Technical News|Gdmfx Brokerage|Daily

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FOREX NEWS: U.S. BANKS CLOSED, GERMAN CPI STEALS THE SHOW

EUR/USD

Forex News: Friday the bears scored another victory and took price below support; the U.S. Gross Domestic Product showed the anticipated change of 0.8%, which was better than the previous and this helped the US Dollar.

Technical Outlook

We expect the current move to continue until 1.1085 is touched but the Relative Strength Index is just entering oversold so a bounce higher is highly probable if the mentioned support is reached. To the upside, 1.1150 is the first potential resistance but today we are likely to have a slow day if the German inflation data doesn’t show a substantial difference compared to the forecast.

Fundamental Outlook

At 12:00 pm GMT the German Prelim Consumer Price Index is announced and this will be the main event of the day. It measures changes in inflation and higher values than the expected 0.3% (previous -0.4%) will likely strengthen the Euro. U.S. banks are closed in observance of Memorial Day and no economic indicators are released.


GBP/USD

The positive change posted by the U.S. Gross Domestic Product showed its effect and the pair descended Friday below the immediate support at 1.4650, generating a bearish session.

Technical Outlook

We anticipate a slow day, with price trapped between the resistance at 1.4650 and the support at 1.4565. A break of these technical barriers is less likely because banks in the United Kingdom and the United States are closed due to holidays and this will trigger irregular price action and possibly alternating volatility. If price does move above or below the levels, we may be dealing with a false break, followed by a move back inside.

Fundamental Outlook

Today the UK celebrates Spring Bank Holiday and because of this, no major economic announcements are made; it’s also possible that we will see choppy, irregular movement.

GDMFX

FOREX NEWS: BULLISH PRESSURE MOUNTS AHEAD OF EUROPEAN CPI, U.S. CONSUMER CONFIDENCE

EUR/USD

Forex News: The pair showed a bullish session yesterday, with the German CPI posting an optimistic figure that aided the climb. Resistance was not threatened but price came close to it.

Technical Outlook

The resistance at 1.1150 is still intact and the bulls haven’t made any clear attempts to break it. The current retracement may extend above the mentioned resistance and in this case, we expect the 50 period Exponential Moving Average to stop bullish momentum. However, if the EMA does not reverse the bullish action, we are likely to see an end of the medium term downtrend.

Fundamental Outlook

At 9:00 am GMT more inflation data comes out, this time in the form of the Eurozone Flash Estimate Consumer Price Index. The indicator measures changes in the price that consumers pay for their products across Europe and under normal circumstances, higher values than the anticipated -0.1% strengthen the Euro.

On the US Dollar side we have the Consumer Confidence survey, released at 2:00 pm GMT and expected to show a 96.1 value, compared to the previous 94.2. The survey is derived from the opinions of about 5,000 households, regarding job availability and economic environment in general. Usually a higher than expected value is beneficial for the US Dollar because it acts as a leading indicator of consumer spending levels.


GBP/USD

Banks were closed yesterday in the US as well as in the UK so the economic calendar was blank and the pair had a choppy session.

Technical Outlook

Although price action was choppy, we can clearly see a bullish bounce at the 50 period Exponential Moving Average, with both oscillators curving upwards. This sets the stage for a break of 1.4650 but if this resistance pushes price lower, we expect a break of the 50 period EMA and another run for 1.4565 support. Until one of the two barriers is broken decisively, we are likely to see continued choppiness.

Fundamental Outlook

The Pound has a lacklustre economic calendar today, without major releases so the main focus will be on the technical aspect and on the U.S. survey.

GDMFX

FOREX NEWS: BULLS FADE AWAY, MARKING THE END OF THE RETRACEMENT

EUR/USD

Forex News: European inflation data showed the expected reading so the event didn’t create strong movement; on the other hand, the US Consumer Confidence survey showed a disappointing value but shortly after the initial impact, the pair moved lower.

Technical Outlook

The pair showed bullish action in the first part of yesterday’s trading session, moving above the resistance at 1.1150 and close to the 50 period Exponential Moving Average. The oscillators are showing good upwards momentum so it’s very possible to see a break of the EMA and a consequent move into 1.1210; however, a bearish cross of the Stochastic would be an early warning that the bears are trying to regain control. If the pair stays below 1.1150, we expect a touch of 1.1085.

Fundamental Outlook

The most notable event of the day is the release of the U.S. Manufacturing PMI, scheduled at 2:00 pm GMT. The survey shows the opinions of purchasing managers from the manufacturing sector regarding business conditions and overall activity in the said sector, acting as a leading indicator of economic health. Higher numbers than the anticipated 50.5 usually trigger US Dollar strength.


