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Weekly Commentary | Gdmfx | Technical

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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Jan 30, 2017 5:18 am

WEEKLY ANALYSIS: DOLLAR IN THE SPOTLIGHT AGAIN: NON-FARM PAYROLLS AND FED MONETARY POLICY REVEAL


EUR/USD

Weekly Analysis: Last week the bears managed to erase some of the advances made by the buyers and we saw a pullback to the previous support; however, the pair remained above the 50 period Exponential Moving Average and the short term bias is still bullish.

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Technical Outlook

As long as the pair remains above 1.0650 support and above the 50 days EMA, the bulls remain in control of price dynamics, so we consider the current down move a retracement in a short term uptrend. This means that price is likely to rally again, aiming for 1.0800 resistance, followed by 1.0850. If these barriers cannot be surpassed this week, it would mean that the buyers’ strength is starting to fade and this will increase the chance of a reversal. A bearish break of the 50 EMA will make 1.0525 the target for the week.

Fundamental Outlook

The week starts Monday with a first look at German inflation with the release of the Consumer Price Index, followed Tuesday by the U.S. Consumer Confidence, a survey that acts as a leading indicator of consumer spending. Wednesday the Fed will announce the interest rate, which is not expected to change but the accompanying FOMC Statement will offer hints about future monetary policy and possibly about the next hike.

Thursday is a slow day for both Euro and US Dollar but Friday we will probably see the strongest movement due to the release of the U.S. Non-Farm Payrolls. This is widely considered the most important jobs data for the U.S. economy and almost always volatility surges at release.


GBP/USD

Last week, UK’s High Court ruled that the Government must get Parliament’s approval before triggering Article 50, which would initiate the Brexit. The Pound got a boost from this decision and the pair climbed almost 300 pips during the week.

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Technical Outlook

The pair is trading above the 50 period Exponential Moving Average and shows bullish momentum but the Stochastic has started to turn downwards in overbought territory, warning of a potential retracement. If price pulls back, we expect it to find support around 1.2420 and there, bullish price action is likely to resume, aiming for 1.2750 at the top of the range. As an alternate scenario, a drop below 1.2420 and below the 50 EMA would open the door for a move towards the bottom of the range (1.2090 zone).

Fundamental Outlook

The first notable release of the week is the Manufacturing PMI, scheduled Wednesday and followed Thursday by the Construction PMI. The same day the Bank of England will release their Inflation Report and Governor Carney will hold a press conference discussing the contents of said report; also, the Official Bank rate is announced, with no change expected from the current 0.25%. The week ends Friday with the Services PMI, a survey derived from the opinions of purchasing managers from the respective sector, regarding economic and business conditions.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Feb 06, 2017 2:31 pm

WEEKLY ANALYSIS: PRESSURE MOUNTS, WITH PRICE TRAPPED BETWEEN SUPPORT AND RESISTANCE. BREAKOUTS IMMINENT


EUR/USD

Weekly Analysis: U.S. data released throughout last week was mostly bearish and the Fed kept the rate unchanged, without hinting about a March hike. Also the NFP report showed more jobs but with a lower hourly wage and this increased market confusion.

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Technical Outlook

The pair is under pressure and struggling to decide the next direction; Thursday’s candle has a long upper wick while Friday’s candle has a long lower wick, both showing opposing signals and an unstable environment. The support at 1.0710 rejected price higher but 1.0800 resistance pushed it lower after a brief climb above, so these will be the levels to watch early in the week; a break of either one will likely generate an extended move in that direction. The 50 period Exponential Moving Average is still angled upwards and below price, thus making the bias bullish but the up move is becoming more and more fragile.

Fundamental Outlook

The first two days of the week are quiet, without major economic announcements but Wednesday United Kingdom’s Parliament will vote to decide if they will confer power to the Prime Minister to trigger Article 50; this will likely affect the EUR/USD pair as well.

