FOREX NEWS: THE POUND EXPERIENCES IRREGULAR VOLATILITY AS UK BANKS ARE CLOSED
EUR/USD
Forex News: During her speech at the Jackson Hole Symposium, Fed Chairwoman Janet Yellen mentioned improvements in the US labor market and suggested that the economy is healing while ECB President Mario Draghi signaled that the European economy is still not back on track.
Technical Outlook
The comments of the two bankers generated a sharp drop for the pair, after an almost perfect bounce off of 1.3295 level which was previous support, now turned resistance. The first lower target and support is located at 1.3200 but at the moment the pair is diverging from the Relative Strength Index as we can notice a lower low printed by price and a higher low made by the indicator. This is known as regular divergence and in this case is indicative of a potential bullish retracement. However, two important economic indicators come out today and price movement will be affected by their readings.
Fundamental Outlook
The first release of the day is the German IFO Business Climate, a confidence survey derived from the opinions of about 7,000 businesses. This large sample makes the survey a well respected one and increases its importance. The release is scheduled at 8:00 am GMT and the anticipated number is 107.1, a small decrease from the previous 108.
At 2:00 pm GMT the US New Home Sales numbers come out, with an anticipated change to 426K from the previous 406K. Better than expected numbers usually strengthen the US Dollar as they indicate that consumers are confident in economic conditions and they can afford a house.
GBP/USD
The pair was also affected by Yellen’s comments but not as much as the EUR/USD and overall we had a slow Friday, with mostly ranging price action.
Technical Outlook
We expect the pair to touch the level at 1.6550 today but we don’t anticipate a lot of movement as banks in the United Kingdom will be closed, celebrating Summer Bank Holiday. The first level of interest to the upside is 1.6600 but we might experience irregular volatility and low liquidity, making price action hard to predict.
Fundamental Outlook
As mentioned above, banks in the United Kingdom will be closed and no economic indicators will be released today but the pair will be affected by the US New Home Sales release.
FOREX NEWS: DOWNTREND’S “FATE” RESTS ON AMERICAN CONFIDENCE INDICATORS
EUR/USD
Forex News: The indicators released yesterday for both the European and American economies posted worse than expected values but not much action was seen and the pair ranged almost the entire day.
Technical Outlook
The week opened with a gap to the downside and more often than not, these gaps tend to be filled (price climbs to the point where the gap originated) so we might see a move into 1.3220. The regular divergence is still present as price is showing a lower low while the Relative Price Index is making higher lows and we have an oversold condition of the pair. These factors, combined with the strength of 1.3200 support will probably generate a bullish day.
Fundamental Outlook
The Dollar will be affected today by the release of the Durable Goods Orders, scheduled at 12:30 pm GMT and expected to increase substantially from last month’s 1.7% to 7.4%. An increased number of such orders shows that producers will have to speed up their activity to fill those orders and also that consumers are confident enough to buy long lasting goods.
At 2:00 pm GMT the US Consumer Confidence is released, showing the state of the public opinion regarding current and future economic conditions. Increased or high confidence is a leading indicator of consumer spending because usually people tend to spend more when they are confident about their economic situation. The anticipated value is 89.1 while the previous was 90.9.
GBP/USD
Despite the fact that banks in the United Kingdom were closed yesterday, the Pound managed to retrace higher after a failed break of 1.6550 support.
Technical Outlook
The week opened with a downside gap which was quickly filled after a bounce off of 1.6550 support zone but 1.6600 resistance stopped the upwards momentum. A stronger bullish move is still anticipated but if today the pair cannot break decisively the level at 1.6600, the downtrend might resume. The first lower barrier is of course 1.6550.
Fundamental Outlook
The British Bankers’ Association will announce today at 8:30 am GMT the Mortgage Approvals numbers. Lately the house market has been closely watched by the Bank of England and Mortgage Approvals are in close relation with house purchases because usually a mortgage is often used for such a purchase. More mortgages suggest that people are willing to buy houses and that loans can be obtained, facts which are beneficial for the British economy and hence for the Pound. Today’s expected number is 44.2K, a small increase from the previous 43.3.
FOREX NEWS: MARKET IN CONSOLIDATION PHASE. BREAKOUTS EXPECTED
EUR/USD
Forex News: The Durable Goods Orders showed a much better than anticipated value yesterday but the Core version of the same indicator, which excludes transportation items, posted a surprising drop and all this generated mostly sideways price action.