GBP/USD

The pair had a mixed day yesterday, bouncing perfectly at support and then failing to move past resistance and moving lower again.

Technical Outlook

The bounce close to 1.4730 and then the failure to move again above 1.4650 shows clear bearish pressure, so today we expect to see a move into 1.4525, followed by 1.4475. The Stochastic is starting to curve downwards, same as the Relative Strength Index and the bulls showed several times they lack the strength to move the pair above key resistance. All this makes our bias for the day bearish.

Fundamental Outlook

At 8:30 am GMT British manufacturing data comes out in the form of the Manufacturing PMI. Same as the same indicator for the United States, this one acts as a leading indicator of economic performance and is derived from the opinions of surveyed purchasing managers form said sector. Higher numbers than the forecast 49.6 are beneficial for the Pound and can take the pair higher.

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FOREX NEWS: BUCKLE UP FOR THE ECB RATE ANNOUNCEMENT AND PRESS CONFERENCE!

EUR/USD

Forex News: The pair moved on a bullish path for most of yesterday’s trading session but better than expected U.S. Manufacturing data brought dollar strength later in the afternoon, generating another bounce at the 50 period Exponential Moving Average.

Technical Outlook

Price lacks a clear bias and market participants seem reluctant to commit to a direction but if the pair remains above 1.1150, we are likely to see a break of the 50 period EMA and a move into 1.1210. The oscillators show mixed signals so the entire picture is blurry, probably because the ECB interest rate decision is approaching and traders wait for the result as well as for Mario Draghi’s press conference.

Fundamental Outlook

At 11:45 am GMT the ECB will announce their decision regarding the interest rate. No change from the current 0.00% is expected but the event will surely generate market volatility. Soon after the release, at 12:30 pm GMT, Mario Draghi, the President of the ECB will hold the usual press conference during which he answers journalists’ questions. This conference is likely to generate even stronger movement than the rate announcement so caution is recommended.

At 12:15 pm GMT we take a first look into the U.S jobs situation with the release of the ADP Non-Farm Employment Change, an indicator that shows changes in the number of employed people, excluding the farming industry and government. Higher numbers than the forecast 177K usually strengthen the greenback.


GBP/USD

The bears continued their assault and the pair dropped, breaking immediate support levels. The British Manufacturing PMI came out better than anticipated but the difference was insignificant and the Pound did not have a strong reaction.

Technical Outlook

The current bearish move is in need of a retracement as shown by the oversold condition of the Stochastic and Relative Strength Index. If the current support level at 1.4400 is broken, we don’t expect the same to happen to 1.4350 and instead the chances of a bounce north will be increased once or if price gets there.

Fundamental Outlook

British construction data comes out at 8:30 am GMT in the form of the Construction PMI, a survey of about 170 purchasing managers who are asked to rate the level of business conditions and the overall health of the said sector. Usually, numbers above the forecast 51.9 bring Pound strength but if the actual number is close to analysts’ expectations, we may see a muted impact.

GDMFX

FOREX NEWS: IT’S NFP DAY! THE US DOLLAR PREPARES FOR STRONG SWINGS

EUR/USD

Forex News: Yesterday the ECB decided to maintain the interest rate at 0.00% and the pair showed irregular movement at the time of release as well as during Mario Draghi’s press conference.

Technical Outlook

Price bounced perfectly at 1.1210 resistance and moved back below the 50 period Exponential Moving Average, currently testing the support at 1.1150. Today’s price action will be heavily influenced by the fundamental aspect but from a strictly technical perspective we expect a break of nearby support (1.1150) and a move into 1.1085; this view is supported by the position of the Stochastic (overbought), the direction of the Relative Strength Index and by the fact that the downtrend is intact.

Fundamental Outlook

The most anticipated U.S. jobs report is released today at 12:30 pm GMT: the Non-Farm Employment Change, also known as the Non-Farm Payrolls. The report tracks the change in the number of new jobs created during the previous month and almost always triggers huge movement. More jobs are indicative of increased levels of consumer spending in the near future and that’s why higher numbers than the forecast 159K usually bring US Dollar strength.


GBP/USD

British Construction data was lower than analysts had anticipated but the difference was not substantial and the pair bounced at support, retracing higher.

Technical Outlook

The bounce at 1.4400 should be considered just a retracement, generated by the oversold condition of the Stochastic and Relative Strength Index. We expect downwards movement to resume soon, especially if the barrier at 1.4475 cannot be breached to the upside. The U.S. jobs data will have a strong impact and we believe the technical aspect will be secondary today.

