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WEEKLY ANALYSIS: POUND REMAINS JITTERY AS BREXIT UNCERTAINTY CONTINUES


EUR/USD


Weekly Analysis: The pair climbed above the 50 days Exponential Moving Average last week, mostly due to concerns regarding inflation in the United States. However, the resistance at 1.1875 couldn’t be broken and now some rejection is present.

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Technical Outlook

After breaking the 50 days EMA, price hit the resistance at 1.1875 and dropped slightly lower but the week ended above the Moving Average. As long as the pair is trading between 1.1875 resistance and 1.1700 support the picture is unclear but early this week we expect to see a break of resistance or immediate support (50 EMA) and the direction of the break will decide the next move. A break of 1.1875 will open the door for 1.2000, while a break of the 50 EMA will probably take the pair into the support at 1.1700.

Fundamental Outlook

Monday we don’t have any important indicators, so the first notable release will be German ZEW Economic Sentiment, scheduled Tuesday. However, this survey has a medium impact so we don’t expect huge volatility at the time.

Wednesday ECB President Draghi will deliver opening remarks in Frankfurt at the ECB conference and on the US Dollar side the U.S. Building Permits will be the only notable release. Thursday the Philly Fed Manufacturing Index will affect the US Dollar and the Euro will have a light economic calendar.

Friday the Euro remains unaffected by economic data and on the US Dollar side we have the Existing Home Sales numbers; later in the day, Fed Chair Yellen will speak in Washington DC at the Herbert Stein Memorial Lecture; however, the late hour of the speech may translate into a low impact.


GBP/USD

Last week the pair erased a good chunk of the losses incurred a week before and moved again above 1.3250. The Pound was heavily affected by Brexit negotiations and showed erratic movement in the second part of the week.

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Technical Outlook

The pair has broken to the upside the 50 days EMA and the important level at 1.3250. These are bullish signs but as we saw last week, the Pound is very vulnerable to Brexit talks and rumors, so the technical side will be overshadowed if this week we will get more Brexit news.

Strictly from a technical standpoint, the last Daily candle is showing a long wick in its upper part, which is a sign of rejection, so we may see a move below 1.3250 but as long as price is trading above the 50 days EMA, the bias is slightly bullish.

Fundamental Outlook

The first important day of the week ahead will be Tuesday when Bank of England Governor Mark Carney will testify before the Treasury Select Committee. The same day the British Consumer Price Index will be released, showing changes in the price that consumers pay for the goods and services they purchase; this is the main gauge of inflation and has a high impact on the currency, so we expect to see strong movement.

Wednesday the Average Earnings Index will show changes in the price that employers pay for labor and the last major release of the week is scheduled Thursday: the British Retail Sales, which account for the major part of consumer spending. Overall it’s a busy week for the Pound and this will probably trigger high volatility.

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WEEKLY ANALYSIS: EURO PREPARES FOR ECB MEETING, US DOLLAR SHOWS MODEST RECOVERY SIGNS


EUR/USD


Weekly Analysis: Last week the pair remained in a relatively tight range, moving above and below the 50 days Exponential Moving Average, which is flat thus confirming the lack of momentum. 

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Technical Outlook

The pair spent another week inside the horizontal channel created by 1.1875 resistance and 1.1700 support but Friday we saw that price approached the upper part of the channel and then bounced lower. This may be a sign that we are headed towards 1.1700 once again but overall the pair is range-bound and neither side is in clear control.

Fundamental Outlook

The first day of the week lacks major announcements for any of the two currencies and action picks up Tuesday with the release of the Eurozone Manufacturing and Services PMIs, which are surveys derived from the opinions of purchasing managers regarding business conditions in the respective sector.

Wednesday’s highlight will be the release of the U.S. Durable Goods Orders, an indicator that shows changes in the total value of orders for goods with a life expectancy of more than 3 years. Thursday will be the most important day of the week for the Euro as the ECB will announce their interest rate and soon after, ECB President Mario Draghi will hold his usual press conference, which is known to be a major market mover. 

