FOREX NEWS: US DOLLAR SUFFERS SHORT TERM WEAKNESS, POUND AT HISTORICAL LOWS
EUR/USD
Forex News: The U.S. employment data released Friday disappointed as the NFP report showed that only 156K new jobs were created during the last month (forecast 171K). The pair bounced higher as a result, on the back of temporary US Dollar weakness.
Technical Outlook
The greenback took a blow from the NFP report but the actual value wasn’t disastrous so the move up is likely to be reversed. The 50 period Exponential Moving Average is now sitting in front of rising price and if we don’t see a bullish break soon, we expect the pair to return to the zone around 1.1150. A break of the 50 period EMA will open the door for a move into 1.1240 resistance but we don’t expect the climb to extend past that level.
Fundamental Outlook
Europe didn’t schedule major indicators today and United States banks will be closed in observance of Columbus Day so the US Dollar will not be affected by major releases either.
GBP/USD
The Pound was hit hard by a “flash crash” and the pair dropped to historical levels. The sudden move was attributed in part to fears about a difficult Brexit and a potential loss of access to the European single market.
Technical Outlook
Most of the move was reversed and now the pair is trading between 1.2480 and 1.2227. These can be considered levels of resistance and support respectively but the next move for the pair is uncertain. It looks like the pair has calmed down and is likely to move inside the channel for a while but the Pound is definitely vulnerable right now and the possibility of another drop cannot be ruled out. Caution is recommended!
Fundamental Outlook
Same as the rest of the week, the economic calendar is light for the United Kingdom and we don’t have any notable releases today.
FOREX NEWS: MPC MEMBER TESTIFIES. POUND PRONE TO SUDDEN MOVES
EUR/USD
Forex News: Yesterday we saw the pair bounce at the 50 period Exponential Moving Average and drop into the support at 1.1150. The economic calendar was light and overall volatility remained low.
Technical Outlook
The pair is still in range mode, with low volatility; so far the 50 EMA offered good resistance and the bias is slightly bearish as long as price is trading below it. We expect a break of 1.1150 and 1.1130 soon, followed by another move into the next support, located at 1.1100. Today’s price action will be influenced by the German ZEW survey but lately the impact of this indicator has diminished.
Fundamental Outlook
As mentioned above, the day’s most notable release is the German ZEW Economic Sentiment, scheduled at 9:00 am GMT. This is a survey of about 275 German analysts and institutional investors and reflects their optimism regarding a 6-month outlook for German economy. Higher numbers than the forecast 4.2 (previous 0.5) usually strengthen the Euro.
GBP/USD
As it was expected, the pair remained between 1.2480 resistance and 1.2227 support yesterday and no major developments took place.
Technical Outlook
The direction remains uncertain and the pair is mostly affected by overall sentiment rather than technical factors. The main bias is bearish and we expect a move closer to 1.2227 support but for the time being we recommend caution because the Pound is prone to unexpected and sudden moves. The Stochastic is overbought, while the Relative Strength Index is oversold, thus showing mixed signals and adding to the overall uncertainty.
Fundamental Outlook
Michael Saunders, a member of the Bank of England Monetary Policy Committee will testify before the Treasury Select Committee today at 9:00 am GMT. His speech may generate irregular movement or may go mostly unnoticed; either way, use caution.
FOREX NEWS: US DOLLAR GAINS GROUND AHEAD OF FOMC MINUTES, MPC MEMBER TESTIFIES ON BREXIT EFFECT
EUR/USD
Forex News: The German ZEW Economic Sentiment survey released yesterday posted a better than expected value but the impact on the Euro was minimal and instead the pair had a bearish day, breaking support.
Technical Outlook
The support at 1.1100 was finally broken and the pair now sits on 1.1075, with both the Stochastic and Relative Strength Index in oversold territory. It looks like the bears are taking control of the pair’s short term movement but it’s very likely to see a bounce higher here because price is still moving a low amount of pips each day, without clear determination. Our bias is bearish after small retracements, anticipating a move into 1.0960 during the days to come.
Fundamental Outlook
The day is slow on the Euro’s side but at 6:00 pm GMT the FOMC will release the Minutes of their latest meeting regarding interest rates. We expect this to affect strongly the US Dollar, especially if the document will contain hints about a potential rate hike later this year.
GBP/USD
Yesterday the pair grinded lower, towards support but didn’t threaten it and the testimony of MPC Member Saunders did not have a huge impact on the Pound.