Fundamental Outlook

The final survey in the series of three is released today at 8:30 am GMT: the Services PMI. This survey is derived from the opinions of purchasing managers from the services sector regarding overall business conditions and acts as a leading indicator of economic health. The forecast is 52.5 and under normal circumstances, the Pound is positively affected by higher values.

We hope you had a profitable trading week and we wish you a relaxing weekend.

GDMFX

FOREX NEWS: “RUBBER BAND” EFFECT IN PLAY, US DOLLAR FIGHTS BACK

EUR/USD

Forex News: Friday’s highlight was of course the release of the Non-Farm Employment Change report that showed only 38K new jobs, while the forecast was 159K. This huge difference weakened the US Dollar and elevated the pair for more than 200 pips.

Technical Outlook

The effects of the NFP release will be seen throughout today’s session but usually a strong move like the one seen Friday is followed by a retracement lower or at least a period of sideways movement. The Relative Strength Index is deep in overbought and the Stochastic will soon follow (this indicator is slower than the RSI and that’s the reason why it is not yet overbought) so we expect a bounce lower once or if 1.1385 is reached. This potential dip should be regarded as a retracement, not a reversal.

Fundamental Outlook

Early at 6:00 am GMT the German Factory Orders come out, showing changes in the value of orders placed with manufacturers. The indicator doesn’t create strong movement usually but as a rule of thumb, higher values than the forecast -0.4% (previous 1.9%) strengthen the Euro.

Later in the day, at 4:30 pm GMT, Fed Chairwoman Janet Yellen will speak at a luncheon in Philadelphia on the topics of monetary policy and economic outlook. As always, caution is recommended during speeches of heads of central banks, because the respective currency can show irregular movement.


GBP/USD

The Pound also benefited from a worse than expected NFP and the pair climbed on the back of a weak Dollar; however, the move up was not as drastic as the one seen on EUR/USD.

Technical Outlook

After breaching 1.4565 the pair retraced lower and is now currently testing the 50 period Exponential Moving Average. This is a clear sign of weakness and shows that even with disappointing U.S. data, the Pound cannot make substantial advances above key levels. If the pair remains below the 50 period EMA and below 1.4525, we expect to see a move closer to 1.4475.

Fundamental Outlook

The economic calendar is blank for the Pound today so the main focus will be on the technical aspect. Keep an eye on Yellen’s speech as this can also affect the pair’s movement.

GDMFX

FOREX NEWS: BREXIT FEARS SHAKE THE MARKET

EUR/USD

Forex News: Yesterday was a slow day, without any substantial advances to either side and this was mostly because the pair was in need of a breather after the huge rally seen Friday.

Technical Outlook

The pair moved sideways for most of yesterday but we expect this behavior to change and the upside movement to resume. The greenback is still suffering from the effects of the disappointing NFP report and currently cannot drag the pair lower. However, the Relative Strength Index and Stochastic are overbought and price did not retrace after the massive climb, so we may see a move below 1.1335. If this support holds, we expect price to move above 1.1385.

Fundamental Outlook

The day ahead is slow and the only notable economic indicator is the German Industrial Production, released early at 6:00 am GMT. This indicator tracks changes in the total value of output generated by mines, manufacturers and utilities. The expected change is 0.8% compared to the previous -1.3% and higher values usually strengthen the Euro but the impact is often muted.


GBP/USD

The focus shifted yesterday towards the Pound as Brexit fears escalated. Polls showed that more people favor a separation of the United Kingdom from the European Union and this triggered a drop that erased all of Friday’s gains.

Technical Outlook

The week opened with a gap and usually gaps are closed (meaning that price will move back to where the gap originated) but the time period needed for that cannot be known in advance. Also the pair bounced at 1.4350 support and the US Dollar is weak so it’s very possible to see a move into 1.4475 and the 50 period Exponential Moving Average. However, price direction will continue to be affected by Brexit talks so extra caution is recommended because as we can see, movement is very mixed.

Fundamental Outlook

There are no major economic indicators on the schedule today so price direction will depend on the technical aspect and on the Brexit situation.

GDMFX

FOREX NEWS: EURO PREPARES BREAKOUTS, POUND IN LIMBO AFTER ‘FAT FINGER’ SPECULATION

EUR/USD

Forex News: The pair had another choppy trading session, with price confined between 1.1385 resistance and 1.1335 support; the German Industrial Production numbers matched analysts’ expectations so the impact was minimal.