Thursday the U.S. Unemployment Claims are the only notable event and the week ends Friday with the release of the University of Michigan Consumer Sentiment, a survey that tries to gauge the opinions of about 500 respondents regarding current and future economic conditions. The survey acts as a leading indicator of consumer spending, which in turn represents a major part of the entire economic activity.


GBP/USD

The Pound-Dollar showed mixed behavior last week, first climbing to establish a new high and then dropping to the levels seen at the beginning of the week. Most of Pound’s losses occurred when the Bank of England released the Inflation Report and Governor Carney adopted a cautious stance.

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Technical Outlook

The move up seen during the last weeks seems to have hit a dead end as the bulls failed to decisively break the previous high and to touch 1.2750 resistance. Currently the bears are testing 1.2420 support, with the 50 period Exponential Moving Average in close vicinity; if this confluence zone will be broken early during the week, then the bears are likely to regain control of the pair but a failed attempt would make 1.2750 the target for the week.

Fundamental Outlook

The first highlight of the week ahead is the EU Membership Vote, scheduled Wednesday. The Parliament will decide if they give power to the Prime Minister to notify the European Union about UK’s intention to leave the union, by invoking Article 50 of the Lisbon Treaty. Volatility will probably increase and we recommend caution throughout the day, especially because the exact time of the vote is not yet known. Please note that the date may change as well.

Friday the British Manufacturing Production will show changes in the total value of goods produced by the manufacturing sector and the same day NIESR will release an estimate of the British Gross Domestic Product. Overall we have a slow week ahead, with the EU Membership Vote being the key event.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Feb 13, 2017 1:47 pm

WEEKLY ANALYSIS: KEY POINTS OF THE WEEK AHEAD: U.S. INFLATION, RETAIL SALES, FED CHAIR TESTIFIES


EUR/USD

Weekly Analysis: Last week’s price action confirmed 1.0800 as a very strong zone of resistance and the pair bounced lower once it reached it. Now price is trading below the 50 days EMA and the bears are in control of short term movement.

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Technical Outlook

The bearish bounce at 1.0800 followed by the break of the 50 period Exponential Moving Average shows that the balance of power is shifting again and that we may enter an extended period of downside movement. However, Friday’s candle shows a relatively long wick and 1.0650 support is not decisively broken, so a move higher is not out of the question. If early in the week the pair moves above the 50 EMA, we expect to see another test of 1.0800 and on the other hand, if it remains below the line, the next likely destination is 1.0525 zone.

Fundamental Outlook

The first major release of the week ahead is the German Preliminary Gross Domestic Product, scheduled Tuesday. The German economy is an important pillar of the entire Eurozone and the GDP is the main gauge of performance, thus higher numbers usually strengthen the Euro. The same day Fed Chair Yellen will testify on the Semiannual Monetary Policy Report before the Senate Banking Committee.

Wednesday is a strategic day for the US Dollar as we take a first look at the always-important U.S. Consumer Price Index (measure of inflation), but also the U.S. Retail Sales and later in the day Fed Chair Yellen will testify again, this time before the House Financial Services Committee.

Thursday’s highlights are the U.S. Building Permits (a higher number suggests increased activity in the construction sector) and the Philly Fed Manufacturing Index, a survey that acts as a leading indicator of economic health, focused on the Philadelphia district. Friday is a light day, without any major releases.


GBP/USD

The week that just ended was slow, with price action confined in a tight range above the 50 days Exponential Moving Average and above 1.2420 support. This tight squeeze may be followed by a strong breakout.

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Technical Outlook

For the entire last week price remained above 1.2420 and above the 50 days EMA, moving almost completely sideways and leaving no clear clues about future direction. From a longer term perspective the pair is in a channel, with 1.2750 as the upper barrier and 1.2090 as the lower one, so until a clear breakout is seen, price will bounce between boundaries. The mentioned breakout may occur this week and even if it doesn’t, we expect to see a lot more action than last week, mostly because lately price has been trading in a very tight range and this is usually followed by a strong move.

