Weekly Analysis: Although the pair showed big swings during the week, it ended the period almost where it started it, showing rejection at the bullish trend line. The Fed kept rates unchanged as expected but mentioned that 2 hikes may come until the end of the year.
Technical Outlook
A massive drop was completely reversed last week and the pair moved above and below the 50 period Exponential Moving Average, bouncing at the bullish trend line. This shows that the market is in a state of indecision, probably generated by the approaching of the Brexit referendum. We recommend caution throughout the week because we expect irregular movement and alternating volatility. The latest movement shows bullish pressure so if the buyers can take price above the 50 EMA, we expect a move into 1.1400; on the other hand, a break of the trend line will open the door for a move into 1.1060.
Fundamental Outlook
Monday doesn’t hold major events but Tuesday action picks up with the release of the German ZEW Economic Sentiment, a survey of 275 German investors and professional analysts regarding the state of the economy. The same day, Fed Chair Janet Yellen will testify before the Senate Banking Committee with the main topic being monetary policy; Wednesday she will again testify on the same topic but this time before the House Financial Services Committee. Both these events have the capability to trigger erratic movement so caution is recommended.
Thursday we focus on the US Dollar for the release of the New Home Sales numbers and Friday we have the German IFO Business Climate (a survey of about 7,000 businesses regarding business conditions), followed later in the day by the U.S. Durable Goods Orders. This indicator tracks changes in the total value of orders for goods with a life expectancy of more than 3 years and usually a higher value shows increased economic activity and tends to strengthen the greenback.
GBP/USD
The Pound was heavily affected last week by the shooting of Jo Cox, a British lawmaker who had a pro-EU stance and the pair finished the week higher after an initial move below support.
Technical Outlook
We saw a strong whipsaw last week, which confirms the fact that price action is heavily influenced by the shaky fundamental environment. Price is approaching the 50 period Exponential Moving Average and this is a good place for downside movement to resume but a break will probably take the pair into 1.4500 psychological resistance. To the downside, 1.4050 remains a key support but our stance is neutral, considering the nearing of the referendum.
Fundamental Outlook
A huge event takes place this week: the referendum that will decide whether Britain will remain or not in the European Union. It is scheduled for Thursday and is expected to create huge movement and irregular volatility. We recommend choosing other pairs to trade on until things calm down. Other than this, there are no major events on the Pound’s calendar.
WEEKLY ANALYSIS: A SMALLER EUROPEAN UNION – A BIG BLOW FOR THE EURO AND POUND
EUR/USD
Weekly Analysis: Last week Britain has decided to leave the European Union and the impact on the market was tremendous. The Euro tumbled for more than 500 pips but the effects of the Brexit are still in play so we may see further declines.
Technical Outlook
The fact that Britain parted ways with the EU weakened both the Pound and the Euro. It’s a historical decision and the markets will continue to be affected by it, especially we’ll hear talks about other EU members leaving or thinking about it. For now the low at 1.0911 represents a key level and to the upside the first major barrier is the recently broken trend line, followed by 1.1335 and 1.1400.
Fundamental Outlook
The week starts slow, without any major events Monday but Tuesday action picks up with the release of the Final version of the U.S. Gross Domestic Product as well as a U.S. Consumer Confidence survey which acts as a leading indicator of consumer spending.
Wednesday we turn our attention to the Euro for the release of the German Prelim Consumer Price Index (main gauge of inflation) and Thursday the focus remains on German economy for the release of the German Retail Sales.
Friday’s only major event is the release of the U.S. Manufacturing PMI, a survey of purchasing managers from the manufacturing sector that tries to gauge their level of confidence regarding overall business conditions.
GBP/USD
Due to Britain’s referendum results, the Pound dropped for almost 1,800 pips against the US Dollar, reaching levels that were last seen in the mid-1980s. The future is just as uncertain for the Pound as is for the United Kingdom and the European Union.