Technical Outlook

The pair bounced at 1.1385 resistance and now appears to be headed lower, with both the Stochastic and Relative Strength Index favouring such a scenario. Keep in mind that periods of small, ranging movements are often followed by strong breakouts and the bulls have the latest momentum so it’s very possible to see a move above 1.1385.

Fundamental Outlook

The day ahead is very slow for both the Euro and the US Dollar in terms of economic releases so the main focus will be the technical aspect.


GBP/USD

Early yesterday the Pound-Dollar experienced a massive spike up but a clear reason is not yet known. The move is attributed to a so called “fat finger” (human error in introducing the right position size) or a trading algorithm failing to work as intended.

Technical Outlook

It’s a weird time for this pair and extra caution should be used because the combination of Brexit talks and sudden spikes without apparent reason can wipe out stops in an instant. So far the resistance at 1.4650 is still holding but 1.4565 was broken several times; to the downside we have 1.4525 as immediate support, followed by the 50 period Exponential Moving Average. If the latter is touched, we expect a bounce higher and a move above 1.4565, which will open the door for 1.4650 once again.

Fundamental Outlook

At 8:30 am GMT the Pound will be affected by the release of the British Manufacturing Production, which is an indicator that tracks changes in the overall output generated by the manufacturing sector. Since this sector is a key part of the British economy, higher numbers than the forecast 0.1% usually strengthen the Pound.

GDMFX

FOREX NEWS: EURO JITTERY AS ECB’S DRAGHI DUE TO SPEAK IN BRUSSELS

EUR/USD

Forex News: Yesterday the pair finally picked up some speed and we experienced a bullish break of 1.1385. This opens the door for 1.1450 and prepares us for more upside movement.

Technical Outlook

The Relative Strength Index is still overbought and this calls for a move south. Of course, the bulls just managed to break 1.1385 after a period of sideways movement and this means that the next target is the resistance at 1.1450 but once this level is reached, we expect a stronger retracement to the downside, which will probably clear the overbought condition of the oscillator.

Fundamental Outlook

At 7:00 am GMT, ECB President Mario Draghi will speak at the Brussels Economic Forum and this will be the only major event of the day. The speech will have a higher impact if the President will touch on the topic of the financial markets but either way, volatility may rise so, as always during such speeches, caution is advised.


GBP/USD

The Pound continued its jerky movement and created a whipsaw yesterday when the Manufacturing Production was released (forecast 0.0%, actual 2.3%).

Technical Outlook

The move below 1.4525 couldn’t be sustained and the pair found support on the 50 period Exponential Moving Average, bouncing higher after touching it. This shows some bullish pressure but as we can see, part of the move was reversed so the control doesn’t clearly belong to either side. If price stays above 1.4565 we expect it to reach 1.4650 during the days to come, otherwise we will probably see another move into the 50 period EMA.

Fundamental Outlook

The British Goods Trade Balance is released today at 8:30 am GMT and is expected to show a figure of -11.1B (previous -11.2B). This indicator shows the value difference between imported and exported goods and usually a higher number is beneficial for the currency but often the impact is small.

GDMFX

FOREX NEWS: US DOLLAR FIGHTS BACK, BREAKS SUPPORT

EUR/USD

Forex News: Price reversed sharply yesterday, after a brief climb above 1.1385 that couldn’t be sustained. The pair was in need of a deeper retracement and that’s what we are seeing now.

Technical Outlook

The bearish momentum is strong, with full and long candles and both oscillators coming out of overbought. That’s why we believe the move will extend into the 50 period Exponential Moving Average and possibly even below it. If the moving average is broken we expect a move into 1.1240 but we must not forget that the bulls still have underlying strength and price may start to move up once the 50 EMA is touched so look for signs of rejection in that area.

Fundamental Outlook

At 2:00 pm GMT the University of Michigan will release their Consumer Sentiment survey, which asks about 500 consumers to give their opinions on current and future economic conditions. A higher consumer confidence often suggests that consumer spending will pick up in the near future and that’s why numbers above the predicted 94.1 usually strengthen the US Dollar.


GBP/USD

The Pound-Dollar reversed once again yesterday and broke the 50 period Exponential Moving Average to the downside. The pair continues to be driven by uncertainty and movement is choppy.

Technical Outlook

Although the 50 period EMA is broken, price may very well return above it so we cannot treat this as a bearish market. Movement is still jerky and most moves are quickly reversed but as long as price stays below the moving average, we slightly favor the short side for a slide towards 1.4400. If upwards momentum resumes, we expect to see a touch of 1.4565.