The trading week ends Friday with the release of the U.S. Advance Gross Domestic Product, which is the first version in a series of three and thus tends to have the strongest impact. The GDP is an economy’s main gauge of overall performance, so higher numbers usually strengthen the currency.


GBP/USD

The pair continued lower after bouncing at 1.3350 resistance, mostly because British inflation data wasn’t as good as some expected and BOE Governor Carney didn’t show a hawkish stance.

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Technical Outlook

Price descended below the 50 days Exponential Moving Average, which makes the bias bearish but the last daily candle is showing a long wick in its lower part, which is a sign of rejection. If the 50 days EMA and 1.3250 resistance can stop this upwards momentum, then we will probably see a touch of 1.3050 this week, otherwise the pair will be headed for 1.3350. 

Fundamental Outlook

Only two notable releases will affect the Pound this week, both scheduled Wednesday: the Preliminary GDP (main gauge of economic performance as mentioned prior) and the Inflation Report Hearings, during which BOE Governor Carney will testify on inflation before Parliament's Treasury Committee. As always, the U.S. releases will have a direct impact on the pair’s movement.

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WEEKLY ANALYSIS: US DOLLAR AND BRITISH POUND SET FOR HUGE MOVES: NON-FARM PAYROLLS AND BOE POTENTIAL RATE HIKE


EUR/USD


Weekly Analysis: The European currency weakened after ECB President Draghi announced a QE taper on Thursday last week. From 2018 the monthly pace will run at 30 billion Euros, as opposed to the current 60 billion Euros.

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Technical Outlook

The rejection at the 50 days Exponential Moving Average followed by the confident break of 1.1700 key support shows that the long term uptrend is coming to an end. The pair is likely to enter a bearish market, with the next support and target located at 1.1450 but it’s also possible to see a bounce higher from the current support and a re-test of the recently broken level at 1.1700. If the level will turn into resistance, rejecting price lower, then the chances of a downtrend will increase.

Fundamental Outlook

The week starts with the release of the German Preliminary Consumer Price Index, scheduled Monday and continues Tuesday with the Eurozone CPI. These are the main gauges of inflation but often the German data has a bigger impact because it is released earlier and also because the German economy is one of the most important for the entire Eurozone.

Wednesday the FOMC will release their Rate Statement, announcing the rate decision. There’s no change expected but if the statement contains hints about the next hike, we will most likely see very strong movement. Thursday will be a slower day for the pair but the week ends Friday with the most important U.S. jobs data: the Non-Farm Payrolls, which is a report that shows changes in the total number of employed people in the U.S., excluding the farming industry. Higher numbers show increased economic activity and indicate that consumer spending is likely to pick up in the near future, thus strengthening the greenback.


GBP/USD

The pair completed another choppy week, with higher volatility than usual but it still remained between support and resistance and all strong moves in one direction were reversed.

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Technical Outlook

The last move is bearish and the US Dollar is picking up pace across the board but for the time being the sellers are having difficulty breaking the support at 1.3050 and the 50 days Exponential Moving Average is still flat, indicating that the pair is in range-mode. This week we expect to see another attempt to break the mentioned support, which, if successful will open the door for an extended move lower, with 1.2950 and 1.2850 as targets. Otherwise, the 50 days EMA will become the first target.

Fundamental Outlook

The first major release for the Pound is scheduled Wednesday in the form of the British Manufacturing PMI and followed Thursday by the Construction PMI. These are surveys of purchasing managers that ask respondents to rate business conditions in their respective sectors; the impact is moderate but a greater number than expected usually strengthens the currency.

Also Thursday the Bank of England will announce the interest rate, which is expected to change from 0.25% to 0.50%. If this does happen, we will most likely see huge movement on all Pound pairs, so caution is strongly advised. The same day the Bank of England will release the Inflation Report containing an outlook for inflation and economic growth for the next 2 years and BOE Governor Carney will hold a press conference discussing the Report.

The final event of the week will be the Services PMI, scheduled Friday but this release will probably be overshadowed by the events that unfold Thursday.

