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542

FOREX NEWS: INFLATION DATA ACROSS THE BOARD

EUR/USD

Forex News: For the first part of yesterday’s trading session, price traded mostly sideways due to the lack of economic releases. The second part was more active, with the bulls taking control of direction.


Technical Outlook

The pair remained above the 50 period Exponential Moving Average and pierced both the trend line and the resistance at 1.1186. However, we must note that 1.1186 is not clearly broken so we may see a reversal from here; if price descends, it will reach the area around 1.1150 where we see a convergence of three key elements: the 1.1150 level itself, the bearish trend line and the 50 EMA (which by then will climb to reach that zone). This strong confluence area is likely to push price upwards again but on the other hand, a break would show that the US Dollar is gaining back control.

Fundamental Outlook

Two important indicators will hold today’s headlines: on the Euro side we have the German ZEW Economic Sentiment, which is a survey of about 275 German investors and analysts, focused on their 6-month economic outlook. The scheduled time is 9:00 am GMT and the expected value is 2.1, a hefty increase from the previous -6.8.

On the US Dollar side we have a very important indicator: the Consumer Price Index, which is the main gauge of inflation. Traders and the Fed pay more attention to the CORE version of the CPI, which excludes from calculation energy and food; the indicator is expected to show a 0.2% change, same as previous and is released at 12:30 pm GMT. Higher numbers strengthen the US Dollar under current conditions.

GBP/USD

Yesterday the pair continued its downwards path and reached our predicted target at 1.2880. The entire session was controlled by the sellers but movement wasn’t extremely strong.


Technical Outlook

Now that the pair has reached an important support zone and both oscillators are oversold, we expect retracements to the upside to begin. The extent of this potential pullback should be limited and afterwards, we anticipate another drop, with the key low at 1.2796 as target. If price descends below current support, it will probably retrace higher before 1.2800 zone is reached.

Fundamental Outlook

At 8:30 am GMT the British CPI comes out, showing the state of current inflation in the United Kingdom. The indicator usually has a high impact and can strengthen the Pound if it shows better than anticipated figures. For today’s release the forecast is 0.5%, same as previous.

543

FOREX NEWS: FOMC MEETING MINUTES: TELLING THE STORY OF THE NEXT RATE HIKE


EUR/USD

Forex News: U.S. inflation data disappointed yesterday and this was one of the reasons why the pair climbed strongly; however the CPI wasn’t much lower than anticipated so that was not the only reason for the climb.



Technical Outlook

The level at 1.1186 turned into support and pushed price higher in yesterday’s trading session but such a fast climb is likely to retrace lower, possibly into 1.1240 which was also broken during the rally. The Relative Strength Index is hooking down, after reaching overbought territory and this is another indication that a move lower will follow. After this anticipated retracement, if price remains above the 50 period EMA, we expect another push higher.

Fundamental Outlook

The Euro will not be affected by economic releases today and on the US Dollar side we have the always important FOMC Meeting Minutes, released at 6:00 pm GMT. This document contains a detailed record of the latest Fed meeting regarding interest rates and usually contains hints about future rate moves. If this is the case, we expect strong movement on USD pairs.

GBP/USD

The British CPI showed slight improvement and this, combined with the disappointing U.S. data, triggered a retracement higher and a bullish session.


Technical Outlook

As long as the pair is trading below the 50 period Exponential Moving Average, our bias is still bearish and consider this just a much needed retracement which was already anticipated. The candles start to show long wicks, which is a clear sign that the bullish impulse is fading away, thus we expect price to move lower today. As an alternate scenario, a break of the 50 EMA will likely take the pair into 1.3070 which is now resistance.

Fundamental Outlook

Today at 8:30 am GMT we take a look at British unemployment with the release of the Claimant Count Change, an indicator that tracks changes in the total number of people who asked for social help due to their unemployed condition. Higher numbers than the anticipated 5.2K (previous 0.4K) usually weaken the Pound.

544

FOREX NEWS: US DOLLAR TAKES A BLOW FROM MIXED FOMC OPINIONS

EUR/USD

Forex News: Ahead of the FOMC Minutes release, the pair drifted mostly sideways, without clear direction but the document showed that participants generally agreed that the next rate hike will depend on labour market performance and economic activity.


Technical Outlook

The pair climbed when the FOMC Meeting Minutes were released but their contents were not extremely bearish for the US Dollar so we don’t expect this climb to break 1.1340 resistance; the overbought position of the Relative Strength Index and Stochastic strengthens our opinion that this move will not break 1.1340. However, keep in mind that the pair is trading above the 50 period Exponential Moving Average and 1.1240 is now support so the bias is bullish.

