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724

FOREX NEWS: EURO IN THE SPOTLIGHT AS THE FRENCH ELECTION SHAKES THE MARKET

EUR/USD

Forex News: Friday the pair showed mixed movement, first descending into the support at 1.0680 and then bouncing above 1.0710; economic data came close to analysts’ expectations, so the impact was mostly overlooked.


Technical Outlook

The 50 period Exponential Moving Average together with the level at 1.0680 created a very strong confluence zone of support, which acted as a springboard for price and immediately pushed it higher. Under normal circumstances, we would anticipate a continuation of the bullish advance, but given the important French Presidential Election that took place over the weekend, we maintain a neutral stance and recommend caution.

Fundamental Outlook

The Euro will be affected throughout the day by the French Presidential Election and this will probably be a reason for irregular price action, with alternating periods of high and low volatility.

At 8:00 am GMT the German IFO Business Climate is released, expected to show a reading of 112.4. This is a well-respected survey, with a large sample of about 7,000 businesses, that asks respondents to rate the current level of business conditions, as well as a 6-month outlook; under normal circumstances, a higher than anticipated reading strengthens the Euro.

GBP/USD

The pair dropped Friday, mostly due to a worse than expected value of the British Retail Sales (forecast -0.3%; actual -1.8%) but the support at 1.2770 couldn’t be broken and price returned above it after a temporary dip below.



Technical Outlook

The support at 1.2770 proved once again too strong and the pair bounced higher after a failed attempt to break it. This shows that the bears still cannot build enough pressure and the bulls remain in control but for the time being the pair is trapped between support (1.2770) and resistance (1.2855). A break of support will probably take price into the 50 period EMA, while a break of resistance will make 1.2905 the first target but the pair’s movement will likely be affected by the French Presidential Election.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases for today but the markets will be affected by the French Presidential Election so we recommend caution throughout the day.

725

FOREX NEWS: EURO GETS A BOOST FROM THE FRENCH PRESIDENTIAL ELECTION RESULTS

EUR/USD

Forex News: The week opened with a huge upside gap of almost 150 pips, generated by the French Presidential Election. The pair is now sitting above several levels, which were previously resistance.


Technical Outlook

The gap took price to a high of 1.0890 but afterwards the pair started to range and the bullish advance stopped. Usually, gaps are closed, meaning that price will eventually return to the point where the gap originated but the time it takes for price to move there is unknown. We could very well see a push into the high at 1.0905 but it’s more likely to get another ranging trading session; for now, caution is recommended, until the pair chooses a clear direction.

Fundamental Outlook

The U.S. Consumer Confidence survey will be today’s only notable release, scheduled at 2:00 pm GMT and expected to show a value of 123.7, which is a drop from the previous 125.6. The survey is derived from the opinions of about 5,000 households regarding economic and business conditions; this large sample is what makes it important, generating US Dollar strength if the actual reading surpasses analysts’ expectations.

GBP/USD

Yesterday the pair wasn’t much affected by the French Election and instead remained confined in a relatively tight range, with low volatility.



Technical Outlook

As long as the pair remains confined inside the channel created by 1.2770 support and 1.2855 resistance, we consider it in a range and we have a neutral directional bias. From a longer term perspective the pair is in an uptrend and we expect a continuation but if 1.2770 support is broken, we will most likely see a touch of the 50 period Exponential Moving Average.

Fundamental Outlook

The Pound will not be affected by any major economic releases, so the pair’s direction will be determined by the technical aspect and by the U.S. Consumer Confidence survey.

726

FOREX NEWS: EURO BREAKS OUT, POUND STILL STUCK IN A RANGE

EUR/USD

Forex News: The Euro continued its advance to the upside yesterday and the pair managed to pierce through the high at 1.0905. The U.S. Consumer Confidence survey showed a disappointing value of only 120.3 (forecast 123.7) and this weakened the US Dollar, facilitating the climb.


Technical Outlook

Now that the pair broke the previous significant high at 1.0905, we expect to see a touch of 1.0950 resistance, followed possibly by a move into the psychological resistance at 1.1000. It must be noted that both the Stochastic and Relative Strength Index are clearly overbought, thus increasing the chances of a move down, below 1.0900. Also, the weekly gap is not closed and usually price returns to where the gap originated; however, the time frame for this to happen cannot be anticipated.

Fundamental Outlook

The Euro and US Dollar both have a slow day ahead, in terms of economic news releases, so the main driver of price will be the technical aspect.

GBP/USD

The Pound-Dollar remained in a relatively tight range, with low volatility for the most part of yesterday’s trading session. Overall the session was bullish but price is still inside the horizontal channel.


