FOREX NEWS: POUND SOARS ON BOE TAPERING COMMENTS, US DOLLAR LOOKS TO RETAIL SALES FOR NEXT MOVE
EUR/USD
Forex News: Inflation in the United States improved, as shown by the CPI released yesterday (forecast 0.3%, actual 0.4%) but the US Dollar soon gave up all gains as the pair bounced at 1.1840 support.
Technical Outlook
The last four hour candle has a very long lower wick, suggesting that the bears have run out of steam and that the pair is headed north. If price moves above 1.1900, which is now resistance, we expect to see a climb into the 50 period Exponential Moving Average but otherwise the pair is most likely headed towards 1.1840 for another attempt to break it. The U.S. economic data released today will probably have a big role to play for price direction.
Fundamental Outlook
The main event today will be the release of the U.S. Retail Sales, scheduled at 12:30 pm GMT and expected to show a reading of 0.1%, which is a drop from the previous 0.6%. The indicator shows changes in the total value of sales made through retail outlets and usually has a high impact on the US Dollar, with higher numbers strengthening it.
GBP/USD
The Bank of England (BoE) kept the rate unchanged at 0.25% but announced that stimulus tapering is likely to begin during the “coming months”. This was a strong bullish signal that took the Pound more than 200 pips higher.
Technical Outlook
The massive climb seen yesterday is likely to bring in additional buyers, taking the pair into 1.3450 resistance but if this comes true, it will probably happen next week. For today, we expect a pullback that will re-test the previous resistance at 1.1330 but in case the market overreacted to yesterday’s BoE news, then we will probably see a deeper move south. The RSI is showing bearish divergence again and is approaching overbought, thus increasing the probability of a drop.
Fundamental Outlook
The United Kingdom didn’t schedule important economic data releases for today, so price direction will be decided by the U.S. Retail Sales and the technical aspect.
FOREX NEWS: POUND SKYROCKETS. WHAT WILL BE THE DOLLAR’S RESPONSE?
EUR/USD
Forex News: Friday was a bullish day for the pair and the US Dollar took a hit from disappointing U.S. Retail Sales (expected change 0.1%, actual change -0.2%). The pair moved above the 50 EMA but failed to close the week above 1.1960 resistance.
Technical Outlook
The latest move up lacks momentum and price action is showing rejection after breaching through 1.1960 resistance. The long wicks of the last few candles are a sign that price is about to bounce and move lower, towards 1.1900 but if the bears fail to take the pair below the 50 EMA, we will probably see a move above 1.1960 and closer to 1.2000. We don’t expect substantial movement today, due to the lack of major economic releases.
Fundamental Outlook
The European Final Consumer Price Index is today’s only notable release, scheduled at 9:00 am GMT and expected to show a change of 1.5%. This is the main gauge of inflation in the Eurozone but the impact of the Final version is rather dim because the Flash Estimate version and German inflation numbers were already released. Nonetheless, higher numbers usually strengthen the Euro.
GBP/USD
The Pound soared Friday after a member of BoE’s Monetary Policy Committee stated that we are approaching a rate hike. This added more fuel to the Pound rally, taking the pair to the highest level since the Brexit referendum.
Technical Outlook
The pair reached a high at 1.3616 and had its best week in a long time but moves like the one seen Friday are usually followed by a pullback or at least a period of consolidation. The Relative Strength Index is deep in overbought territory, thus adding to the probability of a move lower but we don’t expect price to retrace too low because the bulls are clearly in control. The first potential support is located at 1.3450 but it’s unlikely that the pair will reach it today.
Fundamental Outlook
The Pound will not be affected today by economic data releases, thus price direction will be determined by the technical aspect.
FOREX NEWS: CONSOLIDATION PHASE STILL UNDERWAY. BREAKOUTS WILL SOON FOLLOW
EUR/USD
Forex News: The pair remained in a relatively tight range for the most part of yesterday’s trading session and this can be attributed to the lack of major news releases. The European Final CPI came out with the expected value, so the impact was low.
