOWNSIDE TO FOLLOW

EUR/USD

Forex News: The pair attempted yesterday to break above the 50 period Exponential Moving Average but failed and moved below support. The German ZEW survey came out better than anticipated but still much worse than previous and this contributed to the bearish session.


Technical Outlook

Short term control belongs to the bears but the Stochastic is already below its oversold level, while the Relative Strength Index is coming close to it. On top of that, the pair doesn’t show a lot of downside momentum and price action this month was mostly bullish so we cannot rule out a sudden move above 1.1160 and even above 1.1200. However, as long as price remains below the 50 period Exponential Moving Average, our bias remains bearish, for a touch of 1.1040 in the days to come.

Fundamental Outlook

The first important event of the day is the release of the U.S. Building Permits, scheduled at 1:30 pm GMT and expected to show a number of 1.21M, a small increase from the previous 1.20M. Obtaining a permit is the first step necessary to build a construction so this is a good indicator of future activity in the housing sector and higher numbers show increased activity, leading usually to a stronger US Dollar.

Later in the day, at 7:00 pm GMT the FOMC will release the Minutes of their latest Meeting, showing the reasons that determined their decision on the interest rate. Usually this document contains hints about the pace of future hikes and usually triggers strong movement so caution is recommended at the time of the release.

GBP/USD

Yesterday the pair made an early attempt to move above the 50 period Exponential Moving Average but soon reversed and dropped sharply below support.


Technical Outlook

Now that 1.4350 support is broken, we expect more sellers to step in and take price into 1.4230. If this support is touched, the probability of a bounce higher will be increased by the position of the oscillators which will probably become oversold by then. A move above 1.4350 would imply that the ranging period is still not over and the break was a false one. Both the Pound and US Dollar will be affected by economic indicators today so the technical aspect is somewhat secondary.

Fundamental Outlook

At 9:30 am GMT the British Claimant Count is released, showing the changes in the number of people who asked for unemployment related help. A higher number of unemployed people is detrimental for the economy, thus a higher reading than the anticipated -2.9K will likely weaken the Pound, taking the pair lower.

415

FOREX NEWS: DOWNSIDE RISKS PRESENT, YET US DOLLAR GAINS AGAINST ITS COUNTERPARTS

EUR/USD

Forex News: Ahead of the FOMC Minutes release, the euro-dollar showed choppy price action and the support at 1.1110 was touched but not broken. The Minutes showed that some members see downside risks to the economy; however the greenback made timid advances at release time.


Technical Outlook

Although price action is choppy, the bears seem to push the pace, making another attempt to break the support located around 1.1100. As long as the pair trades below the 50 period Exponential Moving Average we favour the short side to a limited extent. A break of 1.1110 would confirm our bearish bias and would make 1.1040 the next target but the Stochastic has already reached oversold and is now moving upwards so we cannot rule out a move above the moving average, headed into 1.1210.

Fundamental Outlook

The US Dollar will be affected today by the release of the Philly Fed Manufacturing Index, a survey that offers insights into the opinions of about 250 manufacturers from the Philadelphia district regarding the health of the sector. The previous value was -3.5 and the forecast for today is a small increase to -2.9 but the indicator usually creates strong impact only if there’s a substantial difference between the actual number and the forecast.


GBP/USD

The British Claimant Count Change released yesterday posted better than expected numbers but this only created a brief moment of Pound strength, which was quickly reversed. The FOMC Meeting Minutes generated some US Dollar strength but nothing spectacular.


Technical Outlook

The bulls made an attempt to take price above 1.4350 but the pair reversed before seriously threatening the said level and it appears that 1.4230 will be touched again today. A break of this level would increase the chances of another encounter with 1.4125 and a possible break of the key low established last month. The oscillators have reached extreme territory (oversold) and this might be a reason for a move up but as long as price trades below 1.4350, we favour the short side.

Fundamental Outlook

The GBP/USD will be driven today by the U.S. indicators and by the technical aspect as the United Kingdom didn’t schedule major releases for the day.

416

FOREX NEWS: UNSTABLE PRICE ACTION AHEAD OF U.S. INFLATION DATA, BRITISH RETAIL SALES

EUR/USD

Forex News: Yesterday the pair continued its slow crawl, moving below the support located at 1.1110 but no substantial advances were made. The U.S. Manufacturing data came out close to analysts’ prediction, hence the impact on the market was limited.


Technical Outlook

The bearish movement lacks momentum and both oscillators are in the lower part of their channels, suggesting that a move into higher territory is likely to happen today. If this is the case, the bulls will encounter heavy resistance at the 50 period Exponential Moving Average and at the 1.1160 level. To the downside the first target is the zone between 1.1060 – 1.1040 and if the pair reaches it, we expect a bounce higher; however, a lot of today’s price action will be influenced by the U.S. inflation data scheduled for release.

Fundamental Outlook

The U.S. Consumer Price Index comes out today at 1:30 pm GMT and is expected to show a change of -0.1%. Inflation is a key element which is taken into consideration by the Fed when the interest rate is set and usually an increase brings US Dollar strength, especially because the current value is too low. We can expect the pair to move lower in case of a value that’s higher than anticipated.