Technical Outlook

The pair touched several times the support at 1.2770 and each time it bounced higher, so for today we expect to see a touch of 1.2850 – 1.2855 resistance zone, which is also the upper boundary of the horizontal channel. If that zone is broken, we will most likely see an extended move into 1.2905. Keep in mind that until one boundary of the channel is broken decisively, the pair is in range-mode, without a clear bias.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound will not be affected today by any economic news releases, so the main focus will be on the technical side.

727

FOREX NEWS: ALL EYES ON ECB FOR RATE DECISION AND PRESS CONFERENCE

EUR/USD

Forex News: Yesterday’s trading session was mostly bearish, with price dropping after a perfect bounce at 1.0950 resistance. The pair wasn’t affected by major economic releases and most of the move was technical.


Technical Outlook

Even if yesterday the sellers managed to take the pair below 1.0900, the bias remains bullish as long as the pair is trading above the 50 period Exponential Moving Average. However, this bearish move may continue, considering that the Relative Strength Index was overbought for a long time and is now moving down with good momentum. It must be noted that today the technical aspect will be secondary as traders around the world will focus on Mario Draghi’s attitude and answers during the ECB Press Conference.

Fundamental Outlook

Today all eyes will be on the European Central Bank for the interest rate announcement, scheduled at 11:45 am GMT. The rate is not expected to change from the current 0.00% but usually the event creates volatility nonetheless. Later, at 12:30 pm GMT, ECB President Mario Draghi will hold a press conference discussing the rate decision; he will also answer journalists’ questions and usually this part creates strong movement on Euro pairs.

At the same time (12:30 pm GMT) the U.S. Durable Goods Orders are released, showing changes in the total value of orders placed for goods with a life expectancy of at least three years. Numbers above forecast (1.5%), usually generate US Dollar strength.

GBP/USD

The pair remained in a tight range and showed choppy movement yesterday. It is currently in a consolidation phase, inside a horizontal channel.


Technical Outlook

The lack of economic releases for the Pound is part of the reason why the pair moved sideways the entire week so far and until the horizontal channel created by 1.2855 and 1.2770 is broken, we expect to see more of the same. Our bias remains bullish, expecting a move into the resistance at 1.2905 but a break to the downside would invalidate this scenario.

Fundamental Outlook

Similar to the rest of the week, today the United Kingdom didn’t schedule major economic news releases, so the pair’s direction will be affected by the technical aspect and the U.S. Durable Goods Orders.

729

FOREX NEWS: KEY DATA TO END THE TRADING WEEK: UNITED STATES AND UNITED KINGDOM GDP

EUR/USD

Forex News: The Euro initially strengthened yesterday when ECB’s Draghi mentioned that downside risks to the economy have diminished but soon after, the market turned and the pair crossed back below 1.0900, heading towards 1.0850.


Technical Outlook

The pair is still facing strong support at 1.0850 and 1.0830 but bearish pressure has clearly increased and we expect a break of these levels, followed by an encounter with the 50 period Exponential Moving Average. If price can move below the 50 EMA, we expect to see an extended move down, possibly to where the weekly gap originated. Even if this will be the case, we will most likely see bullish pullbacks until price closes the gap; also, we don’t expect to see a closing of the gap during one day. A move back above 1.0900 would invalidate such a scenario for now.

Fundamental Outlook

Today the focus shifts towards the US Dollar for the release of the U.S. Advance version of the Gross Domestic Product. The GDP is an economy’s main gauge of overall performance and under normal circumstances, higher numbers strengthen the currency; also the Advance version is the most important of the three and this increases its importance. The release is scheduled at 12:30 pm GMT and the forecast is 1.3%.

GBP/USD

The pair continued slowly but surely to the upside, exiting the horizontal channel that confined it for more than a week. However, the resistance at 1.2905 stopped upside momentum.


Technical Outlook

The pair is very likely to retrace lower from 1.2905, considering that the Relative Strength Index is overbought and price travelled a long distance to the upside (compared to the movement seen during the last week). If this is the case, the first barrier is represented by the previous resistance at 1.2855, which now may turn into support; however, we don’t exclude the possibility of a move back inside the horizontal channel.

Fundamental Outlook

The British Preliminary Gross Domestic Product is released today at 8:30 am GMT and is expected to show a change of 0.4%. As mentioned above the GDP is the main gauge of economic performance and higher values usually strengthen the currency.

730

FOREX NEWS: EUROPE CELEBRATES LABOR DAY. CHOPPY PRICE ACTION EXPECTED

EUR/USD

Forex News: Price showed mixed movement Friday, first climbing to touch resistance and then bouncing lower, erasing most of the gains. For now the pair remains in a range, without clear direction.