Technical Outlook
The bulls are still struggling to break 1.1960 resistance but the bears cannot keep the pair below the 50 period Exponential Moving Average so we can say that control doesn’t belong to either side. The next direction will depend on the economic data released today but as long as price is hovering between 1.1960 and the 50 period EMA, our outlook is mostly neutral, expecting a strong break of one of these technical hurdles.
Fundamental Outlook
The German ZEW Economic Sentiment is today’s highlight for the Euro. This is a survey of about 300 German professional analysts and investors regarding a 6-month outlook for the German economy. Its impact has diminished lately, but higher numbers usually strengthen the Euro. The release is scheduled at 9:00 am GMT and the expected reading is 12.3 (previous 10.0).
On the US Dollar side the most notable event is the release of the Building Permits, scheduled at 12:30 pm GMT and expected to show a number of 1.22 Million new permits. Higher numbers show increased activity in the construction sector and usually strengthen the US Dollar but the impact is often mild.
GBP/USD
The pair retraced lower yesterday, as it was expected after the strong climb seen Friday but the overall picture remains strongly bullish.
Technical Outlook
The pullback seen yesterday didn’t bring the Relative Strength Index below its overbought level, so we may very well see more downside movement or consolidation. To the upside the first barrier remains the high at 1.3616, while 1.3450 is the first potential support but this is still a distant target for one day unless surprising developments take place. Of course, the pair is in a strong uptrend so we will probably see upside movement once the retracement is over.
Fundamental Outlook
The economic calendar lacks any major releases for the Pound today, so the pair’s direction will be mainly dictated by the technical aspect and the U.S. data.
FOREX NEWS: FED IN THE LIMELIGHT: POTENTIAL BALANCE SHEET REDUCTION ON THE HORIZON
EUR/USD
Forex News: Yesterday’s price action was mostly bullish, due in part to a better than expected German ZEW Economic Sentiment survey (forecast 12.3, actual 17.0). The key resistance at 1.2000 was touched but it pushed price lower almost immediately.
Technical Outlook
Although the pair moved higher yesterday, the trading range was lower than 50 pips at the time of writing, so momentum is clearly lacking. This is likely to change today with the FOMC Rate Meeting but until then we will probably see choppy movement, capped by the resistance at 1.2000 and the 50 period Exponential Moving Average. If a breakout happens before the FOMC events, it may trigger additional movement but to a limited extent.
Fundamental Outlook
The main event today is without a doubt the FOMC Meeting scheduled at 6:00 pm GMT. They will release a set of Economic Projections for the next two years, as well as the Rate Statement that contains the outcome of their vote on the interest rate (no change expected) and insights into the reasons that determined the vote.
The Fed is expected to start shrinking their balance sheet and if they announce it today, we will surely see very strong US Dollar movement. Also, at 6:30 pm GMT, Fed Chair Janet Yellen will hold a press conference discussing the rate decision among other things. Audience questions are expected and volatility is likely to surge.
GBP/USD
The pair continued lower yesterday and approached the support at 1.3450, without threatening a break. The picture remains bullish and this behaviour can be considered a normal retracement, not a reversal.
Technical Outlook
Today we may see a drop into 1.3450 support as the Relative Strength Index is descending below its 70 level after spending a long period in overbought territory. To the upside the first resistance is located at 1.3616 but today we have important economic releases for both currencies, so the technical aspect will be overshadowed by the fundamentals.
Fundamental Outlook
The British Retail Sales are today’s main event for the Pound. The release is scheduled at 8:30 am GMT and the expected value is 0.2% (previous 0.3%); the report tracks changes in the total value of sales made through retail stores and has a high impact on the currency. Higher numbers show increased economic activity and usually strengthen the Pound.
FOREX NEWS: THE US DOLLAR IS BACK! BEARISH PRESSURE MOUNTS
EUR/USD
Forex News: As expected the Fed kept the rate unchanged (<1.25%) and announced that they will begin balance sheet reduction in October, which was perceived as hawkish by market participants. As a result, the pair tumbled through several support levels, on the back of US Dollar momentum.