GBP/USD

The pound-dollar was mostly bullish yesterday, fuelled by optimistic talks regarding a potential Brexit. Resistance was breached but a clear break wasn’t recorded at the time of writing.


Technical Outlook

For the bullish impulse to continue the pair needs to break the 50 period Exponential Moving Average to the upside but for now this technical indicator is offering good resistance. A move above the moving average will make 1.4450 a likely target, while a rejection will open the door for a touch of 1.4230. The technical aspect is secondary today because both currencies in the pair are affected by important economic releases.

Fundamental Outlook

The British Retail Sales are the week’s last important release for the Pound. The event is scheduled at 9:30 am GMT and the anticipated change is 0.8%, compared to the previous -1.0%. Usually the indicator creates strong volatility, with higher values strengthening the Pound, thus taking the pair higher.

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

417

FOREX NEWS: POUND RISES AS PRIME MINISTER CAMERON AND EU LEADERS FINALIZE AN OPTIMISTIC DEAL


EUR/USD

Forex News: U.S. inflation improved as shown Friday by the Consumer Price Index and the US Dollar strengthened at first but soon after, the gains were erased and the pair climbed higher.


Technical Outlook

Price action confirmed the zone around 1.1085 as support and price bounced higher once it touched it. This bounce at support combined with the fact that both oscillators are moving upwards may very well generate a break of the 50 period Exponential Moving Average and if this is the case, the first target is the zone around 1.1200. However, as long as price stays below the 50 EMA, we favour the short side and a bearish break of 1.1085.

Fundamental Outlook

The Euro will be affected today by the release of the German Manufacturing PMI which is a survey of approximately 500 purchasing managers who are asked to rate business conditions in their sector. Usually higher numbers than expected strengthen the Euro but the indicator has a lower impact if the actual number matches or comes very close to analysts’ forecast. The release time is 8:30 am GMT and the expected value is 52.1.

GBP/USD

The pair ended last week on a bullish note after a back and forth Friday session. The British Retail Sales came out better than anticipated and British Prime Minister Cameron agreed on a deal with European Union leaders regarding Britain’s stay in the union.


Technical Outlook

At the time of writing the pair is trying to break the 50 period Exponential Moving Average to the upside and the buyers seem in control of short term price direction. If they succeed to take price above the moving average, we will probably see bullish price action for most of the day or at least until the resistance at 1.4450 is reached. A quick move below 1.4350 would make 1.4230 the first target but this is probably a distance that will not be entirely travelled on a Monday.

Fundamental Outlook

The Pound will not be affected today by major news releases so the main focus of traders around the world will be on the technical aspect. Keep in mind that rumours and talks surrounding a possible “Brexit” will probably affect today’s price direction.

418

FOREX NEWS: HEIGHTENED BREXIT RISKS DRIVE THE POUND LOWER

EUR/USD

Forex News: The German Manufacturing data disappointed yesterday, contributing to the weakening of the Euro and consequently a bearish day during which support was breached.


Technical Outlook

The support at 1.1040 was broken yesterday but the pair didn’t threaten 1.0980 and price action currently shows rejection. The Relative Strength Index is oversold abut the Stochastic is just crossing near its 50 level so the oscillator don’t show clear momentum; however, as long as the pair trades below 1.1085 and below the 50 period Exponential Moving Average, we maintain our bearish bias and expect a break of 1.0980.

Fundamental Outlook

At 9:00 am GMT the German IFO Business Climate survey is released and expected to show a value of 107.0, little changed from the previous 107.3. The sample size for this survey is very large, of about 7,000 businesses and usually has a hefty influence on the Euro, with higher numbers strengthening it.

The U.S. Consumer Confidence survey comes out later in the day, at 3:00 pm GMT, showing the opinions of about 5,000 households regarding overall economic conditions. The forecast is 97.4 and usually higher numbers are beneficial for the US Dollar.

GBP/USD

The Pound weakened severely due to increased risks regarding a Brexit and the pair opened with a weekly gap. The fall continued throughout yesterday and the pair threatened support.



Technical Outlook

After a big drop the pair rebounded around 1.4050 and moved back above 1.4125 but the heightened risks surrounding a potential Brexit will probably continue to weaken the Pound and drive the pair lower. The support at 1.4050 represents an important level that will most likely be touched again in the near future and today we expect the pair to move lower but the direction will depend on the fundamental aspect.

Fundamental Outlook

Bank of England Governor Mark Carney will testify on economic outlook and inflation at 10:00 am GMT, before the Parliament’s Treasury Committee. The testimony and more importantly Carney’s attitude will probably have a strong impact on the Pound and on top of that, any rumors or news about a potential Brexit will add more volatility so caution is recommended throughout the day.

419

FOREX NEWS: WARNING: SUPPORT AHEAD. BULLS STEP IN?

EUR/USD

Forex News: Both the German and American surveys showed worse than anticipated numbers yesterday and this created mixed, up and down movement; however the pair was mostly bearish, threatening support.