Technical Outlook
Currently price is not driven by the technical aspect but by the reactions of EU leaders and major market participants. The low at 1.3227 is a level not reached since the mid ‘80s and it’s very possible to see another attempt to break it but it’s also very possible to see a move back above 1.3835. Either way, caution is still recommended as the next direction is uncertain and volatility has reached peak levels.
Fundamental Outlook
The United Kingdom didn’t schedule a lot of economic indicators for the week ahead but noteworthy is the Current Account, that will be released Thursday and the Manufacturing PMI that will come out Friday. The first indicator shows the difference between imported and exported goods, while the second acts as a leading indicator of economic health, focused on the Manufacturing sector. Considering the turmoil generated by Britain leaving the EU, the mentioned events may be overlooked by market participants.
Weekly Analysis: Last week the pair erased some of the losses generated by the Brexit referendum and headed higher, into resistance. Part of this climb was generated by speculation that the Fed will not raise rates in the near future.
Technical Outlook
The pair is still trading below the 50 period Exponential Moving Average and the resistance at 1.1150 is still holding. Upside movement should be contained by the resistance around 1.1200 and by the 50 days EMA so if the pair reaches that zone, we expect downside action to resume. A move above the mentioned zone would invalidate such a scenario and would make the medium term outlook bullish.
Fundamental Outlook
Monday the United States celebrate Independence Day and this will likely generate irregular volatility; banks across the US will be closed and no indicators will be released. Tuesday is another slow day, without major releases but Wednesday action picks up with the FOMC Meeting Minutes that will offer details on the latest Fed meeting and possibly hints about future rate direction.
Thursday Automatic Data Processing Inc. will release their version of the Non-Farm Employment Change and Friday the Non-Farm Payrolls come out, showing changes in the number of new jobs created during the previous month. This is widely regarded as the most important jobs related report and almost always its release creates strong movement, with higher numbers strengthening the US Dollar. It will probably be the week’s main market mover so caution is recommended.
GBP/USD
Last week the pair established a new historical low at 1.3120 and retraced higher before dropping again. These are massive swings of more than 400 pips so trading the Pound still carries increased risk.
Technical Outlook
Price was rejected higher at 1.3227 support and after establishing a high at 1.3533, it came back, attempting to break the mentioned support. If this barrier is surpassed earlier in the week, we expect a re-test of 1.3120 and possibly a new low somewhere in the 1.3000 area. A lot will depend on the talks that are still surrounding United Kingdom’s separation from the EU but also on the NFP results that come out later in the week.
Fundamental Outlook
Monday the Construction PMI comes out, showing the opinions of purchasing managers regarding overall business conditions in the Construction sector. It will be followed Tuesday by the Services PMI and the BOE Financial Stability Report; also Tuesday BOE Governor Carney will hold a press conference about the Report and this may create high volatility on Pound related pairs.
Wednesday no major indicators are released, Thursday the Manufacturing Production numbers come out and the week ends Friday with the Goods Trade Balance, an indicator which shows value differences between imported and exported goods. Occasionally this indicator creates a strong impact but many times it goes overlooked by the market.
WEEKLY ANALYSIS: MASSIVE SWINGS AHEAD. POTENTIAL BANK OF ENGLAND RATE CUT!
EUR/USD
Weekly Analysis: Last week belonged to the bears again as we witnessed the end of the bullish retracement followed by a move below support. The previous low was not broken and the U.S. NFP triggered irregular movement although the value was better than anticipated.
Technical Outlook
The resistance zone near 1.1150 was tested several times but it proved a barrier too tough to break and the pair soon started to move lower. Price is currently below 1.1060 but the last daily candle shows clear signs of indecision, having long wicks in both its upper and lower parts. Despite this indecision, this week we expect a move into 1.0911 and a potential break of this support. As an alternate scenario, if the pair starts to move north, we expect it to find resistance at the 50 period Exponential Moving Average.
Fundamental Outlook
The week ahead starts Monday with the Eurogroup Meetings, attended by central bankers and key political figures from the EU member states and continues with the Final German CPI released Tuesday. The CPI is the main gauge of inflation but the Final version is the least important so we don’t expect it to be a major market mover.
