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522

FOREX NEWS: BOE MAINTAINS RATE UNCHANGED, POUND CLIMBS SIGNIFICANTLY

EUR/USD

Forex News: The pair climbed yesterday ahead of the U.S. Producer Price Index but the better than expected value of the indicator brought back some of the US Dollar’s strength and most of the gains were erased.


Technical Outlook

The resistance at 1.1150 was breached yesterday but price soon bounced lower, so this level is still valid. If early in today’s session the pair descends below 1.1100 and the 50 period Exponential Moving Average, we expect more bears to step in and take price close to 1.1025 support. On the other hand, a clear break of 1.1150 will open the door for a move into 1.1240.

Fundamental Outlook

Today is a busy day for the US Dollar that starts with the CORE version of the Consumer Price Index, scheduled at 12:30 pm GMT. The indicator tracks changes in the price that consumers pay for the products they purchase and this version excludes food and energy from calculation. The expected change is 0.2%, same as last month, and higher numbers usually strengthen the greenback.

At the same time (12:30 pm GMT) the US Retail Sales are released, expected to show a 0.1% change from the previous 0.5%. Since sales made at a retail level represent a major part of the entire consumer spending, higher numbers also strengthen the US Dollar.

The last event of the day is the University of Michigan Consumer Sentiment survey, scheduled at 2:00 pm GMT and expected to show a value of 93.7, almost the same as the previous 93.5. Consumer sentiment is indicative of future consumer spending, thus higher numbers show optimism and strengthen the US Dollar.

GBP/USD

The Bank of England decided to maintain the rate at 0.50% and this strengthened the Pound during yesterday’s trading session, making it reach resistance.


Technical Outlook

The key levels for short term price action are 1.3119 (1.3120) as support and 1.3483 as resistance; a break of either one may trigger an extended move in that direction. BOE’s decision to maintain rates unchanged will probably extend its effects during today’s trading session so we expect price to climb above resistance but keep in mind that the US Dollar will also be affected by a lot of indicators today.

Fundamental Outlook

Bank of England governor Mark Carney will speak today in Toronto about the financial climate and this appearance may trigger increased volatility on Pound pairs, especially if he will drop hints about the next rate change. The event is scheduled at 12:00 pm GMT and caution is advised.

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

523

FOREX NEWS: SUPPORT THREATENED AS BEARS RE-ENTER THE MARKET


EUR/USD

Forex News: The U.S. Retail Sales released Friday showed a positive change of 0.6% while the forecast was just 0.1% and this brought strength to the greenback, taking the pair into support.


Technical Outlook

The pair bounced once more at 1.1150 resistance and is now trading below the 50 period Exponential Moving Average; also the oscillators are headed downwards but not oversold and all these signs point towards a break of 1.1025 support zone. If this happens today, we expect the pair to move into 1.0960 zone and as an alternate scenario, a bounce higher will probably find resistance at the 50 period Exponential Moving Average.

Fundamental Outlook

We have a lacklustre fundamental environment today as no major announcements are scheduled. Price action might be slow and ranging as a result.

GBP/USD

Friday the bears managed to take price below support, mostly on the back of better than expected U.S. data. This erased all the gains made by the Pound Thursday when the BOE decided to keep the rate at 0.50%.



Technical Outlook

Currently the pair is trading below the 50 period Exponential Moving Average and below 1.3227 but has bounced at 1.3119 support. Today we expect a re-test of this support and the way price behaves there will probably decide the direction for the day: a break will probably take price into the zone around 1.3050, while a bounce and a move above the 50 EMA will open the door for another re-test of 1.3483 during the days to come.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound is not affected today by any major economic releases, thus price direction will be likely determined by the technical aspect.

524

FOREX NEWS: GERMAN ZEW, BRITISH INFLATION DATA TO TRIGGER LARGER SWINGS

EUR/USD

Forex News: Yesterday’s price action was incredibly slow and mostly sideways. This was mostly due to the lack of major economic releases.


Technical Outlook

The movement seen yesterday doesn’t reveal a lot of clues about future direction but the pair is still trading below the 50 period Exponential Moving Average and this tilts the balance slightly towards the short side. A break of 1.1025 will likely trigger a move into 1.0960, while a move above the 50 EMA and above 1.1100 resistance will probably take the pair into 1.1150 again.

