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Weekly Commentary | Gdmfx | Technical

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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Sep 12, 2016 11:56 am

WEEKLY ANALYSIS: US DOLLAR MAKES TIMID ADVANCES. U.S. RETAIL SALES, INFLATION DATA ON THIS WEEK’S WATCHLIST


EUR/USD

Weekly Analysis: Early last week the US Dollar was hit with disappointing economic data and this allowed the pair to climb close to 1.1340 resistance. A big portion of the Euro’s gains were erased during Thursday’s ECB press conference but the week still ended higher than it started.

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Technical Outlook

The pair is not showing a clear trend and the oscillators are giving mixed signals (Stochastic is moving up, coming out of oversold while the RSI is turning slowly lower) but it’s clear that rejection was present around 1.1340. The daily candle that came close to this resistance has a long upper wick and was followed by a bearish candle that confirmed the sell signal; this makes us anticipate a drop into the 50 period Exponential Moving Average and the bullish trend line seen on the chart above. If this area will be broken early during the week, we expect a move below 1.1150, otherwise we will probably see another attempt to break 1.1340 resistance.

Fundamental Outlook

The week starts slow as Monday lacks any major events; Tuesday action picks up with the release of the German ZEW Economic Sentiment and the same day ECB President Mario Draghi will speak at a ceremony in Trento. We don’t expect his speech to trigger huge moves but caution should be used nonetheless.

Wednesday we have another slow day, followed by a full calendar Thursday when the U.S. Retail Sales are released, as well as the U.S. Producer Price Index, which shows changes in the price charged by producers for their goods. This indicator has inflationary implications because a higher price charged by the producers will be eventually paid by the consumer, and that’s what makes it important.

Friday we take a look at United States inflation with the release of the Consumer Price Index, an indicator that shows changes in the price paid by consumers for the goods and services they purchase. The same day the University of Michigan will release their Consumer Sentiment, a survey that gauges the opinions of consumers regarding current economic conditions.


GBP/USD

The Pound was heavily affected by economic indicators last week and moved according to the readings posted. Better than expected data brought it up in the first part of the week but the second part was disappointing and the Pound weakened.

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Technical Outlook

The bounce at 1.3445 took the pair into the 50 period Exponential Moving Average and into the support at 1.3280 so we are now dealing with a ‘bounce or break’ scenario that will decide the next medium-to-short term direction. A bounce will make 1.3445 the target for the week, while a break will put the bears in control, making 1.3070 the target. The oscillators are curving downwards, close to overbought and this slightly favors the bears but control doesn’t clearly belong to either side.

Fundamental Outlook

The first important release of the week is the British Consumer Price Index, a key gauge of inflation that shows changes in prices paid by consumers for the products they purchase. The indicator is scheduled Tuesday and is followed Wednesday by the Claimant Count, a report that shows changes in the total number of unemployed people who asked for social aid.

Thursday will be the most important day of the week for the Pound, with the main event being the Bank of England interest rate decision. At the same time a Monetary Policy Summary comes out, detailing the reasons that stood behind the rate decision. Earlier during the day the British Retail Sales are released, so we are in for a busy day but Friday the Pound will have a lackluster economic calendar.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Sep 19, 2016 1:42 pm

WEEKLY ANALYSIS: BEARISH BREAKOUTS. THE US DOLLAR REIGNS AGAIN?


EUR/USD

Weekly Analysis: The US Dollar finally had a good week, strengthening against the Euro and breaking the bullish trend line seen on the Daily chart. The main catalyst was the better than expected U.S. Consumer Price Index, released Friday.

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Technical Outlook

After a relatively long period of indecision, the pair finally managed to pick a direction and we expect this impulse to continue. Now the 50 days Exponential Moving Average and the bullish trend line are broken and this makes the bias bearish but keep in mind that 1.1150 is not clearly broken so there’s still a chance of a bounce here. We favor the short side and a move into the 1.1000 area but if current support holds, we expect another encounter with 1.1240.