Technical Outlook
The bullish divergence is still present and the level at 1.3200 seems strong as the pair couldn’t break it decisively. On top of that, the weekly gap is still not closed so bullish moves are still expected but yesterday’s price action doesn’t offer a lot of hints about future direction so for the time being we are neutral on the pair, expecting a break of the consolidation pattern created around 1.3200.
Fundamental Outlook
The day ahead is very slow in terms of economic releases and the only notable indicator is the GFK German Consumer Climate scheduled at 6:00 am GMT. Its value is expected to drop slightly from the precious 9.0 to 8.9 and better than expected figures are usually beneficial for the Euro but the indicator tends to have a mild impact on the market.
GBP/USD
The British Bankers’ Association Mortgage Approvals were fewer than anticipated but the figure didn’t differ much from analysts’ expectations and it didn’t create a huge impact as a result.
Technical Outlook
The bulls failed to take price above 1.6600 minor resistance but on the other hand, the bears didn’t succeed to break 1.6550 and this shows that indecision is currently governing the pair. These two levels will be important for today’s price action and a break of either one will probably generate an extended move in that direction. A conservative approach would be to expect the retest after the initial break occurs.
Fundamental Outlook
The United Kingdom didn’t schedule any economic indicator releases for the day, thus price direction will be mainly influenced by the technical aspect.
FOREX NEWS: GERMAN INFLATION AND AMERICAN GDP – CATALYSTS FOR A BREAKOUT
EUR/USD
Forex News: The Euro managed to recover yesterday from an almost one-year low on the back of comments made by German finance minister who said that Mario Draghi’s latest speech was “over-interpreted”. This spurred interest for the single currency and took the pair into 1.3200 resistance.\
Technical Outlook
Yesterday we saw a bearish break of 1.3200 support zone but developments during the day took price back into the mentioned zone for a retest. After a breakout, a retest of the recently broken level is common and usually, this retest shows if the break is sustainable or if it was just a fake. The bullish divergence is still present and the weekly gap is still not closed, so if price moves above 1.3200, we might see it climb at least until the gap is closed.
Fundamental Outlook
The German Consumer Price Index is released today at 12:00 pm GMT and analysts expect it to remain unchanged at 0.8%. German inflation contributes to overall Euro Zone inflation and lately it has been one of ECB’s major concerns; the Euro would benefit from higher values of the German CPI.
The United States will announce their Preliminary Gross Domestic Product today at 12:30 pm GMT and a minor decrease from 4.0% to 3.9% is expected. Since the GDP is an economy’s main performance gauge, better than expected values have the potential to strengthen the currency.
GBP/USD
The pair failed to break out of the tight range and instead bounced between support and resistance for the entire day as no major news affected either of the two currencies.
Technical Outlook
For today, a breakout is a high probability scenario but the direction will probably be determined by the US Gross Domestic Product. Yesterday we saw that price touched 1.6550 support and immediately moved up to test 1.6600 but failed to break this level as well. This shows indecision and the fact that price needs some sort of catalyst which will generate a break of either one of the levels mentioned.
Fundamental Outlook
The United Kingdom didn’t schedule any important news for today thus market participants will focus on the American events which are likely to trigger strong moves.
FOREX NEWS: EUROPEAN INFLATION DATA LIKELY TO PUT AN END TO THE CONSOLIDATION PHASE
EUR/USD
Forex News: German inflation stalled, just as analysts expected but the American Gross Domestic Product showed a surprising increase, spurring demand for the greenback and taking the pair below 1.3200 support.
Technical Outlook
The move above 1.3200 couldn’t be sustained by the bulls and price soon dropped below the level but the weekly gap is still not closed so we might see further upside movement. For the time being price is confined between 1.3150 and 1.3220, without clear direction, thus market participants will probably focus on the fundamental aspect which will most likely dictate the next direction.
Fundamental Outlook
Today the main gauge of European inflation is released: the Euro Zone Consumer Price Index. For quite a long time inflation has been lower than ECB’s target of just below 2.0% and if it continues to drop we are likely to see more stimulus added by the ECB, a thing considered bearish for the Euro. Today’s anticipated change is 0.3% while last month’s value was 0.4% and the time of the release is 9:00 am GMT.
GBP/USD
Surprisingly, the positive change of the American Gross Domestic Product didn’t do much for the pair and the US Dollar couldn’t gain substantially against the Pound.