Fundamental Outlook

At 12:30 pm GMT the Philly Fed Manufacturing Index is released, showing the health of the manufacturing industry in the Philadelphia district. The anticipated number is 1.4, a reasonable increase from the previous -2.9 and we can expect some US Dollar strength if even higher values are posted.

GBP/USD

The pair continued higher and touched the resistance at 1.3070 before the release of the Minutes and is now trying to break it on the back of mixed opinions among FOMC members regarding the next rate hike.


Technical Outlook

The resistance at 1.3070 rejected an early attack and pushed price lower but now the Pound bulls are trying to break the level again. The oscillators are close to overbought so it’s very possible to see a return below 1.3070 even if it will be briefly breached. On the other hand, a break followed by a successful re-test of the level would suggest that we will see further upside movement.

Fundamental Outlook

An important British indicator is released today at 8:30 am GMT: the Retail Sales. Such sales are the most important for an economy and usually this release has strong impact on the Pound, with higher numbers strengthening it. The anticipated change is 0.1%, compared with the previous -0.9% so we can expect some Pound strength if analysts’ prediction comes true or if higher values are posted.

545

FOREX NEWS: DEEP OVERBOUGHT LEVELS WARN ABOUT A REVERSAL

EUR/USD

Forex News: The pair continued higher yesterday and the resistance at 1.1340 was reached although the U.S. Philly Fed Manufacturing Index was slightly better than anticipated. Overall the session was bullish but signs of a reversal started to appear.


Technical Outlook

The Relative Strength Index is moving above the overbought level for the second time in a relatively short while, resistance sits in front of rising price and the candles show long wicks on their upper and lower parts. All these are clear signs that the current bullish move is exhausted and that a reversal is looming. The first known support is located at 1.1240 but the retracement may stop before it hits this level and on the other hand, a break of 1.1340 will open the door for the zone around 1.1400, which is where the Brexit move originated.

Fundamental Outlook

Both currencies in the pair have a lacklustre fundamental environment, without important releases. This may trigger a slow, ranging day.

GBP/USD

Yesterday the Pound benefited from increased sales made at retail levels (anticipated 0.1%, actual 1.4%) and strengthened considerably, generating a substantial climb.


Technical Outlook

The pair is now trading above the 50 period Exponential Moving Average and above 1.3070, which puts it in a short to medium term bullish market. The current climb is likely to continue but the extent should be limited because both the Stochastic and Relative Strength Index are overbought and price travelled a long distance without a retracement. Also, 1.3175 is minor resistance so we may see some sort of retracement from here.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound is not affected my major indicator releases today so we expect price direction to be decided by the technical aspect.

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

546

FOREX NEWS: BLANK ECONOMIC CALENDAR OPENS THE DOOR FOR RANGE-BOUND STRATEGIES

EUR/USD

Forex News: Friday the economic calendar was blank and action slowed down compared to previous days but the bears managed to bring the pair lower after reaching a high at 1.1366.


Technical Outlook

Price is again trading below the resistance at 1.1340 which was briefly broken last week; for now this is just a retracement in an uptrend and cannot be considered a reversal or a clear change of direction. Today we will probably see some ranging movement, capped by 1.1366 to the upside and by the 50 period Exponential Moving Average to the downside. The oscillators are exiting overbought, moving down and this makes our bias slightly bearish, without excluding another encounter with resistance.

Fundamental Outlook

The day totally lacks any notable events for both the Euro and the US Dollar and this strengthens our view that we are in for a slow, ranging day.

GBP/USD

Friday belonged to the bears, who managed to bring the pair back into the 50 period Exponential Moving Average. This is a key confluence zone, where a bounce or break could decide the next medium term move.


Technical Outlook

The level at 1.3070 and the 50 period EMA create a confluence zone that can push price higher; also, the candles show wicks in their lower part, which is a sign of rejection. Based on the way price has been moving lately, the Pound seems to gain short term strength so a bounce higher is very possible. On the other hand, a break of the mentioned confluence zone would be a clear sign of power for the bears, so if that happens, we expect the pair to continue lower during the days to come.

Fundamental Outlook

The Pound has a slow economic day ahead, without major announcements; price direction will be influenced by the technical aspect but we don’t expect strong movement.

547

FOREX NEWS: BULLS PUSH HIGHER, AIMING FOR KEY RESISTANCE

EUR/USD

Forex News: The day lacked major events and the pair moved initially lower but soon reversed direction and travelled back up, close to the opening price of the week.


Technical Outlook

It looks like the two sides are evenly balanced and that the pair might enter a ranging period, with price capped between the 50 period Exponential Moving Average and the resistance at 1.1340. For today we favour a move lower, into the moving average. A break of this line will extend the drop into 1.1240 and possibly into the bullish trend line seen above but the pair is in a short-to-medium term uptrend at the moment so we don’t exclude a move higher.