Fundamental Outlook

We have a busier day than yesterday, starting with the German ZEW Economic Sentiment scheduled at 9:00 am GMT. This is a survey of about 275 German professional analysts and investors that tries to gauge their assessment of a 6-month economic outlook. The expected figure is 8.2 (previous 19.2) and higher numbers suggest optimism, usually strengthening the Euro.

At 12:30 pm GMT the U.S. Building Permits are released, and expected to show a figure of 1.15M (previous 1.14M). These are annualized numbers and better values can strengthen the US Dollar because the construction sector is an important part of the U.S. economy.

GBP/USD

The Pound also had a slow day, without major new developments and the pair lingered close to the 50 period Exponential Moving Average for the most part of the day.


Technical Outlook

The pair is now trading closely above the 50 period EMA but movement is slow and without a clear bias. The latest strong impulse is bearish and we expect it to continue until 1.3119 is tested again but this will depend a lot on today’s economic indicators. If the Pound strengthens, we don’t expect the resistance at 1.3483 to be broken.

Fundamental Outlook

British inflation data is released today at 8:30 am GMT in the form of the Consumer Price Index (CPI). A small increase to 0.4% from the previous 0.3% is expected and because inflation is currently considered too low, higher numbers will most likely strengthen the Pound. As always, the U.S. indicators will have a direct impact on the pair as well.

525

FOREX NEWS: US DOLLAR GATHERS MOMENTUM, THREATENS SUPPORT

EUR/USD

Forex News: The U.S. Building Permits numbers matched analysts’ expectations but the German ZEW Economic Sentiment survey disappointed by showing a -6.8 reading (anticipated 8.2). This weakened the Euro and took the pair lower.


Technical Outlook

The 50 period Exponential Moving Average was touched yesterday but the bulls lacked the strength to break it and the pair soon dropped below 1.1025 support. The break is not a clear one and so far both sides lack the conviction necessary for a strong breakout. If today the pair remains below 1.1025, we expect the bears to make a run for 1.0960, otherwise the 50 EMA is the first bullish target.

Fundamental Outlook

The day lacks major economic indicators for the US Dollar and Euro so we expect the technical side to be the main market mover. We may see a slow day based on the lack of news releases.

GBP/USD

Yesterday’s action was slow but the pair moved lower for the most part of the day. The British CPI showed improvement but not enough to trigger Pound strength.


Technical Outlook

The pair reached the zone around 1.3120 and is now trading below the 50 period Exponential Moving Average but a clear breakout did not occur. Once price moves below 1.3120 and re-tests it from below, then we can consider this level resistance and we expect a drop into 1.2880 during the days to come.

Fundamental Outlook

Today at 8:30 am GMT we take a look into the British unemployment situation with the release of the Claimant Count Change. This indicator shows changes in the number of individuals that asked for social help due to their unemployed status and usually a higher reading is indicative of decreased economic activity, weakening the Pound. For today’s release the expected figure is 4.1K (previous -0.4K)

526

FOREX NEWS: EURO IN THE SPOTLIGHT AS ECB RATE DECISION LOOMS

EUR/USD

Forex News: The euro-dollar pair wasn’t affected by major economic releases yesterday and movement was mixed, with a dip below support and a move back towards the opening of the session.



Technical Outlook

Price moved below 1.1025 and then returned to re-test the broken support; if here price will be rejected lower, then we can consider that 1.1025 has turned into resistance and we expect the pair to move lower. If price doesn’t bounce and instead continues higher, we anticipate a touch of the 50 period Exponential Moving Average. Keep in mind that today the technical aspect will be secondary to the fundamental due to the ECB rate announcement.

Fundamental Outlook

At 11:45 am GMT the European Central Bank will announce their rate decision and although no change is forecast (currently 0.00%), volatility will surely increase. Later at 12:30 pm GMT, ECB President Mario Draghi will hold the usual press conference during which he will offer insights into the rate decision and will answer journalists’ questions. This is known to be a major market mover and caution is always advised because price action is often irregular.

GBP/USD

The British unemployment situation showed improvement yesterday and as a result the pair climbed above 1.3119 and into the 50 period Exponential Moving Average, generating a bullish session.


Technical Outlook

Traders still lack a clear bias and as a result the pair reverses direction often. If today we will see a climb above the 50 period Exponential Moving Average, maybe more buyers will join in, taking price higher. The oversold condition of the Stochastic favours such a scenario but is not a sure indication that price will climb. The fundamental aspect will play an important role in today’s direction.