Technical Outlook
A breakout is still anticipated but for the time being price movement is still caped by 1.6600 resistance and 1.6550 support. The Relative Strength Index is moving close to the 50 level and doesn’t show an extreme condition of the market, thus it doesn’t offer a lot of hints about the next move and we maintain our view that a clear breakout, followed by a retest of the broken level, will generate an extended move in that direction.
Fundamental Outlook
The Nationwide Building Society will announce today the change in the selling price of UK homes purchased with mortgages provided by this Society. The indicator acts as a measure of house market inflation and it’s a leading gauge of health for the housing industry. The release is scheduled at 6:00 am GMT, with an anticipated change of 0.0% while the previous was 0.1%; higher values usually strengthen the Pound, driving the pair higher.
FOREX NEWS: IRREGULAR VOLATILITY DUE TO AMERICAN BANK HOLIDAY. POUND AFFECTED BY MANUFACTURING DATA
EUR/USD
Forex News: Friday’s main event was the release of the Euro Zone CPI which slowed down from 0.4% to 0.3%, just how analysts anticipated. The drop weakened the Euro and the pair finished the week with the bears in control.
Technical Outlook
Now that price surpassed 1.3150, we anticipate a move closer to 1.3100 after a potential retest of the recently broken level. However, the pair has been on an extended move to the south and the Relative Strength Index is oversold on a Daily chart, signaling that bullish pullbacks are a probable scenario. If this is the case, the first major barrier is 1.3200 which has now turned into resistance.
Fundamental Outlook
American banks will be closed today due to Labor Day and no economic indicators are scheduled for release today. As a result, the New York session might suffer from low liquidity and irregular movement. There are no major European releases either, so we may experience slow and ranging price action during the day.
GBP/USD
The Pound had another slow day Friday and no special developments took place. Price remained confined in a tight range and the anticipated breakout didn’t occur.
Technical Outlook
The resistance at 1.6600 and the support at 1.6550 managed to contain price for longer than anticipated and this was mostly due to the lack of major economic releases last week. Today the probability of a breakout is greatly increased but the direction depends mostly on the manufacturing data released by the United Kingdom.
Fundamental Outlook
At 8:30 am GMT the British Manufacturing PMI is released. The indicator is a measure of optimism among purchasing managers from the manufacturing sector and also acts as a leading indicator of economic health. The expected value is 55.1 and a higher number is usually beneficial for the Pound.
FOREX NEWS: PRICE ACTION AFFECTED BY PURCHASING MANAGERS’ INDEXES
EUR/USD
Forex News: The Euro climbed yesterday, moving towards 1.3150 but price action lacked momentum as no major economic news came out and the market suffered from low volatility due to the fact that US banks were closed.
Technical Outlook
The bears slowed down their momentum but the downtrend is intact and a touch of 1.3150 is expected before we can see more downside movement. If 1.3150 is surpassed, the next resistance is located at 1.3200 but we might experience slow and ranging movement until the ECB meets this week. The first level of interest to the south is 1.3100.
Fundamental Outlook
The main event of the day will be the release of the American Manufacturing PMI scheduled at 2:00 pm GMT. This is a survey of about 400 purchasing managers from the manufacturing sector who are asked to rate economic and business conditions; the anticipated value is 57.0 and higher numbers usually strengthen the greenback as they suggest that optimism among purchasing managers is increasing.
GBP/USD
The Pound strengthened earlier in the day but the disappointing value of the British Manufacturing PMI stopped further bullish advances and erased some of the Pound’s gains.
Technical Outlook
The current bullish move can be considered just a retracement in a rather strong downtrend so we expect downside movement and another close encounter with 1.6550 support. The Relative Strength Index is approaching the overbought level for the first time in a long while and bearish divergence is present, a fact which favors another move south. If the pair continues upwards, it will encounter the first resistance at 1.6700.
Fundamental Outlook
AT 8:30 am GMT the British Construction PMI is released and anticipated to drop from last month’s 62.4 to 61.5. Since this is a measure of optimism among purchasing managers from the construction sector, it acts as a leading indicator of economic health and higher than anticipated numbers are beneficial for the Pound. As always, the US events will directly affect the pair as well.
FOREX NEWS: DOWNTREND RESUMED, MAJOR SUPPORT AHEAD
EUR/USD
Forex News: Speculation that the Fed will raise interest rates sooner than anticipated boosted the US Dollar and allowed it to climb versus its main counterparts. This affected our pair as well, but the impact was not tremendous and major support was not touched.
