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806

FOREX NEWS: U.S. RETAIL SALES, BRITISH INFLATION: ALL THE INGREDIENTS FOR WILD SWINGS

EUR/USD

Forex News: Yesterday the control belonged to the bears mostly, and the pair returned to re-test 1.1775. Overall movement was slow, mostly due to a lacklustre economic scene.

Technical Outlook

Price action has created a minor resistance around 1.1840, so if the pair bounces at the current support, that level will become the first target for today. The 50 period Exponential Moving Average is flat, signalling that the pair may be entering a ranging period but the Stochastic and Relative Strength Index show bearish momentum and this suggests that a break of 1.1775 and the 50 EMA will bring the pair down towards 1.1713.

Fundamental Outlook

French and Italian banks will be closed today in observance of Assumption Day, so we can expect a choppy European session. On the US Dollar side we have a very important release: the Retail Sales, scheduled at 12:30 pm GMT. The indicator tracks changes in the total value of sales made through retail outlets and usually has a high impact on the currency because retail sales represent the majority of consumer spending. The anticipated change is 0.4%, while the previous was -0.2%.

GBP/USD

The Dollar showed some strength against the Pound and took the pair towards support after a bounce at 1.3030 resistance. Overall yesterday’s session was bearish but the pair is still inside a range.

Technical Outlook

Lately the pair moves above and below the psychological level at 1.3000 and is trapped inside the horizontal channel created by 1.3030 and 1.2950, so the short term bias doesn’t clearly belong to either side. A break of support will send the pair into 1.2930, followed by 1.2900 but a lot will depend on the US and UK data released throughout the day.

Fundamental Outlook

At 8:30 am GMT, British inflation data comes out in the form of the Consumer Price Index. The indicator shows changes in the price paid by consumers for the goods and services they purchase and usually has a high impact because inflation levels are closely watched by the central bank when deciding the next rate hike. Today’s forecast is 2.7% while the previous was 2.6%.

807

FOREX NEWS: US DOLLAR BOOSTED BY RETAIL SALES. KEY SUPPORT THREATENED

EUR/USD

Forex News: The U.S. Retail Sales posted a change of 0.6%, better than the anticipated 0.3%, while the CORE version posted a 0.5% change (anticipated 0.3%). This strengthened the US Dollar throughout yesterday’s trading session and the pair broke support.

Technical Outlook

The uptrend showed signs of weakness when it failed to make another higher high and instead printed a lower high at 1.1840. This fact combined with yesterday’s break of 1.1713, suggests that the pair might be entering a bearish phase (not necessarily a downtrend) and makes us anticipate a touch of 1.1650 in the near future. Keep in mind that the last candle on the chart above shows a long wick, which is a sign of rejection and the Relative Strength Index is approaching oversold, so a move to the upside is not out of the question.

Fundamental Outlook

At 9:00 am GMT we take a look at the state of Eurozone’s economy with the release of the Flash version of the Gross Domestic Product. This is the second version in a series of three, so the impact is medium, but it shouldn’t be overlooked. The forecast is a change of 0.6% and usually a higher value strengthens the currency, showing a thriving economy.

On the US Dollar side we have the FOMC Meeting Minutes, scheduled at 6:00 pm GMT. The document contains details of the latest FOMC meeting, but also insights into the reasons that determined the latest rate decision. Sometimes the document also contains hints about future rate changes, and that’s when the impact is the highest.

GBP/USD

Yesterday the British inflation numbers missed the market consensus of 2.7%, posting a reading of 2.6%. This fact combined with US Dollar strength generated by the U.S. Retail Sales, triggered a strong drop into key support.

Technical Outlook

After the break of the horizontal channel formed by 1.3030 resistance and 1.2950 support, the pair continued to move strongly south, reaching the key support at 1.2850. We expect to see a bounce/retracement around this area considering that the Relative Strength Index is already oversold and that price travelled a long distance. The bias is bearish but the sellers are facing an important support at 1.2770 if 1.2850 is broken.

Fundamental Outlook

At 8:30 am GMT the British Average Earnings Index is released, showing the changes in the price paid by businesses for labor. The indicator has inflationary implications because if businesses pay more, they will probably charge more for their goods and services to cover the cost of labor. The forecast is 1.8% and usually a higher value strengthens the Pound.

808

FOREX NEWS: US DOLLAR WEAKENS ACROSS THE BOARD AFTER FOMC MINUTES. RESISTANCE STILL STANDS

EUR/USD

Forex News: The pair dropped below support but price action was irregular and characterized by quick reversals in the first part of the day. The FOMC Minutes didn’t show any major surprises but the US Dollar weakened and the pair climbed into the 50 period Exponential Moving Average.