Technical Outlook

Friday’s bounce lower after touching 1.0950 resistance showed that the bulls are lacking the strength to take the pair higher and this makes us anticipate a move lower, into the 50 period Exponential Moving Average. From a longer term perspective the pair is in an uptrend so we don’t exclude a break of 1.0950, but as long as price remains below this level, our bias is bearish.

Fundamental Outlook

Today banks across Europe will be closed, celebrating Labor Day and no major indicators will be released. Volatility and price action will also be affected, so we recommend caution throughout the day.

At 2:00 pm GMT the U.S. Manufacturing PMI comes out, showing the opinions of purchasing managers from the manufacturing sector about the economic health of this sector. The forecast is 56.6 and usually, higher numbers strengthen the currency.

GBP/USD

The British Gross Domestic Product disappointed Friday but the same was true for the U.S. GDP and the pair wasn’t much affected by the releases. Price continued higher, following the break of 1.2905.


Technical Outlook

The bias remains bullish, anticipating a move into 1.3000 psychological resistance. The level at 1.2905 can be considered support because price returned to re-test it from above after the bullish break and then bounced higher; this means that a break of the level would show bearish pressure and might trigger a move lower, possibly towards the 50 period EMA. Also, the Relative Strength Index is overbought and this is an early signal that price may reverse or at least retrace lower.

Fundamental Outlook

British banks will be closed today in observance of May Day and no important economic indicators will be released. This will most likely affect volatility and price behaviour.

731

FOREX NEWS: VOLATILITY PICKS UP AFTER LABOR DAY, BRITISH MANUFACTURING PMI EYED

EUR/USD

Forex News: The pair showed slow movement yesterday, mostly because banks across Europe were closed, celebrating Labor Day, and no major indicators were released.


Technical Outlook

Yesterday’s trading session was choppy and doesn’t hold important clues about future direction. For now the pair is in a range but we must note that it moved above 1.0900 and this may bring in additional buyers; however, this is a level that lately didn’t have a lot of importance (price didn’t react to it), so we may easily see a drop below it. The levels to watch remain 1.0950 as resistance and 1.0850 as support and as long as the pair is trading between them, we consider it in a range.

Fundamental Outlook

We don’t have anything major on the economic calendar for the Euro and US Dollar so we might get another slow, ranging session.

GBP/USD

Similar to the Euro-Dollar, the Pound-Dollar moved without clear determination and direction but it remained above the previous resistance, now turned support.


Technical Outlook

Yesterday the pair descended into 1.2905 and bounced higher immediately after touching it, so now the previous resistance has turned into support. It must be noted that the bounce wasn’t a strong one, overall price action lacks strength and volatility is low. Our bias is still bullish as long as the pair is trading above 1.2905 and above the 50 period Exponential Moving Average but we don’t exclude a retracement lower or a ranging session.

Fundamental Outlook

At 8:30 am GMT the British Manufacturing PMI is released, with a forecast value of 54.0, a small change from the previous 54.2. This is a survey derived from the opinions of about 600 purchasing managers, regarding economic and business conditions in the manufacturing sector and acts as a leading indicator of economic health. Usually numbers above expectations trigger Pound strength but the impact is low if the actual number comes close to the forecast.

732

FOREX NEWS: VOLATILITY GUARANTEED: U.S. FEDERAL FUNDS RATE ANNOUNCEMENT


EUR/USD

Forex News: Movement was slow and choppy yesterday, mostly due to the lack of major economic releases. The pair remained in range-mode and no substantial advances were made by either side.


Technical Outlook

The pair is confined in a tight range and movement is slow; this behavior is usually followed by a strong breakout but the direction is difficult to predict. Our general bias is bullish as long as price is trading above the 50 period Exponential Moving Average but that doesn’t exclude a drop to touch the EMA or even break it. For now we recommend caution because probably today we will see a strong breakout.

Fundamental Outlook

The first key event of the day is the release of the ADP Non-Farm Employment Change, a report that tracks changes in the total number of employed people, excluding the farming industry and Government. This is less important than the Government data (NFP), announced Friday, but it is still a very important indicator, which can strengthen the US Dollar if it posts a higher reading than today’s forecast of 178K; the scheduled time of release is 12:15 pm GMT.

Later in the day, at 6:00 pm GMT the FOMC will release the Rate Statement, which contains the outcome of the interest rate vote (no change expected from the current <1.00%) and also details of the reasons that stood behind the votes. If the document will contain hints about future monetary policy direction or possibly about the pace of rate hikes, then we will most likely get a volatility boost on all US Dollar pairs. Either way, caution is recommended.