Fundamental Outlook

As usual, the first day of the week will be slow in terms of economic releases but action picks up Tuesday with the U.S. Building Permits. More permits means that activity in the construction sector will increase and this usually strengthens the greenback but the impact is not always very high.

Wednesday will be the busiest day of the week for the US Dollar as the Fed will announce the interest rate decision and will release a FOMC Statement outlining the reasons that stood behind the rate vote. Soon after the announcement, Fed Chair Janet Yellen will hold a press conference during which we expect increased volatility.

Thursday ECB President Mario Draghi will speak at the European Systemic Risk Board, in Frankfurt and the on the US Dollar side the Existing Home Sales will be the only notable event. The week ends Friday with the release of the German Manufacturing and Services PMIs, which are medium impact indicators but can have a positive effect on the Euro is they show higher numbers than forecast.


GBP/USD

The Pound closed last week at its weakest point since August 17, with Friday being the worst day of the week. The pair dropped more than 250 pips on the back of comments made by U.K. Chancellor of the Exchequer Philip Hammond regarding the willingness to give up Britain’s single-market membership in the European Union in order to achieve immigration restrictions, according to Bloomberg.

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Technical Outlook

The key support at 1.3070 was broken by a strong candle and the fundamental scene doesn’t favor the Pound, while the US Dollar benefits from a stronger than expected CPI (inflation data). In the current scenario the fundamentals and the technical aspect point towards the downside for the pair and this makes our bias bearish, anticipating a move into 1.2865 zone.

We don’t expect price to travel in a straight line to get there so it’s very possible to see some sort of bullish retracement, at least on the lower timeframes. The first potential resistance is now 1.3070, followed by the 50 period Exponential Moving Average.

Fundamental Outlook

The entire week lacks any major news releases for the Pound so the US Dollar events will hold the headlines. Worth mentioning is the release of the Public Sector Net Borrowing, scheduled Wednesday; the indicator shows the difference between spending and income for public corporations and the government. A number above zero shows deficit so the higher the number the bigger the deficit. This indicator is not known to be a major market mover but it may increase volatility because the week lacks other important indicators.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Sep 26, 2016 1:41 pm

WEEKLY ANALYSIS: EURO STILL IN RANGE-MODE, US DOLLAR FEEBLE AHEAD OF DRAGHI AND YELLEN’S TESTIMONIES


EUR/USD

Weekly Analysis: Last week we saw some bullish action that nullified the US Dollar gains from a week before but the pair was confined in a relatively small range and movement wasn’t strong.

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Technical Outlook

The 50 days Exponential Moving Average is still flat and the pair reverses all directional moves so we can safely say that control doesn’t clearly belong to either side. The first barriers for the pair this week are 1.1240 as resistance and 1.1150 as support; a break of the former will open the door for a touch of 1.1340 while a break of the latter will likely take price into 1.1060. Until the pair breaks one of the two lines, our bias is neutral.

Fundamental Outlook

The week starts in full force Monday with the release of the German IFO Business Climate (a large survey of about 7,000 businesses) and Mario Draghi’s testimony before the Committee on Economic and Monetary Affairs of European Parliament. The latter event is prone to trigger high volatility and possibly irregular movement so caution is recommended.

Tuesday focus shifts on the US Dollar for the release of the U.S. Consumer Sentiment, a survey that asks about 5,000 households to give their opinions on current and future economic conditions. Wednesday Fed Chair Yellen will testify before the Committee on Financial Services and another notable release is the U.S. Durable Goods Orders, an indicator that tracks changes in orders for goods with a life expectancy of more than three years. The testimony is of course the more important event of the two and may generate strong US Dollar movement.

Thursday we take a look at the United States Gross Domestic Product (Final version), which is considered the main gauge of overall economic performance and the week finishes Friday with the German Retail Sales and the European Flash Estimate version of the Consumer Price Index.