Technical Outlook
If 1.3100 support is touched, we expect bullish pullbacks into 1.3150 – 1.3200 resistance. On a Daily chart the trend has been moving straight down for an extended period and the Relative Strength Index is deep in oversold territory. These factors call for a “breather” in the form of a retracement north but the pair’s direction may be affected by the economic indicators that are released today.
Fundamental Outlook
The European Retail Sales numbers come out at 9:00 am GMT and a negative change is expected from the previous 0.4% to -0.3%. Although Retail Sales are usually a high impact indicator, this release is likely to have a muted impact because Germany and France have already released their consumer spending indicators, but higher than anticipated numbers will most likely add some strength to the Euro.
GBP/USD
The Pound weakened drastically against the US Dollar as a survey showed increased support for Scotland’s independence which will be decided through a referendum later this month. The release of the British Construction PMI was mostly overlooked by market participants.
Technical Outlook
Now that 1.6550 is clearly broken, the first support and target for the pair is located at 1.6460. The downtrend is resumed and the ranging period is hopefully over but we might see moves close to 1.6550 before 1.6460 is touched. If such a scenario occurs and 1.6550 will turn into resistance, the chances of a touch of 1.6460 will increase.
Fundamental Outlook
The UK Services PMI is released today at 8:30 am GMT and it’s expected to drop from last month’s 59.1 to 58.6, a fact which would be detrimental for the Pound. The indicator is a measure of optimism among purchasing managers from the British Services sector and also acts as a leading indicator of economic health.
FOREX NEWS: INTEREST RATES AND AN EARLY LOOK INTO AMERICAN EMPLOYMENT LEVELS SET THE STAGE FOR A WILD DAY
EUR/USD
Forex News: A cease-fire agreement between Russia and Ukraine strengthened the single currency and triggered a move up. Market participants overlooked the disappointing value of the European Retail Sales and the pair experienced a bullish day.
Technical Outlook
From a purely technical point of view, a bounce off of the current level at 1.3150 is very likely. If this bounce occurs, the next destination is 1.3100 support, but Mario Draghi’s speech and the ECB interest rate decision will decide the day’s direction and the technical aspect will be secondary.
Fundamental Outlook
At 11:45 am GMT the ECB will make public their decision regarding the interest rate which is not expected to change from the current 0.15%. A Press Conference will follow at 12:30 pm GMT and during this conference the highest volatility of the day will probably be seen. There has been a lot of talk about additional measures adopted by the ECB to stimulate economic growth and during the press conference ECB President Mario Draghi will probably answer questions on the matter. His attitude will be closely watched by market participants and will trigger sharp moves.
A privately owned company will release an early version of the US Non Farm Employment Change at 12:15 pm GMT. This data tries to mimic the government issued indicator which is released Friday and usually has a hefty impact on the market. The anticipated number is 216K and higher values usually strengthen the US Dollar but Friday’s indicator normally has a higher impact.
GBP/USD
The pair retraced higher yesterday with the help of a better than expected value of the Services PMI but bears regained control later in the day and a new low was printed.
Technical Outlook
The pair reached the important support located at 1.6460 but now it shows clear signs of slowing down. We can see multiple candles which suggest indecision and the Relative Strength Index reached oversold territory. This makes it harder for the bears to push the pair further down and increases the chances of bullish retracements but price action will be influenced by the fundamental aspect.
Fundamental Outlook
At 11:00 am GMT the Bank of England will announce the interest rate but no change is expected (currently 0.50%). Because a Statement is issued only in the case of a rate change, today we will probably not have any information about the reasons that stood behind the rate decision and this diminishes the impact of the event. However, surprises can happen and we recommend caution if trading at the time. The US events will have a direct impact on the pair’s movement throughout the day.
FOREX NEWS: ECB SURPRISES THE MARKET WITH ANOTHER RATE CUT. FOCUS SHIFTS ON NON FARM PAYROLLS
EUR/USD
Forex News: The ECB unexpectedly decided to cut the interest rate to 0.05% (previously 0.15%) and Mario Draghi announced that a form of Quantitative Easing will be introduced in order to stimulate the economy. He also mentioned that other measures might be implemented if needed.
Technical Outlook
The surprise offered by the ECB drastically weakened the Euro and the effect was a massive drop of almost 200 pips. The selloff broke 1.3100 and brought the pair into the psychological support at 1.3000, solidifying the control of the bears and renewing the downtrend. Today’s direction will be heavily affected by the US Non Farm Payrolls but strictly from a technical point of view, we expect a small bounce followed by a trend continuation.