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WEEKLY ANALYSIS: BEARISH PRESSURE INCREASES, POSSIBLE DOWNTREND DEVELOPS AS THE US DOLLAR GAINS TRACTION


EUR/USD


Weekly Analysis: Despite key economic data being released last week, the pair remained in a relatively tight range, bouncing between 1.1600 support and 1.1700 resistance for the entire week.

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Technical Outlook

Price is consolidating between support and resistance, which is a sign that the pair is preparing for a breakout. The latest move is bearish, testing 1.1600, so if the level can be surpassed, we expect to see a move into the next support, located at 1.1450. On the other hand, if the current support rejects price, the immediate target will become the top of last week’s range (1.1700), followed by the 50 days Exponential Moving Average. As long as price is trading below 1.1700 and below the 50 EMA, our bias is bearish.

Fundamental Outlook

The week starts with the Eurogroup Meetings, scheduled Monday and continues with the ECOFIN Meetings scheduled Tuesday. These meetings are closed to the press but participants usually speak to journalists during the day and a formal statement is released at the end of each meeting. The impact is usually negligible on the Euro, unless special developments take place.

Wednesday we don’t have anything major on the economic calendar and Thursday’s only notable event is the release of the EU Economic Forecasts, which is a document released by the European Commission, containing an economic outlook for the EU member states for the next 2 years.

Friday U.S. banks will be closed in observance of Veterans Day and the only important release will be the University of Michigan Consumer Sentiment, which is a survey that tries to gauge the opinions of consumers regarding current and future economic conditions. As you can see, we have a slow week ahead, so the technical aspect will probably take center stage.


GBP/USD

Last week the Bank of England decided to raise the interest rate from 0.25% to 0.50% but the market expected this hike to be followed by three more next year. However, the Bank’s statement showed that it was planning only two more hikes and this was received as disappointing news, thus weakening the Pound.

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Technical Outlook

The pair is currently testing the support at 1.3050 but it is still ranging and a clear direction hasn’t yet emerged. The 50 days EMA is also flat, supporting the view that the pair is range-bound. The current level of support (1.3050) will be very important early in the week because a break of it will show that bearish pressure is increasing and that we will probably see a more directional behavior, with 1.2950 as first target.

Fundamental Outlook

Similar to the other two currencies, the Pound has a light economic week ahead, with only 2 notable releases. Thursday the National Institute of Economic and Social Research (NIESR) will release an Estimate version of the British Gross Domestic Product and Friday the British Manufacturing Production numbers come out, showing changes in the value of goods produced by the manufacturing sector. These indicators are not known to have a high impact on the currency, but if the actual numbers differs a lot form expectations, the effect will increase.

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WEEKLY ANALYSIS: PAIRS STILL IN LIMBO. LOOKING FORWARD TO INFLATION AND RETAIL SALES DATA FOR A VOLATILITY BOOST


EUR/USD


Weekly Analysis: In the second part of last week the pair showed some signs of directional movement but overall it is still in a range, bouncing between 1.1600 and 1.1700. The lack of major economic releases contributed to the slow movement.

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Technical Outlook

The sellers have tried several times to break 1.1600 support zone in the last period but all attempts have failed and now price is moving north, towards the confluence zone created by the 50 days Exponential Moving Average, the resistance at 1.1700 and the bearish trend line seen on the chart above. This confluence zone will be tough to break, considering that lately the pair has been moving very slow, but on the other hand, a break would show that finally the balance is tilting towards one side and that more directional movement will follow.

Fundamental Outlook

Monday will be a slow economic week for the pair but action picks up Tuesday with the release of the Eurozone Flash Gross Domestic Product and the German ZEW Economic Sentiment, which is a survey of about 300 institutional investors and analysts that asks respondents to give a 6-month outlook for the German economy.

Wednesday the focus shifts on the US Dollar for the release of the Consumer Price Index (which is one of the main gauges of inflation) and the Retail Sales, which represent the main part of consumer spending and thus are very important for the currency itself.