Fundamental Outlook

There are no major releases on the Pound’s schedule so we expect the technical aspect and the U.S. survey to determine price direction.

We hope you had a profitable trading week and we wish you a relaxing weekend.

GDMFX

FOREX NEWS: US DOLLAR GAINS ON THE BACK OF MORE BREXIT DRAMA

EUR/USD

Forex News: The last 2 days of last week belonged to the bears and we saw the US Dollar strengthen Friday even if the University of Michigan Consumer Sentiment survey showed a value close to analysts’ forecast.

Technical Outlook

On a four hour chart the pair has clearly moved below the 50 period Exponential Moving Average, making the short term bias bearish. However, it must be noted that the Relative Strength Index is close to oversold and the Stochastic has already entered that territory, so we may see a move up today. Adding to the probability of this scenario is the fact that 1.1240 is very close so all this may trigger a bullish retracement that will probably find resistance at the 50 EMA.

Fundamental Outlook

The day doesn’t hold any major indicator releases, thus the main focus will be the technical aspect unless unscheduled events take place.


GBP/USD

Polls showed Friday that more citizens are now likely to vote for Britain to leave the European Union and this was the main cause of the huge drop. News about a potential Brexit will likely continue to overshadow economic releases and technical levels.

Technical Outlook

The pair moved through support levels like a hot knife through butter but this doesn’t mean it cannot reverse direction just as quick. The levels to watch are 1.4230 where rejection was seen Friday (long wick in the lower part of the candle) and 1.4320 (1.4350) as potential resistance; the oscillators are oversold and this favours a bounce higher but the technical indicators are secondary if Brexit comes back into focus.

Fundamental Outlook

The Pound’s direction will not be affected by major economic releases and similar to the Euro and US Dollar, price direction will be determined by technical analysis unless we get unexpected Brexit news.

GDMFX

FOREX NEWS: THE VOLATILE PERIOD CONTINUES WITH THE RELEASE OF U.S. RETAIL SALES, BRITISH CPI

EUR/USD

Forex News: Yesterday we had a slow day from an economic perspective as no major indicators were released, so price was influenced mainly by the technical aspect.

Technical Outlook

The pair bounced almost perfectly at 1.1240 support and is now testing the 50 period Exponential Moving Average, trying to break it to the upside. The oscillators are agreeing with a break and if this comes true, we are likely to see a push into the potential resistance at 1.1335. If the bulls don’t manage to break the 50 EMA, the pair is headed towards the zone around 1.1200.

Fundamental Outlook

The U.S. Retail Sales numbers are released today at 12:30 pm GMT, showing changes in the total value of sales made through retail outlets. This type of sales represent the main part of the entire consumer spending, which is the main reason why this indicator has a high impact; values above the forecast 0.4% (previous 1.3%) usually strengthen the US Dollar.


GBP/USD

The pair continued its highly volatile movement characterized by fast whipsaws and showed a strong reversal after initially moving lower.

Technical Outlook

After last week’s big drop, a bullish retracement was a likely scenario but the next move remains uncertain, considering the fundamental environment and the fact that the Brexit referendum is drawing closer. The current move may extend into 1.4350 but there we expect bearish action to resume; if the pair moves quickly below 1.4230, the next target will be represented by the minor support created at 1.4115.

Fundamental Outlook

Important British inflation data is released today at 8:30 am GMT in the form of the Consumer Price Index. Current inflation is considered too low and a higher reading for today’s indicator would bring Pound strength; the forecast is a 0.4% change while the previous was 0.3%.

GDMFX

FOREX NEWS: BUCKLE UP, IT’S FED DAY

EUR/USD

Forex News: The greenback strengthened yesterday, helped by a better than expected value of the U.S. Retail Sales and as a result, we had a bearish session and support was broken.

Technical Outlook

The pair bounced nicely at the 50 period Exponential Moving Average and continued lower, through 1.1240 and 1.1210 support levels. The bias is bearish but the Relative Strength Index is touching its 30 level, which suggests an oversold position and favours a move back above the mentioned levels; however the Stochastic is not yes oversold so the downside may continue for a while, possibly into 1.1150 support.

Fundamental Outlook

Key events take place today and that’s why we expect price action to be choppy until the release. At 6:00 pm GMT the Fed announces their decision on the interest rate and this will be accompanied by a FOMC Rate Statement (containing details of the reasons that determined the rate decision) and followed at 6:30 pm GMT by a press conference held by Fed Chairwoman Janet Yellen. The rate is not expected to change this month (currently <0.50%) but any hints about a nearing hike will likely generate a lot of strong movement.