GBP/USD

The pair showed mixed movement last week, initially dropping, then climbing just to fall again during the last day of the week. Movement has slowed down but the latest impulse is bearish

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Technical Outlook

The bulls attempted to take the pair above 1.3070 but after a small climb above the mentioned level, price dropped and now the door is open for a touch of 1.2865 support. The Stochastic is oversold and looks to cross upwards so we will most likely see some bullish movement this week but as long as the pair remains below 1.3070, our bias is bearish for a touch of the support mentioned earlier.

Fundamental Outlook

The week ahead is slow for the Pound as far as economic releases are concerned: the busiest day will be Friday when the Final Gross Domestic Product and the Current Account are released. The former is the main measure of the economy’s health and the latter shows the difference between the value of imported and exported goods and services. Even if there are not a lot of economic releases, this doesn’t mean that the pair will have a slow week in terms of movement and as always, the U.S. events will have a direct impact.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Oct 03, 2016 4:56 am

WEEKLY ANALYSIS: NON-FARM PAYROLLS – THE KICK THE MARKET NEEDS


EUR/USD

Weekly Analysis: The pair ended another sideways week and so far nothing seems to take it out of its slumber. Friday was the most active day, with the Euro weakening due to a Deutsche Bank possible fine imposed by the U.S. Department of Justice for the sale of mortgage-backed bonds.

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Technical Outlook

The 50 days Exponential Moving Average continues to move flat and the pair is trapped between 1.1280 resistance and 1.1150 support. Until one of these barriers is broken, price is in range-mode and neither side is in control, so our bias is neutral but we must warn traders that often after a sideways period, the pair tends to breakout strongly in one direction or the other. This week important U.S. data comes out so we expect the mentioned breakout to happen.

Fundamental Outlook

German Unity Day is celebrated Monday, thus German banks will be closed; on the US Dollar side we have the Manufacturing PMI, a survey of purchasing managers that acts as a leading indicator of economic health, focused on the manufacturing sector.

Tuesday is a slow day for the Euro and US Dollar but Wednesday action picks up with a first look at U.S. employment data with the release of the ADP Non-Farm Employment Change, a report that shows changes in the number of employed people, excluding government jobs and the farming sector.

Thursday is another slow day and Friday the U.S. Non-Farm Payrolls come out, showing how many new jobs were created during the previous month. This is widely viewed as the most important jobs related indicator for the United States economy and usually it creates huge movement, with higher numbers strengthening the greenback.


GBP/USD

Similar to the euro-dollar, the pair traded mostly sideways and remained below resistance for the entire last week. The United Kingdom didn’t release important economic indicators and this contributed to the lack of action.

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Technical Outlook

The bulls made timid attempts to break 1.3070 resistance but trading volume remained low throughout the week and no major developments took place. The lack of determination from both sides makes our bias neutral but we must note that the 50 days Exponential Moving Average is still moving downwards and price is trading below it; also the resistance at 1.3070 is still holding and all this slightly tilts the balance towards the short side. First minor support is located at 1.2945 (better seen on a 4-hour chart), followed by the more important 1.2865.

Fundamental Outlook

The first three days of the week are reserved for the three PMIs that focus on the health of their respective sectors: Monday the Manufacturing PMI comes out, followed Tuesday by the Construction and Wednesday by the Services PMI. These are surveys derived from the opinions of purchasing managers from each of the three sectors and usually a higher value for any of them, brings Pound strength.

The last important release of the week is scheduled Friday in the form of the Manufacturing Production, an indicator that shows changes in the total value of output generated by the manufacturing sector. A higher reading is usually beneficial for the Pound but the impact is limited at times.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Oct 10, 2016 1:21 pm

WEEKLY ANALYSIS: BRUTAL POUND DROP AS BREXIT FEARS MATERIALIZE


EUR/USD

Weekly Analysis: Surprisingly, last week’s events did not bring the pair out of its range. Support was breached but the bears didn’t follow through and a worse than expected NFP brought the pair back up, close to the opening price of the week.