Wednesday we don’t have anything big on the economic calendar but Thursday action picks up with the release of the American Producer Price Index, which shows the changes in the price charged by producers for their goods and services. This indicator can have inflationary implications because a higher producer price usually leads to a higher price paid by consumers.
Friday is the busiest day of the week as three major U.S. indicators are released: the Consumer Price Index, which is a major gauge of inflation, the Retail Sales and the University of Michigan Consumer Sentiment Survey. All three can strongly affect the greenback, with higher numbers being beneficial for the economy.
GBP/USD
The Pound took another blow last week and dropped for 500 pips, reaching a new several decades low at 1.2796.
Technical Outlook
Last week’s drop took the Stochastic and Relative Strength Index in deep oversold territory and this calls for a retracement higher. This potential retracement should find resistance around the 1.3100 mark but the Pound remains a high risk currency and price can shoot through support or resistance without warning. The overall control belongs to the bears, so we favor the short side but the Bank of England is going to announce the interest rate this week and this will overshadow the technical aspect.
Fundamental Outlook
Tuesday the Inflation Report Hearings take place, with BOE Governor Mark Carney answering questions regarding the Inflation Report. Usually this event creates strong volatility and considering the current situation, we expect it to do the same this time.
Thursday we are preparing for another price storm because the Bank of England will announce the interest rate, which is expected to drop from the current 0.50% to 0.25%. If this comes true, we will possibly see another dip for the pound-dollar pair but nothing is certain and extreme caution is advised. The rate decision will be accompanied by a Monetary Policy Summary which will outline the reasons that stood behind the decision.
Weekly Analysis: The pair had a pretty indecisive run last week, climbing into resistance and then erasing all gains, dropping to the levels seen in the beginning of the week.
Technical Outlook
The busiest day of last week was Friday when we saw a bearish bounce near the confluence zone created by the 50 period Exponential Moving Average and the horizontal resistance at 1.1150. This rejection may trigger an extended drop that will probably reach the low at 1.0911 but for that to happen, the technical and psychological support at 1.1000 needs to be broken. Considering that this week the ECB will announce their interest rate decision, we expect strong movement but the direction will be decided by the events ahead.
Fundamental Outlook
The first notable event of the week ahead is scheduled Tuesday: the release of the German ZEW Economic Sentiment, a survey that asks about 275 German analysts and investors to give their opinion about a 6-month economic outlook. The same day the U.S. Building Permits come out, offering information about the state of the construction sector in the United States.
Wednesday is a relatively slow day for the Euro and US Dollar but Thursday we expect strong movement because the European Central Bank will announce the interest rate and President Mario Draghi will hold a press conference. Although the rate is not expected to change, the announcement and the conference almost always create high volatility and possible whipsaws.
The week ends Friday with German Manufacturing data in the form of the Purchasing Managers’ Index but the indicator often lacks the strength to trigger massive moves.
GBP/USD
The Bank of England was expected to cut the interest rate last week but they didn’t and as a result the Pound strengthened. Some of the gains were erased Friday on the back of better than expected U.S. data.
Technical Outlook
Even before BOE’s decision to hold rates was made public, the pair retraced higher, clearing an oversold position of the Relative Strength Index and Stochastic. Now it seems like the pair is headed lower, possibly through 1.3120 and towards 1.2800, resuming the bearish bias generated by the British referendum. The geopolitical environment is fragile and may trigger increased volatility and sharp reversals so caution is recommended.
Fundamental Outlook
British inflation data (Consumer Price Index) is released Tuesday, followed Wednesday by the Claimant Count Change, an indicator that tracks changes in the number of individuals that asked for unemployment related social benefits during the previous month.
Thursday’s main event is the release of the British Retail Sales, an important indicator that usually has a strong impact on the market, mainly because sales made at retail levels represent a major part of the entire consumer spending.
The last event of the week for the Pound comes out Friday in the form of the Manufacturing PMI, a survey that offers insights into the state of the manufacturing sector and acts as a leading indicator of economic health.