Technical Outlook

Yesterday’s climb took the pair into a confluence zone created by the 50 period EMA and 1.1775; this resistance will be tough to break but if the bulls can take price above it, this will show US Dollar weakness and will possibly trigger a move into 1.1840. On the other hand, a bounce from the current zone will show that the move up was just an impulsive market reaction and will make 1.1713 the immediate target, followed by 1.1650.

Fundamental Outlook

At 9:00 am GMT the Final version of the European Consumer Price Index is released, showing changes in the price that consumers pay for the goods and services they purchase. The CPI is the main gauge of inflation and a higher number usually strengthens the currency but the Final version tends to be the least important. Today’s forecast is a change of 1.3%, same as previous.

Later in the day the U.S. Industrial Production is released, showing changes in the value of output generated by mines, utilities and manufacturers. The impact of the indicator is medium, with higher numbers than the forecast 0.3%, strengthening the US Dollar.

GBP/USD

The pair had a choppy session ahead of the FOMC Minutes release, hovering close to 1.2850 support after a bounce at resistance. The Dollar weakened across the board when the Minutes were released but resistance was not broken.

Technical Outlook

It is clear now that 1.2850 is strong support and this fact combined with the oversold condition of the Relative Strength Index and the FOMC Minutes triggered a jump higher. However, this is just noise until a key level is broken (in this case, 1.2900). As long as price remains below the mentioned resistance, our bias is bearish, anticipating a break of 1.2850.

Fundamental Outlook

The Pound will be affected today by the release of the British Retail Sales, scheduled at 8:30 am GMT. The indicator shows changes in the total value of sales made through retail outlets and generally has a high impact. Today’s expected value is 0.2% and numbers above that usually strengthen the currency.

809

FOREX NEWS: SELLING PRESSURE INCREASES, US DOLLAR REMAINS IN THE LIMELIGHT

EUR/USD

Forex News: The Dollar bulls stepped in early in yesterday’s trading session and managed to break 1.1700 once again, taking the pair close to 1.1650 support. Later the Euro erased some of the losses and the pair climbed above the previously broken level.

Technical Outlook

After the failed attempt to break 1.1775 and the 50 period Exponential Moving Average, the pair dropped through 1.1713 - 1.1700 and came close to 1.1650 support. This shows increased bearish pressure but the quick return above the zone creates a mixed picture, where control doesn’t clearly belong to either side. However, our view remains mostly bearish as long as the pair is trading below the 50 EMA and we anticipate a move into 1.1650.

Fundamental Outlook

The day’s only notable release is the Preliminary version of the University of Michigan Consumer Sentiment. This is a survey that tries to gauge the opinions of consumers regarding current and future economic conditions; higher numbers usually strengthen the US Dollar because if consumers are confident in economic conditions, they are likely to spend more and this further boosts the economy. The time of release is 2:00 pm GMT, the expected number is 94.0 and the impact is typically medium.

GBP/USD

The British Retail Sales exceeded expectations and this created temporary Pound strength, taking the pair into 1.2900 but the move was quickly reversed and 1.2850 support was touched again.

Technical Outlook

Overall yesterday’s trading session was characterized by bounces at support and resistance. Now price is touching resistance for a second time in a very short period and if this move doesn’t translate into a bullish break, we will probably see a move below the support at 1.2850 and a touch of 1.2815. On the other hand, a move above 1.2900 will probably take the pair close to the 50 EMA but as long as price is trading between support and resistance, the pair is in a range from a short term perspective.

Fundamental Outlook

The Pound has a light day ahead, without any important releases, thus the pair’s direction will be decided by the technical aspect and the U.S. survey mentioned earlier.

810

FOREX NEWS: MARKETS IN RANGE-MODE. BREAKOUTS NEEDED TO CONFIRM NEXT DIRECTION

EUR/USD

Forex News: Friday’s price action was choppy, with a slightly bullish bias; resistance was touched but the pair lacked the determination to break it. The U.S. Consumer Sentiment survey came out better than anticipated but this only created a brief US Dollar reaction.

Technical Outlook

Price is drifting between support and resistance without conviction and without a clear bias. The 50 period Exponential Moving Average is mostly flat (very slightly angled downwards), thus confirming that the market lacks proper direction. Today we expect mostly a ranging session, but the US Dollar looks weak, affected also by political unrest in the U.S., so a break of 1.1775 may trigger additional upside but to a limited extent. To the downside, 1.1713 – 1.1700 remains a strong support zone, which we don’t expect to be broken today.

Fundamental Outlook

The Dollar and Euro both have a lacklustre economic calendar for today, so the technical aspect will be the deciding factor for the pair’s direction.

GBP/USD

The pair showed some big swings Friday, breaking resistance first, then support, only to finish the week in the middle of the horizontal channel. The U.S. Consumer survey had a positive impact on the greenback but the effect was soon nullified.