Fundamental Outlook

The British Retail Sales numbers come out at 8:30 am GMT and this will be the main event of the day for the Pound. The indicator shows changes in the total value of sales made at retail levels and is expected to post a figure of -0.4%, while the previous was 0.9%. Lower numbers are indicative of decreased consumer spending and this usually leads to a weaker Pound.

527

FOREX NEWS: EURO WEAKENS, POUND STILL IN RANGE MODE AHEAD OF MANUFACTURING AND SERVICES DATA

EUR/USD

Forex News: The European Central Bank kept the rate unchanged, as it was expected and Mario Draghi’s press conference created a whipsaw where price moved higher just to reverse almost immediately.


Technical Outlook

Movement during yesterday’s press conference was pretty strong but lacked clear direction and now we can see rejection off of the 50 period Exponential Moving Average. Price returned below 1.1025 and is now headed for the low at 1.0980 but considering the choppy movement seen lately, we expect it to bounce higher once this lower target is reached. As long as the pair remains below the 50 period EMA, our bias is bearish, anticipating a touch of 1.0960 zone.

Fundamental Outlook

The German Manufacturing PMI is released today at 7:30 am GMT and is expected to show a value of 53.6 (previous 54.5). This is a medium impact indicator that usually doesn’t create strong movement but under normal circumstances, a higher reading than the forecast strengthens the Euro.

GBP/USD

The Pound was hit yesterday by a -0.9% change for the Retail Sales and the pair dropped for about 100 pips as a result; however, some of the losses were erased later in the session and overall the pair had mixed movement.



Technical Outlook

Price is ranging between 1.3227 and 1.3119 or briefly exits the channel and then returns inside. This type of movement usually predicts that a strong breakout will occur but the direction is hard to anticipate. Until one of the mentioned levels is broken and then re-tested, we have a neutral bias on the pair and we turn our attention towards the economic releases because these will probably decide direction.

Fundamental Outlook

At 8:30 am GMT the British Manufacturing and Services PMIs are released, attempting to gauge the opinions of purchasing managers from the respective sectors regarding economic health post Brexit referendum. The expected figure for the Manufacturing PMI is 47.8 (previous 52.1) while for the Services sector the forecast is 48.9 (previous 52.3). Higher numbers usually strengthen the Pound and the opposite is true for lower numbers.

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

528

FOREX NEWS: BEARS BACK IN THE MARKET, SUPPORT THREATENED

EUR/USD

Forex News: Friday’s economic data matched analysts’ expectations and didn’t have a strong impact on the market but the US Dollar strengthened and took the pair into the support at 1.0960.


Technical Outlook

Friday’s move was stronger than what we’ve seen lately and this often calls for a retracement to the opposite side. If price bounces here, we don’t expect it to reach 1.1025, which is now resistance, and instead we favour the short side after the said retracement completes. The Euro will be affected by economic releases and we expect this to be a deciding factor as far as direction is concerned.

Fundamental Outlook

Today at 8:00 am GMT the German IFO Business Climate survey is released and anticipated to post a value of 107.7, slightly lower than last month’s 108.7. Although this is not known to be a huge market mover, lower numbers usually weaken the Euro because the survey acts as a leading indicator of economic health and is based on the opinions of 7,000 businesses regarding business conditions and a 6-month outlook.

GBP/USD

Friday the bears got the upper hand and drove the pair into support, below the 50 period Exponential Moving Average. Economic data was mixed, with the British Manufacturing PMI showing better values than expected but the Services sector disappointed.


Technical Outlook

Recent price action created resistance at 1.3280 and support at 1.3070; we expect the latter to be broken today, after a brief retracement to the upside. This potential retracement can find resistance at the 50 period Exponential Moving Average where we expect bearish movement to resume and the pair to move below 1.3070.

Fundamental Outlook

The Pound has a slow day for economic releases, so direction will be decided by the technical aspect. Due to the lack of economic indicators, we may see a slow, ranging session.

529

FOREX NEWS: RANGING MARKETS AHEAD OF U.S. CONSUMER CONFIDENCE SURVEY


EUR/USD

Forex News: Price action yesterday was rather slow but the Euro got a small boost from a better than expected value of the German IFO survey so the pair climbed. However, resistance was not threatened and no major developments took place.


Technical Outlook

The pair bounced at 1.0960 support but the “mini” downtrend that started after the rejection seen at 1.1150 is still intact and this makes us anticipate a break of support, probably today. The biggest candle of yesterday’s trading session shows a relatively long upper wick and this is a sign of rejection that strengthens our opinion that a move lower will follow. If 1.0960 is broken, the next target is the zone around 1.0900, otherwise the 50 period Exponential Moving Average will likely cap upside movement.