Fundamental Outlook
The day’s main event will be the release of the Non Farm Payrolls which is scheduled at 12:30 pm GMT; the expected number is 226K, an increase from last month’s 209K. Higher numbers show that more jobs were created and usually this strengthens the greenback because employment is closely correlated with consumer spending which in turn is a major part of the economy. The NFP release is known to be a huge market mover thus caution is recommended if trading at the time.
GBP/USD
The Bank of England left the rate unchanged and the event didn’t have a huge impact on the pair’s movement but US Dollar strength generated a clear break of 1.6460 support.
Technical Outlook
The downtrend is resumed and 1.6460 is clearly broken. This level will probably turn into resistance and will reject any bullish moves that may come close to it. The first major support is now located at 1.6250 (visible on a Daily chart) and the Relative Strength Index continues to move in oversold territory, a fact which favors moves to the north in the form of small retracements. The day’s direction will be heavily influenced by the American NFP release which will overshadow the technical side.
Fundamental Outlook
The United Kingdom doesn’t release major economic indicators today and all eyes will be turned towards the American employment report.
FOREX NEWS: THE CALM AFTER THE STORM. THE MARKET SLOWS DOWN
EUR/USD
Forex News: Friday’s price action was heavily influenced by the worse than expected value posted by the American Non Farm Payrolls, a fact which allowed the pair to climb. However, the Euro bulls weren’t strong enough to sustain the move and some of the gains were erased.
Technical Outlook
The last two days of last week were heavily influenced by the fundamental environment and the moves generated were huge. Such movement is often followed by sideways price action and we believe the pair will range between the low at 1.2920 and the potential resistance at 1.3000. Usually Mondays are slow days unless major news comes out and today the schedule is pretty light.
Fundamental Outlook
The only noteworthy indicator released today is the German Trade Balance which shows the difference in value between imported and exported goods. The expected figure is 17.3B compared with last month’s 16.2B and higher numbers will most likely strengthen the Euro but the indicator has a mild impact on price action unless surprising values are posted. The time of the release is 6:00 am GMT.
GBP/USD
Similar to the Euro, the Pound briefly gained on the back of the worse than expected value of the US employment report but overall Friday was slow compared to the previous days.
Technical Outlook
First major support is located at 1.6250 and will probably attract price like a magnet since it is very close and it is considered a key level for medium term price action. The first lower barrier is represented by Friday’s low located at 1.6280 which is considered minor support. We expect a rather slow day based on the fact that no important economic or financial indicators are released.
Fundamental Outlook
As mentioned above, the fundamental scene is calm and price action will be governed by the technical aspect.
FOREX NEWS: THE POUND DROPS AS SCOTTISH INDEPENDENCE BECOMES A DISTINCT POSSIBILITY
EUR/USD
Forex News: The German Trade Balance showed improved numbers but overall the day lacked strong movement and the pair traded inside a 30 pip range for almost the entire duration of the day.
Technical Outlook
The day ahead is likely to be characterized by ranging movement, similar to the one experienced yesterday. The pair is capped to the downside by the low located at 1.2920 and we might see another attempt to break it but the Relative Strength Index is making its way up, coming from oversold territory and this suggests that price may revisit the zone around 1.3000 as a stronger bullish retracement is still anticipated. However, keep in mind that control belongs to the bears and a break of the low can easily occur.
Fundamental Outlook
The French Trade Balance is announced at 6:45 am GMT. The indicator shows the difference in value between imported and exported goods but it is known to have a mild impact on price action. The expected value is -5.0B while the previous was -5.4B and higher numbers are usually beneficial for the Euro.
GBP/USD
A poll regarding a potential separation of Scotland from the United Kingdom showed that for the first time the number of people who are pro-independence exceeded the number of people who still want to be a part of the United Kingdom.
Technical Outlook
The poll result triggered a massive downside gap which made the pair open below the key level at 1.6250. A potential separation of Scotland from the United Kingdom will severely damage the Pound and until the 18th of September (the day when Scottish people will express their view through a referendum), we are likely to see irregular and hard to predict price action. For now the first minor support is located at 1.6100 while potential resistance sits in the 1.6250 zone.
Fundamental Outlook
At 8:30 am GMT, Bank of England Governor Mark Carney will deliver a speech in Liverpool. Considering the latest developments, this speech is likely to have a higher impact than usual but it all depends on his attitude and matters discussed. At the same time the British Manufacturing Production change is announced and the expected value is 0.3%, same as last month. Because Manufacturing is an important part of the entire British Industrial Production, today’s release is considered a high-impact one and higher values will most likely strengthen the Pound.