GBP/USD

British inflation numbers came out lower than analysts had anticipated, as shown by yesterday’s CPI release (actual 0.3%, forecast 0.4%) and this combined with better than expected U.S. data, generated another bearish session.

Technical Outlook

After bouncing at 1.4320 resistance the pair started to move lower, pushed by disappointing British inflation data but also by a shaky fundamental environment in the UK. However, the current move seems exhausted and both oscillators are oversold, so we may see another move north. This pair continues to carry an increased degree of risk so we recommend caution; the main levels to watch are 1.4230 and 1.4050.

Fundamental Outlook

The British Claimant Count Change is announced today at 8:30 am GMT and is expected to show -0.1K compared to the previous -2.4K. This indicator tracks changes in the number of unemployed people who asked for social benefits during the previous month and usually a higher number shows a slowdown in economic activity, thus weakening the Pound.

GDMFX

FOREX NEWS: U.S. INFLATION DATA IN THE SPOTLIGHT. US DOLLAR WEAKNESS MAY BE SHORT-LIVED

EUR/USD

Forex News: Ahead of the Fed release the pair showed choppy movement, with a bullish bias but the dovish speech delivered by Chairwoman Yellen weakened the greenback and drove prices higher. The rate remained unchanged as expected but the FOMC Statement showed that a potential Brexit was factored into the decision.

Technical Outlook

The current move up shows rejection at 1.1300 minor resistance and so far the 50 period Exponential Moving Average is not broken to the upside. This means that a reversal here is a distinct possibility and if that happens, we will see another run for 1.1210 (1.1200) support. A break of the moving average and the mentioned resistance will open the door for a continuation into 1.1385.

Fundamental Outlook

Today we remain on the US Dollar side for the release of the U.S. Consumer Price Index, which is one of the main gauges of inflation. Current inflation levels are considered too low, so a rise would most likely bring some strength to the greenback. The release is scheduled at 12:30 pm GMT, with an anticipated change of 0.3% compared to the previous 0.4%.


GBP/USD

Price retraced higher during the first part of yesterday’s trading session but the Fed events triggered mixed reaction and choppy movement, without clear direction.

Technical Outlook

Overall yesterday was a bullish day but this was expected due to the oversold condition of both oscillators and on top of that, the resistance at 1.4230 is still intact. This makes us believe that the move up was just a needed retracement, in part triggered by a dovish Fed and that price will soon resume bearish movement. It’s possible to see a test of 1.4230 resistance but if it holds, the pair is headed south, towards 1.4050.

Fundamental Outlook

It’s a busy day for the Pound as the British Retail Sales numbers are announced at 8:30 am GMT and are expected to show a 0.3% change while the previous was 1.3%. This type of sales represent a major part of the entire economy, thus higher numbers show increased activity and usually strengthen the Pound.

Later at 11:00 am GMT the Bank of England will announce the interest rate decision as well as the council member’s votes on the rate. Even if no change is expected (current 0.50%), the event almost always creates volatility so caution is recommended.

GDMFX

FOREX NEWS: SUPPORT SHATTERED AS THE US DOLLAR WINS THE SHORT-TERM BATTLE

EUR/USD

Forex News: The US Dollar ignored all economic indicators and rallied sharply against most of its competitors, triggering a move south of more than 150 pips and breaking support with ease.

Technical Outlook

Yesterday’s strong move opens the door for a touch of the key support located at 1.1100 and is now clear that the US Dollar has the upper hand in this currency war. If the mentioned support is touched, we expect slight bounces to the upside, followed by a break of said level. To the upside, the first potential resistance is located at 1.1150 followed by 1.1200 and before the assault on 1.1100, we may see a test of these levels.

Fundamental Outlook

The only notable economic indicator is the U.S. Building Permits, released at 12:30 pm GMT and expected to show 1.15M compared to the previous 1.12M. The report shows the annualized number of building permits and acts as a leading indicator of activity in the construction sector. A higher than anticipated reading usually generates US Dollar strength but sometimes the release has a mild impact.


GBP/USD

The Bank of England maintained the rate unchanged at 0.50% and the members of the Monetary Policy Committee (MPC) voted unanimously to do so. After an initial period of uncertainty the pair dropped substantially lower, breaching key support.

Technical Outlook

Yesterday’s strong move and the breach of 1.4050 show that the bears are in control of the market, making us anticipate a move lower, probably towards the low at 1.3835. This move will not be completed during the course of one day (unless spectacular events take place) and price shows rejection off of 1.4050 support so we expect a pause here or even slight retracements to the upside before another attempt to clearly break 1.4050.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases for today, thus the pair’s direction will be affected by the U.S. Building Permits release and by the technical side.