Fundamental Outlook

Today at 2:00 pm GMT the U.S. Consumer Confidence is released. This is a survey that has a large sample of about 5,000 households and tries to gauge the relative level of confidence in overall economic conditions from the consumer’s standpoint. Usually, higher numbers than the anticipated 95.6 are beneficial for the US Dollar, suggesting that consumer spending will increase in the near future.


GBP/USD

Yesterday’s trading session was incredibly slow and choppy, mostly due to the lack of major economic releases for the US Dollar and Pound alike.



Technical Outlook

Yesterday’s price action doesn’t offer a lot of clues about future direction but we maintain our view that a break of 1.3070 is next. The pair is still trading below the 50 period Exponential Moving Average and the predicted retracement occurred yesterday (although it was very small); this favours a break of support but given the lack of conviction, a move up is not out of the question. If this happens and the 50 EMA is broken, we expect the bullish impulse to stop around 1.3280.

Fundamental Outlook

The United Kingdom didn’t schedule major economic news releases so the pair’s direction will be decided by the technical aspect and by the U.S. survey.

530

FOREX NEWS: FED ANNOUNCES RATES, US DOLLAR POISED FOR BREAKOUTS

EUR/USD

Forex News: Movement was bullish yesterday ahead of the U.S. Consumer survey but a better value posted by this indicator, fuelled the US Dollar and created a bounce at resistance.


Technical Outlook

The 50 period Exponential Moving Average and the resistance at 1.1025 were touched yesterday but the bulls ran out of steam and now rejection is clearly present. This means that we are likely to see another attempt to break the support at 1.0960 but today’s price action will be heavily influenced by the Fed rate announcement.

Fundamental Outlook

At 12:30 pm GMT the U.S. Durable Goods Orders come out, expected to show a change of -1.1% compared to the previous -2.3%. Goods with a life expectancy of at least 3 years are considered “durable” and more orders for such goods usually suggest that economic activity is picking up and this often strengthens the US Dollar.

Later in the day, at 6:00 pm GMT, the most important event of the week is scheduled: the Fed rate announcement and the FOMC Rate Statement. The current rate is <0.50% and this is not expected to change today but we will probably see increased volatility nonetheless; also the Rate Statement is likely to contain hints about future rate changes and this is another reason for strong movement.

GBP/USD

The Pound wasn’t affected by major news releases yesterday but price action was mostly bullish before the release of the U.S. survey which brought the pair slightly lower.


Technical Outlook

Price bounced at the 50 period Exponential Moving Average but movement is still slow and without clear direction. We maintain our bearish bias as long as the pair is trading below the 50 EMA but we don’t exclude a move into 1.3280 if the moving average is broken. The fundamental side will be the main market mover today.

Fundamental Outlook

Before the major U.S. announcement, the British Preliminary Gross Domestic Product is released and expected to show a change of 0.5% from the previous 0.4%. The GDP is an economy’s main gauge of performance, thus higher values usually strengthen the Pound. The time of the release is 8:30 am GMT.

531

FOREX NEWS: FED KEEPS RATE UNCHANGED AS EXPECTED, US DOLLAR MOMENTARILY WEAKENS

EUR/USD

Forex News: Price movement was slow ahead of the Fed release and surprisingly, the rate announcement did not create high volatility. The Fed decided to maintain the rate at <0.50% but some hints were offered that a September hike is on the table.


Technical Outlook

At the release time the pair initially dropped to re-test 1.0960 but then soon climbed into the 50 period Exponential Moving Average. This is not necessarily a sign that price will continue to move upwards but if the confluence zone created by the 50 EMA and the resistance at 1.1025 will be broken, we expect more buyers to join in and to take price higher. As long as this resistance zone is intact, we maintain our bearish bias, anticipating a break of 1.0960.

Fundamental Outlook

Today at 12:00 pm GMT, Germany will announce their Preliminary version of the Consumer Price Index. This is considered the main gauge of inflation and because the German economy is an important pillar of the Euro Zone economy, the CPI will have a strong impact on the Euro. The expected change is 0.2% (previous 0.1%) and higher numbers usually strengthen the single currency.

GBP/USD

The Pound-Dollar pair continued its sideways movement for most of yesterday but once the Fed announced the rate decision, price broke above the 50 period Exponential Moving Average.