GBP/USD

The Pound was strengthened yesterday by the British Manufacturing PMI, which posted a reading of 57.3, better than the expected 54.0. The release erased an earlier drop below 1.2905.



Technical Outlook

The move below 1.2905 may be considered just a retracement in an uptrend, especially because price rallied from close vicinity of the 50 period Exponential Moving Average and 1.2855 support. The first resistance is now located at 1.2965 and a break of it would open the door for a move into 1.3000 psychological level. Today the technical aspect will be somewhat secondary to the fundamental because both currencies in the pair will be affected by important releases.

Fundamental Outlook

The British Construction PMI is released today at 8:30 am GMT and expected to show a value of 52.1, almost identical to the previous 52.2. This is a survey of purchasing managers that acts as a leading indicator of economic health, focused on the Construction sector; higher numbers usually strengthen the Pound but the impact is limited if the actual reading matches analysts’ expectations.

733

FOREX NEWS: US DOLLAR REVITALIZED BY HAWKISH FED STANCE. BEARISH MOVES TO FOLLOW?

EUR/USD

Forex News: The pair showed choppy movement ahead of the FOMC Rate Statement but at the time of release the US Dollar strengthened although the rate remained unchanged, as expected. The statement was relatively hawkish, mentioning that the labor market has continued to strengthen and inflation is on track as well.


Technical Outlook

The pair has moved back below 1.0900 support and bearish pressure has increased, so for today we expect to see a move into the 50 period Exponential Moving Average, followed by a test of 1.0850 support. If that level will be broken, the move is likely to extend lower, possibly into 1.0800 but this target will not be reached in a day unless surprising developments take place. A bullish bounce at the 50 EMA will probably take price back above 1.0900 and into 1.0950.

Fundamental Outlook

The economic calendar is light for both Euro and US Dollar, without major releases, so the pair’s direction will be mainly influenced by the technical aspect.

GBP/USD

The Pound showed some strength before the Fed release but the previous gains were erased and the pair descended below 1.2900, approaching the 50 period Exponential Moving Average.


Technical Outlook

Today we will most likely see a touch of the 50 period EMA and the support at 1.2855. If the confluence zone created by these two technical elements will be broken, the pair will re-enter the horizontal channel that confined it for more than a week. This sets up two possible scenarios: either the pair will start ranging again, inside the channel, or we will see an extended bearish move that will have 1.2770 as first target. A quick move above 1.2900 will make 1.2965 the immediate target.

Fundamental Outlook

At 8:30 am GMT the last British survey in this week’s series is released: the Services Purchasing Managers’ Index (PMI). The expected value is 54.6 and under normal circumstances, higher numbers strengthen the Pound; usually this indicator has a medium impact on the currency.

734

FOREX NEWS: IT’S NFP DAY. EXPECT FIREWORKS!

EUR/USD

Forex News: Yesterday after an initial drop that touched the 50 Period Exponential Moving Average, the bulls stepped in and took the pair very close to the recent resistance at 1.0950. The session was bullish but the pair is still in a range.


Technical Outlook

The bounce at the 50 period Exponential Moving Average shows that the US Dollar is not yet strong enough to take the pair significantly lower. On the other hand, the bullish move seen yesterday shows that upwards pressure has increased and that we will probably see a move into 1.1000 psychological level if 1.0950 can be broken. Keep in mind that today the technical aspect will be somewhat secondary to the fundamental, due to the important U.S. jobs data release.

Fundamental Outlook

Today the spotlight will be on the US Dollar for the release of what is considered the most important employment data: the Non-Farm Employment Change (aka Non-Farm Payrolls). The scheduled time is 12:30 pm GMT and the expected change is 194K, much higher than last month’s 98K. Higher numbers usually strengthen the US Dollar but keep an eye on the Average Hourly Earnings released at the same time because lately this indicator seems to gain a lot of importance. If people are paid more for their work, they tend to spend more and this ultimately increases economic activity, strengthening the US Dollar as well. The expected change is 0.3%, while the previous was 0.2%.

Round two of the French Presidential Election will take place Sunday and this will most likely affect price on Monday’s opening but possibly also today.


GBP/USD

The British Services PMI showed a reading of 55.8, higher than the expected 54.6 and this was part of the reason why the pair had another bullish session, reversing an early drop below support.


Technical Outlook

The failed break of the support at 1.2855 and the move back above the 50 period Exponential Moving Average shows increased bullish pressure and makes us anticipate a move into 1.2965. Another move below the 50 EMA and 1.2855 would invalidate the bullish scenario and would open the door for a move into 1.2770; however, this is a less likely scenario. Price behaviour will be strongly affected by the fundamental side today and we may experience irregular movement.