Technical Outlook

Price is trapped inside the horizontal channel created by 1.2900 resistance and 1.2850 support. Until we see a clear and strong breakout, the pair will probably show back and forth movement, inside the range. Both oscillators are lacking momentum, thus they are not showing a clear signal, but the 50 EMA is angled down and this tilts the balance slightly towards the bears.

Fundamental Outlook

The United Kingdom hasn’t scheduled any economic data release for today and this fact will probably contribute to a slow trading session.

811

FOREX NEWS: BREAKOUTS UNDERWAY, BULLS PUSH HIGHER

EUR/USD

Forex News: The Euro spiked higher yesterday afternoon and the pair moved above the 50 period Exponential Moving Average and broke the resistance at 1.1775. The move was mostly technical because no major economic data was released.

Technical Outlook

The move above 1.1775 resistance marks the end of the consolidation phase that the pair was in and makes the short term outlook bullish. If the pair remains above 1.1775, we expect to see a move that will have 1.1840 as target but it is very likely to see a re-test from above of the recently broken level (price returns to touch the level and then bounces higher). The two oscillators show good upwards momentum, thus increasing the probability of a climb to 1.1840.

Fundamental Outlook

The German ZEW Economic Sentiment is scheduled at 9:00 am GMT and will be today’s highlight for the Euro. This survey shows the opinions of about 275 German professional investors and analysts regarding their 6-month outlook for the economy and acts as a leading indicator of optimism. Today’s forecast is 15.3, a drop from the previous 17.5.

GBP/USD

Yesterday’s session was mostly bullish and the pair climbed after another perfect touch of 1.2850 support. At the time of writing the horizontal channel created by 1.2850 and 1.2900 is broken so the pair seems to be out of the ranging phase.

Technical Outlook

Price is rapidly approaching the 50 period Exponential Moving Average, which is an important hurdle and if it can be surpassed, we will most likely see an extended move to the upside. Immediate resistance will be represented by 1.2930, followed by 1.2950 but if price bounces at the 50 EMA is, we will probably see a return inside the horizontal channel and more ranging movement will follow.

Fundamental Outlook

At 8:30 am GMT the British Public Sector Net Borrowing is released, showing the difference between spending and income for the government and public corporations. A positive number indicates deficit and a higher number means a bigger deficit, so lower numbers usually strengthen the Pound. Today’s forecast is 0.4 Billion, lower than the previous 6.3 Billion.

812

FOREX NEWS: MIXED TRADING SIGNALS AHEAD OF JACKSON HOLE ECONOMIC SYMPOSIUM

EUR/USD

Forex News: European Manufacturing data was mostly positive yesterday and this fact combined with a slightly hawkish Draghi speech, took the pair above resistance once again, creating a bullish session.

Technical Outlook

Lately all moves are reversed and all gains or losses erased. This suggests indecision and shows that the pair is in range mode, so until either side commits to a strong move, we can expect more of this bouncing movement. The most recent momentum is bullish after the failed break of the 50 period Exponential Moving Average so we will likely see a touch of the resistance at 1.1840.

Fundamental Outlook

Today is day one of the Jackson Hole Economic Symposium, so volatility is likely to be affected. This meeting takes place annually and is attended by finance ministers, central bankers and other financial personalities from across the globe. The actual impact depends on the speeches of the attendants and today no major speeches are scheduled.

GBP/USD

Yesterday the control belonged to the bears who managed to take the pair below 1.2815 but movement was slower, partly due to the lack of economic data releases.

Technical Outlook

The pair is trading below 1.2815 and seems headed towards 1.2770, which is an important support level. Once price reaches this barrier, we expect to see a retracement higher, mostly due to the oversold condition of the Relative Strength Index but also because key levels are rarely broken in the first try. Overall our bias is bearish but bullish pressure will increase at support.

Fundamental Outlook

At 8:30 am GMT the Second Estimate GDP is released, showing changes in the value of all goods and services produced by the British economy. It acts as the primary gauge of economic performance and higher numbers usually strengthen the Pound. Today’s forecasted change is 0.3%, same as previous.

813

FOREX NEWS: ENDING THE WEEK IN FULL FORCE: ECB’S DRAGHI AND FED’S YELLEN BOTH SPEAK AT THE JACKSON HOLE SYMPOSIUM

EUR/USD

Forex News: For most of yesterday’s trading session the pair was confined in a tight range after failing to break the previous top. The economic scene was calm and the Jackson Hole Symposium did not trigger notable movement.

http://i.imgur.com/L4UafSu.jpg

Technical Outlook

The pair is ranging without direction or conviction from either side and we expect this movement to continue until economic data will be released and the two heads of central banks will speak. The levels to watch are 1.1775 as support and 1.1820 – 1.1840 as resistance. The 50 period Exponential Moving Average is another location where we can see an important bounce or break but until something notable happens, the bias is neutral.