Technical Outlook
Newfound US Dollar strength took the pair below 1.1900 after a near touch of 1.2040 earlier in the session and the momentum is likely to extend throughout today’s session, so we expect at least a touch of the support located at 1.1840. However, it must be noted that sharp moves tend to retrace a little after the initial momentum wanes, so we may see a move up that will find resistance around 1.1900. Despite the recent move, the pair is not in a downtrend so we cannot rule out a stronger move to the upside.
Fundamental Outlook
ECB President Mario Draghi will deliver opening remarks at the European Systemic Risk Board annual conference, in Frankfurt. The impact if the speech is uncertain and will depend on Draghi’s attitude but caution is recommended whenever heads of central banks speak publicly. The event is scheduled at 1:30 pm GMT.
The most notable event for the US Dollar will be the release of the U.S. Unemployment Claims, scheduled at 12:30 pm GMT. The indicator shows how many persons have asked for unemployment related benefits but it’s a weekly release and this means that it has a rather low impact. However, higher numbers than the expected 302K usually weaken the US Dollar.
GBP/USD
The Pound benefited from much better than anticipated Retail Sales numbers early in yesterday’s session and the pair jumped higher. However, US Dollar strength generated by the Fed meeting erased al gains and took the pair into support.
Technical Outlook
After a short lived break of 1.3616 resistance, the pair dropped to touch 1.3450 but at least at the time of writing, the level was not breached. If a break occurs, the drop will probably extend into the 50 period Exponential Moving Average but once that mark is hit, we expect to see moves north, based on the fact that the pair is still in a strong uptrend. On the other hand, a break of the 50 EMA would show increased bearish pressure and would weaken the uptrend.
Fundamental Outlook
The economic calendar for the Pound is blank today, so price direction will be determined by the technical aspect but also by the effects of yesterday’s events.
FOREX NEWS: FINISHING THE WEEK WITH SPEECHES FROM ECB PRESIDENT DRAGHI AND BRITISH PRIME MINISTER MAY
EUR/USD
Forex News: The momentum created by the Fed Meeting slowed down yesterday and the pair moved above the psychological level at 1.1900. The session was bullish but bearish pressure is still high.
Technical Outlook
After the failed break of 1.1875, the pair climbed above 1.1900 and seems headed for the 50 period Exponential Moving Average. However, it must be noted that the last bullish candles are showing long wicks and price lacks upside momentum, so we may very well see a drop even before the 50 EMA is reached. The bias remains bearish but the pair is not in a downtrend.
Fundamental Outlook
At 8:00 am GMT the European Manufacturing and Services PMIs are released, showing the opinions of purchasing managers regarding economic and business conditions in their respective sectors. The indicators have a low to medium impact on the Euro, with higher numbers strengthening the single currency. The forecast for the Manufacturing PMI is 57.2 and for the Services PMI is 54.7.
At the same time (8:00 am GMT), ECB President Mario Draghi will deliver a speech at the Trinity College, in Dublin. The impact will depend on the matters discussed but caution is recommended whenever heads of central banks speak publicly.
GBP/USD
Yesterday’s trading session was slow, with price consolidating above 1.3450 support. The economic calendar didn’t hold any important events and this contributed to the slow movement of price.
Technical Outlook
The overall trend is clearly bullish but the latest momentum is bearish and now the pair is consolidating (moving in a range) in close vicinity of 1.3450 support. We already saw a failed attempt to break the level so if it won’t broken on a second attempt, the pair will probably be headed higher or it will remain in a range. If 1.3450 is broken, the 50 period EMA will become the first target.
Fundamental Outlook
British Prime Minister Theresa May will speak today in Florence on the post-Brexit relationship between Britain and the European Union. The exact time of the speech is not known at the time of writing, so we recommend keeping an eye on our Economic Calendar for updates.