WEEKLY ANALYSIS: US DOLLAR IN THE SPOTLIGHT AS FED DECIDES MONETARY POLICY
EUR/USD
Weekly Analysis: Last week the pair broke the psychological and technical support at 1.1000, continuing the bearish move started after the bounce at 1.1150. The ECB kept the rate unchanged and President Mario Draghi’s press conference did not move the Euro in a clear direction.
Technical Outlook
The break of 1.1000 will probably bring in additional sellers that will take price into the low at 1.0911 but overall price action is choppy and candles have long wicks, suggesting indecision. The levels to watch are 1.0800 as key support and 1.1150 as resistance but unless this week’s Fed meeting triggers some strong movement, we don’t expect the pair to break either of them. Minor support sits at 1.0911 and minor resistance at 1.1060.
Fundamental Outlook
The week ahead starts Monday with the release of the German IFO Business Climate, a survey that draws its importance from the large sample of about 7,000 businesses that are asked to rate the current level of economic conditions as well as their 6-month outlook. A similar survey but for the U.S. economy is released Tuesday: the Consumer Confidence; this is indicative of future levels of consumer spending and usually had a medium-to-high impact on the US Dollar.
Wednesday is the most important day of the week for the greenback as the Fed will announce their interest rate and will release a statement outlining the reasons behind the decision. No change is expected (currently <0.50%) but the event creates volatility almost always so caution is advised.
Thursday we take a look at German inflation with the release of the Consumer Price Index and the economic week ends Friday with the most important version of the U.S. Gross Domestic Product – the Advance version. The GDP is the main gauge of overall economic performance so its release is considered a high-impact event.
GBP/USD
Last week we saw mixed movement on the pound-dollar pair, without any substantial developments but overall price action was bearish. Direction was mostly determined by individual economic releases and the pair remained between support and resistance.
Technical Outlook
Price action created support around 1.3070 and considering that the latest impulse is bearish, we expect a break of this level early during this week. Such a break would open the door for a move into the zone around 1.2800 but if instead price bounces at 1.3070, it will probably climb into the zone around 1.3280. The Fed meeting scheduled this week will probably be the deciding factor for medium term direction.
Fundamental Outlook
The Pound has only one potential market mover on this week’s calendar: the Preliminary Gross Domestic Product, scheduled for release Wednesday. Out of the three versions (Preliminary, Second Estimate and Final), this one is the first and thus tends to have the biggest impact on the market. As always, the U.S. events mentioned earlier will have a direct impact on the pair’s movement.
FOREX NEWS: EURO GAINS AGAINST THE US DOLLAR, POUND STILL HESITANT AHEAD OF MANUFACTURING DATA
EUR/USD
Forex News: Friday the US Dollar weakened against the Euro and the bulls made a clear break of resistance. This was mostly generated by a disappointing reading posted by the Advance version of the U.S. Gross Domestic Product: anticipated 2.6%, actual 1.2%.
Technical Outlook
The level at 1.1150, which acted as strong resistance in the past, is now clearly broken and may turn into support if price returns to test it. Already some rejection is seen around 1.1180 and the oscillators are overbought, so we may see a 30 pip drop into 1.1150 but the short term bias is bullish and price will probably continue towards 1.1240. This view will be strengthened if 1.1150 becomes support.
Fundamental Outlook
At 2:00 pm GMT the U.S. Manufacturing PMI is released, with an anticipated value of 53.1, almost identical to the previous 53.2. This is a survey of purchasing managers from the manufacturing sector that asks respondents to give their opinions on overall business conditions and health of the said sector; usually, higher numbers bring strength to the dollar but the impact is not always substantial.
GBP/USD
The pair remained above the 50 period Exponential Moving Average Friday and even tested 1.3280 resistance on the back of a worse than expected U.S. GDP but a break did not occur.
Technical Outlook
Although the latest impulse is bullish and the pair is trading above the 50 period Exponential Moving Average, the picture is blurry until we will see a break of the horizontal channel created by 1.3280 resistance and 1.3070 support. For today, we expect another touch of the moving average and if price moves below it, a touch of 1.3070 zone is very possible.