Technical Outlook
Price is approaching the support at 1.2227 and once it gets in that zone, we expect a bounce higher. The Relative Strength Index is deep in oversold territory and this will probably contribute to a future move up but the Stochastic is still heading downwards with good momentum so the signals offered by the two oscillators are still mixed. We continue to recommend caution as the Pound is still prone to sudden moves.
Fundamental Outlook
Another MPC member, Jon Cunliffe, will testify today at 9:00 am GMT before the Financial Affairs Sub-Committee. Because the topic is Brexit’s effect on the financial scene, we expect this speech to create a higher impact than Saunders’ testimony that took place yesterday. Also, the FOMC Meeting Minutes will have a direct impact on the pair’s movement.
FOREX NEWS: US DOLLAR STRENGTHENED BY FOMC MINUTES, BEARS MAINTAIN CONTROL
EUR/USD
Forex News: The US Dollar strengthened ahead of the FOMC Meeting minutes and once the document was released, price action became mixed. According to the Minutes, the FOMC members see a rate hike sooner rather than later, so we expect to see more US Dollar strength in the near future.
Technical Outlook
The pair is hovering around the minor support at 1.1025, with both the Stochastic and Relative Strength Index in oversold territory. Also, price travelled a long distance without a retracement so we expect small moves up, followed by another drop that will likely reach the support at 1.0960. The hawkish stance of the FOMC strengthens this bias.
Fundamental Outlook
The only notable indicator released today is the U.S. Unemployment Claims, scheduled at 12:30 pm GMT. It shows the number of people who asked for unemployment related benefits during the previous week but because it’s frequency is high (weekly), its impact is often mild. Nonetheless, numbers above the forecast 252K are usually detrimental for the US Dollar.
GBP/USD
The pair broke immediate support and then retraced higher ahead of the FOMC release, which didn’t generate a clear direction. Overall the Pound is still vulnerable and under bearish pressure.
Technical Outlook
Even if the US Dollar strength generated by the hawkish tone of the FOMC Minutes was not immediately seen, we expect the effect to kick in and to drive the pair lower. For now we have another low created at 1.2090, which will act as support and target for today’s price action. If the pair moves above 1.2227 (1.2230), more bulls will probably join in and will take price higher; however, for the time being our bias remains bearish and moves north are regarded as retracements, not reversals.
Fundamental Outlook
Bank of England Governor Mark Carney will deliver a speech today, at a forum in Birmingham but the exact time of the event is not yet known. This is definitely an event that could spark volatility on Pound related pairs and the lack of information regarding the scheduled time makes it even more “dangerous”.
FOREX NEWS: U.S. RETAIL SALES IN THE FOCUS, POUND STILL VULNERABLE
EUR/USD
Forex News: Yesterday the pair retraced higher, mostly due to technical reasons; the fundamental scene was calm and no major indicators affected price action.
Technical Outlook
The pair found minor support at 1.0985 and bounced higher; the Stochastic and Relative Strength Index are just exiting oversold, so the current push up may extend into the potential resistance at 1.1075 or even 1.1100. However, after this retracement is complete, we expect downside movement to resume and the pair to touch or even break 1.0960.
Fundamental Outlook
Today’s main event is the release of the U.S. Retail Sales, scheduled at 12:30 pm GMT and expected to show a change of 0.6% compared to the previous -0.3%. Sales made at retail levels represent a major part of the entire consumer spending and usually, higher numbers strengthen the US Dollar.
Later in the day, at 2:00 pm GMT the University of Michigan will release their Consumer Sentiment survey, which tries to gauge consumers’ opinion about current and future economic conditions. Higher numbers than the forecast 92.1 strengthen the greenback under normal conditions.
GBP/USD
The pair remained below 1.2227 yesterday and price action was mostly ranging, without special developments.
Technical Outlook
Price action stalled yesterday and it looks like the bulls don’t have enough strength to take the pair above 1.2230. As long as the pair is trading below the 50 period Exponential Moving Average, our bias is bearish, anticipating a move into 1.2090, but we still recommend caution on this pair because it’s moving on “shaky” ground.
Fundamental Outlook
The United Kingdom didn’t schedule major events for today, thus the pair’s direction will be influenced by the technical aspect and by the U.S. events mentioned above.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: EUROPEAN FINAL CPI – TODAY’S PRICE ACTION CATALYST
EUR/USD
Forex News: The U.S. economic data released Friday was mostly positive and helped the US Dollar to strengthen against the Euro, generating a bearish move after a small retracement.