Fundamental Outlook

At 7:30 am GMT the German Manufacturing PMI is released, with an anticipated value of 53.7, almost unchanged from the previous 53.8. This survey is derived from the opinions of about 500 purchasing managers and is focused on their opinions regarding the health of the manufacturing sector. Usually, numbers above the forecast strengthen the Euro but the impact is often limited.

On the US Dollar side we have the New Home Sales, scheduled at 2:00 pm GMT and expected to show a number of 575K compared to the previous 592K. The indicator shows the annualized number of houses sold during the previous month and gauges the health of the U.S. housing market, thus higher values have a positive impact on the greenback.

GBP/USD

After another attempt to break the 50 period Exponential Moving Average, price bounced higher, generating a bullish day although the Pound wasn’t fueled by notable economic releases.


Technical Outlook

The fact that price tried for the second time to break the moving average but failed makes us anticipate a move to the upside, that will probably reach 1.3175. This level is now resistance and we expect it to reject price lower once and if it is touched. As an alternate scenario, a break of 1.3070 and the 50 EMA will probably bring in more sellers but this is less likely to occur until price climbs higher first.

Fundamental Outlook

The Pound will be affected today by the technical side and by the U.S. housing data because the United Kingdom didn’t schedule any notable economic news releases.

548

FOREX NEWS: RESISTANCE LEVELS HIT. WILL THE US DOLLAR START A NEW ASSAULT?


EUR/USD

Forex News: The bulls managed to take the pair into resistance yesterday despite positive U.S. housing data; however, the effects of the New Home Sales (actual 645K, forecast 575K) are likely to make their presence known and to strengthen the US Dollar.


Technical Outlook

Although the pair moved briefly above 1.1340 resistance, we expect a bounce lower from here, with the low at 1.1270 as first target. Price is trading above the 50 period Exponential Moving Average and it’s printing higher lows and higher highs so it’s clear that the pair is in an uptrend but the move up seems exhausted. The moving average is in close vicinity of the latest low so the way price behaves when and if it gets there, will offer hints about future movement. On the other hand, a break of 1.1340 will open the door for the high at 1.1366.

Fundamental Outlook

The only notable indicator on today’s calendar is the U.S. Existing Home Sales, scheduled at 2:00 pm GMT. The indicator excludes from calculation new buildings and usually has a low-to-medium impact, but higher numbers than the forecast 5.55M can strengthen the US Dollar.

GBP/USD

As expected the pair continued to climb and reached the resistance at 1.3175, generating a bullish day. Although the level was breached, we don’t consider that the move will extend much further.


Technical Outlook

The pair has moved above 1.3175 resistance but the Relative Strength Index is touching its overbought level and on top of that, bearish divergence is present. This type of divergence indicates that a move lower may soon follow and occurs when price is making a higher high but a corresponding oscillator (the RSI in this case) is just showing a lower high. If the pair returns soon below 1.3175, it means the bullish break was false and that we will see a move lower, probably into the 50 period Exponential Moving Average.

Fundamental Outlook

The Pound has another slow economic day ahead, with no major indicators on the calendar. The direction will be mainly decided by the technical aspect and to some extent, by the U.S. housing data.

549

FOREX NEWS: US DOLLAR SHOWS MIXED REACTION AHEAD OF JACKSON HOLE SYMPOSIUM

EUR/USD

Forex News: Yesterday the economic releases didn’t have a huge impact but after an encounter with resistance, the US Dollar gained some momentum and reached support, generating a bearish session.


Technical Outlook

The bears managed to break an important confluence zone, created by the support at 1.1270 and the 50 period Exponential Moving Average. This shows that the balance of power is starting to tilt in their favour and that we will probably see an encounter with the bullish trend line on the chart above. On the other hand, a move above the 50 EMA will open the door for a climb back into 1.1340 but the economic releases will likely be the deciding factor.

Fundamental Outlook

At 8:00 am GMT, the German IFO Business Climate survey comes out, showing the opinions of about 7,000 businesses regarding their economic expectations for the next 6 months. The large sample of this survey is what makes it important and usually numbers above the forecast 108.5, strengthen the Euro.

Later in the day, at 12:30 pm GMT the U.S. Durable Goods orders come out, with an anticipated 3.4% change, a strong increase from the previous -3.9%. If the actual number will be close to this forecast, the US Dollar is likely to strengthen.

Also keep in mind that today is the first day of the Jackson Hole Symposium and this may increase volatility because the event is attended by key financial and political personalities from across the globe.