Technical Outlook

The break of the 50 EMA seen yesterday is likely to extend into 1.3280, but once this target is reached, we expect the bears to take back control or at least try to. Price is currently trapped between 1.3070 and 1.3280 and until one of them is broken, we consider price in a range, without clear direction.

Fundamental Outlook

The United Kingdom didn’t prepare any major economic releases for today, thus the main market mover will be the technical aspect.

532

FOREX NEWS: EURO TESTS RESISTANCE, POUND STILL IN A RANGE AHEAD OF U.S. GDP

EUR/USD

Forex News: Inflation in Germany improved slightly as shown by yesterday’s Consumer Price Index that posted a change of 0.3% (forecast 0.2%). The pair continued the bullish impulse started a day ago but stopped around 1.1100.


Technical Outlook

Price tested the resistance at 1.1100 but it seems like the bulls are running out of steam, so we are likely to see a bounce into lower territory. The Relative Strength Index and Stochastic are both overbought and this increases the chance of a move south, with the 50 period Exponential Moving Average as target but a clear break above 1.1100 will probably take the pair into 1.1150.

Fundamental Outlook

The main event of the day is the U.S. Advance Gross Domestic Product, scheduled at 12:30 pm GMT and expected to show a big increase of 2.6% from the previous 1.1%. Out of the three versions of the GDP (Advance, Preliminary and Final), this is the first one and tends to have the strongest impact, with higher numbers strengthening the US Dollar.

GBP/USD

The Pound failed to move into 1.3280 and instead reversed, erasing most of the previous gains and confirming the fact that until the channel is broken, the par is still in range mode.


Technical Outlook

The pair is trapped inside the horizontal channel created by 1.3280 resistance and 1.3070 support. This is a wide range in terms of pips but considering the pair’s latest behaviour, it’s still a relatively tight channel and usually, when tight channels are broken, price travels a considerable distance in the direction of the break. Until that happens, our view is neutral and we consider that direction will be decided by the economic indicators scheduled for release today and during the days to come.

Fundamental Outlook

The U.S. Gross Domestic Product will be today’s main market mover for the pair because the United Kingdom didn’t schedule major economic indicators.

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

533

FOREX NEWS: EURO GAINS AGAINST THE US DOLLAR, POUND STILL HESITANT AHEAD OF MANUFACTURING DATA


EUR/USD

Forex News: Friday the US Dollar weakened against the Euro and the bulls made a clear break of resistance. This was mostly generated by a disappointing reading posted by the Advance version of the U.S. Gross Domestic Product: anticipated 2.6%, actual 1.2%.


Technical Outlook

The level at 1.1150, which acted as strong resistance in the past, is now clearly broken and may turn into support if price returns to test it. Already some rejection is seen around 1.1180 and the oscillators are overbought, so we may see a 30 pip drop into 1.1150 but the short term bias is bullish and price will probably continue towards 1.1240. This view will be strengthened if 1.1150 becomes support.

Fundamental Outlook

At 2:00 pm GMT the U.S. Manufacturing PMI is released, with an anticipated value of 53.1, almost identical to the previous 53.2. This is a survey of purchasing managers from the manufacturing sector that asks respondents to give their opinions on overall business conditions and health of the said sector; usually, higher numbers bring strength to the dollar but the impact is not always substantial.

GBP/USD

The pair remained above the 50 period Exponential Moving Average Friday and even tested 1.3280 resistance on the back of a worse than expected U.S. GDP but a break did not occur.


Technical Outlook

Although the latest impulse is bullish and the pair is trading above the 50 period Exponential Moving Average, the picture is blurry until we will see a break of the horizontal channel created by 1.3280 resistance and 1.3070 support. For today, we expect another touch of the moving average and if price moves below it, a touch of 1.3070 zone is very possible.

Fundamental Outlook

The British Manufacturing PMI is released at 8:30 am GMT. Just like the U.S. indicator with the same name, this survey is derived from the opinions of purchasing managers and usually, higher numbers than the forecast 49.1 generate strength for the Pound.

534

FOREX NEWS: US DOLLAR FIGHTS BACK AS BOTH PAIRS BOUNCE AT RESISTANCE

EUR/USD

Forex News: The pair had a very slow and slightly bearish session yesterday, without threatening resistance or support. The U.S. Manufacturing data came out close to analysts’ expectations thus the event did not create strong movement.