Fundamental Outlook

The Pound will be affected by three major releases this week: Tuesday the Consumer Price Index comes out, followed Wednesday by the Claimant Count Change (indicator that shows how many people asked for unemployment related benefits) and Friday by the British Retail Sales. These are all major indicators that can have a strong effect on the Pound and the pair will also be affected by the U.S. events throughout the week.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Feb 20, 2017 1:53 pm

WEEKLY ANALYSIS: EURO PUSHES HIGHER, POUND LACKS DETERMINATION, US DOLLAR SHOWS SIGNS OF A COMEBACK


EUR/USD

Weekly Analysis: After reaching the weekly target at 1.0525, the pair bounced higher immediately and tested resistance. Most of the Dollar weakness was triggered by a rather dovish stance adopted by Fed Chairwoman Janet Yellen.

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Technical Outlook

After reaching the resistance zone between 1.0650 and 1.0680, which coincides with the 50 period Exponential Moving Average, the pair started to show signs of rejection and now bearish pressure is growing. If the pair cannot break 1.0680 early during the week, we expect the bears to take over and nullify the gains posted by the bulls last week; this will make 1.0525 the target for this week as well, possibly extending to 1.0460. To the upside, if 1.0680 is broken we expect to see a move into 1.0800.

Fundamental Outlook

Monday U.S. banks will be closed in celebration of Presidents’ Day, thus no major indicators will be released; the Euro also has a slow day, without notable announcements so we expect a ranging trading session.

Tuesday we take a look at the state of the German Manufacturing sector with the release of the Manufacturing Purchasing Managers’ Index and Wednesday will probably be the most important day of the week for the US Dollar as the FOMC will release the Minutes of their latest Meeting, which will probably offer hints about a future rate hike but also insights into the reasons of the latest rate vote.

Thursday’s only notable event is the release of the U.S. Unemployment Claims, an indicator that shows how many people asked for unemployment benefits during the previous week and the last release of the week is the U.S. New Home Sales, scheduled Friday.


GBP/USD

The Pound-Dollar completed another lacklustre week, with price moving almost sideways. The bears made some timid advances, mostly on the back of disappointing UK economic data but support is still holding and neither side is in clear control.

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Technical Outlook

The 50 period Exponential Moving Average is flat, without indicating a clear direction and price is moving sideways, close to support. This has been the situation for a couple of weeks now and the probability of a strong breakout grows with each passing day but the direction is hard to anticipate. It looks like now the bears are trying to break 1.2420 but movement is incredibly choppy and for the time being we recommend caution with this pair.

Fundamental Outlook

The Pound also has a lacklustre week ahead, with only one major release: the Second Estimate Gross Domestic Product, scheduled Wednesday. The GDP is the primary measure of overall economic performance but the Second version is less important than the Preliminary so the impact may be mild; however, higher values usually strengthen the currency. As always, the U.S. events mentioned earlier will have a direct impact on the pair’s performance throughout the week.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Feb 27, 2017 1:57 pm

WEEKLY ANALYSIS: HIGHLIGHTS OF THE WEEK AHEAD: EUROPEAN INFLATION DATA, UNITED STATES GDP, BRITISH OPTIMISM SURVEYS


EUR/USD

Weekly Analysis: The pair remained below the 50 days Exponential Moving Average last week but price action was mixed and showed strong rejection at support. The FOMC Minutes showed that a rate hike may come fairly soon and this is likely to create US Dollar strength in the near future.

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Technical Outlook

The support at 1.0525 appeared to be broken last week but price soon returned above it despite hints of a nearing Fed rate hike. On the other hand, the last daily candle is bearish and shows a long wick in its upper side, which is a sign of rejection and a warning sign that the pair may test 1.0525 again. If that support is broken, we expect to see a touch of 1.0460 but a break of this level will probably come only if the U.S. economic data released throughout the week will add USD strength. To the upside, the 50 days EMA is the first strong resistance and as long as the pair is trading below it, our bias is bearish.