Technical Outlook
The retracement seen Friday confirmed 1.1060 as resistance and now we expect the pair to move into 1.0955 and maybe 1.0900 later in the week. Once price gets to 1.0955, it’s very likely to see another bounce higher because the Relative Strength Index is already oversold, but this potential climb should be followed by another drop; 1.0985 may turn into minor resistance.
Fundamental Outlook
The final version of the European Consumer Price Index comes out today at 9:00 am GMT, with an anticipated change of 0.4%. This is the main gauge of inflation but the Final version tends to have the lowest impact. Nonetheless, higher numbers can strengthen the Euro to a limited extent.
GBP/USD
Friday the pair continued to move sideways and remained inside a horizontal channel. Volatility was lower than the previous days and it seems like price is about to enter a ranging period.
Technical Outlook
The horizontal channel created by 1.2325 resistance and 1.2090 support is likely to contain today’s price action. However, if the channel is broken to the upside, then the 50 period Exponential Moving Average will offer resistance and will probably push the pair lower. If the pair breaks 1.2090 we don’t have any immediate support so price is likely to stop once the oscillators become oversold again.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases today so we expect price action to be mainly influenced by the technical aspect.
FOREX NEWS: U.S. AND U.K CPI RELEASES GUARANTEE VOLATILITY ON POUND AND US DOLLAR
EUR/USD
Forex News: The Final version of the European CPI matched analysts’ expectations, thus the event didn’t bring a lot of volatility. Yesterday’s session belonged to the bulls but overall the picture is still bearish.
Technical Outlook
Yesterday the pair climbed back above 1.0985, without touching the support at 1.0955 but our bias remains bearish, anticipating a touch of the mentioned support. The oscillators are still close to oversold so the current move up might extend further but we don’t expect a touch of 1.1060 resistance unless surprising developments take place.
Fundamental Outlook
Today’s main event for the pair is the release of the United States Consumer Price Index, scheduled at 12:30 pm GMT. The CPI shows changes in the price paid by consumers for the products they purchase and is considered the main gauge of inflation. Higher numbers than the forecast 0.3% (previous 0.2%), usually strengthen the US Dollar. Keep an eye on the CORE version of the CPI (excludes food and energy from calculation), released at the same time and expected to show a 0.2% change.
GBP/USD
The pair had a very slow yesterday, mostly due to the lack of economic releases. Price remained inside the horizontal channel and movement was mostly sideways.
Technical Outlook
Price is squeezing inside the horizontal channel created by 1.2325 resistance and 1.2090 support and lacks direction from a short term perspective. Usually a strong breakout follows after a period of low volatility and sideways movement but the direction is hard to anticipate. We recommend caution if trading any Pound related pairs.
Fundamental Outlook
Today’s direction is likely to be determined by the release of the British Consumer Price Index, scheduled at 8:30 am GMT. As mentioned before, the CPI is the main gauge of inflation, thus higher numbers than today’s forecast 0.9% (previous 0.6%) will most likely strengthen the Pound.
FOREX NEWS: POUND PUSHES HIGHER, FUELLED BY IMPROVING INFLATION
EUR/USD
Forex News: The CORE version of the U.S. Consumer Price Index showed a slightly lower value than analysts had anticipated and this created a brief period of US Dollar weakness. Soon after, the greenback strengthened and the pair had an overall bearish session yesterday.
Technical Outlook
Price completed a bullish retracement and is now headed towards the support around 1.0955. The bears are in control of short term price action but the Relative Strength Index is approaching oversold for the third time in a relatively short period and this suggests that once 1.0955 area is reached, we may see a stronger move up. The Exponential Moving Average will offer the first resistance zone.
Fundamental Outlook
The U.S. Building Permits are released today at 12:30 pm GMT and expected to show a number of 1.17M (annualized). A higher number of permits means that the construction sector will see increased activity in the near future and this usually strengthens the US Dollar but the impact is often medium.
GBP/USD
The British CPI showed an optimistic value of 1.0%, higher than analysts’ expectations and this was the main reason why the Pound gained yesterday.
Technical Outlook
The pair is approaching the 50 period Exponential Moving Average and the resistance at 1.2325. Once this zone is reached, we expect the bullish action to stall and even reverse. The pair is in a downtrend and as long as it is trading below resistance and below the 50 EMA, we favour the short side. A break of this resistance zone will open the door for a move into 1.2480.