FOREX NEWS: ECB PRESIDENT DRAGHI TESTIFIES. BEWARE OF SUDDEN VOLATILITY SPIKES
EUR/USD
Forex News: Friday the pair moved higher on the back of better than expected numbers for the European Purchasing Managers’ Indexes but the key resistance at 1.2000 pushed the pair lower and erased all gains, so the session ended close to where it started.
Technical Outlook
Friday’s price action doesn’t offer a lot of clues for the next move and overall the pair remains in a range, without clear direction. Strong resistance is located at 1.2000 and to the downside, if the pair can move below the 50 EMA, it might drop into 1.1900. Today’s price action will probably be affected by the German Federal Elections that took place Sunday, so the technical side will be secondary.
Fundamental Outlook
Today at 1:00 pm GMT, ECB President Mario Draghi will testify in Brussels before the European Parliament Economic and Monetary Affairs Committee, about monetary developments and the economy. This has the potential to be a high-impact event, so caution is recommended.
The day’s other notable event is the release of the German IFO Business Climate, which is a survey derived from the opinions of about 7,000 businesses, focused on economic optimism and outlook for the next 6-months. The time of the release is 8:00 am GMT and the expected value is 116.0, a small increase from the previous 115.9.
GBP/USD
British Prime Minister May delivered a speech Friday in Florence, mentioning that the U.K. will be leaving the single market and the customs union. This was the main reasons for the weakening of the Pound but support wasn’t breached.
Technical Outlook
The last 4-hour candle shows a long wick in its lower part, which is a sign of rejection. Also, price is bouncing off of the confluence zone created by the 50 period Exponential Moving Average and the horizontal support at 1.3450. Strictly from a technical point of view, all this suggests that price will probably bounce higher but the fundamental side (represented by Prime Minster May’s stance) indicates that lower prices will follow. Look for a break of the confluence zone because if it occurs, more sellers will probably join.
Fundamental Outlook
The United Kingdom didn’t schedule any important releases for today, thus the pair’s direction will be mainly decided by the technical aspect.
FOREX NEWS: RANGE-BOUND TRADING CONTINUES BUT BEARISH PRESSURE INCREASES
EUR/USD
Forex News: Following the German Federal Elections, the Euro depreciated against the US Dollar and the pair had a bearish session yesterday, moving below support. However, price is still confined in a range and a clear trend is not in place.
Technical Outlook
The short term momentum belongs to the bears and the pair is trading below the 50 period Exponential Moving Average but 1.1875 support is still holding at the time of writing. Once this level is broken, we expect a quick move into 1.1840, which is a more important level and a break would suggest that a downtrend may be developing. To the upside the first resistance is 1.1900, followed by the 50 period EMA.
Fundamental Outlook
The U.S. Consumer Confidence is today’s first event, scheduled at 2:00 pm GMT. The survey has a large sample size (about 5,000 households) and tries to gauge the respondents’ opinions regarding current and future economic conditions. The expected reading is 119.6 and usually a higher number shows optimism, strengthening the US Dollar but the impact is generally medium.
At 4:45 pm GMT, Fed Chair Yellen will speak in Cleveland at the National Association for Business Economics Annual Meeting. The title of the speech is "Inflation, Uncertainty, and Monetary Policy" and audience questions are expected, so depending on her answers, we may see increased volatility on USD pairs.
GBP/USD
The pair remained in a range during yesterday’s trading session, mostly due to the lack of economic releases. No major developments took place and price action was choppy.
Technical Outlook
The pair is still capped by the resistance at 1.3616 and the support at 1.3450, with the 50 period EMA in close vicinity. Until we see a clear break of this horizontal channel, the direction will be unclear and the pair will continue to show range-bound behavior. A strong break of the confluence zone created by the 50 EMA and 1.3450 support would weaken the uptrend, thus increasing bearish pressure.
Fundamental Outlook
It’s a slow day for the Pound from an economic standpoint, without any notable releases. This may be another reason for ranging price action.