Thursday the Philly Fed Manufacturing Index will show the opinions of about 250 manufacturers from the Philadelphia district regarding overall business conditions in the district, and the week ends Friday with the U.S. Building Permits that will offer insights into the construction activity. Apart from a few major releases, we have another slow week ahead, with the technical side taking center stage.


GBP/USD

The Pound retraced higher last week, erasing some of the losses incurred a week before but the pair is still in a range, without a clear trend.

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Technical Outlook

After the bounce at 1.3050 support, price moved higher and reached the 50 days Exponential Moving Average, which is flat, showing that control doesn’t clearly belong to either side. For this week we expect to see a breakout of either 1.3250 resistance or 1.3050 support and if that happens, it will probably trigger additional movement in the direction of the break. Until price moves outside one of the two levels, the pair is ranging and we can expect to see further choppiness.

Fundamental Outlook

The first important release of the week will be the British Consumer Price Index, scheduled Tuesday. This is the main gauge of inflation and usually has a strong impact on the Pound, so caution is recommended.

Wednesday’s highlight will be the release of the Average Earnings Index, a report that shows changes in the price that employers pay for labor and the final economic data of the week is scheduled Thursday in the form of the British Retail Sales numbers, which usually have a high impact on the Pound.

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WEEKLY ANALYSIS: THE WEEK AHEAD: ECB’S DRAGHI AND BOE’S CARNEY TESTIFY, U.S. PREPARES FOR THANKSGIVING DAY


EUR/USD


Weekly Analysis: Buying interest around the Euro increased last week and the pair moved above several types of resistance, finishing the week more than 100 pips higher than it started. 

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Technical Outlook

The bulls managed to break the confluence zone created by 1.1700 resistance, the 50 days Exponential Moving Average and the bearish trend line seen on the chart above. This shows that momentum is clearly on the Euro side, so we expect to see a touch of the resistance at 1.1875 early in the week. If the level can be surpassed, the next target will become the key level at 1.2000 but it could take more than a week for the bulls to cover the entire distance. A move below the confluence zone mentioned earlier would invalidate this scenario.

Fundamental Outlook

The week opens Monday with the double testimony of ECB President Draghi before the European Parliament Economic and Monetary Affairs Committee. This is likely an event that will generate increased volatility on Euro pairs, so caution is advised.

Tuesday the economic scene will be calm and Wednesday the FOMC will release the Minutes of their latest meeting, containing details about the reasons that determined the rate vote. More importantly, if the document offers hints about future rate changes, then we will probably see strong USD movement.

Thursday U.S. banks will be closed in celebration of Thanksgiving Day and on the Euro side the Manufacturing and Services PMIs will be the most notable releases. The week finishes Friday with the German IFO Business Climate, which is a survey with a large sample size of about 7,000 businesses that are asked to rate current economic conditions and to offer a 6-month outlook.


GBP/USD

Price action was choppy, with a bullish bias last week and the pair didn’t manage to break out of the range. British data was mixed, with lower than expected CPI but better employment numbers.

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Technical Outlook

The 50 days Exponential Moving Average is flat and price is bouncing between 1.3050 support and 1.3250 resistance; also, the oscillators are moving without clear momentum and all this is indicative of a ranging market. The last daily candle shows a long wick in its upper part and this increases the probability of a bounce lower but overall trading will remain range-bound until a clear breakout occurs. The levels to watch are 1.3250 followed by 1.3320 as resistance and the lower part of the range is represented by 1.3050.

Fundamental Outlook

The Pound has a slow economic week ahead, with only three notable events: Tuesday the Public Sector Net Borrowing comes out, showing differences in value between spending and income for government and public companies. The same day, Bank of England Governor Carney will testify before the Parliament's Treasury Committee on inflation and economic outlook

The last release of the week will be the Second Estimate Gross Domestic Product scheduled Thursday. The GDP is the main gauge of an economy’s performance, however this version is not as important as the Preliminary, which was already released.