At 2:00 pm GMT an unofficial estimate of the British Gross Domestic Product is released. This estimated value is calculated using statistical projection techniques and has an impact similar to the one of the official release. The previous estimate was 0.6% and higher numbers will most likely strengthen the Pound.
FOREX NEWS: BULLISH PRESSURE MOUNTS AS RETRACEMENTS ARE STILL EXPECTED
EUR/USD
Forex News: The economic scene lacked major developments and the pair moved lower just to return higher later in the day. Yesterday’s low was broken before the bullish move and a new yearly low was printed.
Technical Outlook
Currently the pair is testing the recently broken level of 1.2920 but the downtrend doesn’t show signs of slowing down thus there’s a high probability that price will bounce lower, turning the previous support into resistance. The next major support is located at 1.2750 (better seen on a Daily chart) and the first resistance sits at 1.3000.
Fundamental Outlook
The day ahead has a lackluster news scene for the Euro and US Dollar and price action will be mostly influenced by the technical aspect.
GBP/USD
Mark Carney’s speech was postponed for a few hours yesterday but the bullish effect created by the Governor’s attitude was soon dampened by the sellers’ pressure.
Technical Outlook
The pair moved above and below the level at 1.6100 and the day was pretty volatile but neither side made any major advances. The Relative Strength Index continues to trade deep into oversold territory and the possibility of bullish moves has increased but the Pound cannot seem to recover, mostly due to the Scottish independence issue which continues to be a major influence. Minor support sits at 1.6060 while first resistance is located at 1.6160.
Fundamental Outlook
Bank of England Governor alongside members of the Monetary Policy Committee will testify on economic outlook and inflation today at 1:45 pm GMT, before the Parliament’s Treasury Committee. Their speeches will most likely have a strong impact on the Pound but the direction will be determined by their answers and attitude. Volatility will probably be high and caution is recommended.
FOREX NEWS: SHORT TERM RESISTANCE HOLDS. THE PROBABILITY OF NEW LOWS INCREASES
EUR/USD
Forex News: Yesterday the pair showed mixed price action with both the bulls and the bears battling for control. No major indicators were released and price couldn’t break minor resistance but the sellers didn’t manage to threaten support either.
Technical Outlook
Price action established the zone around 1.2960 as short term resistance and this will be the first barrier in front of higher prices. Yesterday we saw another rejection off of this level but further bullish movement is not out of the question and a break of the mentioned level will most likely bring in additional buyers. To the downside, the first level of interest sits at 1.2860 and a break would show that bears still have some steam left and that price will continue to move south, towards 1.2750.
Fundamental Outlook
The day’s direction will be influenced by Mario Draghi’s speech scheduled at 7:00 pm GMT. The ECB President will speak in Milan at the Eurofi Financial Forum 2014 and any reference regarding the current Euro Zone situation will most likely trigger a response in the market. Keep in mind that the relatively late hour of the speech may be a reason why impact could be mild; however, if Draghi’s position will be straightforward, the market impact will be strong so we recommend caution.
GBP/USD
After a touch of support, the pair headed north yesterday on the back of a hawkish attitude shown by Bank of England Governor Mark Carney during the Inflation Report Hearings.
Technical Outlook
Although we had some bullish action yesterday, the pair didn’t manage to break the short term resistance located at 1.6160. This might be a sign that downside movement is next, aiming for 1.6060 support, but we must note the position of the Relative Strength Index which is now coming out of oversold territory for the first time in a long period, a fact which favors the bulls. However, bearish price action is anticipated, considering the strong downtrend the pair is in.
Fundamental Outlook
The United Kingdom didn’t schedule important news releases for the day so price direction will be influenced by the technical factors.
FOREX NEWS: TODAY’S HEADLINE – THE AMERICAN RETAIL SALES
EUR/USD
Forex News: The Euro had a bullish day yesterday but price remained between support and resistance for almost the entire duration of the trading session.
Technical Outlook
Today we expect a break of either the resistance at 1.2960 or the support at 1.2860 but the direction will be mainly influenced by the outcome of the American Retail Sales which will have a strong impact on the greenback. Major support sits at 1.2750 and we expect this level to be touched in the near future but not necessarily today.
Fundamental Outlook
As mentioned above, the American Retail Sales are released today and the outcome could influence the US Dollar heavily. The scheduled time is 12:30 pm GMT and the expected change is 0.3%, better than last month’s 0.0%. Sales made at a retail level represent the major part of the economy and the release is considered a major market mover; at the same time, the Core version of this indicator (which excludes automobiles from calculation) is released. For both versions, higher values normally strengthen the US Dollar.