Technical Outlook

The pair is now headed towards 1.1150, with the Stochastic and Relative Strength Index just exiting overbought territory, heading down. This suggests that if 1.1150 cannot reject price higher and a break happens early in the day, we will see a touch of 1.1100. On the other hand, if 1.1150 turns into support and the pair bounces off of it, we expect a break of 1.1186 and a consequent move into 1.1240 during the next days.

Fundamental Outlook

The economic calendar lacks major events for the Euro and US Dollar, a thing that may generate another slow and ranging trading session.

GBP/USD

British manufacturing data disappointed yesterday but the impact on the Pound wasn’t tremendous. The pair dropped lower after a bounce at 1.3280.


Technical Outlook

Price action stopped at the 50 period Exponential Moving Average but it also bounced at 1.3280 resistance. This shows that control doesn’t clearly belong to either side and that the pair is still in a ranging environment. Usually when price is inside a horizontal channel, it bounces from side to side so if the 50 EMA is breached, we expect a move into 1.3070.

Fundamental Outlook

Today the British PMI series continues with the release of the Construction PMI, scheduled at 8:30 am GMT and expected to show a value of 44.2 (previous 46.0). This survey of purchasing managers acts as a leading indicator of economic health and can strengthen the Pound if it shows a better reading than analysts’ forecast. Usually the impact is not strong but this can change if the actual number differs substantially from expectations.

535

FOREX NEWS: FIRST LOOK AT U.S. EMPLOYMENT DATA: BOOST OR BUST?

EUR/USD

Forex News: The bulls continued their assault yesterday and the US Dollar lost the short term battle as the resistance at 1.1180 was broken.


Technical Outlook

Despite the Relative Strength Index and Stochastic being overbought, the pair continued higher after a small retracement and broke 1.1186 decisively. The bullish run started at 1.0960 looks now overextended but we believe it will reach the zone around 1.1240 and there we expect a deeper retracement or possibly even a reversal.

Fundamental Outlook

Today at 12:15 pm GMT we take a first look into U.S. employment situation with the release of the ADP Non-Farm Employment Change. This report tracks changes in the number of employed people during the previous month but does not include the farming sector and government jobs. It is less important than the Non-Farm Payrolls released 2 days after but still, higher numbers than the anticipated 171K can strengthen the US Dollar.

GBP/USD

The Pound finally broke out of the horizontal channel that confined it for the last period and the pair travelled more than 150 pips north, generating a clearly bullish session.


Technical Outlook

After another bounce on the 50 period Exponential Moving Average, the pair is finally out of the horizontal channel created between 1.3070 support and 1.3280 resistance. Usually after a breakout, price continues in the initial direction but all that remains to be seen is whether the break is a true one or not. If price doesn’t return inside the horizontal channel, we will likely see a touch of 1.3480, otherwise the moving average is the next target.

Fundamental Outlook

At 8:30 am GMT the last British PMI in this week’s series is released. This one is focused on the Services sector and is derived from the opinions of purchasing managers regarding the health of said sector. The anticipated number is 47.4, same as previous and higher numbers are beneficial for the Pound.

536

FOREX NEWS: POUND UNDER FIRE: RATE CUT EXPECTED

EUR/USD

Forex News: The bullish attack on resistance was stopped yesterday by the US Dollar that made a comeback, aided by a slightly better than anticipated reading posted by the ADP Non-Farm Employment Change.



Technical Outlook

Price action came in close vicinity of 1.1240 resistance but the move was already overextended and as we expected, a bearish retracement has begun. The overbought condition of the Stochastic and Relative Strength Index contributed to the drop and now we expect the pair to touch 1.1150 and probably the 50 period Exponential Moving Average. Although we favor short term moves south, the pair is in a bullish environment as long as it remains above the 50 EMA.

Fundamental Outlook

The economic calendar is light for both the Euro and US Dollar so the technical aspect will be the main market mover.

GBP/USD

The US Dollar erased yesterday some of the losses incurred earlier but the pair remained above 1.3280 although the employment situation in the United States has improved.


Technical Outlook

It looks like the bears are trying to move the pair back below 1.3280; the contributing factors are the position of the two oscillators, which have reached overbought, and the fact that the US Dollar was boosted by optimistic jobs data. However, today’s price direction will be mainly affected by BOE’s decision regarding the interest rate, so the technical aspect will be secondary.

Fundamental Outlook

At 11:00 am GMT the Bank of England will announce their rate decision, will release a Monetary Policy Summary and also a breakdown of the MPC members’ votes on whether to cut or hold the rate. Most analysts anticipate a rate cut today, from the current 0.50% to 0.25% and if this comes true, the Pound will likely weaken against its counterparts. Even if the rate stays the same, we expect high volatility but if the BOE decides to cut it, we recommend extreme caution.