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Technical Outlook

The support at 1.1150 appeared broken but the pair decided to do a quick turn and erased the drop. Indecision continues to rule over this pair and now the 50 days Exponential Moving Average is the first point of interest: a move above it will take price into 1.1280 and possibly 1.1340 but a bounce here will mean that 1.1150 will be broken soon. Keep in mind that the moving average is flat and price bounces between support and resistance; a strong breakout is expected.

Fundamental Outlook

Monday the banks in the United States will be closed, in observance of Columbus Day and no major indicators will be released for neither one of the currencies in the pair. Tuesday action picks up with the release of the German ZEW Economic Sentiment survey but other than that we don’t have anything important on the calendar.

Wednesday the FOMC will release the Minutes of their latest meeting, containing details about the reasons that determined the rate vote, and more importantly, the document can contain hints about the next rate hike. If this is the case, then the US Dollar will probably have a strong reaction.

Thursday we don’t have anything important on the calendar and the trading week ends Friday with the release of the U.S. Retail Sales and the University of Michigan Consumer Sentiment survey. Both are considered high-impact indicators and can strengthen the greenback in case of higher than anticipated numbers.


GBP/USD

The Pound experienced a so called “flash crash” late last week and the pair posted a tremendous drop. Speculation attributes the drop to fears about a hard Brexit early next year but the exact reason is not clearly known.

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Technical Outlook

The pair is currently “high risk” and extreme caution should be used if trading it. Although most of the losses were erased, the possibility of another drop is high as the Pound is vulnerable and prone to sudden moves. Potential resistance sits around 1.2800 but the technical aspect will be overshadowed this week by unscheduled speeches (if any) of British politicians and/or representatives of the Bank of England.

Fundamental Outlook

The entire week is slow for the Pound as far as economic releases are concerned. However, we expect strong movement given last week’s tremendous drop and increased volatility.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Oct 17, 2016 1:28 pm

WEEKLY ANALYSIS: EURO WEAKENS, FOCUS SHIFTS ON ECB INTEREST RATE ANNOUNCEMENT


EUR/USD

Weekly Analysis: Finally the pair started to pick up some speed last week and now the bears are in control. The US Dollar strength was partly due to the FOMC hinting towards a rate hike later this year and partly due to better than expected U.S. economic data.

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Technical Outlook

Price moved below the previous support at 1.1060 and then re-tested it, turning it into resistance so we expect this level to reject future moves up. The bias is bearish for the week, with the first important target being the support at 1.0910; there’s a minor hurdle at 1.0955 and we expect this to be broken during the early days of the week. The oscillators are approaching oversold and this increases the chance of a bounce into the previously mentioned resistance but once this potential retracement is complete, downside movement is likely to resume.

Fundamental Outlook

The week opens with a light calendar and action picks up Tuesday when the United States will release their Consumer Price Index, the main gauge of inflation. Current levels are considered too low, so a higher than anticipated value will likely strengthen the US Dollar.

Wednesday the U.S. Building Permits come out, offering insights into construction sector activity (a permit is the first step required before starting to build). Thursday the European Central Bank takes center stage with the Interest Rate announcement and the press conference that follows shortly. No change is expected for the rate but almost always this event generates strong and often irregular movement. The same day the EU Economic Summit begins and will continue Friday, when no other major indicators are released.


GBP/USD

The Pound continued to weaken against the US Dollar last week and is currently surrounded by a negative sentiment which is likely to bring further downside movement.

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Technical Outlook

The pair created a new intermediate low at 1.2090 and then started to move almost sideways. Resistance is located at 1.2480 but we don’t expect the pair to move that high and instead, we anticipate a break of 1.2090 support. The Relative Strength Index is deep in oversold territory and this may trigger some moves north but overall the pair is still on shaky ground, prone to sudden moves.