Fundamental Outlook

The week opens Monday with the release of the U.S. Durable Goods Orders, an indicator that shows changes in the total value of purchase orders for goods with a life expectancy of more than three years. Tuesday will be a busier day, with two important releases for the US Dollar: the Preliminary Gross Domestic Product, which is the main gauge of overall economic performance and a Consumer Confidence survey that shows the opinions of about 5,000 households regarding economic conditions and acts as a leading indicator of consumer spending.

Wednesday the first major European indicator will be released: The German Preliminary Consumer Price Index (main gauge of inflation for the German economy) but also the U.S. Manufacturing PMI, a survey of purchasing managers, focused on the health of the manufacturing sector.

Thursday we take a look at overall European inflation with the release of the CPI Flash Estimate and the week ends Friday with the release of the U.S. Non-Manufacturing PMI (also called Services PMI), which is another survey of purchasing managers, this time focused on the services sector.


GBP/USD

Although volatility increased last week, the pair continued to show mixed movement, without a clear direction and is now trading very close to the 50 days Exponential Moving Average, which is almost flat.

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Technical Outlook

Thursday’s climb was nullified Friday almost entirely and the pair finished the week very close to where it started it, so not much has changed in terms of direction but at least volatility is higher now and this increases the chances of a stronger move and a potential trend. We recommend caution when trading this pair because as seen from last week’s price action, control doesn’t clearly belong to either side and all moves to one side can be quickly reversed.

Fundamental Outlook

This week will be focused on surveys of British purchasing managers: Wednesday the Manufacturing PMI will be released, followed Thursday by the Construction PMI and Friday by the Services PMI. All these surveys act as leading indicators of economic health, focused on their respective sector, with higher numbers showing optimism and usually strengthening the Pound. As always, the U.S. releases will have a direct impact on the pair throughout the week.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Mar 06, 2017 1:36 pm

WEEKLY ANALYSIS: VOLATILITY HOTSPOTS: ECB RATE MEETING, U.S. NON-FARM PAYROLLS


EUR/USD

Weekly Analysis: Last week we saw a bounce lower from the 50 days Exponential Moving Average but all the US Dollar gains were erased Friday despite Fed Chair Yellen’s speech that was considered hawkish by many. Now the pair is back to the highs of the previous week.

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Technical Outlook

The pair established support at 1.0495 and bounced higher with strong momentum but it is now facing the 50 days Exponential Moving Average, which is angled downwards. The US Dollar had a surprising reaction to Janet Yellen’s speech but it must be noted that she mentioned a possible rate hike at the next Fed meeting and this will probably trigger USD strength in the near future. If the 50 EMA is broken, the pair still faces strong resistance ahead (1.0650 – 1.0680), whilea bounce lower will take price into the strong support zone between 1.0525 and 1.0495; if these zones are not decisively broken, the pair is likely to enter a ranging period.

Fundamental Outlook

The first two days of the week lack major releases but the rest of the week is full of important events that are likely to generate strong movement. Wednesday we take a first look at U.S. jobs with the release of the ADP Non-Farm Employment Change, a report that shows changes in the number of employed people, excluding the government and farming sectors.

Thursday the focus shifts to the Euro as the European Central Bank will announce the interest rate and ECB President Mario Draghi will hold his usual press conference, discussing the rate decision and answering journalists’ questions. The Q&A session is usually when volatility rises and irregular movement is often seen so we recommend caution if trading at the time.

Friday will be the most important day of the week for the US Dollar as the Non-Farm Payrolls are released, showing changes in the total number of employed people during the previous month, excluding the farming sector. This is widely considered the most important U.S. jobs indicator that has a strong impact on the currency, mostly because a growing number of employed people means that consumer spending is likely to increase in the near future.


GBP/USD

The Cable finally broke 1.2420 and started to move with a little more conviction last week; the British economic data was overall disappointing and this contributed to the pair’s bearish movement. This may be the start of a period with clearer movement, aiming for support.