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WEEKLY ANALYSIS: EURO EXPLODES TO THE UPSIDE, CAPITALIZING ON A FRAIL US DOLLAR. KEY RESISTANCE EYED


EUR/USD


Weekly Analysis: Euro strength combined with US Dollar weakness across the board generated a bullish week and a break of key resistance. The pair has exited the consolidation phase but the long term uptrend has not yet resumed.

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Technical Outlook

After breaking the bearish trend line seen on the chart above, the pair consolidated between the 50 days Exponential Moving Average and 1.1875 resistance. Now the consolidation is over and we are dealing with a clear bullish breakout above 1.1875, meaning that the key level at 1.2000 is the pair’s first destination. This is a technical resistance as well as a psychological level (big, round number) and the Relative Strength Index is entering overbought, so we expect to see bounces lower if the pair reaches it.

Fundamental Outlook

The week opens relatively slow, with nothing major for the Euro for the first two days of the week. For the US Dollar the highlights will be the New Home Sales scheduled Monday and followed Tuesday by the Consumer Confidence survey. These releases are not known to have a huge impact but usually a higher number strengthens the currency.

Wednesday action picks up with the Preliminary version of the German Consumer Price Index, which is the main gauge of inflation and has a hefty impact on the shared currency because the German economy is the strongest in the Eurozone. Another important release is the Preliminary version of the U.S. Gross Domestic Product, which is the main gauge of overall economic performance and later the same day, Fed Chair Yellen will testify before the Joint Economic Committee of Congress on U.S. economic outlook.

Thursday the European Flash version of the Consumer Price Index will be released and the week ends Friday with the U.S. Manufacturing PMI, which is a survey of purchasing managers that tries to gauge their optimism regarding economic conditions in the Manufacturing sector.


GBP/USD

Broad US Dollar selling was the main reason for last week’s continued climb. The pair has now moved into medium term resistance, which makes it susceptible to a bounce lower.

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Technical Outlook

For the last few weeks the pair has traded inside the range created by 1.3320 resistance and 1.3050 support. Currently it’s testing the upper boundary but the last two daily candles are small and with long wicks, showing that bullish momentum is fading, so we may see a bounce that could find support around 1.3250 or even at the 50 days Exponential Moving Average. On the other hand, a clear break of 1.3320 will increase the probability of a move into 1.3450.

Fundamental Outlook

The British Bank Stress Test Results will come out Tuesday, offering insights into the financial stability of 7 banks and building societies. The same day the Bank of England will release their Financial Stability Report, which assesses the potential risks for the financial system.

The last event of the week is scheduled Friday in the form of the Manufacturing Purchasing Managers’ Index, which is a leading indicator of economic health and optimism among purchasing managers from the Manufacturing sector.

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WEEKLY ANALYSIS: NON-FARM PAYROLLS – THE LAST MAJOR EMPLOYMENT DATA OF THE YEAR

EUR/USD

The US Dollar showed modest gains in the beginning of last week but the pair then climbed on the back of U.S. political turmoil. Overall price action was choppy and characterized by reversals on the lower time frames.

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Technical Outlook

The pair is supported by a bullish trend line that will probably push price into the key resistance at 1.2000. On the other hand, if the bears manage to break this trend line, we will most likely see a drop into the 50 days Exponential Moving Average where the next direction will be decided. The pair’s behavior this week will be heavily influenced by the U.S. political scene and by the jobs data released later in the week.

Fundamental Outlook

The week starts off slow, without any major releases scheduled Monday, while Tuesday the only notable economic data will be the U.S. Non-Manufacturing PMI (also called Services PMI), which is a survey that shows the opinions of purchasing managers regarding business conditions in the Services sector.

Wednesday action picks up and we take a first look at United States jobs situation, with the release of the ADP Non-Farm Employment Change. The report shows the estimated change in the number of employed people in the U.S., apart from the farming sector and government. A larger number of employed people indicates that consumer spending is likely to pick up in the near future and this in turn strengthens the currency.