FOREX NEWS: US DOLLAR GAINS TRACTION, BREAKS KEY SUPPORT LEVELS
EUR/USD
Forex News: Yesterday’s trading session belonged to the bears, on the back of increasing demand for US Dollars and anxiety coming from the German political scene. Key support was broken and the pair reached its lowest point in 5 weeks.
Technical Outlook
After a very small bounce at 1.1840 support, the pair broke the level and moved lower, approaching the minor support around 1.1775. This is not a key level but combined with the oversold position of the Relative Strength Index and the Stochastic, it might trigger a bounce higher. It must be noted that yesterday’s move established the first lower low after a long while and this is a sign that the long term uptrend (seen on Daily charts) has weakened. After a potential retracement north, the pair will be likely headed towards 1.1700 zone.
Fundamental Outlook
At 12:30 pm GMT the US Durable Goods Orders come out, showing changes in the total value of orders for goods with a life expectancy of at least 3 years. Higher values suggest increased economic activity (producers will increase activity to fill the orders) and usually strengthen the US Dollar but to a limited extent (medium impact). The forecast is a change of 1.1% from the previous -6.8%.
GBP/USD
US Dollar strength was seen against the Sterling as well yesterday and the pair broke the important level at 1.3450, as well as the 50 period Exponential Moving Average, setting the stage for a stronger move south.
Technical Outlook
After a small bounce, the pair moved out of the horizontal channel, breaking the confluence zone represented by 1.3450 support and the 50 EMA. This shows that the US Dollar is gaining momentum and makes the short term bias bearish. The pair seems headed towards the next target, located at 1.1330 but it is clear that price is in an uptrend from a longer term perspective so most likely we will see moves to the upside in the future. A quick move above 1.3450 and the 50 EMA would suggest that the initial break of support was fake and would invalidate the bearish scenario.
Fundamental Outlook
The United Kingdom didn’t schedule important news releases for today, so the pair’s direction will be decided by the technical aspect and the U.S. economic data.
FOREX NEWS: FULL DAY AHEAD: GERMAN INFLATION, U.S. GDP AND MARK CARNEY’S SPEECH
EUR/USD
Forex News: The US Dollar posted another win over the Euro in yesterday’s trading session, by breaking 1.1775 minor support and approaching the more important level at 1.1713. Part of the greenback’s strength was due to a better than expected reading for the U.S. Durable Goods Orders.
Technical Outlook
The balance of power is clearly tilted towards the US Dollar but from a longer term perspective (daily charts), the pair is still in an uptrend (it must be noted that the uptrend is now weakened, as the pair has moved below the 50 days EMA). This uptrend combined with the oversold position of the Relative Strength Index and the long wicks of the last few candles, suggests that we are likely to see a bounce higher from the current support zone at 1.1713 – 1.1700. We have important data coming out today and this will play a big role for direction.
Fundamental Outlook
At 12:00 pm GMT the German Preliminary Consumer Price Index comes out, showing changes in the price that German consumers pay for the goods and services they purchase. The CPI acts as the main gauge of inflation and higher numbers usually strengthen the Euro.
At 12:30 pm GMT the U.S. Final Gross Domestic product will be released and expected to show a reading of 3.0%, same as previous. This is the main gauge of economic performance, thus higher numbers usually generate strength for the US Dollar.
GBP/USD
Yesterday the pair remained below the previous support at 1.3450 and below the 50 period Exponential Moving Average for the entire trading session but in the afternoon some of the gains were erased and small bounces occurred.
Technical Outlook
Yesterday’s price action shows that the break of 1.3450 support wasn’t fake, so now we can expect to see a longer period of downside movement, with 1.3300 as first target. The break of the confluence zone (1.3450 and the 50 period EMA) is an important victory for the bears but there’s still enough buying pressure in the market so we cannot rule out a re-test of 1.3450 or even a break.
Fundamental Outlook
At 8:15 am GMT, BOE Governor Carney will deliver an opening speech in London at the Bank of England's conference celebrating 20 years of independence. As a rule of thumb, all speeches of heads of central banks should be treated with caution but of course the exact impact is not known.