GBP/USD

The Pound remained above 1.3175 and strengthened without apparent reason yesterday, generating a bullish day for the pair.


Technical Outlook

We expect the current climb to extend into the resistance at 1.3280 and if this barrier is broken, we may see a climb into 1.3365 during the days to come. However, the up move is exhausted and both oscillators are overbought so we rather favour a bounce lower around the 1.3280 zone. The U.S. economic indicators will have an important part to play in today’s direction and the Jackson Hole Symposium may do the same.

Fundamental Outlook

The United Kingdom didn’t schedule important economic releases but British personalities will be present at the Symposium so volatility may increase and caution is recommended.

550

FOREX NEWS: US DOLLAR PREPARES FOR YELLEN’S JACKSON HOLE SPEECH

EUR/USD

Forex News: Euro data released yesterday was slightly worse than anticipated while the U.S. Durable Goods Orders exceeded analysts’ expectations, yet the pair didn’t have a bearish reaction and instead moved above the moving average.


Technical Outlook

After nearly touching the support at 1.1240, the pair bounced higher and moved back above the 50 period Exponential Moving Average, setting the stage for a resumption of the uptrend. However, the current move up doesn’t show strength and in fact the entire yesterday’s session was low-volatility; this may suggest that price may be headed in fact lower, towards the bullish trend line seen on the chart above. The main levels to watch today are 1.1240 to the downside and 1.1340 as resistance; if the pair moves below the 50 EMA we favour a touch of the mentioned support.

Fundamental Outlook

At 12:30 pm GMT the U.S. Preliminary Gross Domestic Product comes out, showing changes in the total value of services and goods produced by the economy. This version is less important than the Advance, which was released already, but still, higher values than the forecast 1.1% can strengthen the US Dollar.

Fed Chair Janet Yellen will deliver a speech at the Jackson Hole Symposium at 2:00 pm GMT. The speech is titled “The Federal Reserve’s Monetary Policy Toolkit" so we can surely expect her to talk about monetary policy and usually this topic creates strong market movement.

GBP/USD

Yesterday price travelled the entire distance between resistance and support and seems like the positive U.S. economic data had a strong impact on the pair, unlike it was with the EUR/USD.


Technical Outlook

After the bearish bounce close to 1.3280, the anticipated retracement occurred, but now 1.3175 seems to have turned into support. If this level will push price higher, we expect a move into 1.3280, but a bearish break will make the 50 period Exponential Moving Average the first target. Both oscillators are coming down from overbought, favouring a bearish scenario.

Fundamental Outlook

At 8:30 am GMT the Second Estimate British GDP is released and anticipated to show a change of 0.6%, same as previous. The GDP is the gauge of overall economic performance, thus higher numbers usually have a positive impact on the currency.

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

551

FOREX NEWS: US DOLLAR PREPARES FOR YELLEN’S JACKSON HOLE SPEECH

EUR/USD

Forex News: Euro data released yesterday was slightly worse than anticipated while the U.S. Durable Goods Orders exceeded analysts’ expectations, yet the pair didn’t have a bearish reaction and instead moved above the moving average.


Technical Outlook

After nearly touching the support at 1.1240, the pair bounced higher and moved back above the 50 period Exponential Moving Average, setting the stage for a resumption of the uptrend. However, the current move up doesn’t show strength and in fact the entire yesterday’s session was low-volatility; this may suggest that price may be headed in fact lower, towards the bullish trend line seen on the chart above. The main levels to watch today are 1.1240 to the downside and 1.1340 as resistance; if the pair moves below the 50 EMA we favour a touch of the mentioned support.

Fundamental Outlook

At 12:30 pm GMT the U.S. Preliminary Gross Domestic Product comes out, showing changes in the total value of services and goods produced by the economy. This version is less important than the Advance, which was released already, but still, higher values than the forecast 1.1% can strengthen the US Dollar.

Fed Chair Janet Yellen will deliver a speech at the Jackson Hole Symposium at 2:00 pm GMT. The speech is titled “The Federal Reserve’s Monetary Policy Toolkit" so we can surely expect her to talk about monetary policy and usually this topic creates strong market movement.

GBP/USD

Yesterday price travelled the entire distance between resistance and support and seems like the positive U.S. economic data had a strong impact on the pair, unlike it was with the EUR/USD.


Technical Outlook

After the bearish bounce close to 1.3280, the anticipated retracement occurred, but now 1.3175 seems to have turned into support. If this level will push price higher, we expect a move into 1.3280, but a bearish break will make the 50 period Exponential Moving Average the first target. Both oscillators are coming down from overbought, favouring a bearish scenario.