Fundamental Outlook
The British Claimant Count Change comes out today at 8:30 am GMT, offering insights into the British unemployment situation. The forecast is a change of 3.4K compared to the previous month and higher numbers are detrimental for the Pound because they show that more people asked for unemployment related benefits.
FOREX NEWS: ECB RATE, BRITISH RETAIL SALES – A FULL DAY AHEAD
EUR/USD
Forex News: Overall the pair had a slow day yesterday and neither side was in clear control. The U.S. Building Permits showed a larger number than forecast and this strengthened the US Dollar but to a limited extent.
Technical Outlook
The picture remains bearish but it looks like now the pair is deciding the next direction. The support at 1.0955 was almost touched, without being seriously threatened but as long as the pair is printing lower lows, lower highs and is trading below the 50 period Exponential Moving Average, we favour the short side. Today’s direction will be mainly affected by the ECB Meeting so the technical will be secondary.
Fundamental Outlook
At 11:45 am GMT the ECB will announce the interest rate. No change is expected from the current 0.00% but the event usually creates volatility anyway. Later at 12:30 pm GMT, ECB President Mario Draghi will hold a press conference during which he will discuss the reasons that determined the rate decision and then will answer journalists’ questions.
This second part of the conference is usually when volatility surges and the Euro is prone to sudden changes of direction, depending on the President’s attitude and answers. We recommend caution if trading at the time.
GBP/USD
The British Claimant Count Change showed that fewer people applied for unemployment-related benefits and this slightly strengthened the Pound.
Technical Outlook
The pair hovered close to 1.2325 resistance for the most part of yesterday’s trading session and now the Stochastic has entered overbought, increasing the chances of a bounce lower. The 50 period Exponential Moving Average is also in close vicinity and will offer resistance. A break of 1.2325 will open the door for 1.2480, while a bounce will make 1.2090 the first target.
Fundamental Outlook
The British Retail Sales are today’s main highlight for the Pound. The release is scheduled at 8:30 am GMT and the forecast is a change of 0.3% compared to the previous -0.2%. Higher numbers usually strengthen the Pound given that sales made at retail levels represent the main part of the entire consumer spending.
FOREX NEWS: EURO SHOWS MIXED REACTION AFTER ECB, US DOLLAR ENDS THE WEEK IN CONTROL
EUR/USD
Forex News: The ECB left the rate unchanged at 0.00% and Mario Draghi’s press conference triggered erratic movement. The initial Euro strength soon faded and the Dollar broke support.
Technical Outlook
The initial climb found resistance at the 50 period Exponential Moving Average and soon after, the pair broke the support at 1.0955. If the bears can keep price below this level, we will probably see a move closer to 1.0900 but we must note that the Relative Strength Index and Stochastic are approaching oversold and this may favour bullish retracements.
Fundamental Outlook
Today is the second day of the European Economic Summit and this may be a reason for increased volatility but other than that, there’s nothing major on the economic calendar.
GBP/USD
The British Retail Sales numbers came out below analysts’ expectations and this weakened the Pound, generating a bearish session and a bounce at resistance.
Technical Outlook
The pair found resistance at the 50 period Exponential Moving Average and 1.2325 level. The Pound is also weakened by disappointing economic data so we may see a drop closer to 1.2090. Both oscillators are pointing downwards and the pair is in a downtrend, thus increasing the chances of a move lower. As long as the pair is trading below resistance and below the 50 EMA, our bias is bearish.
Fundamental Outlook
The United Kingdom didn’t schedule any major economic releases but the European Economic Summit can affect the Pound so we recommend caution.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: BEARS MAINTAIN OVERALL CONTROL, MINOR RETRACEMENTS EXPECTED
EUR/USD
Forex News: The bears remained in control for most of Friday’s trading session and continued the momentum started Thursday during Draghi’s press conference. June’s low was taken out and this represents an important victory for the sellers.
Technical Outlook
Price broke 1.0910 support and established a new minor level at 1.0860 but now both oscillators are oversold so we expect bearish movement to stall. The next important target is 1.0800 but we are likely to see bullish retracements until price gets there. The previous support at 1.0910 may turn into resistance but if the pair moves above it, we don’t expect 1.0955 to be tested today.
