FXDailyInfo.com Weekly Trading Forecasts for major pairs

[natalie oikl]

EURUSD

Dominant bias: Bearish

The market is bearish, and the bearishness has been in place since February 16. Last week, price moved briefly below the support line at 1.2200, and then rallied in the context of a downtrend. Unless the rally enables price to overcome the resistance lines at 1.2400 and 1.2450, it would merely turn out to be another short-selling opportunity. The support lines at 1.2250, 1.2200 and 1.2150 could be reached this week.



USDCHF

Dominant bias: Bullish

This pair is bearish in the long-term, neutral in the short-term, and it is quite choppy at the present. The bearishness in the market has been in place since early November 2017; plus last week was rough. Price rose from the support level at 0.9350, went above the resistance level at 0.9450, only to drop towards the support level at 0.9350 again. A breach of the support levels at 0.9350, 0.9300 and finally, 0.9250, would bring about a bearish outlook on the market. A movement to the upside would save the extant bullish bias.



GBPUSD

Dominant bias: Bearish

This trading instrument dropped steeply last week, losing 300 pips from the high of Monday. The movement on Friday was somehow flat, but price is expected to resume its southwards journey this week. The outlook on GBP pairs is bearish for the week, and thus, this instrument could go towards the accumulation territories at 1.3750, 1.3700 (which has been previously tested), and 1.3650.



USDJPY

Dominant bias: Bearish

This pair consolidated from Monday to Thursday, and then began to come downwards (to place more emphasis on the bearishness of the market). Price has gone below the supply levels at 106.50, and 106.00; and it may test the demand levels at 105.50, breaching it to the downside as another demand level at 105.00 targeted. On the other hand, a strong reversal could occur, which would result in a threat to the current bearish bias.



EURJPY

Dominant bias: Bearish

It is interesting to see EURJPY being engaged in a long, protracted bearish movement. Since the beginning of February, at least, 700 pups have been shed. In the past few weeks, short-term rallies have been invariably followed by further southwards movements. Price would continue moving downwards towards the demand zones at 130.00, 129.50 and 129.00. Nonetheless, a strong rally is in the offing, as the outlook on EUR pairs is bullish for this week.



GBPJPY

Dominant bias: Bearish

The recent price movement on GBPJPY is similar to that of EURJPY, except the fact that GBPJPY moves faster than EURJPY. For instance, since testing the supply zone at 156.50 on February 2, price has gone downwards by more than 1,100 pips, reaching the demand zone at 145.00. More than 450 pips got dropped last week alone! All this has brought about a Bearish Confirmation Pattern in the market, which points to the possibility of price reaching other demand zones at 140.00 and 139.50. However, there could also be a strong bullish reversal in the market.

This forecast is concluded with the quote below:

regular forex analysis

 

[natalie oikl]

U.S. Tariffs – A political show?

The 1.1% surge in the S&P 500, the 336 points rally in the Dow Jones Industrial Average, and the strong bounce in European markets on Monday are hard to justify after President Trump announced plans to slap tariffs on steel and aluminum imports last week. He followed this up with a statement saying that trade wars are good and easy to win.



History has taught us that trade wars are not good and in fact not easy to win. In March 2002, President George W Bush took a similar approach to Trump, imposing tariffs of 8-30% on steel to revive the domestic industry and exempted Canada, Mexico and few other countries. These temporary duties were scheduled to remain in effect until 2005. As a result, the EU threatened to impose retaliatory tariffs on U.S. products and a case was filed at the World Trade Organization which ruled in November 2003, that more than $2 billion in sanctions would be levied if the U.S. did not remove tariffs. Less than a month after the ruling President Bush backed down and withdrew the tariffs.



The S&P 500 dropped more than 30% from March until July 2002, U.S. 10-year treasury yields fell 100 basis points, and the U.S. dollar lost more than 12% in the same period. Of course, many other factors led to these declines, but surely the tariffs did not benefit the economy as Bush thought it would.



Investors seem to believe that President Trump is using his “Art of the Deal” skills to get a better trade deals with the rest of the world, or as Ray Dalio, the Bridgewater Associates founder wrote on Monday “what is happening now is more for political show than for real threatening."



Trump tweeted yesterday that “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.” This confirms my belief that this mess will likely end up with Mexico, E.U. and China taking a less protectionist stance, rather than the U.S. taking a stronger one.



House Speaker Paul Ryan and other conservatives are not falling in line behind Trump, only time will tell how the situation will evolve, given the unpredictability of Trump. Although I am optimistic that things won’t degenerate into a full-scale trade war, caution is warranted at this stage.



Futures indicate that equities will continue the rebound when Europeans markets open, but there’s little action in currency markets. I think investors are holding off from big bets ahead of the European Central Bank meeting on Thursday and the U.S. jobs report on Friday. With no tier-one data on the economic calendar today, expect range-bound trading to resume unless we see a surprise on the political front.

#forex analysis