Fundamental Outlook

Tuesday the first important British event of the week comes out: the Consumer Price Index, a gauge of inflation that shows changes in the price that consumers pay for the products they purchase. Higher numbers usually strengthen the Pound.

Wednesday we take a look at UK’s unemployment situation with the release of the Claimant Count Change (shows changes in the number of people who asked for unemployment related social help) and the last important release of the week is the British Retail Sales, scheduled Thursday. UK representatives will participate in the EU Economic Summit and this may generate volatility on the Pound.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Oct 24, 2016 7:05 am

WEEKLY ANALYSIS: EURO HEADING FOR KEY SUPPORT, BOE GOVERNOR CARNEY TO TESTIFY ON BREXIT CONSEQUENCES


EUR/USD

Weekly Analysis: Last week belonged to the bears, with the last 2 days being the most active. Euro weakness was mainly generated by the ECB Meeting and Draghi’s press conference.

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Technical Outlook

The June low created by the Brexit vote was taken out last Friday and it looks like the pair’s next destination is the key support zone around 1.0800. The Relative Strength Index is just entering oversold and the Stochastic is already there so we expect a bullish retracement to come when the 1.0800 mark is touched or even sooner. The previous support levels (1.0955 and 1.0910) may turn into resistance and reject a possible move up; if these levels become resistance, the chances of a move into 1.0800 will increase.

Fundamental Outlook

The first day of the week ahead is focused on Eurozone Manufacturing and Services PMI but these are medium impact indicators so we don’t expect strong movement. Action picks up Tuesday with the release of the German IFO Business Climate, a well respected survey due to its large sample of about 7,000 businesses. On the US Dollar side we have the Consumer Confidence, another survey focused on the opinions of respondents regarding overall economic conditions.

The next major release comes Thursday in the form of the U.S. Durable Goods Orders, followed the same day by the U.S. Pending Home Sales and the week ends Friday with the release of the German Consumer Price Index and the Advance version of the U.S. GDP. The last two events of the week may have the strongest impact because one measures inflation and the other is the main gauge of an economy’s performance, both key elements for a currency’s strength.


GBP/USD

The Pound moved in a range last week, with some strength generated by better than expected inflation data; however, most of the gains were erased later in the week.

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Technical Outlook

The pair is under bearish pressure and we expect to see a move closer to 1.2090 this week. It must be noted that the Relative Strength Index is still in oversold territory and the bears had difficulties breaking 1.2090 in the past. This may push price higher once (and if) the mentioned support is touched again but the pair is in a downtrend so our overall bias is bearish.

Fundamental Outlook

Tuesday the Pound is likely to show increased volatility and irregular movement because Bank of England Governor Mark Carney will testify on the consequences of the Brexit vote before the House of Lords Economic Affairs Committee. We recommend extreme caution at the time.

The other important event of the week is the release of the British Gross Domestic Product, scheduled Thursday. Although we only have 2 major events for the Pound this week, both of them have the potential to generate strong movement; as always, the U.S. releases will directly impact the pair’s direction.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Oct 31, 2016 1:45 pm

WEEKLY ANALYSIS: US DOLLAR STEALS THE SPOTLIGHT: RATE ANNOUNCEMENT AND NFP RELEASE


EUR/USD

Weekly Analysis: The US Dollar weakened last week, with Friday being the most active day. The decline was generated by FBI’s decision to reopen Clinton’s email case; depending on new developments on that matter, we may see further greenback weakness.

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Technical Outlook

Price bounced at 1.0850 and moved past 1.0955, with the Relative Strength Index and Stochastic exiting oversold, going up. We expect the push up to extend into the 50 period Exponential Moving Average but the pair is still in a downtrend (although fragile) so it’s very likely to see a bearish move when that zone is reached. A break of the 50 EMA will make 1.1150 the first bullish target.