537

FOREX NEWS: CLOSING THE WEEK WITH A BANG: U.S. NON-FARM PAYROLLS

EUR/USD

Forex News: Yesterday the pair returned below 1.1150 and re-tested the 50 period Exponential Moving Average, completing a predicted bearish retracement.


Technical Outlook

Currently the bears are struggling to break the 50 period Exponential Moving Average but rejection is clearly seen. A move back above 1.1150 would mean that yesterday’s behaviour was just a retracement in a bullish environment, but a break of the EMA will make the short term bias bearish; however, today’s technical aspect will be overshadowed by the fundamental and direction will be decided by the U.S. jobs data.

Fundamental Outlook

At 12:30 pm GMT the most important U.S. report of the week comes out: the Non-Farm Employment Change (or Non-Farm Payrolls). A big decrease is anticipated, from the previous 287K to 180K and if the actual number is lower than the forecast, the US Dollar is likely to weaken. A figure above forecast would show increased economic activity and thus will probably strengthen the greenback.

GBP/USD

The Bank of England decided to cut the interest rate from 0.50% to 0.25% as it was anticipated and this generated a huge drop that took price close to support.



Technical Outlook

The drop seen yesterday is attributed to the rate cut and we will probably see more downside movement. The first target is the support at 1.3070 but we expect slight retracements to the upside, possibly into the 50 period Exponential Moving Average. Just like in the case of the EUR/USD, we expect the fundamental aspect to decide today’s direction.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases but the U.S. jobs data will hold today’s headlines and will generate increased volatility.

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

538

FOREX NEWS: POUND TRADES BELOW SUPPORT, EURO LOSES GROUND AGAINST THE US DOLLAR

EUR/USD

Forex News: The pair moved slowly yesterday, which was expected after a strong drop and due to the lack of economic indicator releases. We had a small retracement but price remained below the 50 period Exponential Moving Average.


Technical Outlook

Price climbed to re-test the level at 1.1100 and it successfully did so, as seen from the bounce at this level. Now we can consider it resistance and expect to reject price in the future as well. For today we anticipate moves closer to 1.1025 and we base this assumption on the fact that the effects of the NFP will probably extend throughout this week; as long as the pair is trading below the 50 EMA and below 1.1100, the technical agrees with the fundamental and the bias is bearish.

Fundamental Outlook

We have another slow day for economic indicator releases so price direction will be mainly decided by the technical aspect.

GBP/USD

The pair remained close to 1.3070 for most of the day and no major developments took place yesterday. It is worth noting that support doesn’t seem to reject bearish price action anymore.


Technical Outlook

Price has moved slowly below 1.3070 support and it looks like the bears will win the battle for the horizontal channel. If the pair remains below 1.3070, we expect it to move closer to 1.2880 during the days to come but the oversold position of the Stochastic might generate some bullish reaction; however, our bias is bearish as long as the pair is trading below the 50 period Exponential Moving Average.

Fundamental Outlook

At 8:30 am GMT the British Manufacturing Production numbers come out, showing changes in the total value of goods produced by the manufacturing sector. Higher readings than the anticipated 0.0% (previous -0.5%) usually strengthen the Pound but the impact is often limited if the actual number matches or comes very close to analysts’ forecast.

539

FOREX NEWS: EURO MAKES A SURPRISING COMEBACK AS THE POUND DIPS LOWER

EUR/USD

Forex News: After a period of calmness and sideways movement, the Euro jumped above the 50 period Exponential Moving Average and erased some of the previous US Dollar gains, generating a bullish session yesterday.


Technical Outlook

The current climb is likely to be short lived and followed by a drop into 1.1025 as long as the 50 period Exponential Moving Average is not clearly broken. If the moving average will be broken, the next destination is 1.1150 and this will also mean that the NFP gains will be completely erased but we still favour the short side as long as the pair is trading below 1.1150 resistance.

Fundamental Outlook

We have another slow economic day ahead, with the only notable indicator being the JOLTS Job Openings, released at 2:00 pm GMT. As its name suggests, the indicator shows the number of job openings in the United States and higher numbers than the forecast 5.52M can strengthen the US Dollar but keep in mind that the impact is often very low.


GBP/USD

Yesterday’s main event was the release of the British Manufacturing Production, which disappointed by showing a -0.3% change, and the Pound reacted by dropping further below support.