Thursday ECB President Mario Draghi will hold a press conference in Frankfurt at the Bank of International Settlements and the economic week will end Friday with the most important U.S. employment data: the Non-Farm Payrolls. This report shows changes in the total number of employed people in the U.S., excluding the farming industry and has a very strong impact on the US Dollar. Higher numbers strengthen the currency because employment is a leading indicator of consumer spending, which in turn represents a hefty part of overall economic activity.

GBP/USD

Renewed optimism regarding Brexit negotiations took the pair above long term resistance (1.3450), reaching a weekly high at 1.3550. Some rejection was seen during the last day of the week but momentum is still on the buyers’ side.

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Technical Outlook

The bias is bullish but the pair is capped by last week’s high at 1.3550 and the Relative Strength Index is entering overbought territory, warning that a deeper retracement south may follow. If early in the week the bears can break 1.3450, we may see a move back into the 1.3320 zone but on the other hand, if 1.3450 becomes support, we will probably see a move into 1.3600 area.

Fundamental Outlook

The week is rather slow for the Pound, with only a few notable releases. The Construction PMI and Services PMI will come out Monday and Tuesday respectively, showing the opinions of purchasing managers regarding business conditions in their sector.

The last announcement of the week is the Manufacturing Production scheduled Friday. This indicator shows changes in the total value of goods produced by the manufacturing sector and has a positive impact on the Pound if it posts a higher than anticipated reading; the opposite is true for a lower reading. As always, the U.S. releases will have a direct impact on the pair’s movement.

Edited by GDMFX

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WEEKLY ANALYSIS: THREE INTEREST RATES – THREE REASONS FOR HUGE VOLATILITY

EUR/USD

Weekly Analysis: Last week belonged to the US Dollar that showed signs of recovery and took the pair into 1.1700 area. Most of the move was technical as the economic scene was slow and without market moving events.

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Technical Outlook

After the break of the bullish trend line seen on the chart above, price remained below 1.1875 and descended below the 50 days Exponential Moving Average. Although last week closed below the 50 EMA, the last daily candle has a very long wick and a very small body, which is a sign of indecision, so the next direction is difficult to anticipate. For now the first support is located at 1.1700 and resistance sits at 1.1875; if price climbs above the 50 EMA, showing that the initial break was false, we expect a move into 1.1875.

Fundamental Outlook

The first notable releases of the week are scheduled Tuesday: the German ZEW Economic Sentiment (survey of about 300 German investors and analysts regarding economic conditions) and the U.S. Producer Price Index (shows changes in the price that producers charge for their goods and services).

Wednesday will be the most important day of the week for the US Dollar as the Fed will announce their interest rate, which is expected to increase from <1.25% to <1.50%. A Rate Statement will come out at the same time, outlining the reasons that determined the rate decision and half an hour later, Fed Chair Yellen will hold a press conference, discussing the rate. Given that this is the final rate announcement of the year, we may see strong movement on the US Dollar.

Thursday it’s the ECB’s turn to announce the interest rate (no change expected) and soon after, ECB President Mario Draghi will hold his usual press conference during which he will answer unscripted questions from journalists. Also Thursday the U.S. Retail Sales will come out, so this will be another day with possibly high volatility. The week ends Friday without any notable releases.

 

GBP/USD

The Pound had a choppy week and was affected by Brexit talks that generated periods of irregular volatility and reversals on the lower time frames. The bias was bearish but the pair remained above support. 

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Technical Outlook

After bouncing at 1.3320, the pair climbed above 1.3450 only to move back below it again, showing choppy price action. The technical aspect will be overshadowed by any news regarding Brexit negotiations but the levels to watch remain 1.3320 as support and 1.3550 as resistance (for now 1.3450 doesn’t seem too important). A break of 1.3320 and the 50 EMA will open the door for a move into 1.3050 but this could take more than a week.

Fundamental Outlook

The Pound has a busier week than usual, starting with the Consumer Price Index, scheduled Tuesday. This is the main gauge of inflation and shows changes in the price that consumers pay for the goods and services they purchase.

Wednesday the Average Earnings Index comes out, showing changes in the price that employers pay for labor. The indicator has inflationary implications because usually if businesses pay more for labor they tend to increase the price of their products. If the actual change surpasses expectations, this usually strengthens the Pound.