Fundamental Outlook

The week ahead starts Monday with the release of the German Retail Sales and Eurozone Estimate Consumer Price Index but these are likely to generate just a medium impact on the Euro. Tuesday French and Italian banks are closed in observance of All Saints Day, so we expect low volatility coming from the Euro’s side and on the U.S. side the Manufacturing PMI is the only notable release.

Wednesday is a huge day for the US Dollar because the Fed will announce the interest rate and will release a FOMC Statement that will explain some of the reasons that determined the rate decision. No change is expected yet, but the event usually generates strong movement.

The final major release of the week is scheduled Friday in the form of the U.S. Non-Farm Employment Change, a report that is widely considered the most important jobs data in the United States. Since this week we have the rate announcement and the NFP (usually these are not released the same week), we expect strong movement on all US Dollar pairs.


GBP/USD

The pair moved sideways for almost the entire last week and all directional impulses were quickly reversed. The Pound benefited from a better than expected GDP value but this strengthened it just momentarily.

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Technical Outlook

The bears tried twice last week to break the support at 1.2090 but failed and price stalled. If the pair moves into this support for a third time, it will either break it or it will shoot up. If 1.2090 is broken, we don’t have any immediate support below it, while to the upside we have minor resistance at 1.2325. This level will be the first bullish target if 1.2090 holds. Our bias is neutral, anticipating a strong breakout.

Fundamental Outlook

The first major release of the week is the Manufacturing PMI, scheduled Tuesday, followed Wednesday by the Construction PMI and Thursday by the Services PMI. These are leading indicators of economic health, focused on business conditions and derived from the opinions of purchasing managers from the respective sector. The impact is often mild but usually, higher numbers strengthen the Pound.

Thursday the Bank of England will also release their Inflation Report, containing inflation and economic expectations for the next 2 years and the same day the interest rate is made public, as well as a Monetary Policy Summary that offers insights into the reasons that determined the rate vote. As always, the U.S. events released throughout the week will have a direct and potentially strong impact on the pair.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Nov 07, 2016 3:24 pm

WEEKLY ANALYSIS: UNITED STATES PRESIDENTIAL ELECTION: CLASH OF TITANS


EUR/USD

Weekly Analysis: The pair completed a bullish week and moved above the 50 days Exponential Moving Average. The Fed maintained the interest rate unchanged and the NFP report somewhat disappointed, contributing to the strong move up.

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Technical Outlook

Price is now trading above the 50 days EMA, placing the pair in a bullish environment from a short to medium term perspective. However, a clear trend is not in place, the oscillators are approaching overbought and the resistance at 1.1150 sits in front of rising price; all this may suggest that we will see a bounce lower once 1.1150 is touched. If this occurs, price will likely retrace to the 50 EMA but a clean break of 1.1150 will make 1.1250 the first potential target.

Fundamental Outlook

The week ahead starts Monday with the Eurogroup Meetings and continues Tuesday with the ECOFIN Meetings. However, the more important event is the U.S. Presidential Election that also takes place Tuesday and will probably overshadow the Meetings. The US Dollar may react strongly to the result of the election so we recommend caution throughout the day.

Wednesday and Thursday have a lackluster economic calendar, while Friday’s only notable release is the University of Michigan Consumer Sentiment, a survey that tries to gauge the confidence of consumers in overall economic conditions. As you can see, we have a slow week ahead, but this doesn’t mean that price movement will be slow, especially considering the huge event that is the U.S. Presidential Election.


GBP/USD

The Pound won last week’s race against the US Dollar and we saw a move outside the horizontal channel. This week’s price action will probably reveal if the break is true or just a fake move above resistance.

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Technical Outlook

The pair moved above 1.2480, which represents the upper part of the horizontal channel but now it’s sitting right on the 50 days Exponential Moving Average. The break of 1.2480 is not yet clear (the level was not re-tested after the move above it) and the moving average is likely to offer resistance so we may very well see a bounce lower. If price moves above the 50 days EMA, the chances of a move into 1.2800 zone will increase, while a move back inside the channel would mean that the ranging period is still not over.