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Technical Outlook

The break of the 50 days Exponential Moving Average and of the support at 1.2420 is an important victory for the sellers and is likely to generate additional bearish movement, with a test of 1.2090 key support. A lot will depend this week on the U.S. employment data but from a technical standpoint, we anticipate a move into the mentioned support. Pullbacks to the upside are very likely but as long as price remains below 1.2420, our view is bearish.

Fundamental Outlook

Wednesday the HM Treasury will release the Annual Budget, outlining spending and income levels as well as planned investments and borrowing levels. The release can have a high impact on the currency, thus caution is recommended.

The second important release of the week is the British Manufacturing Production, scheduled Friday. The indicator shows changes in the total value of goods produced by the manufacturing sector and acts as a leading indicator of economic activity. As always, the U.S. releases will have a direct and potentially strong impact on the pair’s movement.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Mar 13, 2017 1:14 pm

WEEKLY ANALYSIS: FED RATE HIKE IS LOOMING, US DOLLAR PREPARES FOR MASSIVE MOVES


EUR/USD

Weekly Analysis: After a bearish start of last week, the pair rallied during the last two trading days and pushed higher, testing resistance. Although the NFP report showed more jobs, hourly wages decreased and apparently this was the reason for US Dollar weakness.

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Technical Outlook

The pair bounced at 1.0525 support and broke through the 50 days Exponential Moving Average but it is now facing the resistance at 1.0680. If this barrier is broken, we expect to see a climb into 1.0800 – 1.0850 this week but the US Dollar reacted surprisingly to the NFP report, weakening even if more jobs were posted. We may see some delayed effects of the NFP at the beginning of this week and if this is the case, the pair will drop back down into 1.0525.

Fundamental Outlook

The week opens Monday with a speech delivered by ECB President Mario Draghi at the Massachusetts Institute of Technology Labs for Innovation Science and Policy Fostering, in Frankfurt. This may not have a high impact on the financial market but it is worth mentioning nonetheless and caution should always be used during speeches of heads of central banks.

Tuesday the focus remains on the Euro for the release of the German ZEW Economic Sentiment, a survey of about 275 German analysts and professional investors, which tries to gauge their opinion about a 6-month economic outlook. The survey has a medium impact on the currency, with higher numbers showing optimism and strengthening the Euro.

Wednesday will be the most important day of the week because the Fed will announce the interest rate, accompanied by a rate statement and followed soon after by a press conference held by Fed Chair Janet Yellen. Currently analysts expect a rate hike to <1.00% from the current <0.75% and if this happens, we will probably see US Dollar strength and a drop for the pair. Either way, the event is likely to generate increased volatility.

Thursday the US Dollar will be affected by the release of the Building Permits (number of residential building permits issued during the previous month) and the week finishes Friday with the University of Michigan Consumer Sentiment survey. The same day the Group of 20 (G20) Meetings start, attended by finance ministers and central bankers from the member states.


GBP/USD

The pair completed another bearish week, approaching the key support at 1.2090, which is also the bottom of the channel that confined the pair for several months.

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Technical Outlook

If the support zone between 1.2090 and 1.1986 is broken, the pair will be out of the channel so we may see more directional movement and less choppiness. However, it must be noted that this is a strong support zone, the Stochastic is oversold and the Relative Strength Index is very close to its oversold level. *** these factors are likely to push the pair higher, creating a bullish retracement that may extend into the 50 days EMA.

Fundamental Outlook

Two major events will affect the Pound directly this week: Wednesday the Claimant Count Change will show changes in the total number of unemployed people in the United Kingdom and Thursday the Bank of England will announce the interest rate as well as the Monetary Policy Summary. No change is expected for the rate, so unless the Monetary Policy shows some surprising information, the event will just create temporary volatility.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Mar 20, 2017 1:48 pm

WEEKLY ANALYSIS: US DOLLAR TAKES A BLOW AS FED RAISES RATE BUT LOWERS EXPECTATIONS


EUR/USD

Last week the Fed decided to hike the rate to <1.00% but their expectations for the rest of the year remained relatively low, anticipating only 2 more increases and this was generally perceived as bearish for the US Dollar. This was also the main reason for the pair’s strong climb.