Fundamental Outlook
Eurozone’s Manufacturing and Services PMIs are both released today at 8:00 am GMT; these are surveys of purchasing managers from the manufacturing and services sectors respectively that try to gauge the opinion of said managers regarding the health of these sectors. Higher numbers usually strengthen the Euro but the impact is often limited; today’s forecast for the Manufacturing PMI is 52.7 and for the Services PMI is 52.4.
GBP/USD
Movement on the pair has slowed down significantly lately but price is still sliding lower, trading below resistance and below the 50 period Exponential Moving Average.
Technical Outlook
We expect the pair to remain below the 50 EMA and below the resistance at 1.2325 for the entire day but the latest impulse (seen on the lower time frames) is bullish, so it’s very likely to see a test of the mentioned resistance zone but even if the pair breaches it, the upside movement should be limited. To the downside, key support sits at 1.2090 but we don’t expect price to move that far.
Fundamental Outlook
The United Kingdom didn’t schedule important economic releases for today, thus the Pound may be in for a slow, ranging day.
FOREX NEWS: BOE GOVERNOR CARNEY TESTIFIES ON BREXIT EFFECTS. EXPECT A STORM!
EUR/USD
Forex News: Eurozone’s Manufacturing and Services PMIs both showed higher than expected values yesterday and this triggered limited bullish movement during the first part of yesterday’s trading session. However, the pair’s movement was rather slow and without special developments.
Technical Outlook
Price came close to the resistance at 1.0910 but quickly ran out of steam and now the pair shows signs that it may come down. If this is the case, the support at 1.0860 will be the first target, followed by 1.0800 but the Stochastic and Relative Strength Index are close to their respective oversold levels, so we may see another attempt to break 1.0910.
Fundamental Outlook
Two important releases will hold today’s headlines: the first is the German IFO Business Climate, scheduled at 8:00 am GMT and expected to show a value of 109.6. This is a survey that acts as a gauge of optimism regarding overall economic conditions and is derived from the opinions of about 7,000 German businesses. This large sample is what makes it a well-respected indicator, with higher levels usually strengthening the Euro.
The second economic indicator of the day is the U.S. Consumer Confidence survey, released at 2:00 pm GMT and expected to show a reading of 101.5, lower than the previous 104.1. This is a survey derived from the opinions of about 5,000 households regarding overall economic conditions and higher numbers have a positive impact on the US Dollar.
GBP/USD
The pair continued to move inside the horizontal channel yesterday and remained below the 50 period Exponential Moving Average. The lackluster economic calendar contributed to the ranging movement.
Technical Outlook
The pair is building up pressure for a strong breakout but the direction of that breakout will be decided probably by speculation regarding the Brexit and by today’s testimony delivered by Mark Carney. The levels to watch remain 1.2325 as resistance and 1.2090 as support.
Fundamental Outlook
At 2:35 pm GMT, Bank of England Governor Mark Carney will testify before the House of Lords Economic Affairs Committee. This testimony is likely to generate strong movement on Pound related pairs because the main topic is the effects of the Brexit and its economic consequences. Depending on the Governor’s attitude and answers, the Pound may react erratically so extreme caution is recommended at the time.
FOREX NEWS: EURO STILL IN A RANGE, POUND WEAK AGAINST THE US DOLLAR
EUR/USD
Forex News: The pair had another mixed trading session, where the Euro initially strengthened on the back of an optimistic German IFO survey, then price dropped below support only to bounce higher later on.
Technical Outlook
The US Dollar is showing strength against most of its peers but is reluctant to take this pair lower; however, we expect 1.0860 support to be taken out, probably today. To the upside, the pair is capped by 1.0910 resistance, followed by the 50 period Exponential Moving Average, which we don’t expect to be broken today. Some form of upside movement is likely to be seen, because the oscillators are still close to their oversold levels.
Fundamental Outlook
The day ahead is pretty calm in terms of economic releases, with the only notable one being the U.S. New Home Sales, scheduled at 2:00 pm GMT and expected to show 601K, lower than the previous 609K (annualized numbers). Higher numbers show increased activity on the house market and usually strengthen the greenback but to a limited extent.
GBP/USD
The Pound weakened and dropped more than 150 pips, touching the support at 1.2090 but soon bounced higher on Carney’s comments.
Technical Outlook
It’s clear now that rejection is present near 1.2090 and that the bears lack the necessary strength to break this support, at least for the time being. For today, we expect a move up, to the zone where yesterday’s drop initiated, and maybe a touch of the 50 period Exponential Moving Average. On the other hand, a break of 1.2090 support will probably bring in more sellers.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for today, thus price direction will be mainly influenced by the technical aspect and by the U.S. housing data.