Fundamental Outlook

At 8:30 am GMT the Second Estimate British GDP is released and anticipated to show a change of 0.6%, same as previous. The GDP is the gauge of overall economic performance, thus higher numbers usually have a positive impact on the currency.

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

552

FOREX NEWS: YELLEN BOOSTS THE US DOLLAR, PAIRS DROP THROUGH SUPPORT

EUR/USD

Forex News: The bears scored a major victory Friday, mostly fuelled by Fed Chair Yellen’s speech at the Jackson Hole Symposium. Several support levels were broken and now the balance has shifted towards the short side.


Technical Outlook

Friday’s fall took the pair below the 50 period Exponential Moving Average, broke 1.1240 support and the bullish trend line, making the bias clearly bearish. However, after a strong move in one direction, usually price retraces or moves sideways for a period, so we expect some bullish pullbacks today. The oversold position of the Relative Strength Index and the vicinity of 1.1185 support strengthen this view, making us anticipate bullish retracements but these will most likely be followed by another drop.

Fundamental Outlook

At 12:30 pm GMT the U.S. Personal Spending is released, showing the changes in the total value of expenditures made by U.S. individuals. The indicator has a relatively low impact on the US Dollar but higher numbers than the forecast 0.3% can strengthen it because consumer spending represents the main part of the entire economic activity.

GBP/USD

Friday, after a brief jump that took the pair into resistance, the US Dollar strengthened during Yellen’s speech and price dropped for more than 150 pips, creating a bearish trading session.


Technical Outlook

The resistance at 1.3280 is still a key level that stopped once again bullish advances and rejected the pair lower, into the 50 period EMA. As long as the bears can keep the pair below the moving average, our bias is negative and we anticipate a move into 1.3070. If the pair moves back above the moving average, we are likely to see a touch of 1.3175.

Fundamental Outlook

British banks will be closed today, celebrating their Summer Bank Holiday; this also means that no major indicators will be released and volatility may be low.

553

FOREX NEWS: BEARS IN CONTROL, OVERSOLD LEVELS CALL FOR RETRACEMENTS

EUR/USD

Forex News: The speed of movement slowed down yesterday but the US Dollar continued to strengthen against its peers and support was broken, creating a bearish trading session.


Technical Outlook

The current move is likely to extend into the support at 1.1150, where we expect a bullish retracement based on the oversold condition of the Relative Strength Index and Stochastic. This potential retracement can find resistance at 1.1185 and if this level rejects price, we expect a move below 1.1150, towards 1.1100.

Fundamental Outlook

At 12:00 pm GMT we take a look at German inflation with the release of the Preliminary version of their Consumer Price Index. This is a key indicator that can strengthen the Euro if it posts a reading above the forecast 0.1% (previous 0.3%).

On the US Dollar side we have the Consumer Confidence survey, released at 2:00 pm GMT and expected to show a value of 97.2, little changed from the previous 97.3. This is a leading indicator of consumer spending and higher values usually strengthen the greenback, with the opposite being true for lower values.

GBP/USD

After the break of the 50 period Exponential Moving Average, more sellers joined in and the fall extended into support. The economic scene was rather calm so the move was mostly technical.



Technical Outlook

Although the bears have short term control, we expect the pair to bounce at 1.3070 and to climb slightly, due to the oversold condition of the oscillators. However, a break of this important support would show that the bears are stronger than anticipated and would mean that further downside will follow. Even if the pair moves below support, we expect some sort of retracement to follow soon, based on the fact that the move will become overextended.

Fundamental Outlook

The United Kingdom didn’t schedule major economic announcements for today, so price direction will be influenced by the U.S. survey and by the technical aspect.

554

FOREX NEWS: ADP NON-FARM EMPLOYMENT REPORT – A FIRST LOOK AT U.S. JOBS DATA

EUR/USD

Forex News: The German Preliminary CPI released yesterday was slightly worse than expected and the U.S. Consumer survey was slightly better than anticipated, so the pair descended below 1.1150 after a short ranging period.


Technical Outlook

Price just pierced 1.1150 but did not break it decisively and the two oscillators are still oversold, making us anticipate a bullish retracement that will probably reach 1.1185. If this level turns into resistance and rejects the pair lower, then we can expect to see a clear break of 1.1150 and a move closer to 1.1100 but if 1.1185 doesn’t turn into resistance, we may see a climb into the 50 period Exponential Moving Average.

Fundamental Outlook

Today at 12:15 pm GMT we take a first look at U.S. employment levels with the release of the ADP Non-Farm Employment, a report that tracks changes in the number of employed people, excluding the government and of course the farming industry. The anticipated number is 173K (previous 179K) and higher levels can strengthen the US Dollar but its impact (although high), is lower than the NFP report released Friday.