We hope you had a profitable trading week and we wish you a relaxing weekend.

GDMFX

FOREX NEWS: CURRENCIES ON SHAKY GROUND AS WE ENTER BREXIT WEEK

EUR/USD

Forex News: Friday the pair continued the bullish impulse started a day before and tested the resistance at 1.1300. The week ended close to its opening price and the most important happening was the huge whipsaw that totally reversed direction.

Technical Outlook

After piercing 1.1150, price bounced and moved strongly to the upside and stopped in close vicinity of 1.1300 resistance. This irregular movement leaves little room for an accurate technical prediction so our stance is neutral until we see a clear break of either 1.1300 or 1.1240. A true break should be followed by a re-test of the level and if this happens, price is likely to continue in the direction of the break.

Fundamental Outlook

Today no major announcements are scheduled by either Europe or the United States so we expect a slow Monday, with price action influenced by the technical aspect.


GBP/USD

The Pound edged above resistance Friday, without any apparent reason, thus finishing the week higher. This pair continues to be high-risk and as we saw last week, all moves can be quickly reversed.

Technical Outlook

The pair sits above the 50 period Exponential Moving Average so the short term control belongs to the bulls but this doesn’t necessarily mean that today we will see further advances north. The resistance at 1.4350 was broken Friday so if price doesn’t move below it today, we expect a touch of 1.4400. The Stochastic is overbought and the Relative Strength Index is approaching its 70 level, so a touch of 1.4400 may be followed by a bounce lower.

Fundamental Outlook

Similar to the Euro and US Dollar, the Pound will be mainly influenced by the technical side because the United Kingdom didn’t schedule major economic releases for today.

GDMFX

FOREX NEWS: DRAGHI AND YELLEN TAKE CENTRE STAGE, TESTIFYING ON MONETARY POLICY

EUR/USD

Forex News: The market opened with a weekly gap generated mostly by Brexit turmoil over the weekend. Throughout the day the bullish action continued until price came in close vicinity of resistance.

Technical Outlook

After the near touch of 1.1385 resistance, the pair bounced lower and is currently testing 1.1335. If the bears can take price below this level, we expect it to also move below 1.1300 to close the gap. Usually gaps are closed (price retraces to where the gap originated) but the time needed for such a move to complete is not known. The oscillators are overbought, favouring a move into the 50 period Exponential Moving Average.

Fundamental Outlook

At 9:00 am GMT the German ZEW Economic Sentiment Survey comes out, expected to show a figure of 5.1, lower than the previous 6.4. This is a survey of 275 German professional investors and analysts that tries to gauge their outlook regarding economic conditions during the next 6 months; usually a higher number is beneficial for the Euro.

ECB President Mario Draghi will testify today at 1:00 pm GMT before European Parliament's Economic and Monetary Affairs Committee with the topic being monetary policy. It’s an important event that is likely to trigger some wild swings, depending on the President’s attitude and answers.

Fed Chairwoman Janet Yellen will also testify today at 2:00 pm GMT before the Senate Banking Committee on the Semiannual Monetary Policy Report. This is an important event and can affect the US Dollar, depending on her attitude and answers; caution is recommended because volatility may be irregular during these two events.


GBP/USD

The Pound was affected by more Brexit polls, which this time showed that the balance is slowly tipping in favour of the ‘remain’ side. A big bullish gap was created and the pair continued higher throughout the day.

Technical Outlook

The recent climb took the pair into 1.4650 resistance and now both the Stochastic and Relative Strength Index are overbought. Under normal circumstances this would call for a bearish retracement but considering the current fundamental environment, everything is possible so our outlook is neutral and we recommend extreme caution if trading this pair.

Fundamental Outlook

The United Kingdom didn’t schedule major economic indicators today but any type of Brexit talk is likely to trigger strong moves. Fed Chair Yellen’s speech will also have a direct impact on the pair’s movement.

GDMFX

FOREX NEWS: US DOLLAR RECOVERS AHEAD OF YELLEN’S SECOND TESTIMONY

EUR/USD

Forex News: Despite a better than expected value for the German ZEW survey, the Euro depreciated against the US Dollar throughout yesterday. Also ECB President Draghi hinted towards adding further stimulus if needed and this aided the drop.