Fundamental Outlook

The first release of the day is the German IFO Business Climate, scheduled at 8:00 am GMT. This is a survey with a very large sample size of about 7,000 businesses that are asked to give their assessment on current and future business conditions. The survey acts as a leading indicator of optimism and higher numbers than the anticipated 115.5 usually strengthen the Euro.

At 12:30 pm GMT the U.S. Durable Goods Orders come out, showing changes in the value of orders for goods with a live expectancy of more than 3 years. A higher than anticipated number shows increased economic activity and usually strengthens the US Dollar. Today’s forecast is -6.0%, which is a hefty decrease from the previous 6.4%.

Fed Chair Yellen will speak at the Jackson Hole Symposium today at 4:00 pm GMT and ECB President Mario Draghi will speak later at 7:00 pm GMT. These speeches can potentially move the respective currencies strongly, so caution is recommended.

GBP/USD

The British Gross Domestic Product matched the market consensus, to the impact of the release was limited. However, most of yesterday’s session was bullish, following a bounce at 1.2770 support.

Technical Outlook

The Relative Strength Index was oversold, warning that a bullish retracement will soon follow and this happened yesterday, after a near touch of 1.2770. For today we expect to see another move lower and if this move doesn’t break 1.2770, we will probably see a period of bullish movement, with 1.2850 as target.

Fundamental Outlook

The Pound will not be affected today by major economic releases so the pair’s direction will be decided by the technical aspect and the U.S. events mentioned above.

814

FOREX NEWS: NO ECONOMIC CATALYSTS FOR TODAY. CAN BULLS MAINTAIN THEIR ADVANTAGE?

EUR/USD

Forex News: Friday’s price action revolved around the speeches of Draghi and Yellen, which triggered strong bullish moves. Yellen’s speech didn’t contain any hints about future monetary policy and was described as “boring” by some market analysts.

Technical Outlook

The latest move was generated by the speeches of the two heads of central banks but from a technical standpoint, we can clearly see a bounce at 1.1775 support and at the 50 period Exponential Moving Average.

Two resistance levels (1.1840 and 1.1875) are broken now and the long term uptrend is renewed, facts that make us anticipate another push north in the near future. However, it’s very possible to see ranging movement today or possibly a pullback based on the overbought condition of the Relative Strength Index.

Fundamental Outlook

There are no major economic indicators on today’s calendar, so the pair’s direction will be mainly decided by the technical aspect.

GBP/USD

Yellen’s speech delivered Friday weakened the US Dollar across the board and the Pound bulls capitalized, taking the pair above the 50 period Exponential Moving Average.

Technical Outlook

The pair has created a bottom near 1.2770 support and now, bullish pressure generated by Yellen’s speech, has taken price above the 50 EMA. The current move is likely to extend into 1.2900, where we expect to see some type of retracement lower. Probably by that time the Relative Strength Index will become overbought, thus increasing the chances of a move lower. To the downside, 1.2850 is the first potential barrier and place where we may see bounces if the pair drops.

Fundamental Outlook

British banks will be closed today, celebrating Summer Bank Holiday and no economic data will be announced. This will most likely affect volatility, possibly triggering a slow or choppy trading session.

815

FOREX NEWS: PAIRS CLIMB TIMIDLY AHEAD OF CB CONSUMER CONFIDENCE SURVEY

EUR/USD

Forex News: Yesterday’s trading session was slow but slightly bearish after a bounce at 1.1960, which is now short term resistance. No major economic data was released and this contributed to the relatively low volatility.

Technical Outlook

The Relative Strength Index and Stochastic are both in overbought territory, warning that a move lower may soon follow. That being said, the pair is still showing upside momentum and yesterday’s ranging movement should be considered normal after a strong climb, not a sign of weakness. For today we anticipate another encounter with 1.1960 and if that barrier is broken, price will probably climb into 1.2000 where we expect a pullback.

Fundamental Outlook

Today we have another fairly slow economic day, with the CB Consumer Confidence being the only notable release. This is a survey with a large sample size of about 5,000 households, which tries to gauge respondents’ opinion regarding the overall economic situation in the United States. A higher than expected number shows optimism and usually strengthens the US Dollar but the survey is not known to be a major market mover. The scheduled time is 2:00 pm GMT and the anticipated value is 120.3.

GBP/USD

The week opened with a bullish gap that was already closed during yesterday’s trading session and now price is trading close to the highs but below 1.2930 resistance.

Technical Outlook

The bulls kept price above the 50 period Exponential Moving Average yesterday and this may suggest that the upside move will continue into 1.2950 area in the near future. The Relative Strength Index and Stochastic are approaching overbought so we will likely see a pullback after a touch of 1.2950. To the downside, 1.2900 is the first support, followed by the 50 period EMA.