GBP/USD

The support at 1.3070 proved yesterday its importance once again and rejected price higher. However, the pair did not surpass the 50 period Exponential Moving Average so the bias is still bearish.


Technical Outlook

As long as the pair remains below the 50 EMA, we maintain a bearish stance and anticipate a break of 1.3070 but so far the sellers tried twice to break this level and each time they failed. This shows that control doesn’t clearly belong to either side and suggests that a break of the moving average will probably take price closer to 1.3175.

Fundamental Outlook

A lot will depend on the U.S. jobs data released today and this will probably be the main market mover, especially because the United Kingdom didn’t schedule major releases.

556

FOREX NEWS: RANGING MOVEMENT IN ANTICIPATION OF KEY U.S. JOBS DATA


EUR/USD

Forex News: Despite the oversold condition of the two oscillators, the pair grinded slowly lower yesterday and moved below 1.1150. The U.S. ADP jobs data came very close to the forecast value, thus the event didn’t have a huge impact.


Technical Outlook

The pair is en route to 1.1100 support and once it gets there, we expect the bulls to step in and take price higher, clearing the oversold condition of the Stochastic and Relative Strength Index. It’s possible to see such a retracement even before 1.1100 support is reached, because the speed of movement has decreased and the oscillators are oversold for a relatively long while. A bullish move will likely find resistance at 1.1185 and if 1.1100 is broken, price can find support at 1.1075.

Fundamental Outlook

The European scene is slow today and on the US Dollar side we have the ISM Manufacturing Purchasing Managers’ Index, scheduled at 2:00 pm GMT and expected to show a value of 52.0, little changed from the previous 52.6. The survey acts as a leading indicator of economic health, focused on the manufacturing sector and has a positive impact on the greenback if the actual number is higher than analysts’ forecast.

GBP/USD

The Pound bulls tried to move the pair above the 50 period Exponential Moving Average yesterday but overall price showed mixed direction, with sharp reversals.


Technical Outlook

After the move above the 50 EMA the pair returned close to 1.3070 and then pushed higher again. This type of movement shows that neither side in is clear control and that the next move is uncertain. Until the resistance at 1.3175 or the support at 1.3070 is broken, we consider the pair in a range and expect direction to be influenced by the economic releases scheduled today and tomorrow.

Fundamental Outlook

At 8:30 am GMT the United Kingdom will release Manufacturing data in the form of the Purchasing Managers’ Index. This is a survey derived from the opinions of purchasing managers from the manufacturing sector, regarding overall business conditions in said sector and usually has a medium impact, with higher numbers strengthening the Pound. The forecast for today’s release is 49.1, slightly higher than the previous 48.2.

557

FOREX NEWS: PREPARE FOR A VOLATILITY SPIKE. IT’S NFP DAY!

EUR/USD

Forex News: Yesterday the pair didn’t show a clear direction until the release of the U.S. Manufacturing PMI, which showed a value of 49.4, lower than the forecast 52.0. The greenback weakened once the indicator came out and the pair broke above resistance.


Technical Outlook

A weak US Dollar allowed the pair to climb above 1.1150 and close to 1.1185; although the distance travelled is not huge, this bullish impulse may generate a stronger climb that may reach the 50 period Exponential Moving Average. If this barrier is surpassed, we can expect to see a move into 1.1240 but if the move up proves to be short-lived, then 1.1100 will become the first bearish target. The technical aspect will be overshadowed today by the NFP release which is always a strong market mover.

Fundamental Outlook

At 12:30 pm GMT the most important U.S. jobs data is announced: the Non-Farm Payrolls (also known as Non-Farm Employment Change). This report shows changes in the number of employed people in the United States, during the previous month, excluding the farming industry and is considered a high impact indicator. In fact, almost always at the time of release, volatility increases drastically and the US Dollar moves strongly, so we recommend caution. The anticipated number is 186K (previous 255K) and as a rule of thumb, lower numbers weaken the greenback, with the opposite being true for higher numbers.

GBP/USD

The British Manufacturing PMI was much better than anticipated while the U.S. indicator with the same name showed a disappointing value. This strengthened the Pound and weakened the US Dollar, thus generating a strong bullish day for the pair.


Technical Outlook

The pair moved almost 200 pips north, broke 1.3280 and took the two oscillators in overbought territory. Strong moves are usually followed by retracements or periods of sideways movement but the main focus today will be on the U.S. jobs data and the technical side will be secondary; the levels to watch are 1.3365 as potential resistance and 1.3280 as potential support.