Fundamental Outlook

The United Kingdom didn’t schedule major economic releases for today, so the pair will be mainly influenced by the U.S. employment data and by the technical aspect.

735

FOREX NEWS: FRANCE GETS A NEW PRESIDENT, EURO GETS A VOLATILITY BOOST

EUR/USD

Forex News: Friday the spotlight was on the U.S. Non-Farm Payrolls that posted a figure of 211K, better than the anticipated 194K. However, last month’s number was revised from 98K to 79K and this was the main reason why the US Dollar weakened.


Technical Outlook

The pair finished last week right on the psychological resistance located at 1.1000. If this level will be broken, we expect price to consolidate above it and then shoot up to 1.1100 – 1.1120 but this will not happen during the course of one day unless surprising events take place. If the level can’t be broken, the pair will probably move back into 1.0945 – 1.0950 zone but keep in mind that the Euro will be influenced by the French Election, so the technical aspect is secondary.

Fundamental Outlook

The German Factory Orders will be released today at 6:00 am GMT, expected to post a reading of 0.7% from the previous 3.4%. The report shows changes in the value of orders placed with manufacturers and acts as a leading indicator of production and economic activity, with higher numbers strengthening the Euro. The effect is often low to medium.

French banks will be closed today in observance of Victory Day but the Presidential Election will probably trigger irregular price action and increased volatility.

GBP/USD

Friday the bulls continued the move started after the bounce at the 50 period Exponential Moving Average and managed to break the previous high located at 1.2965. Most of the US Dollar weakness was generated by the lower revision of last month’s NFP.


Technical Outlook

The next resistance is located at 1.3050 and we expect the pair to retrace lower once it gets there. The level at 1.3000 is also an important hurdle and the Relative Strength Index is very close to overbought on H4 and Daily charts, so we might see a retracement lower when one of the mentioned levels is touched. That being said, as long as the pair is making higher highs and higher lows and is trading above the 50 EMA, we consider it in an uptrend so we favor the long side.

Fundamental Outlook

The United Kingdom didn’t schedule any important economic indicators for today, so the pair’s direction will be mainly decided by the technical aspect.

736

FOREX NEWS: BEARISH PRESSURE ESCALATES, SUPPORT LEVELS THREATENED

EUR/USD

Forex News: The pair had a bearish session yesterday, on the back of a stronger US Dollar, boosted partly by higher than expected values posted by the JOLTS Job Openings.


Technical Outlook

Price broke the 50 period Exponential Moving Average and the support at 1.0900, showing strong bearish momentum, so we anticipate a move into 1.0850. At the time of writing the pair is showing rejection at the previous low (1.0875) but this hurdle will probably be taken out soon. If the support at 1.0850 is broken, we will probably see a move to close the weekly gap in the near future, but this scenario will be invalidated for now if price moves back above the 50 period EMA.

Fundamental Outlook

ECB President Mario Draghi will speak today at the Dutch House of Representatives, about the impact of monetary policy. The effect of this speech is not known but as usual, caution should be used whenever heads of central banks speak publicly. The scheduled time is 12:00 pm GMT.

GBP/USD

The pair had a mixed session yesterday, first dropping into support and then bouncing higher from the confluence zone created by the 50 EMA and the level at 1.2905. For now the pair is still in an uptrend but bearish pressure has increased.



Technical Outlook

Price is facing an important support zone created by the Exponential Moving Average and the level at 1.2905. Judging by yesterday’s trading session, price is reacting to this zone because it moved higher immediately after touching it, but as long as the pair stays below 1.2965, we expect a drop through this zone and into 1.2855 – 1.2850. The oscillators are showing good downside momentum and are not oversold, further increasing our bearish bias; however, keep in mind that we are still in an uptrend, so the possibility of a move up shouldn’t be ruled out.

Fundamental Outlook

The Pound has another light day in terms of economic releases, but this doesn’t mean that the pair will have a slow trading day; however, the technical aspect will prevail.

737

FOREX NEWS: POUND IN THE SPOTLIGHT: BOE INTEREST RATE, INFLATION REPORT AND MONETARY POLICY SUMMARY

EUR/USD

Forex News: The speech of ECB President Draghi was shifted an hour earlier than initially scheduled but the Euro remained mostly unfazed by the event and was stuck in 40 pip range for the most part of yesterday’s trading session.


Technical Outlook

Although movement was slow yesterday, the pair remained below the 50 period Exponential Moving Average and broke the previous low at 1.0875. These are bearish signs, which make us anticipate a break of 1.0850 in the short term, followed by an extended move to the downside, possibly to the place where the bullish gap originated. This scenario is valid as long as the pair remains below the 50 period EMA.