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Technical Outlook

After failing to move below the 50 days Exponential Moving Average, the pair jumped, fueled by the fundamental side and is now headed towards the resistance zone between 1.0800 and 1.0850. We expect this zone to be reached early during the week and afterwards, the pair is likely to move lower, especially if the oscillators will become overbought by that time. Last week the pair bounced strongly at 1.0600, which is a psychological level (big round number) as well as a technical level so a potential move lower will likely find support there.

Fundamental Outlook


The entire week ahead is light in terms of economic releases and the first two days actually lack major announcements altogether. Wednesday the first notable indicator is released: the U.S. Existing Home Sales, which offers insights into the American housing industry by showing the annualized number of homes sold in the previous month, but excluding new buildings.

Thursday Fed Chair Janet Yellen will deliver a speech at the Federal Reserve System Community Development Research Conference and the same day the U.S. New Home Sales numbers come out, showing the annualized number of new homes sold during the previous month.

Friday’s highlights for the Euro are the European Manufacturing and Services PMIs that will show the opinions of purchasing managers regarding the health of their respective sectors, while the US Dollar will be affected by the release of the Durable Goods Orders. Overall we have a slow week ahead, without major announcements, so the main focus will be on the technical side.


GBP/USD

The pair was boosted higher last week by two reasons: on one hand the US Dollar weakened due to low expectations for 2017 and on the other hand the Pound strengthened because one MPC member saw the need for a rate hike whereas before all 9 members agreed upon holding the rate unchanged.

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Technical Outlook

The support at 1.2090 proved once again that it is a strong barrier in front of falling price and pushed the pair higher, into the 50 days Exponential Moving Average (of course, the fundamentals outlined above played a major role). The most important level for short and medium term price action is located at 1.2420 and the way price behaves around it will offer hints about the rest of the week: a failed break will open the door again for 1.2090 support, while a clean break will make 1.2570 the first target for the week. Although the latest impulse is bullish, the pair is still in a range from a longer term perspective.

Fundamental Outlook


The Pound will be affected by only two important scheduled releases: the British Consumer Price Index, which is the main gauge of inflation, showing changes in the price paid by consumers for the products they purchase and the Retail Sales, which show changes in the total value of sales made through retail outlets. The first indicator comes out Tuesday, while the second is released Thursday and as always, the pair’s direction will also be affected by the U.S. events.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Mar 27, 2017 2:25 pm

WEEKLY ANALYSIS: BEARISH PRESSURE MOUNTS. EUROPEAN INFLATION DATA AND UNITED STATES GDP EYED FOR NEXT DIRECTION


EUR/USD

Weekly Analysis: Price action was choppy last week, apart from Tuesday when we saw a strong bullish push that took the pair into 1.0800 resistance. The buyers remained in control but strength faded after Tuesday’s climb.

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Technical Outlook

The pair has reached a strong resistance zone located between 1.0800 and 1.0850 and we can already see signs of bearish pressure: the Stochastic has reached overbought, candles have small bodies and long wicks and upside momentum is fading. During this week we expect another test of 1.0850, which will decide the next medium term direction. A break of said resistance will make 1.1060 the next target (not necessarily reached in one week), while a bounce will probably generate a drop into the 50 days Exponential Moving Average.

Fundamental Outlook

The week starts Monday with the release of the German IFO Business Climate, a survey with a very large sample size of about 7,000 German businesses, focused on their opinions regarding economic and business conditions for the next 6 months.

Tuesday the spotlight shifts towards the US Dollar for the release of the U.S. Consumer Confidence, another survey with a large sample size of about 5,000 households, focused on the respondents’ opinions regarding current and future economic conditions.