Fundamental Outlook

Apart from the important U.S. jobs data, the pair will be influenced by the release of the British Construction PMI, scheduled at 8:30 am GMT. The expected value is 46.6 and higher numbers are beneficial for the Pound but this indicator usually has a lower impact than the Manufacturing PMI which was released yesterday.

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

558

FOREX NEWS: US DOLLAR IN FOR A SLOW DAY AS UNITED STATES CELEBRATE LABOR DAY

EUR/USD

Forex News: Friday’s highlight was the NFP release, which proved once again that it can create sharp reversals and irregular movement. The actual number was 151K, lower than the forecast 180K and this initially weakened the US Dollar but hawkish comments from a Fed official brought the pair back down.


Technical Outlook

Price dropped for almost 100 pips after the initial climb and the short-term bias is now bearish. The 50 period Exponential Moving Average offered good resistance and pushed price lower, confirming the bearish bias, so we expect a move below the support at 1.1150, probably into 1.1130. As an alternate scenario, if price climbs we don’t expect 1.1185 to be broken.

Fundamental Outlook

Today we expect a low volatility day, because U.S. banks will be closed due to Labor Day and Europe hasn’t scheduled major releases either. The only reason for volatility today may be the G20 Meetings but their impact is sometimes mild, depending on the matters discussed.

GBP/USD

The disappointing NFP number took the pair higher and although the US Dollar strengthened soon after, it didn’t manage to erase all the Pound gains. Overall the session was bullish but rejection is clearly present.


Technical Outlook

The NFP candle shows a long wick in its upper part, the two oscillators are overbought and price travelled a long distance in a relatively short while. All this makes us anticipate a retracement to the downside and a move back below 1.3280 but even if the bullish impulse generated Friday will continue today, we don’t expect the move to extend above 1.3365.

Fundamental Outlook

At 8:30 am GMT the British Services PMI is released, anticipated to show a value of 49.1, better than last month’s 47.4. This is a survey that shows the opinions of purchasing managers regarding the health of the services sector and usually has a medium-to-low impact but higher numbers strengthen the Pound.

559

FOREX NEWS: US DOLLAR STILL LACKS A CLEAR BIAS. TRADERS SHIFT ATTENTION TOWARDS U.S. NON-MANUFACTURING PMI

EUR/USD

Forex News: During yesterday’s trading session volatility remained relatively low and the pair moved in a 50 pip range but Friday’s low was broken; however, no major advances were made.


Technical Outlook

The support at 1.1150 pushed price higher initially but the climb lacked enough strength to reach the 50 period Exponential Moving Average and came close to the resistance at 1.1185, without threatening it. This suggests that control still belongs to the bears and that we will see an encounter with the support at 1.1130, possibly 1.1100. Once the oscillators become oversold and turn upwards, look for retracements north.

Fundamental Outlook

The day’s only notable indicator is the U.S. Non-Manufacturing PMI, scheduled for release at 2:00 pm GMT. This is a survey of purchasing managers from the services sector regarding their assessment of overall conditions in said sector. Numbers above 50 indicate optimism, strengthening the US Dollar; today’s forecast is 55.4, almost identical to the previous 55.5.

GBP/USD

The Pound strengthened yesterday on the back of a better than anticipated Services PMI (actual 52.9, forecast 49.1) but resistance wasn’t taken out and rejection signs are present.


Technical Outlook

For several days the pair is printing candles with long upper shadows (wicks) and the oscillators are overbought. These are strong signs of rejection and we expect price to change direction soon, heading for 1.3280 which may turn into support. If this level becomes support and rejects price, we will probably see another push to break 1.3365, otherwise the 50 period Exponential Moving Average is the next target but we don’t expect it to be hit during the course of one day unless exceptional developments take place.

Fundamental Outlook

Price direction today will be determined by the technical aspect and by the U.S. survey because the United Kingdom didn’t schedule important news releases.

560

FOREX NEWS: US DOLLAR DIPS ON WEAK DATA, POUND SOARS AHEAD OF MARK CARNEY’S TESTIMONY

EUR/USD

Forex News: The Non-Manufacturing PMI took a big hit and posted a value of 51.4, the lowest value since January 2010. The US Dollar immediately weakened and the pair broke resistance.


Technical Outlook

The weak survey for the US Services sector is likely to generate an extended move north but the current level at 1.1240 rejected strong movement in the past so the same could happen now. A clear break, followed by a re-test of the broken level will increase the chances for a continuation upwards, into 1.1340. The Stochastic is oversold, moving upwards and the Relative Strength Index is close to overbought so the oscillators show mixed signals and are not of much help.

Fundamental Outlook

The fundamental scene is calm for the US Dollar and the Euro, without any notable indicators, so the technical aspect will be the main market mover.