Fundamental Outlook

At 12:30 pm GMT the United States Producer Price Index comes out, showing changes in the price charged by producers for their goods. The index acts as a leading indicator of inflation because a higher producer price usually means that consumer prices will increase. The forecast is a change of 0.2% (previous -0.1%) and higher values tend to strengthen the US Dollar but often the impact is limited if the actual number matches expectations.

GBP/USD

The Cable had another close encounter with the resistance at 1.2990 but immediately bounced lower, thus offering more hints that the uptrend is starting to fade.



Technical Outlook

The bulls failed to take out 1.2990 resistance but the pair is still trading above the 50 period Exponential Moving Average, so the bias is not yet bearish. Once (and if) the 50 EMA is broken, we expect price to move below 1.2905 and closer to 1.2855 but it must be noted that today is an important day for the Pound, due to multiple Bank of England releases. The technical aspect will be secondary and the pair’s direction will be mostly decided by the fundamentals.

Fundamental Outlook

At 11:00 am GMT the Bank of England will release the Monetary Policy Summary, containing their interest rate decision as well as the breakdown of the rate votes and commentary about the reasons that influenced the votes. The rate is not expected to change (currently 0.25%) but if the Summary contains hints about future changes, volatility will increase on all Pound pairs.

At the same time the BoE will release the Inflation Report, containing their economic and inflation predictions for the next 2 years. This is yet another reason for increased volatility so the Pound is likely to have a busy day ahead.

738

FOREX NEWS: FOCUS SHIFTS ON THE US DOLLAR: U.S. RETAIL SALES AND INFLATION DATA

EUR/USD

Forex News: Yesterday’s trading session belonged to the bears, who managed to test 1.0850 support, partly helped by a better than expected value of the U.S. Producer Price Index.


Technical Outlook

The pair is slowly making its way lower but the support at 1.0850 is still not broken and can reject price higher. The short term bias is bearish, anticipating a move into 1.0800 and a closing of the gap later on. A move above the 50 period Exponential Moving Average would invalidate our bearish scenario for the time being and keep in mind that today the US Dollar will be affected by important releases so the technical side will be secondary.

Fundamental Outlook

At 12:30 pm GMT the U.S. Consumer Price Index is released, showing changes in the price paid by consumers for the goods and services they purchase. The expected value is 0.3% and because the indicator has inflationary implications, higher numbers usually strengthen the US Dollar.

At the same time another important indicator comes out: the U.S. Retail Sales, expected to show a change of 0.6% from the previous -0.2%. Sales made at retail level represent the main part of consumer spending, which in turn accounts for the major part of economic activity, so higher numbers can also strengthen the U.S. Dollar.

GBP/USD

The Bank of England kept the rate unchanged as expected but the Monetary Policy Summary and Governor Carney’s press conference triggered a boost of volatility and moved the pair into key support.



Technical Outlook

The pair has moved strongly below the 50 period Exponential Moving Average and is now facing a key level at 1.2855 (1.2850). We will probably see some sort of rejection here, but the extent should be limited and followed by a break of the mentioned support, if the pair will remain below the 50 period EMA and below 1.2900. Also keep in mind that the US Dollar will be affected by important economic releases that will play a major role for today’s price direction.

Fundamental Outlook

The Pound doesn’t have anything major on the economic calendar, so the pair’s movement will be mainly influenced by the USD releases and the technical aspect.

739

FOREX NEWS: SUPPORT HOLDS, BULLS STEP BACK INTO THE GAME

EUR/USD

Forex News: U.S. Consumer Price Index disappointed Friday by showing a change of only 0.2% (forecast 0.3%), but also the Retail Sales showed a 0.4% change compared to the expected 0.6%. All this combined with rumours of ECB tapering the QE, triggered a strong move up.


Technical Outlook

Friday’s move up was fast and strong and broke the 50 period Exponential Moving Average to the upside, thus making the short term bias bullish. However, it must be noted that usually, moves like this one are followed by a counter move or a period of stagnation so we might see a descent into 1.0900 and the 50 EMA. If this support zone holds, the next destination will be 1.0950.

Fundamental Outlook

Today there are no major releases scheduled for either the US Dollar or the Euro, so the technical aspect will prevail and will be the main market mover.

GBP/USD

Friday the pair bounced at support following weak U.S. CPI and Retail Sales data but the bullish advances weren’t substantial and overall we had a slow session, below the 50 period Exponential Moving Average.