Technical Outlook

Yesterday’s price action confirmed 1.1040 as short term resistance and threatened 1.0980 but the Relative Strength Index and the Stochastic are both close to oversold territory and this increases the chances of a move up. Even if our bias is still bearish, we expect some upside price action today, possibly above 1.1040 and into the 50 period Exponential Moving Average.

Fundamental Outlook

At 3:00 pm GMT the U.S. New Home Sales come out, showing the annualized number of homes sold during the previous month and offering insights into the state of the American housing market. The expected figure is 522K, a drop from the previous 544K and usually a higher number strengthens the US Dollar but the impact is often limited.

GBP/USD

Price action slowed down compared to Monday’s sharp selloff but the pair moved again near long term support and bounced slightly higher.



Technical Outlook

Price travelled a long distance in a short while and now is having trouble breaking the previous low. All this combined with the oversold position of the two oscillators makes us anticipate a bounce higher, possibly above 1.4125. However, the overall picture is bearish and a break of 1.4050 would probably bring in more sellers that would take the pair lower.

Fundamental Outlook

The day ahead is slow for the Pound in terms of economic releases so the price direction will be mainly affected by the technical aspect and by the U.S. New Home Sales mentioned earlier.

420

FOREX NEWS: US DOLLAR MAKES HISTORICAL ADVANCES AGAINST POUND; RETRACEMENTS IN PLAY

EUR/USD

Forex News: The pair erased early losses once the US housing data was released, showing a worse than expected number (forecast 522K, actual 494K). Also, yesterday’s price action established support at 1.0960.


Technical Outlook

The bears are still in control of the pair despite the bounce at 1.0960 support seen yesterday. A good place for downside price action to resume is the resistance at 1.1040, followed by the 50 period Exponential Moving Average; the oscillators are starting to move up after being oversold, increasing the chances of a deeper retracement, probably into the moving average.

Fundamental Outlook

The European Final version of the Consumer Price Index comes out today at 10:00 am GMT but no change is expected from the previous 0.4%. Also this is the last version of the indicator and tends to be the least important but nonetheless, higher numbers are beneficial for the Euro.

At 1:30 pm GMT the U.S. Durable Goods Orders are released, with a forecast change of 3.0% (previous -5.0%). Increased numbers for this indicator show a thriving economy and usually strengthen the greenback but the strongest impact is seen if the actual number surpasses the forecast, not only the previous value.

GBP/USD

The US Dollar felt the consequences of a deteriorating house market and weakened at the time of the release. However, yesterday the bears made significant advances and broke 1.4050 without any effort.


Technical Outlook

The next lower barrier is located at 1.3655, a level last touched in 2009; however, this is still far away and not so important at the moment. The oscillators are oversold and this means that we might see a longer retracement to the upside, with 1.4050 being the first potential target. To the downside, yesterday’s low at 1.3880 is the first support. Our bias remains bearish but a retracement higher is due.

Fundamental Outlook

The British Second Estimate Gross Domestic Product is released today at 9:30 am GMT. The GDP is the main gauge of overall economic performance thus higher values suggest increased activity and a thriving economy, a thing that often means a stronger currency. The expected figure is 0.5%, same as previous.

421

FOREX NEWS: GERMAN INFLATION, U.S. GDP AND G20 MEETINGS – ENDING THE WEEK ON A HIGH NOTE

EUR/USD

Forex News: Yesterday the pair had a very choppy trading session and although the U.S. economic data was better than anticipated, price was reluctant to drop.


Technical Outlook

The latest candles show long wicks, which is a sign of indecision and the resistance at 1.1040 seems hard to break. The overall bias remains bearish but a bullish retracement is still due; however, if the pair continues to trade below 1.1040 and the buyers don’t manage to break above this level, we expect to see a drop into 1.0960.

Fundamental Outlook

It’s a big day for the Euro as the German Preliminary CPI is released today at 1:00 pm GMT. This is the main gauge of inflation and the German economy is the most important in the Eurozone so the indicator will probably have a strong impact. Higher numbers than the expected 0.6% (previous -0.8%) are usually beneficial for the Euro.

The US Dollar will be strongly affected by the Preliminary version of the U.S. Gross Domestic Product which is anticipated to show a change of 0.4% from the previous 0.7%. Since the GDP is the main gauge of an economy’s overall performance, higher values usually bring a stronger currency so we are likely to see moves lower for the pair if the actual value is higher than the forecast.

GBP/USD

The British Gross Domestic Product released yesterday matched analysts’ expectations so the impact on the Pound was mild and overall the pair showed a choppy trading session.


Technical Outlook

Yesterday’s choppy price action doesn’t hold a lot of clues for future short term direction. The Relative Strength Index and the Stochastic are both still exiting oversold and this means that a correction to the upside is very possible; also the minor support at 1.3880 wasn’t threatened and this shows that the bears are not too eager to make new advances for the moment. However, keep in mind that we are in a clear downtrend and the possibility of sharp drops should not be overlooked.

Fundamental Outlook

The United Kingdom didn’t schedule major economic indicator releases but the G20 Meetings start today, attended by key personalities of the political and financial scene so we are likely to see increased volatility.

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