FOREX NEWS: US DOLLAR LOSES GROUND AHEAD OF DURABLE GOODS ORDERS RELEASE
EUR/USD
Forex News: Yesterday the bulls completed a retracement to the upside and the pair moved above 1.0910, touching the 50 period Exponential Moving Average. Some US Dollar weakness was generated by a lower than expected number for the New Home Sales, but nothing spectacular.
Technical Outlook
Price action shows clear rejection at the 50 period Exponential Moving Average and the Stochastic is rapidly approaching overbought. This is a good place for the downtrend to resume and price to head back into 1.0860 for another attempt to break this support. If the bulls manage to close a full 4-hour candle above the 50 period EMA, we are likely to see a move closer to 1.1000 zone.
Fundamental Outlook
At 12:30 pm GMT the United States will release the Durable Goods Orders that are expected to show a change of 0.1%. Goods with a live expectancy of more than 3 years are considered “durable” and a higher value for this indicator suggests increased economic activity, which often leads to a stronger US Dollar.
GBP/USD
Yesterday’s price action was mostly bullish but the pair slowed down considerably compared to the previous day.
Technical Outlook
The pair is struggling to break the 50 period Exponential Moving Average and if the bulls succeed to do so, we will likely see a touch of 1.2325 resistance. Such a break would mean the pair is out of the horizontal channel that contained it for the last period and would make 1.2480 the next destination; otherwise, the first target is the lower part of the channel: 1.2090.
Fundamental Outlook
The British Gross Domestic Product is released today at 8:30 am GMT and expected to show a 0.3% change, compared to the previous 0.7%. Since the GDP is an economy’s main gauge of overall performance, higher numbers usually strengthen the currency and the opposite is true for lower numbers.
FOREX NEWS: GERMAN INFLATION AND U.S. GDP: A STRONG FINISH TO A DULL WEEK
EUR/USD
Forex News: The U.S. Durable Goods Orders didn’t have a major impact on price action yesterday and the pair remained in a relatively tight range, capped by the 50 period Exponential Moving Average.
Technical Outlook
The pair approached the 50 period EMA for the second time in a short while and it looks like the bears are trying to push price lower again but currently they lack steam. The level at 1.0910 is not broken decisively but once it’s broken, we expect 1.0860 to be threatened. If the 50 period Exponential Moving Average is broken to the upside, the bulls will gain the upper hand for short term movement.
Fundamental Outlook
The first important release of the day is scheduled at 12:00 pm GMT: the Preliminary version of the German Consumer Price Index. This is the main gauge of inflation and has a strong impact on the Euro because the German economy is an important pillar of the entire Eurozone; that being said, higher numbers than the forecast change of 0.1%, can strengthen the single currency.
On the US Dollar side we have the Advance version of the Gross Domestic Product, scheduled at 12:30 pm GMT. The GDP is an economy’s main measure of performance, thus higher values than the anticipated 2.5% (previous 1.4%) usually give a boost to the US Dollar.
GBP/USD
The British GDP showed yesterday a higher value than expected but still below the previous release. This created somewhat mixed movement, with the Pound strengthening initially then dropping after a bounce at the moving average.
Technical Outlook
The 50 period Exponential Moving Average proved once again too strong for the bulls to break so now we can expect the pair to reach the lower part of the horizontal channel, located at 1.2090. This support proved strong in the past so a break will only come if the greenback strengthens from positive economic data or the Pound weakens for various reasons. If the 50 EMA is broken to the upside, we will probably see a touch of the resistance at 1.2325.
Fundamental Outlook
The Pound will not be affected today by major news releases so the pair will be influenced by the U.S. GDP and the technical aspect.
We hope you had a profitable trading week and we wish you a relaxing weekend.
FOREX NEWS: EUROPEAN INFLATION DATA KICK-STARTS THE WEEK
EUR/USD
Forex News: Friday’s better than expected U.S. GDP was overshadowed by the reopening of the Clinton email case by the FBI. As a result the greenback weakened and the pair shot up through resistance.
Technical Outlook
The 50 period Exponential Moving Average and the resistance at 1.0955 were both broken and now the short term bias is bullish. We expect a move into the zone near 1.1025 but we must note that the Relative Strength Index is entering overbought and the pair is still in a downtrend; this means that once (and if) 1.1025 resistance is hit, we expect a move to the downside, possibly into 1.0955 zone.