Technical Outlook

The support at 1.2855 (1.2850) rejected price twice during the recent period and this may be an indication that the bears lack the strength to clearly end the uptrend. The upside is capped by the 50 period Exponential Moving Average and as long as the pair is trading between these two barriers, our short term bias is neutral. A strong break will be probably followed by an extended move in that direction.

Fundamental Outlook

Similar to the United States and the rest of Europe, the United Kingdom didn’t schedule major news releases, so the technical side will decide the pair’s direction.

740

FOREX NEWS: POUND AFFECTED BY INFLATION DATA, STRONG MOVES AHEAD

EUR/USD

Forex News: The pair remained above the 50 period Exponential Moving Average yesterday and had a strongly bullish session, without retracing lower. No major economic indicators were released, so most of the move was technical.


Technical Outlook

Yesterday’s move easily broke through 1.0950 resistance and came very close to 1.1000 psychological level, bringing the Relative Strength Index and Stochastic in overbought territory. The overextended position of the pair calls for a retracement lower (possibly into the 50 period EMA) although the bias is bullish for the medium term. However, it should be noted that from a longer term perspective the pair is still in a range.

Fundamental Outlook

At 9:00 am GMT the Euro will be affected by the release of the Eurozone Gross Domestic Product, which is the main gauge of economic performance across the European Union. The forecast is a change of 0.5% and usually the release has a stronger impact if the actual number differs from expectations. Higher values strengthen the currency.

At the same time the German ZEW Economic Sentiment is released, showing the opinions of about 275 German professional investors and analysts about the state of the German economy. It acts as a leading indicator of optimism and economic health, and higher numbers than the forecast 22.3 are usually beneficial for the Euro.

GBP/USD

The pair had a slower session than the EUR/USD but maintained a bullish bias and managed to climb above the 50 period Exponential Moving Average and above 1.2905 resistance. The economic scene was calm, without major releases.


Technical Outlook

If the current move above the 50 period EMA and 1.2905 can be sustained, the pair is likely to climb into 1.2965 in the near future. A break below the EMA and 1.2905 will open the door for 1.2855, a level which proved a strong support in the past and may reject falling prices higher. The oscillators are showing good bullish momentum, without being overbought, thus increasing the chances of an extended move north.

Fundamental Outlook

At 8:30 am GMT we take a look at the always important British CPI, which is the main gauge of inflation in the UK. The indicator measures changes in the price paid by consumers for the goods and services they purchase and usually strengthens the Pound if it posts a reading above the forecast, which for today is 2.6% (previous 2.3%).

741

FOREX NEWS: EURO POPS HIGHER. THE BULLS RUN THE SHOW

EUR/USD

Forex News: The pair climbed for more than 100 pips yesterday, without retracing lower and the bulls scored a major victory by taking price way above 1.1000 psychological level.


Technical Outlook

At the time of writing the pair was hovering around the 1.1080 mark, after a strongly bullish session during which the pair moved straight up. The Relative Strength Index and Stochastic are both extremely overbought and this calls for a retracement lower but the overall picture is bullish and we expect to see a move into the next area of resistance, located at 1.1100 – 1.1120.

Fundamental Outlook

At 9:00 am GMT we take a look at European inflation with the release of the Final version of the Consumer Price Index. This is the last version and tends to have the lowest impact but it shouldn’t be overlooked because it can generate increased volatility. The forecast for today is 1.9% and usually a higher number strengthens the Euro.

GBP/USD

British inflation showed a better than expected value but this created just a quick spike up, followed by a drop and by another move that almost erased the earlier dip. Overall we had mixed movement, without a clear bias.


Technical Outlook

It looks like the pair is stuck in a range and control doesn’t clearly belong to either side. Lately price doesn’t react to the level at 1.2900 and we saw it breached several times, so the boundaries of the range are 1.2855 as support and 1.2990 as resistance. Until the pair exits one of these boundaries, we expect more of this choppy movement, without a clear winner. The oscillators lack momentum and the 50 period EMA is flat, further showing the ranging state of the pair.

Fundamental Outlook

The British Average Earnings Index comes out at 8:30 am GMT, showing changes in the price that businesses pay for labor. If people are paid more, they tend to spend more, thus boosting consumer spending and this leads to increased economic activity and usually a stronger Pound. Today’s forecast is a change of 2.4%, while the previous was 2.3%.

742

FOREX NEWS: US DOLLAR TAKES A BIG HIT. ALL EYES ON POUND FOR RETAIL SALES RELEASE

EUR/USD

Forex News: The Euro continued to strengthen and the pair showed another bullish session, moving above the long term resistance located at 1.1120. Despite the overextended condition of the pair, the buyers remained in control.