Technical Outlook

The weekly gap was closed yesterday and the pair slid through 1.1300 and through the 50 period Exponential Moving Average, reaching 1.1240 support. The oscillators still show good downside momentum and are far from oversold so the current impulse is likely to continue below 1.1200 and towards 1.1150. On the other hand, a move above the 50 EMA will open the door for a bullish push close to 1.1335.

Fundamental Outlook

Fed Chairwoman Janet Yellen will testify again today at 2:00 pm GMT, but this time before the House Financial Services Committee. The topic is the Semiannual Monetary Policy Report and caution is recommended as her testimony is likely to influence the US Dollar although yesterday we didn’t see a huge impact.


GBP/USD

The pair continued its climb and found resistance in the area around 1.4765; price action continues to be influenced by Brexit turmoil and movement is still choppy.

Technical Outlook

The bounce at 1.4765 combined with the overbought condition of the Relative Strength Index and Stochastic may trigger a move below 1.4650 and into 1.4565. As noted throughout the week, the Pound remains heavily influenced by Brexit polls and speculation so the technical aspect is secondary and our bias is neutral. Caution is still recommended.

Fundamental Outlook

The pair’s direction will be affected by the testimony of Fed Chair Yellen as the United Kingdom didn’t schedule major indicator releases for the day.

GDMFX

FOREX NEWS: HISTORICAL DAY FOR UNITED KINGDOM AND THE EUROPEAN UNION

EUR/USD

Forex News: The pair erased the losses incurred a day before and reached 1.1335 resistance but soon bounced lower during Fed Chair Yellen’s testimony before the House Financial Services Committee.

Technical Outlook

The long wick seen in the upper part of the candle and the bounce at 1.1335 resistance show that the pair might be headed for 1.1240 in the near future. The first barrier in front of falling price is the 50 period Exponential Moving Average but as mentioned numerous times, today is a key day for the United Kingdom and for the European Union so the technical will be almost completely overshadowed.

Fundamental Outlook

Today’s price action will be heavily influenced by the Brexit referendum and all other releases will be secondary. That being said, it’s still important to mention the U.S. New Home Sales scheduled for release at 2:00 pm GMT and expected to show 561K compared to the previous 619K. The indicator tracks the annualized number of homes sold during the previous month and usually higher figures are beneficial to the US Dollar but the extent is often limited.


GBP/USD

The pair’s jerky movement continued yesterday as price hovered near 1.4650 before shooting up and bouncing back once 1.4765 was touched.

Technical Outlook

Considering the historical event that takes place today, our technical bias is neutral. The referendum will take centre stage and the technical aspect will be secondary.

Fundamental Outlook

Needless to say that the EU membership referendum is the day’s main event and that it will have a huge impact on the markets in general and the Pound in particular. The citizens of the United Kingdom will vote on whether they want UK to remain a part of the European Union or not and the general consensus is that a ‘remain’ result will strengthen the Pound. However, this is not a certainty and extreme caution is advised.

GDMFX

FOREX NEWS: THE AFTERMATH

EUR/USD

Forex News: Although at the time of writing an official result to the British referendum was not made public, the Euro and Pound climbed to new highs during the day. Volatility was high and movement irregular, as expected.

Technical Outlook

Today’s price direction will still be influenced by the effects of the referendum, so we still expect high volatility. The levels to watch are 1.1450 as resistance and 1.1335 as support but our bias remains neutral considering the shaky fundamental scene.

Fundamental Outlook

The German IFO Business Climate is released at 8:00 am GMT, showing the opinions of about 7,000 businesses about current and future economic conditions. Under normal circumstances, higher values for this survey strengthen the Euro but today’s impact is harder to anticipate than usual; the forecast is 107.6, almost identical to the previous 107.7.

On the US Dollar side we have the release of the CORE Durable Goods Orders, scheduled at 12:30 pm GMT. This version of the indicator tracks changes in the value of orders for goods with a life expectancy of at least 3 years but excludes from calculation transportation items. The expected change is 0.1% and higher percentages usually strengthen the US Dollar.


GBP/USD

The pair climbed in the first part of yesterday but most of the gains were negated in the afternoon. Price action was unpredictable, with massive swings.

Technical Outlook

After reaching a high at 1.4946 the pair retraced to 1.4765, with the Relative Strength Index showing overbought. However the next move remains uncertain, especially because an official result of the referendum is not yet known at the time of writing. Our position remains neutral and we recommend further caution.

Fundamental Outlook

The United Kingdom didn’t schedule major news releases but the Pound will be affected by the aftermath of the referendum.

We hope you had a profitable trading week and we wish you a relaxing weekend.