Fundamental Outlook
At 7:00 am GMT the German Retail sales are released and expected to change 0.2% compared to the previous -0.4%. Higher values usually strengthen the Euro because sales made at retail outlets represent the major part of consumer spending, which in turn accounts for the majority of overall economic activity.
At 10:00 am GMT the Flash Estimate Eurozone Consumer Price Index is released, anticipated to show a change of 0.5% (previous 0.4%). The indicator tracks changes in the price paid by consumers for the goods and services they purchase and usually a higher reading brings Euro strength.
GBP/USD
The Advance version of the U.S. Gross Domestic Product showed a change of 2.9%, which was better than the previous (1.4%) and the forecast (2.5%). Despite all this the US Dollar couldn’t make any advances and instead weakened, mainly due to the reopening of Clinton’s email case.
Technical Outlook
The pair came close to 1.2090 support and bounced higher, into the 50 period Exponential Moving Average but movement wasn’t very decisive. If the effect of Friday’s events will extend to today’s session, we will probably see a break of the moving average and a move closer to 1.2325 but if the pair remains below the 50 EMA, we will probably see another attempt to break 1.2090.
Fundamental Outlook
The United Kingdom didn’t schedule major news releases for today and this may contribute to a slow, ranging session.
FOREX NEWS: US DOLLAR STAGES A COMEBACK, MANUFACTURING DATA EYED
EUR/USD
Forex News: The German Retail Sales disappointed yesterday by showing a change of -1.4%, worse than the anticipated 0.2% and the previous -0.3%. This stopped the Euro’s bullish advance and brought the pair back into support.
Technical Outlook
The pair retraced yesterday into the support offered by the 50 period Exponential Moving Average and the way it behaves here will probably decide the next direction. A break of the moving average would show that the US Dollar is still strong and would open the door for a resumption of the downtrend, making 1.0910 the first target, followed by 1.0860. On the other hand, a bounce would make 1.0995 (1.1000) the first bullish target of the day.
Fundamental Outlook
Italian and French banks are closed today in observance of All Saints Day so we may see low volatility coming from the Euro. The US Dollar will be affected by the release of the U.S. Manufacturing PMI, scheduled at 2:00 pm GMT and expected to show a value of 51.8, slightly better than the previous 51.5. Higher numbers show optimism among purchasing managers form the manufacturing sector and usually strengthen the US Dollar.
GBP/USD
Yesterday the pair had a pretty slow day, with a bearish bias. The lack of economic releases contributed to the low volatility and price remained below dynamic resistance.
Technical Outlook
Price came very close to touching the 50 period Exponential Moving Average and then bounced lower again; however, both the bears and bulls lack the willingness to take control of the pair so we expect the ranging period to continue. A break of the 50 EMA would probably bring in more buyers and take price closer to 1.2325, while to the downside 1.2090 remains the first support.
Fundamental Outlook
The British Manufacturing Purchasing Managers’ Index is released today at 9:30 am GMT and expected to show a value of 54.6, lower than the previous 55.4. This index acts as a leading indicator of economic health, thus higher numbers usually strengthen the currency but to a limited extent.
FOREX NEWS: US DOLLAR LOSES GROUND, FED MAY HINT TO DECEMBER HIKE
EUR/USD
Forex News: Yesterday’s trading session belonged to the bulls almost entirely, as the Euro strengthened and pushed easily through resistance. The U.S. Manufacturing PMI matched analysts’ expectation, thus the release didn’t create US Dollar strength.
Technical Outlook
After an almost perfect bounce at the 50 period Exponential Moving Average the pair jumped and broke through the resistance at 1.0995 and 1.1025. We expect the current impulse to continue through 1.1060 and towards 1.1100 but a lot will depend on FOMC’s stance regarding interest rates. The two oscillators are overbought for the second time in a short while and this suggests that a retracement is due in the near future.
Fundamental Outlook
At 12:15 pm GMT, Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change report, which shows how many new jobs were created during the previous month, excluding the farming sector and government. Usually a higher number than the anticipated 166K strengthens the US Dollar but the impact is not as high as the NFP released Friday.
At 6:00 pm GMT the FOMC will release their Statement that contains their decision on the interest rate as well as insights into the reasons that determined it. The rate is not expected to change (currently <0.50%) but any hints about a December hike will strengthen the greenback.
GBP/USD
The British Manufacturing PMI came close to the expected number, so the impact was mild. The pair had another dull session yesterday, without major developments.