Fundamental Outlook

The Pound will not be influenced by economic data today, so the main price driver will be the technical aspect and the U.S. survey.

816

FOREX NEWS: GEOPOLITICAL TENSIONS RISE, TRADERS TURN TO U.S. EMPLOYMENT DATA AND GDP FOR NEXT DIRECTION

EUR/USD

Forex News: The Euro pushed higher yesterday and moved the pair to a high of 1.2070 before retreating into 1.2000 area. The growing political tension generated by North Korea’s missile launch over Japan’s airspace contributed to the volatile movement.

Technical Outlook

Although some of the gains were erased in the latter part of yesterday’s trading session, the pair holds firm above 1.2000 psychological level and the general outlook remains bullish. It is possible to see the pair continue lower into 1.1960 area (RSI is overbought and coming down) but the extent of the move should be limited. To the upside the first resistance is 1.2040 (July 2012 low), followed by yesterday’s high at 1.2070.

Fundamental Outlook

The German Preliminary Consumer Price Index will be released today at 12:00 pm GMT, with an anticipated change of 0.1%. This is the main gauge of inflation and considering that the German economy is one of the more important in the EU, we expect quite a hefty impact on the Euro (higher than anticipated numbers usually strengthen the currency).

On the US Dollar side we have the ADP Non-Farm Employment Change (forecast 186K), scheduled at 12:15 pm GMT and the Preliminary Gross Domestic Product (forecast 2.7%) that will be released 15 minutes later, at 12:30 pm GMT. The former indicator shows changes in the total number of employed people excluding Government and the farming sector, while the latter is the main gauge of an economy’s performance. Higher numbers for any or both of these indicators usually strengthen the US Dollar, thus taking the pair lower.

GBP/USD

The US Dollar was surrounded yesterday by unrest coming from geopolitical tensions and the pair continued its ascent, breaking 1.2950 resistance; however, most of the Pound gains were erased later in the day.

Technical Outlook

Price is now moving south after a break of 1.2950 resistance that failed to reach 1.3000 psychological level and the Relative Strength Index is moving lower after visiting overbought territory. These are bearish signs that show that we might see a drop into 1.2900 and possibly into the 50 period Exponential Moving Average but as long as price doesn’t break these two support levels, the picture remains bullish for a move into 1.3000.

Fundamental Outlook

The British Net Lending to Individuals will be released today at 8:30 am GMT and expected to show a value of 5.3 Billion. The indicator shows changes in the value of credit issued to individuals and usually has a low-to-medium impact on the Pound, with higher numbers strengthening it.

817

FOREX NEWS: US DOLLAR BOOSTED BY STRONG EMPLOYMENT AND GDP DATA. PAIRS HEADED FOR SUPPORT?

EUR/USD

Forex News: The US Dollar got a breath of fresh air from better than expected ADP Non-Farm Employment Change (actual 237K vs 185K forecast) and Gross Domestic Product (actual 3.0% vs 2.7% forecast). As a result the pair had a bearish session and dropped through 1.1960.

Technical Outlook

The drop below 1.1960 opened the door for a touch of the confluence zone created by the 50 period Exponential Moving Average and the support at 1.1875. It’s very possible to see a bounce higher if the pair reaches that zone but the oscillators are showing strong downside momentum without being oversold and the US Dollar benefited from positive economic data, so a break of the zone is not out of the question. The overall environment is still bullish but for the time being the bears seem in control.

Fundamental Outlook

Today at 9:00 am GMT we take another look at European inflation with the release of the Eurozone Consumer Price Index (anticipated change 1.4%) and later in the day the US Dollar will be affected by the Chicago PMI. This is a survey that acts as a leading indicator of economic health, derived from the opinions of purchasing managers from the Chicago area and higher numbers usually strengthen the greenback but to a limited extent. The time of release is 1:45 pm GMT and the expected value is 58.7.

GBP/USD

Positive economic data coming from the U.S. strengthened the US Dollar initially but most of the gains were erased later in the day and several candles with long wicks appeared.

Technical Outlook

The long wicks shown by the last few candles are a clear sign of rejection and the signal is even stronger because it happened right on the 50 period Exponential Moving Average. This suggests that today we will see a bounce from the 50 period EMA and a potential move into the previous top at 1.2980. A drop through the Moving Average would invalidate this scenario, making 1.2850 the next target.

Fundamental Outlook

The United Kingdom didn’t schedule any economic data releases for today, so the pair’s direction will be decided by the U.S. data and the technical aspect.

818

FOREX NEWS: NON-FARM PAYROLLS TO ‘MAKE OR BREAK’ THE US DOLLAR RECOVERY

EUR/USD

Forex News: The US Dollar continued to take the pair lower yesterday, breaking the 50 period Exponential Moving Average and briefly moving below the 1.1840 mark. The Euro recovered later in the session and some of the losses were erased.