Thursday the British Retail Sales will come out and the Bank of England will announce the rate decision, which creates volatility even if no change occurs. As always, the U.S. releases will have a strong impact on the pair so caution is recommended.

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WEEKLY ANALYSIS: PRICE ACTION BECOMES CHOPPIER AS WE GET CLOSER TO THE WINTER HOLIDAYS


EUR/USD

Weekly Analysis: Last week the Fed raised the interest rate from <1.25% to <1.50% as expected but Fed Chair Yellen was somewhat dovish during her press conference and this generated a jump higher on the back of US Dollar weakness. Most of the Euro gains were erased during the following days.


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Technical Outlook

The pair ended last week very close to the opening price and couldn’t break free from the 50 days Exponential Moving Average, which is almost flat, indicating a lack of momentum on both sides. Currently, price action is capped by two trend lines and the break of one of them will probably decide the next direction but until that happens the pair will probably show ranging price action. Horizontal support sits at 1.1700 and resistance is located at 1.1875; for a breakout to happen price needs to clear these zones as well.


Fundamental Outlook

The first release of the week will be the Eurozone Final version of the Consumer Price Index, scheduled Monday. This is an important gauge of inflation but the Final version tends to have the lowest impact. Tuesday the German IFO Business Climate will show the opinions of about 7,000 businesses about a 6-month outlook for the German economy and on the US Dollar side the only notable release will be the Building Permits, which shows how many construction permits were issued during the previous month.


Thursday the U.S. Final Gross Domestic Product will be released, showing changes in the total value of services and goods generated by the economy and the week ends Friday with the U.S. Durable Goods Orders, an indicator that shows changes in the value of orders placed for goods with a life expectancy of at least 3 years. Overall it’s a rather slow week, mostly due to the approaching of the Winter Holidays.

GBP/USD

Last week the pair bounced between support and resistance, a behavior mostly generated by the fundamentals: first the US Dollar weakened during the Fed meeting and then it was the Pound’s turn to go down after more Brexit concerns emerged.


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Technical Outlook

After failing to break 1.3450, the pair dropped into the confluence zone created by the support at 1.3320 and the 50 days Exponential Moving Average. Momentum is on the sellers’ side but as long as the mentioned support zone is intact, the pair’s direction is uncertain. A break will likely trigger a stronger drop but the focus will remain on Brexit negotiations so the Pound will be prone to sudden moves.


Fundamental Outlook

The Pound has a slow week ahead, with only a few notable releases. Wednesday BOE Governor Carney will speak before the Treasury Select Committee about the November Financial Stability Report. De pending on his attitude, the Pound may see increased volatility so caution is advised.


Thursday the Public Sector Net Borrowing comes out, showing the difference between spending and income for the Public Sector. A positive number shows deficit and a negative number shows surplus but the indicator is not a major market mover.


Friday the Current Account will be released, showing the value difference between imported and exported goods and the same day the Final version of the British GDP will come out. This is the main gauge of an economy’s performance but the Final version usually has a low impact on the currency.



 

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WEEKLY ANALYSIS: FIRST TRADING WEEK OF 2018 – US JOBS DATA IN THE SPOTLIGHT

EUR/USD

Weekly Analysis: The US Dollar ended the year on a bearish note, weakening for the entire last week against the Euro. The pair finished 2017 right on the key resistance at 1.2000 but it is unclear yet if we are dealing with a true break.

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Technical Outlook

After breaking the bearish trend line seen on the Daily chart above, the pair continued higher and breached the important barrier at 1.2000. The short term momentum is bullish but price action will be affected by low volumes during the early days of the coming week and this means that we may see either another period of strong movement or tight ranges. The Relative Strength Index is approaching overbought and 1.2000 is a key level, so the probability of a bounce lower from here is high.

Fundamental Outlook

Monday is the first day of the New Year, so most banks across the globe will be closed and no economic data will come out. Tuesday is again a slow day, without major indicators and action finally picks up Wednesday with the U.S. Manufacturing PMI and the FOMC Meeting Minutes, which will offer details about the latest FOMC rate decision and reasons that determined it.