Technical Outlook

Since the latest move up started, only one candle was bearish and the pair climbed strongly, without any form of retracement lower. The Relative Strength Index and Stochastic are extremely overbought and this would normally call for a pullback but the US Dollar totally lacks strength, making us anticipate further advances north for the pair. The previous resistance at 1.1120 – 1.1100 may turn into support, while to the upside the next level of importance is 1.1240.

Fundamental Outlook

At 12:30 pm GMT the U.S. Unemployment Claims are released, showing the number of people who asked for unemployment related benefits. A higher number than the forecast 240K usually weakens the US Dollar and the opposite is true for a lower number but this indicator has a low-to-medium impact, mostly because it is released every week.

GBP/USD

British jobs data matched analysts’ expectations but US Dollar selling pushed the pair higher, into the top of the channel, at 1.2990.


Technical Outlook

The pair is facing a strong resistance at 1.2990 – 1.3000. If this area can be surpassed, we expect to see a move into 1.3050, followed by 1.3100 but we cannot rule out a bounce lower from the current resistance. However, the weakness showed by the US Dollar against most of its counterparts makes us anticipate a break of the level and a continuation higher.

Fundamental Outlook

The British Retail Sales are today’s highlight, released at 8:30 am GMT and expected to show a change of 1.2% compared to the previous -1.8%. Sales made at retail levels represent the major part of consumer spending and usually a higher number strengthens the currency, because it shows increased economic activity.

743

FOREX NEWS: RESISTANCE REACHED, RETRACEMENTS UNDERWAY

EUR/USD

Forex News: Yesterday the bulls pushed the pair higher, reaching a high at 1.1170. The U.S. Unemployment Claims showed a better than expected number, contributing to a limited extent to a pullback that tested 1.1120.


Technical Outlook

The pair retraced and breached the previous resistance at 1.1120 but at the moment this level can be considered support because rejection here is present (candles have long wicks in both their upper and lower sides). The bias remains clearly bullish and we expect further advances, with 1.1170 as first target, followed by 1.1240. Even if the pair breaks 1.1120 to the downside, the extent of the move lower should be limited.

Fundamental Outlook

There are no major economic releases scheduled for the last day of the trading week, so we expect price action to remain driven by the technical aspect.

GBP/USD

Yesterday the Pound benefited from a much better reading for the British Retail Sales (expected 1.2%, actual 2.3%) and this was the main catalyst for a move into key resistance at 1.3050.



Technical Outlook

The pair has reached an important resistance level at 1.3050 and now the Stochastic and Relative Strength Index are approaching overbought levels. This is not a sure indication that price will bounce lower from here, because as seen numerous times before, price can continue higher or lower despite overbought or oversold levels. However, if we get a bounce south, this move will encounter support at 1.2990 followed by 1.2965. To the upside, a break of 1.3050 will make 1.3090 the immediate target.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound will not be affected by economic indicators today, so the main focus will be on the technical side.

744

FOREX NEWS: BEARISH PRESSURE MOUNTS. STRONG RESISTANCE AHEAD

EUR/USD

Forex News: Friday the buyers remained in control, taking the pair above the previous top at 1.1170. The economic scene was calm, without major releases and most of the move was technical.


Technical Outlook

After establishing a low at 1.1075 the pair started to move up, resuming the uptrend and breaking 1.1170. The first upper target is located at 1.1240 but it must be noted that the Relative Strength Index (RSI) is showing bearish divergence, which is present when price is making a higher high and the oscillator is making a lower high. This divergence and the overbought condition of the RSI are early warnings that price may bounce lower but overall the picture remains bullish.

Fundamental Outlook

The day’s only notable event is the Eurogroup Meeting, attended by Finance Ministers from the Euro Area member states, as well as other personalities from the political and financial scene. The impact on the currency varies depending on the matters discussed, but caution should be used throughout the day.

GBP/USD

Friday the pair erased an earlier drop occurred Thursday and moved back into the resistance at 1.3050. The bias is still bullish but bearish pressure has increased.


Technical Outlook

The sudden drop after the first encounter with 1.3050 resistance is a warning sign that the uptrend may be coming to a stop or at least that it is weaker than before. However, the bearish move was completely erased, so the bulls still have enough “juice” for a break of 1.3050; if that happens, the next key level is located at 1.3430 but it’s way too far to be reached during one day. A bounce at 1.3050 will probably take the pair into 1.2990 but our bias for today is mostly neutral.

Fundamental Outlook

The Pound will not be affected today by major economic releases but United Kingdom representatives will attend the Eurogroup Meetings and this could generate increased volatility.