Fundamental Outlook

The busiest day of the week for the Pound will be Tuesday when the Manufacturing Production numbers come out, as well as an estimate of the British Gross Domestic Product, provided by the National Institute of Economic and Social Research (NIESR).

The first indicator tracks changes in the total value of products generated by the manufacturing sector, and the Gross Domestic Product is an economy’s main gauge of performance, so higher numbers usually bring a stronger currency (however, keep in mind this is only an estimate). The U.S. Election will have a direct and probably strong impact on the pair’s direction.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Nov 14, 2016 1:25 pm

WEEKLY ANALYSIS: SPEECHES, TESTIMONIES AND INFLATION – PREPARING FOR ANOTHER BUSY WEEK


EUR/USD

Weekly Analysis: Election week is over and United States has a new President. The US Dollar received the news well, strengthening against most of its counterparts and as a result we saw the pair drop through several support levels.

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Technical Outlook

After a big spike that took price into 1.1300 territory, the pair reversed as the US Dollar was fueled by the Presidential Election, dropping through multiple barriers until finally stopping near 1.0850. Early this week we will see if the pair stopped because the markets closed on Friday or because price is exhausted. The distance traveled was more than 450 pips and this calls for a retracement to the upside; this potential pullback has increased chances of happening after 1.0800 support is hit but 1.0850 is not clearly broken. If the US Dollar doesn’t break its current support (1.0850), we may see a bounce that will take price closer to 1.0950 zone.

Fundamental Outlook

ECB President Mario Draghi opens the week with a speech delivered Monday in Rome. As usual, caution should be used during his speeches because the Euro may have a strong reaction. Tuesday we take a first look at German Gross Domestic Product with the release of the Preliminary version of this indicator and on the US Dollar side we have the always important Retail Sales. This type of sales represents the biggest chunk of consumer spending, which in turn accounts for the main part of overall economic activity, thus higher readings for the retail sales usually strengthen the greenback.

Wednesday the spotlight remains on the US Dollar with the release of the Producer Price Index, an indicator that tracks changes in the price charged by producers for their goods. It has inflationary implications because if the producer charges more, the client will eventually pay a higher price. Currently, higher numbers are beneficial because inflation is considered too low.

Thursday we take a look at U.S. inflation with the release of the Consumer Price Index and Fed Chair Yellen will testify before the Joint Economic Committee; the topic is economic outlook so we expect high volatility during and after the event. The week finishes Friday with another speech delivered by the ECB President, this time at the Euro Finance Week, in Frankfurt.


GBP/USD

The US Dollar couldn’t win the battle against the Pound last week and instead we saw a move above resistance. We have an important week ahead because we will find out if the strength showed by the greenback against other currencies will also extend to this pair.

Image

Technical Outlook

The previous resistance at 1.2480 is now clearly broken but the 50 days Exponential Moving Average may still reject price lower even if last week closed above it. The candle that moved above the EMA shows signs of rejection and the break is not decisive. It looks like bearish pressure is mounting, so if price returns below the Moving Average early this week, we expect it to drop below 1.2480 but if the Pound continues to strengthen, we will most likely see a move into 1.2800 zone.

Fundamental Outlook

The first major release of the week is the British Consumer Price Index, scheduled Tuesday and followed half an hour later by the Inflation Report Hearings, during which BoE Governor Carney will testify on economic outlook and inflation before the Treasury Committee of the Parliament. Both these events usually have a high impact on the Pound so we can expect increased volatility.

Wednesday the Claimant Count Change will offer insights into the British unemployment situation and the final event of the week is the release of United Kingdom’s Retail Sales numbers, scheduled Thursday. As always, the U.S. events will have a direct and possibly strong impact on the pair’s direction.
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