Technical Outlook

The pair is bouncing at 1.1840 resistance but it is still trading below the 50 Exponential Moving Average, so at the time of writing the bias is still negative. We expect to see a break of 1.1840 support and possibly a move into 1.1775 during today’s session if the 50 EMA holds and remains resistance. A big role will be played by the U.S. employment data so the technical side will be secondary.

Fundamental Outlook

The most anticipated report of the week comes out today at 12:30 pm GMT: the U.S. Non-Farm Payrolls. The indicator tracks changes in the total number of employed people in the U.S., excluding the farming sector and is widely regarded as the most important jobs data. The forecast is 180K (previous 209K) and under normal circumstances, higher numbers strengthen the US Dollar. Volatility is almost always high at release time, so caution is recommended.

GBP/USD

After failing to break 1.2930 resistance, the pair dropped hard and reached the key support and target at 1.2850. Now some rejection is present but the short term bias is still bearish.

Technical Outlook

The pair is facing a very important hurdle at 1.2850 and it already bounced higher yesterday, showing that the market is still respecting this level. Upside movement should be contained by the 50 period Exponential Moving Average and 1.2900 resistance, while to the downside, 1.2770 is the first target if 1.2850 is broken. As stated before, the US Dollar will be heavily influenced by the NFP numbers so the technical aspect will be secondary.

Fundamental Outlook

At 8:30 am GMT the British Manufacturing PMI comes out, showing the opinions of purchasing managers regarding business conditions in the manufacturing sector. It’s a leading indicator of optimism, with a medium impact on the Pound and with higher numbers strengthening it. The forecast is 55.0, very similar to the previous 55.1.

819

FOREX NEWS: U.S. BANKS CLOSED DUE TO LABOR DAY, POUND SHAKY AHEAD OF BRITISH CONSTRUCTION DATA

EUR/USD

Forex News: The Non-Farm Payrolls disappointed Friday by showing a change of only 156K compared to the market consensus 180K. This initially weakened the US Dollar and sent the pair soaring above 1.1960 but the US Dollar made a quick comeback and erased the losses.

Technical Outlook

Friday we saw that the US Dollar is able to take the pair lower even after suffering from worse than expected employment data. The pair is now trading below the 50 period Exponential Moving Average and below 1.1875, making the short term bias bearish and indicating that 1.1840 will be reached probably in the first part of today’s trading session. Overall we expect a rather slow session, with limited movement due to the lack of economic data.

Fundamental Outlook

U.S. banks will be closed today in observance of Labor Day and this means that volatility will probably be affected, especially in the second part of the day. On the Euro side there are no important releases either, so the technical aspect will decide market behavior.

GBP/USD

The Pound capitalized on the worse than expected NFP numbers and as a result, Friday’s session was bullish, with the pair moving into 1.3000 region before retreating lower.

Technical Outlook

The pair is currently showing rejection after moving into 1.2980 – 1.3000 resistance and is testing 1.2950, which is now support. Our outlook is bearish, anticipating a move into the 50 period Exponential Moving Average but direction will also be affected by the British economic data that comes out. If the pair bounces at 1.2950 and moves higher, we don’t expect a break of 1.3000.

Fundamental Outlook

At 8:30 am GMT the British Construction PMI comes out, showing the opinions of purchasing managers about business conditions and the overall health of the construction sector. The expected value is 52.1 and usually a higher number strengthens the Pound but the impact is not always high.

820

FOREX NEWS: VOLATILITY PICKS UP, DIRECTION STILL UNCLEAR

EUR/USD

Forex News: Yesterday’s trading session was pretty slow, mostly due to the lack of economic data and the fact that the United States celebrated Labor Day. The bias was lightly bullish but the pair remained in a 50 pip range for most of the day.

Technical Outlook

Volatility is likely to pick up today but for the time being the pair lacks a clear direction and both oscillators are somewhere in the middle of their respective range, showing a lack of momentum. Price is trading above the 50 period Exponential Moving Average and above the bullish trend line seen on the chart above. As long as these forms of support hold, our bias is slightly bullish but a break of the confluence zone created by the trend line, the 50 EMA and the support at 1.1875 will probably trigger a stronger move south.

Fundamental Outlook

At 2:00 pm GMT the U.S. Factory Orders will be released, showing changes in the total value of orders placed with manufacturers. The expected value is -3.3% (previous 3.0%) and usually a higher number strengthens the USD but the impact is low-to-medium. Several FOMC members will deliver speeches during the day but the impact cannot be accurately anticipated.

GBP/USD

Similar to the EUR/USD, the Cable had a slow and ranging day. The British Construction PMI showed a lower than expected value and this briefly weakened the Pound but the losses were soon erased.