GBP/USD
The Pound continues to be heavily influenced by speculation regarding Scottish independence and yesterday we saw bullish movement on the back of a new poll which showed that more people wish that Scotland remains a part of the United Kingdom.
Technical Outlook
Lately the technical aspect was overshadowed by the Scottish independence issue and this is likely to be a reason for speculation until the referendum result will be posted next week. For the time being, we can see some sort of rejection off of the resistance at 1.6750 and bearish divergence is present, so we anticipate a move lower which will probably find support at 1.6160 but a break of the current level could generate additional movement north.
Fundamental Outlook
There are no major news releases for the Pound today, thus price direction will be influenced by the US events and the technical aspect.
FOREX NEWS: DOWNTREND REMAINS INTACT AS RESISTANCE STILL HOLDS
EUR/USD
Forex News: The US Retail Sales didn’t have a major impact on the US Dollar although better than expected values were posted. Friday was mostly controlled by the Euro bulls but short term resistance couldn’t be broken.
Technical Outlook
Lately the level at 1.2960 is becoming more important because we already saw three failed attempts to break it. Last week ended with price very close to the mentioned level and today we expect a move away from it, possibly to the downside since we are still in a clear downtrend and the bears still have underlying strength. The year’s low at 1.2860 will be the first target but we don’t expect it to be reached within a day; on the other hand, a clear bullish break of 1.2960 will invalidate our scenario, making 1.3000 the pair’s next destination.
Fundamental Outlook
The scene is pretty calm today, with the only notable indicator being the US Industrial Production released at 1:15 pm GMT. The indicator shows the change in the value of total industrial output compared with the previous month but for today’s release no change is anticipated from the previous 0.4%. Usually, higher than expected values are beneficial for the greenback and push the pair lower.
GBP/USD
Friday the pair moved in a narrow range close to the level at 1.6250 and no substantial advances were made by either side as the American Retail Sales failed to trigger strong moves.
Technical Outlook
Price action reached a 50 period Exponential Moving Average which combined with the level at 1.6250 creates a confluent resistance zone that will be tough to break. This increases the chances of bearish price action for the day but a move above the confluence zone will probably trigger additional bullish momentum. First support sits at 1.6160 but a touch of this level is less probable to happen today even if price will resume downwards movement.
Fundamental Outlook
The United Kingdom didn’t schedule any important news releases for today and price action will be mainly influenced by the technical aspect and by the American release mentioned earlier.
FOREX NEWS: GERMAN ZEW AND BRITISH INFLATION NUMBERS DRIVE PRICE ACTION
EUR/USD
Forex News: During the first part of yesterday’s trading session, the pair begun to move south but later on, a disappointing reading of the American Industrial Production weakened the US Dollar and allowed the Euro to push higher.
Technical Outlook
The resistance situated at 1.2960 managed to reject price once more and to stop bullish momentum. As long as the pair remains below the 50 period Exponential Moving Average and below resistance, the downtrend is intact and there are high chances of more downside movement, with the first important target being located at 1.2860.
Fundamental Outlook
An important German survey is released today at 9:00 am GMT: the ZEW Economic Sentiment. The importance of this survey comes from the fact that it is based on the opinions of German institutional investors and analysts who are well informed on the economic situation due to the nature of their jobs. The expected value is 5.2 and better than expected numbers will benefit the Euro.
At 12:30 pm GMT the American Producer Price Index is released and expected to remain unchanged at 0.1%. The indicator shows the change in prices charged by producers for their goods and services and usually, higher values strengthen the greenback.
GBP/USD
For almost the entire day the pair moved above and below the level at 1.6250, without any substantial developments. The US release went almost unnoticed and overall we had a ranging day.
Technical Outlook
We expect a day with stronger movement today and potential downtrend resumption if the bulls cannot break the confluence zone created by the 50 period Exponential Moving Average and the resistance at 1.6250. The first minor support is located at 1.6160 but today’s direction will be influenced by the fundamentals.
Fundamental Outlook
The British Consumer Price Index is released today at 8:30 am GMT and another small drop is expected, from the previous 1.6% to 1.5%. Although British inflation is not really a matter of concern at the moment because it stayed in an acceptable range, lower numbers are perceived as bearish and might drive the pair south.