Technical Outlook
Price is still confined by the channel created by 1.2090 support and 1.2325 resistance but it has moved above the 50 period Exponential Moving Average for the first time in a long while. This may suggest that the buyers are trying to make a run for the top of the channel but a clear bias cannot be seen. The Stochastic is overbought and this may call for limited bearish movement.
Fundamental Outlook
The British Construction Purchasing Managers’ Index comes out at 9:30 am GMT and is expected to show a value of 51.9. Higher numbers for this indicator usually suggest optimism regarding economic conditions in the Construction sector, strengthening the Pound, but the impact is often mild.
FOREX NEWS: FED KEEPS RATE UNCHANGED, BOE EXPECTED TO DO THE SAME
EUR/USD
Forex News: Yesterday the pair had a bullish trading session ahead of the Fed rate announcement and the Dollar was little changed after the release. The FOMC kept rates at the current <0.50% but a December hike is not off the table.
Technical Outlook
The Relative Strength Index and Stochastic are both deep in overbought territory and this calls for a bearish retracement; adding to this view is the fact that the resistance at 1.1100 is not yet broken decisively. However, if the pair moves clearly above 1.1100, it will probably touch 1.1150 during today’s session and once that happens, the chances of a move lower will increase. As long as price is trading above the 50 EMA our bias is bullish.
Fundamental Outlook
The U.S. Non-Manufacturing PMI is today’s only notable release that can affect the pair. This survey is derived from the opinions of purchasing managers from outside the manufacturing industry and acts as a leading indicator of economic health. The announcement is scheduled at 2:00 pm GMT and the expected number is 56.2.
GBP/USD
Yesterday the pair moved above the 50 period Exponential Moving Average and had a bullish bias for almost the entire session. An optimistic Construction PMI added Pound strength.
Technical Outlook
Price remained above the 50 period EMA but the bulls didn’t manage to break 1.2325 resistance and that leaves us with a bounce-or-break scenario. If the horizontal channel will be broken, we expect more buyers to join and to take price closer to 1.2480; otherwise, we expect an encounter with the moving average and possibly with the bottom of the channel during the days to come.
Fundamental Outlook
The first major release of the day is the Bank of England Inflation Report that will offer the bank’s projections regarding inflation and economic expectations for the next 2 years. The release is scheduled at 12:00 pm GMT and at the same time the BOE will announce the interest rate (no change expected from the current 0.25%). The Monetary Policy Summary comes out at the same time, containing information about the reasons that determined the rate vote.
Half an hour later, at 12:30 pm GMT, BOE Governor Mark Carney will hold a press conference discussing the contents of the Inflation Report. All the events mentioned can have a very strong impact on the Pound, so caution is recommended.
FOREX NEWS: ENDING THE WEEK ON A HIGH NOTE WITH NFP IN THE FOCUS
EUR/USD
Forex News: The euro-dollar pair retraced lower yesterday after hitting a high of 1.1125. The bulls remain in control of medium term movement and we expect further upside.
Technical Outlook
The retracement lower seen yesterday was signalled earlier by the deep overbought condition of the Relative Strength Index and Stochastic but as long as the pair is trading above the 50 period Exponential Moving Average, the bias is still bullish. For the moment it looks like 1.1060 offers good support and it will probably push the pair higher, through 1.1100. Yesterday’s high at 1.1125 will act as first resistance, followed by 1.1150.
Fundamental Outlook
Today’s main event is without a doubt the release of the US Non-Farm Payrolls report, scheduled at 12:30 pm GMT. This is the most important jobs related data, which shows how many new jobs were created during the previous month. Usually the impact on the US Dollar is high, with bigger numbers strengthening it. The forecast for today’s release is 174K, while the previous was 156K.
GBP/USD
United Kingdom’s High Court ruled yesterday that the Government cannot bypass the Parliament in triggering the Brexit and this generated Pound strength, taking the pair into resistance.
Technical Outlook
The pair hit 1.2480 resistance yesterday and it may pause here for a while or even come down, depending on the NFP reading. The Relative Strength Index is well above its 70 level, showing an overbought condition and this may increase the chances of a bounce lower at resistance. If this happens, the first support may be offered by 1.2325.
Fundamental Outlook
The Pound will not be affected by major releases today but the U.S. jobs data will have a direct and probably strong impact on the pair, so we recommend caution at the time of release.
We hope you had a profitable trading week and we wish you a relaxing weekend.