Technical Outlook

Yesterday’s trading session doesn’t offer many clues about future movement but as long as the pair is trading above the 50 period Exponential Moving Average, our bias is bullish. During the latest period the pair made a higher high and a higher low, which is a characteristic of an uptrend but as seen from latest price action, momentum is lacking in the short term. It’s very possible to see a touch of the 50 EMA and the way price behaves there will offer more clues about future direction.

Fundamental Outlook

The British Services PMI will be released today at 8:30 am GMT, showing the opinions of purchasing managers from the services sector about business conditions in said sector. It acts as a leading indicator of economic health and optimism, with higher numbers strengthening the Pound to a limited extent. The forecast for today’s release is 53.5.

821

FOREX NEWS: THE UPSIDE PREVAILS, US DOLLAR ON THE ROPES AGAIN

EUR/USD

Forex News: Price action remained relatively tame during the first part of yesterday’s trading session and the pair stayed above the bullish trend line. The U.S. Factory Orders matched analysts’ consensus of -3.3% and gave some fuel to US Dollar sellers, thus pushing the pair higher.

Technical Outlook

Early during yesterday’s trading session the pair approached the bullish trend line but it bounced higher in the second part of the day, showing that the next medium term direction will likely be bullish. For today we expect to see an encounter with the resistance at 1.1960 and possibly with the psychological level at 1.2000. As an alternate scenario, a break of the bullish trend line will probably add more sellers, making 1.1875 and 1.1840 the next destinations.

Fundamental Outlook

At 2:00 pm GMT the ISM Non-Manufacturing PMI (also called Services PMI) will be released, showing the opinions of about 400 purchasing managers from the services sector regarding overall business conditions in the sector. The forecast is 55.5 and usually a higher number strengthens the US Dollar to a limited extent.

GBP/USD

Yesterday after a bounce at the 50 period Exponential Moving Average the pair started to move north, fuelled by newfound Pound strength. The U.S. Factory Orders posted a lower value than previous and this pushed the pair even higher.

Technical Outlook

The pair bounced at the 50 period Exponential Moving Average, broke the psychological resistance at 1.3000 and created a new higher high. All these are bullish signs that make us anticipate a move into 1.3100 in the near future. The first hurdle in front of rising prices is 1.3030 where we are likely to see a small bounce lower. As long as the pair stays above 1.3000, our bias is bullish.

Fundamental Outlook

The Pound will not be affected today by economic data so the pair’s direction will be mainly decided by the technical aspect.

822

FOREX NEWS: ECB IN THE SPOTLIGHT AGAIN, DRAGHI STEALS THE SHOW

EUR/USD

Forex News: The pair remained above the bullish trend line but movement remained relatively slow and resistance wasn’t threatened. The U.S. Services PMI came slightly below expectations but the impact was mild.

Technical Outlook

As long as the bullish trend line seen on the chart remains intact and the pair is trading above the Moving Average, our outlook remains bullish, anticipating a move towards 1.1960 – 1.2000. A break of the 50 EMA will make 1.1875 the first destination but today we expect direction to be decided by the ECB rate announcement and Draghi’s press conference. Until then, we will likely see ranging price action.

Fundamental Outlook

Today the spotlight will be on the European Central Bank for the release of the interest rate, scheduled at 11:45 am GMT. There’s no expected change from the current 0.00% but the announcement often creates irregular movement even if no change occurs.

At 12:30 pm GMT, ECB President Mario Draghi will hold his usual press conference, discussing the reasons that determined the rate decision and possibly offering hints about future changes. If such clues will emerge, the Euro is likely to move strongly but the direction will be determined by what the President will say.

GBP/USD

The pair paused at 1.3030 for a short while and then surpassed this resistance, showing bullish momentum. The worse than expected U.S. Services PMI weakened the greenback and helped the climb.

Technical Outlook

The pair remained above the psychological level at 1.3000 and even surpassed 1.3030, thus making us anticipate a move into 1.3100. However, it must be noted that the Relative Strength Index is entering overbought territory and this is an early warning that the pair will soon retrace lower. As long price remains above 1.3000, the overall bias remains bullish.

Fundamental Outlook

The Pound has another lacklustre economic day ahead, without any data coming out. This generally means that direction will be decided by the technical aspect, given that no data comes out for the Dollar either.

823

FOREX NEWS: ECB ECONOMIC EXPECTATIONS INCREASE, THE EURO RIDES THE TIDE

EUR/USD

Forex News: The ECB didn’t alter the rates but the Euro strengthened during Mario Draghi’s press conference and the pair approached the previous high. The ECB revised lower their inflation expectations but the forecast for economic expansion has increased to 2.2% from 1.9%.