FOREX NEWS: FOMC CLUSTER OF EVENTS SETS THE STAGE FOR STRONG MOVEMENT
EUR/USD
Forex News: The German ZEW survey showed that optimism among professional investors and analysts increased but the value was still lower than the previous month and price ranged for the most part of the day.
Technical Outlook
The pair is still trading very close the 50 period Exponential Moving Average and below resistance so the downtrend remains intact for the time being. However, the bearish momentum slowed down considerably and moves to the upside are possible but the day’s direction will be influenced by the afternoon US events and the technical side will be secondary.
Fundamental Outlook
At 12:30 pm GMT the US Consumer Price Index is released but no change is expected from last month’s 0.1%; however, higher values can benefit the US Dollar and take the pair lower. At 6:00 pm GMT a cluster of American events will most likely shake the market: the US Federal Funds Rate, the FOMC Rate Statement and Economic Projections, followed half an hour later by a FOMC Press Conference. Caution is recommended during these events as direction will depend on their outcome.
GBP/USD
The British CPI declined as analysts predicted, weakening the Pound, but later during yesterday’s trading session the US Dollar declined and the Pound erased all losses, managing even to climb higher than the opening of the day.
Technical Outlook
Yesterday’s climb was mostly based on US Dollar weakness rather than Pound strength and the major resistance at 1.6250 is still not broken decisively so the picture remains fuzzy until we see a clear move above resistance, followed by a re-test of the broken level. Keep in mind that yesterday the pair almost touched 1.6160 support and immediately bounced higher, a fact which shows bull strength. Just like in the case of the Euro, today’s price direction will be heavily influenced by the fundamental side.
Fundamental Outlook
United Kingdom’s Claimant Count Change is released today at 8:30 am GMT. The indicator shows the change in the number of jobless people who apply for social help related to their unemployed condition and lower numbers than the anticipated -29.7K are usually beneficial for the Pound. At the same time a breakdown of the latest MPC votes on the interest rate will be released, showing the members’ position regarding a future rate change. Of course, the US events mentioned earlier will have a direct and probably strong impact on the pair.
FOREX NEWS: SCOTTISH INDEPENDENCE VOTE – AN EVENT WITH HISTORICAL IMPLICATIONS
EUR/USD
Forex News: The US Dollar strengthened yesterday on the back of Yellen’s hawkish comments as she noted that economy is continuing to make progress towards goals but the FOMC outlook didn’t offer too many surprises and movement was far from smooth on the lower time frames.
Technical Outlook
It seems like the bears are gathering strength for another push towards the support at 1.2860. Although 1.2960 was briefly broken and 1.3000 was almost touched, the bulls couldn’t sustain the move and this shows their lack of power, thus increasing the chances of more downside movement. The day ahead is full of market-shaking events and a prediction based solely on technical factors cannot be very accurate.
Fundamental Outlook
The European Central Bank will announce today the Targeted LTRO (Long Term Refinancing Option) which is the amount of money the Central Bank will create and loan to European banks. This is the first month of the program and the effects are hard to anticipate since market participants still don’t know exactly what is too much or too little, thus we recommend caution for this release. The scheduled time is 10:15 am GMT.
At 12:45 pm GMT Fed Chair Janet Yellen will deliver a speech at a Conference in Washington DC but the effects are likely to be mild considering that she will speak via satellite and audience questions are not expected. The Philly Fed Manufacturing Index is announced at 2:00 pm GMT and is expected to drop from the previous 28.0 to 22.8, a fact which would weaken the US Dollar and drive the pair higher.
GBP/USD
Better than expected unemployment data helped the Pound climb during the first part of yesterday but the US events brought the pair back down, erasing the previous gains.
Technical Outlook
After yesterday’s initial climb above 1.6250 and above the 50 period Exponential Moving Average, the pair returned to the broken zone and this type of price action can have two outcomes. A move below the mentioned zone would suggest downtrend continuation and possibly a touch of 1.6160 support, while a bounce higher means that the strength of the bears is starting to fade and the Pound is ready to recover.
Fundamental Outlook
Today the Scottish people will express their opinion regarding Scottish Independence through a vote. Irregular movement is anticipated throughout the day because a potential separation of Scotland from the United Kingdom would have tremendous historical implications and would drastically weaken the Pound. It is uncertain when the vote results will come out and a high level of caution is recommended.
The British Retail Sales come out at 8:30 am GMT and are expected to increase by 0.4% while last month’s change was 0.1%. This would strengthen the Pound but the market will be affected by the Scottish vote which may overshadow any other events.