GBP/USD

This pair was also affected by the worse than expected United States survey and despite all signs of rejection, yesterday we had another strongly bullish day.



Technical Outlook

The dollar weakness allowed the pair to climb well above the resistance at 1.3365 despite the overbought condition of the oscillators and other rejection signs. However, now the chances of a retracement lower have increased, so we expect to see a bearish session today, or at least sideways movement as we don’t favour a continuation before the pair takes a “breather”. The levels to watch are 1.3480 as resistance and 1.3365 as potential support.

Fundamental Outlook

At 8:30 am GMT the UK will release the Manufacturing Production, an indicator that shows changes in the total value of goods produced by the Manufacturing sector; the release usually has a medium-to-high impact, with higher values than the expected -0.4%, strengthening the Pound.

Later in the day, at 1:15 pm GMT the Inflation Report Hearings take place. During these hearings, BOE Governor Carney will testify before the Parliament’s Treasury Committee on inflation expectations and economic outlook. The event usually has a strong impact on the Pound so it will likely overshadow the technical aspect, determining today’s Pound bias.

561

FOREX NEWS: EURO IN THE SPOTLIGHT AHEAD OF ECB PRESSER AND RATE ANNOUNCEMENT

EUR/USD

Forex News: Price action yesterday was mostly ranging and this was mostly due to the fact that no major indicators were released for either currency in the pair. Currently price is very close to 1.1240 and the next direction will probably be decided by the ECB events.


Technical Outlook

Yesterday’s sideways movement doesn’t offer a lot of clues about today’s direction and it seems like traders are waiting to see what the European Central Bank will decide regarding rates. The Relative Strength Index and Stochastic are turning downwards, close to overbought and this favours a move below 1.1240 but the technical aspect will be secondary to the fundamental.

Fundamental Outlook

Today’s highlight will be the ECB rate announcement, scheduled at 11:45 am GMT and followed at 12:30 pm GMT by ECB President Mario Draghi’s press conference. The rate sits currently at 0.00% and is not expected to change, but of course a surprise would trigger wild swings so caution is always recommended. As for Draghi’s conference, this is known to be a major market mover but the direction of the Euro will be decided by his attitude and answers to journalists’ questions.

GBP/USD

The Pound took a hit from a worse than expected Manufacturing Production report, that showed a change of -0.9% (forecast -0.4%), and the pair reversed to re-test the previous resistance.


Technical Outlook

Yesterday’s drop was triggered by disappointing economic data but the technical aspect agreed as well because the pair was clearly overbought. The level at 1.3365 was resistance and now it may turn into support if it will reject price higher, otherwise we expect a move into the 50 period Exponential Moving Average. To the upside the first potential target is yesterday’s top located at 1.3445.

Fundamental Outlook

The Pound has a calm day ahead, from a fundamental standpoint and price direction will be mostly influenced by the technical aspect.

562

FOREX NEWS: ECB RATE REMAINS UNCHANGED, POUND FACES A BOUNCE-OR-BREAK SCENARIO

EUR/USD

Forex News: As expected, yesterday the European Central Bank kept the rate unchanged at 0.00% and on top of that, ECB President Mario Draghi maintained a neutral stance, so the Euro didn’t show dramatic movement.


Technical Outlook

Bullish action was seen ahead of the ECB events and during the press conference the pair had mixed reactions, moving upwards at first and nullifying the gains soon after. Now we have two long upper wicks on the last two four-hour candles and both oscillators are overbought, making us anticipate a bearish session today. If this comes true, the pair will likely find support around 1.1240 and if that is broken, then probably the 50 period Exponential Moving Average will be the next target. To the upside, 1.1340 remains the first resistance and target but a clear break of that zone today is a less likely scenario.

Fundamental Outlook

The week ends on a low note, without major economic releases; the only notable event is the start of the Eurogroup Meetings, attended by key political and financial personalities from the member states. Volatility may be triggered but this depends entirely on the matters discussed.


GBP/USD

The sellers stepped in yesterday, creating a bearish day and reaching the 50 period Exponential Moving Average. This was a much needed retracement because as mentioned previously, the pair was overextended.


Technical Outlook

We are dealing with a classic bounce-or-break scenario with the stars of the show being the 50 period EMA and 1.3280 support. If the bears manage to push the pair below this confluence zone, we will probably see an extended move south, but it must be noted that the pair is in an uptrend (starting at 1.2880) and this means that there’s an increased chance of a bounce higher. In any case, the way price behaves here is likely to determine the next medium-term direction.

Fundamental Outlook

The economic calendar is light today for the Pound so the main focus will be the technical aspect; U.K. representatives will attend the Eurogroup Meetings and this may be a reason for increased volatility.

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