Fundamental Outlook
The British Manufacturing PMI is released at 8:30 am GMT. Just like the U.S. indicator with the same name, this survey is derived from the opinions of purchasing managers and usually, higher numbers than the forecast 49.1 generate strength for the Pound.
WEEKLY ANALYSIS: THE US DOLLAR RESUMES ITS ASSAULT, WITH BEARS THREATENING SUPPORT
EUR/USD
Weekly Analysis: The first part of last week was bullish but later on, the US Dollar made a spectacular comeback on the back of better than expected U.S. economic data so the week ended with the bears in control.
Technical Outlook
Price bounced lower near the 1.1200 zone and has now returned below the 50 period Exponential Moving Average. Early during the week we may see small retracements (better observed on the lower time frames probably) but the momentum belongs to the bears and this is likely to generate a break of 1.1060 en route to 1.1000 psychological zone. The Relative Strength Index is pointing downwards and the Stochastic is about to cross, both agreeing with a move lower and strengthening our bearish bias.
Fundamental Outlook
After a busy week, now things calm down a bit as the week ahead offers a lackluster environment. The first notable event of the week comes Wednesday in the form of the U.S. JOLTS Job Openings; the indicator shows the number of job openings, excluding the farming industry and offers a look at future levels of employment but the impact is often mild.
Thursday the US Dollar will be affected by the Unemployment Claims, an indicator that tracks changes in the number of jobless people, but Friday will be the busiest day of the week: on the Euro side we have the German Preliminary Gross Domestic Product, the main gauge of economic performance and for the US Dollar the Retail Sales will be the main market mover. Later in the day the University of Michigan will release their Consumer Sentiment, a survey that tries to gauge the overall opinion of consumers regarding economic conditions and acts as a leading indicator of consumer spending.
GBP/USD
Last week the Bank of England made the bold decision to cut the interest rate from 0.50% to 0.25% and this stopped bullish momentum, pushing price almost 350 pips lower.
Technical Outlook
The control now belongs to the bears and the support around 1.3070 is threatened. This week we expect a break of this level and then a continuation of the move into lower territory, with the zone around 1.2800 as target. Keep in mind that the horizontal channel created by 1.3280 resistance and 1.3070 support is not clearly broken so we don’t exclude the possibility of bullish movement if 1.3070 cannot be broken.
Fundamental Outlook
Similar to the Euro and US Dollar, the Pound has a slow week ahead, with the only major indicator being the Manufacturing Production released Tuesday. It tracks changes in the total value of output generated by the manufacturing sector and usually has a medium impact on the Pound, with higher numbers strengthening it.
WEEKLY ANALYSIS: US DOLLAR REMAINS STRONG AHEAD OF U.S. INFLATION DATA, FOMC MEETING MINUTES
EUR/USD
Weekly Analysis: The pair climbed last week and nullified the drop seen a week before. The fundamental scene was quiet until Friday, which was the busiest day of the week but was filled with disappointing U.S. data.
Technical Outlook
Price is currently ranging and deciding the next move but the short term bias is bullish as seen from last week’s action. After failing to break 1.1060, the pair bounced into 1.1210 resistance but rejection is clearly seen here (the last daily candle has a huge upper wick). The 50 period Exponential Moving Average is flat, meaning the balance doesn’t clearly belong to either side, and this combined with the shape of the candle we talked may generate bearish impulse. If this is the case, we expect a drop into 1.1000 zone. A break of 1.1200 zone will open the door for 1.1335 but unless the fundamental side agrees, we don’t expect that resistance to be touched this week.
Fundamental Outlook
Monday we don’t have any major announcements on the calendar but Tuesday action picks up with the release of the German ZEW Economic Sentiment (survey of about 275 German professional analysts and investors regarding overall economic conditions) and the more important U.S. Consumer Price Index (CORE version, which tends to have a higher impact). The CPI is the main gauge of inflation and the Fed closely watches it when deciding interest rate levels, thus the impact on the US Dollar is usually strong.