Thursday we take a look at German inflation with the release of the German Consumer Price Index and on the US Dollar side we have the U.S. Final Gross Domestic Product, which is the last version in the series of three and tends to be the least impactful but remains a notable indicator nonetheless.

Friday is a rather slow day, with the most notable indicator being the European Consumer Price Index, which shows changes in inflation across the EU.


GBP/USD

The Pound benefited from better than expected inflation readings last week and this was the main reason for the pair’s bullish bias. On top of that, the US Dollar seems weak against most of its counterparts and doesn’t show clear signs of strength.

Image

Technical Outlook

The pair established the 50 days Exponential Moving Average as support last week (broke above it and then bounced off of it) and the next destination seems to be 1.2570. From a longer term perspective the pair is still in a range and this means we should pay attention to the overbought position of the Stochastic, which may be an early warning of a reversal. If 1.2570 cannot be broken we expect to see a drop into the 50 days Exponential Moving Average.

Fundamental Outlook

Almost the entire week lacks important releases and Friday will be the busiest day of the week, with 2 important indicators: the British Current Account, which shows the difference in value between imported and exported goods and services and the Final GDP, which is the main gauge of overall economic performance. Other than this, price action will be mainly driven by the technical aspect and the U.S. releases.
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Re: Weekly Commentary | Gdmfx | Technical

Postby GDMFX » Mon Apr 03, 2017 1:20 pm

WEEKLY ANALYSIS: HUGE MARKET-MOVERS FOR THE US DOLLAR: FOMC MINUTES, NON-FARM PAYROLLS


EUR/USD

Weekly Analysis: Last week the pair’s direction was controlled almost completely by the bears, with price dropping strongly for four days and breaking the 50 days Exponential Moving Average.

Image

Technical Outlook

Once the pair moved above 1.0850, it printed a long-tailed candle, showing rejection and quickly started to descend, breaking several support levels, as well as the 50 days EMA. This type of behaviour cannot be considered a simple retracement and instead, we expect a full scale reversal to the downside, with 1.0500 as main target. If the pair bounces higher at the current support (1.0650), we may see a move into 1.0800 but a break of that zone will depend on the fundamentals released this week.

Fundamental Outlook

The week opens Monday with the release of the U.S. Manufacturing PMI, a survey of purchasing managers that acts as an indicator of optimism and economic health. A more important release is scheduled Wednesday: the FOMC Meeting Minutes, which will offer insights into the reasons behind the latest interest rate vote. If the Minutes will show that the Fed is likely to hike more times than expected this year, the US Dollar will probably strengthen but either way, this is an event that should be treated with caution.

The last major event of the week is the release of the U.S. Non-Farm Payrolls, scheduled Friday. This is widely considered the most important U.S. jobs report and almost always has a very strong impact on the US Dollar; the indicator shows changes in the number of employed people during the previous month, excluding the farming industry, and higher values usually suggest that consumer spending will increase in the near future, a fact that strengthens the currency.


GBP/USD

The Cable had an interesting week, with mixed reaction but it remained trapped between support and resistance after a bounce at the 50 days Exponential Moving Average.

Image

Technical Outlook

The drop from 1.2570 resistance followed by the bounce at the 50 days EMA can be considered a simple retracement, and one that was expected because on the lower timeframes the pair was clearly overbought. However, it must be noted that 1.2570 acted as strong resistance in the past and last week the pair failed once again to surpass it, so if this week we will see another bounce lower from this level, the bears are likely to take control. If this happens, the first barrier will become the 50 days EMA and the support at 1.2420; keep in mind that the pair is still in a range from a longer term perspective.

Fundamental Outlook

The Pound will be affected by three surveys this week: the Manufacturing PMI, Construction PMI and Services PMI, released Monday, Tuesday and Wednesday respectively. The surveys are derived from the opinions of purchasing managers regarding business and overall economic conditions in each sector and act as leading indicators of economic health. Higher numbers usually strengthen the Pound but the impact is often limited if the actual numbers match analysts’ expectations.
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