Technical Outlook

The pair pushed above 1.2040 and approached the previous high at 1.2070 but the Euro gave back some of the gains and price returned below 1.2040. Although the pair retraced lower, our outlook remains bullish, anticipating another move above 1.2040 and a test of 1.2070. It must be noted that the Relative Strength Index is very close to overbought and this fact combined with the resistance at 1.2070 may trigger a move down if the pair climbs into that zone or even before.

Fundamental Outlook

Today we have a slow day for both currencies, without any notable economic data releases. Price direction will depend mainly on the technical aspect but we will probably see more of the effects of Draghi’s comments from yesterday’s press conference.

GBP/USD

The Pound continued to push higher yesterday and the pair reached our projected target at 1.3100. The rally in the EUR/USD played an important role, dragging the US Dollar lower and allowing the Cable to rise.

Technical Outlook

Price is likely to breach 1.3100 but we expect to see a retracement lower soon after. The Relative Strength Index is overbought again, as well as the Stochastic and the pair is facing resistance, so the possibility of a pullback shouldn’t be ruled out even if currently the pair is showing strong upside momentum.

Fundamental Outlook

The British Manufacturing Production numbers will be released today at 8:30 am GMT, showing changes in the total value of goods produced by manufacturers. The forecast is a change of 0.3% compared with last month’s 0.0% and higher numbers show increased economic activity, strengthening the Pound.

824

FOREX NEWS: WHAT GOES UP MUST COME DOWN. PULLBACKS EXPECTED

EUR/USD

Forex News: Friday the pair retraced lower after hitting a high at 1.2092 but most of the drop was due to profit taking by the buyers, not necessarily seller strength. The economic scene was calm and did not have an impact on price direction.

Technical Outlook

Although the pair breached 1.2070, this resistance is still holding and price is showing signs of rejection. Today we don’t expect to see substantial advances made by either side, but as long as price remains below 1.2040, our bias is slightly bearish; keep in mind that the pair is in an uptrend and this means that all moves down should be considered retracements, not reversals. Price will probably be capped today by 1.2070 to the upside and 1.2000 to the downside.

Fundamental Outlook

Neither one of the currencies will be affected by economic data today so the direction will be decided by the technical side.

GBP/USD

The Pound was boosted Friday by the better than expected numbers for the British Manufacturing Production (forecast 0.3%, actual 0.5%) and the pair took off, moving past the 1.3200 mark and reaching a high at 1.3223.

Technical Outlook

The buyers are clearly in control and will probably take the pair into 1.3250 resistance in the near future. However, at the moment price is overextended and the Relative Strength Index is deep in overbought territory, so we expect to see a pullback or at least a consolidation period with price moving in a tight range. If said pullback occurs today, the first support will be represented by 1.3160 but given the lack of economic data, we will probably see a slow session today.

Fundamental Outlook

Similar to the other two currencies, the Pound will not be affected by economic releases and the technical aspect will prevail.

825

FOREX NEWS: POUND LOSES GROUND, BRITISH CPI EYED FOR NEXT MOVE

EUR/USD

Forex News: The US Dollar showed signs of recovery yesterday, a fact that generated a bearish session, with the pair moving back below the psychological level at 1.2000. The economic scene was calm, without notable events.

Technical Outlook

After the failed break of 1.2070, the pair started to roll downhill and the break of 1.2000 shows that the US Dollar is gaining some momentum. The target for today will be the confluence zone created by 1.1960, the 50 period Exponential Moving Average and the bullish trend line seen on the chart. If the sellers manage to take the pair below this zone, we expect to see more downside movement, possibly into 1.1900 – 1.1875 area but this will probably take more than a day to achieve.

A bounce at the confluence zone mentioned earlier and a break above 1.2000 would show that the retracement is over and would make 1.2070 the next target.

Fundamental Outlook

The only notable release of the day is the U.S. JOLTS Job Openings, scheduled at 2:00 pm GMT. As the name suggests, the indicator shows how many jobs are available (excluding the farming sector) and usually strengthens the US Dollar if it posts a higher than expected number but the impact is often mild. Today’s forecast is 5.96 Million, lower than the previous 6.16 Million.

GBP/USD

The Pound re-tested the highs reached last week but bounced lower yesterday, showing that the pair is in need of a pullback or a period of consolidation. Overall the session was choppy, without substantial advances.

Technical Outlook

Price action has established short term resistance at 1.3220 – 1.3225 and as mentioned before, the pair is overextended because it has travelled a long distance in a short period of time. The Relative Strength Index was also overbought and is now moving below the 70 level, indicating that we will see at least a touch of 1.3160. To the upside 1.3220 is the closest resistance, followed by 1.3250.

Fundamental Outlook

British inflation data will be released today at 8:30 am GMT in the form of the Consumer Price Index (CPI). The expected change is 2.8%, compared to the previous 2.6% and usually a higher number generates Pound strength; this is a high-impact indicator, thus caution is recommended.