Wednesday the FOMC Meeting Minutes come out, offering insights into the reasons that determined the latest rate decision and possibly offering hints about future changes, followed Thursday by the Philly Fed Manufacturing Index, which is a leading indicator of economic health derived from the opinions of manufacturers in the Philadelphia district. Friday is an uneventful day, without major releases.
GBP/USD
Despite worse than expected U.S. economic data, the Pound continued to depreciate against the US Dollar throughout last week and is now a step closer to historical support.
Technical Outlook
After the break of the horizontal channel created by 1.3280 resistance and 1.3070 support, the pair continued in the direction of the break, as it was anticipated and now it seems headed towards the historical low at 1.2796. Until it gets there, we will probably see some retracements to the upside but we don’t expect 1.3070 to be broken in the process.
Fundamental Outlook
The first event of the week for the British Pound is the release of the Consumer Price Index, scheduled Tuesday. As mentioned before, this is the main gauge of inflation and has a strong impact on the currency, with higher numbers strengthening it, given the fact that current inflation is considered too low.
Wednesday we take a look at the U.K.’s employment situation with the release of the Claimant Count Change, an indicator that tracks changes in the number of unemployed persons. The last important release of the week is scheduled Thursday in the form of the British Retail Sales; this type of sales represents a major part of the entire economic activity and higher numbers usually strengthen the Pound. As always the U.S. events will have a direct impact on the pair’s movement throughout the week.
WEEKLY ANALYSIS: EURO APPROACHING PRE-BREXIT LEVELS, POUND BOOSTED BY POSITIVE ECONOMIC DATA
EUR/USD
Weekly Analysis: Last week the pair climbed for over 200 pips, approaching the place where the Brexit move started. A major role was played by the dovish stance of the Fed as revealed by the FOMC Minutes.
Technical Outlook
The bullish move started at 1.0911 has nullified the major part of the Brexit fall but 1.1340 resistance may hinder further upside action. The Relative Strength Index and the Stochastic are overbought, increasing the chances of a bounce lower from here but the current bias is bullish so if 1.1340 can be broken early in the week, we expect a climb into 1.1415 and possibly 1.1450.
Fundamental Outlook
The week ahead is filled with medium-impact indicators and only a few that can really be considered market movers. Monday we don’t have anything on the economic calendar and Tuesday the German Manufacturing PMI will affect the Euro, while the New Home Sales will be the main catalyst for the US Dollar, followed Wednesday by the Existing Home Sales.
Thursday the main focus will be on the German IFO Business Climate, a survey with a huge sample of about 7,000 businesses that asks respondents to give their opinion regarding current business conditions as well as a 6-month outlook. The greenback will be influenced by the release of the Durable Goods Orders, an indicator that chows changes in the total value of orders for goods with a life expectancy of more than 3 years.
Friday the Preliminary version of the U.S. Gross Domestic Product is released, showing changes in the total value of services and goods produced by the United States economy and Fed Chair Janet Yellen will speak at the Jackson Hole Symposium. The exact time is not yet known and will be announced during the week.
GBP/USD
Most of the British economic data that came out last week was better than anticipated (including inflation, jobs and retail sales) and this, coupled with the dovish FOMC Minutes, took the pair above resistance.
Technical Outlook
The current move can be considered just a retracement for the bearish move that took place earlier but 1.3070 resistance was breached so if the bears cannot bring price back below this level, we will probably see a climb into the 50 period Exponential Moving Average. On the other hand, if the break of 1.3070 will be short-lived, we expect the pair to move closer to last week’s low at 1.2865.
Fundamental Outlook
Only one major indicator is scheduled this week for the Pound: the Second Estimate Gross Domestic Product. This is less important than the Preliminary version which was already released but it still has a high impact on the Pound because it is the main gauge of overall economic performance. The indicator will be released Friday.
U.K. representatives will participate at the Jackson Hole Symposium that starts Thursday so we may see Pound volatility, depending on the matters discussed.