Technical Outlook

The break of 1.3070 is now clear so we can consider that the bears have successfully taken the pair out of the horizontal channel. This means that we might be headed for the next target, located at 1.2880 but we don’t exclude bullish retracements (both oscillators are oversold). However, as long as the pair is trading below 1.3070 and below the 50 period Exponential Moving Average, our bias is bearish.

Fundamental Outlook

The U.S. indicator mentioned earlier will be the only notable event of the day as the United Kingdom didn’t schedule any economic releases.

540

FOREX NEWS: BULLS REACH RESISTANCE, US DOLLAR PREPARES A COMEBACK


EUR/USD

Forex News: Yesterday the pair ran sharply upwards and nullified the US Dollar gains generated by last week’s NFP release. Immediate resistance was easily broken and the session was dominated by the bulls.


Technical Outlook

The pair has now reached 1.1186 resistance and this also coincides with a bearish trend line seen on the chart above. The Relative Strength Index is just touching its 70 level, suggesting an overbought condition and the Stochastic is starting to cross downwards. All this suggests that a move lower will follow and if this comes true, we expect an encounter with 1.1150 and the 50 period Exponential Moving Average.

Fundamental Outlook

The fundamental scene remains quiet today, and the only notable release is scheduled at 12:30 pm GMT in the form of the U.S. Unemployment Claims. This indicator shows changes in the number of people without jobs that have applied for social help but it is released every week and the impact is not always strong; the expected number is 272K and numbers above this can weaken the US Dollar.

GBP/USD

Price retraced into the previous support but it remained in a range once it reached it and overall yesterday’s trading session was uneventful.



Technical Outlook

After an oversold condition signalled by the Relative Strength Index and Stochastic, the pair returned to re-test the previously broken support at 1.3070 but signs of rejection are already present. A good climb was stopped by 1.3070 and price attempted to move above the level a couple of times but didn’t succeed. This suggests that 1.3070 will turn into resistance and if this is the case, we will see today a drop towards yesterday’s low located at 1.2990; otherwise the 50 EMA is the first bullish target.

Fundamental Outlook

It’s another uneventful day for the Pound, so price direction will be dictated by the technical aspect and also by the U.S. Unemployment Claims but to a limited extent.

541

FOREX NEWS: FOCUS SHIFTS ON ECONOMIC INDICATORS AS GERMAN GDP AND U.S. RETAIL SALES ARE ANNOUNCED

EUR/USD

Forex News: We had another uneventful day on the fundamental scene yesterday and the pair didn’t show any major new developments. Price fell slightly below 1.1150 then returned above it, nullifying most of the initial move.


Technical Outlook

Price is confined between the bearish trend line seen on the chart above and the support at 1.1150 and until one of these technical barriers is broken, we expect ranging movement. Today is the busiest day of the week from a fundamental perspective so the economic indicators will probably decide price direction but strictly from a technical standpoint we anticipate a drop into the 50 period Exponential Moving Average if the trend line holds.

Fundamental Outlook

Early at 6:00 am GMT the German Preliminary Gross Domestic Product is released, with a forecast change of 0.3% (previous 0.7%). Higher than forecast numbers usually strengthen the Euro but the impact is low if the actual value comes close to analysts’ forecast.

On the US Dollar side we have the Retail Sales, scheduled for release at 12:30 pm GMT and expected to show a 0.4% change compared to the previous 0.6%. This type of sales represent the main part of consumer spending, which in turn accounts for a big part of overall economic activity, thus higher readings usually strengthen the greenback.

The last event of the day is the release of the University of Michigan Consumer Sentiment, a survey that tries to gauge the confidence of consumers in overall economic conditions. The time of the release is 2:00 pm GMT and the forecast is 91.5; same as with the other indicators, higher numbers strengthen the currency.

GBP/USD

Yesterday the US Dollar recuperated the losses incurred a day before and the pair bounced at 1.3070 resistance, creating a bearish day.


Technical Outlook

The pair remained below the 50 period Exponential Moving Average and bounced lower after an encounter with 1.3070, which has now turned into resistance. This makes our bias bearish, anticipating a move into 1.2900 area. Possible bullish retracements will be capped by 1.3070 resistance, which we expect to hold in case it is reached, but today’s price behaviour will be mostly influenced by the U.S. releases.

Fundamental Outlook

The United Kingdom didn’t schedule important economic indicators for today so the main focus will be on the US Dollar.

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