Thursday we take a first look at US employment data with the release of the ADP Non-farm Employment Change, which is a report that shows changes in the total number of employed people, apart from the farming sector and Government.

The last release of the week but the most important is scheduled Friday: the Non-Farm Payrolls, which is the main gauge of employment in the United States. The report shows changes in the total number of employed people during the previous month, excluding the farming industry and usually has a high impact on the US Dollar.
 
GBP/USD

US Dollar weakness was seen across the board last week and the pair finished the year very close to 1.3500, on a bullish note.

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Technical Outlook

For this week we expect choppy price action, with the pair trapped between 1.3450 support and 1.3550 resistance. Monday the market will come to a stop due to New Year’s Day but action will pick up later in the week when the U.S. employment data will come out. A break outside the range we’ve just mentioned will probably be determined by the economic data released throughout the week.

Fundamental Outlook

Monday British banks will be closed, celebrating New Year’s Day and the rest of the week will be relatively slow, with only three surveys of purchasing managers. Tuesday the Manufacturing PMI will be released, followed Wednesday by the Construction PMI and Thursday by the Services PMI. These surveys show the opinions of purchasing managers from the respective sectors about business conditions in that sector but the impact is usually medium.

We wish you a Happy New Year!

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WEEKLY ANALYSIS: KEY RESISTANCE LEVELS TESTED. POSSIBLE LONG TERM UPTREND RESUMPTION

EUR/USD

Weekly Analysis: Last week price action slowed down and the pair traded in a relatively tight range between 1.2000 support and 1.2092 resistance. Overall it was an uneventful week and the pair is likely to enter a consolidation phase.

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Technical Outlook

After the big climb seen during the Winter Holidays, price is now bouncing between support and resistance in anticipation of the next breakout. Last year’s high at 1.2092 is a key level for long term price action and a break would show uptrend resumption, followed by moves higher (next potential resistance is located at 1.2280). If the pair bounces at the current resistance, we will probably see a move into the 50 days Exponential Moving Average and possibly 1.1900 – 1.1875 area; the oscillators are coming down from overbought, indicating that a move lower is likely.

Fundamental Outlook

The week opens with the release of the Eurozone Retail Sales scheduled Monday, which has a low-to-medium impact on the Euro and the next two days will lack any notable releases for both currencies.
Action picks up a bit Thursday with the release of the US Producer Price Index, which shows changes in the price that producers charge for their goods and services. This indicator has inflationary implications because usually a higher producer price translates into a higher consumer price.

Friday will be the busiest day of the week, with two important releases: the US Consumer Price Index (one of the main gauges of inflation) and the US Retail Sales. Both have a strong impact on the US Dollar, with higher numbers strengthening it, so we expect increased volatility, especially because the rest of the week lacks major releases.
 
GBP/USD

The pair had a mixed week, with the US Dollar showing brief moments of strength at the time of the FOMC Minutes release. The US jobs data came out worse than anticipated but the market reaction was jerky and without strong directional movement.

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Technical Outlook

Price bounced at 1.3616 resistance and appeared to move lower, towards 1.3450 support. This level can still be reached over the course of this week if the pair bounces again around 1.3600. The current level at 1.3550 will be important to watch on the lower time frames because the way price behaves around it will determine if the immediate target is 1.3600 – 1.3616 or 1.3450.

Fundamental Outlook

The Pound has a very slow economic week ahead, with Wednesday being the only day with notable releases: the Manufacturing Production and NIESR GDP Estimate. The former report shows changes in the total value of goods generated by the manufacturing sector and the latter is just an estimate of the Gross Domestic Product so its impact is sometimes overlooked by market participants.

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FOREX NEWS: MAJOR BREAKOUTS UNDERWAY. BULLS TAKE CONTROL OF MEDIUM TERM PRICE ACTION

EUR/USD

Forex News: The Euro was boosted by news that the ECB might change their forward guidance to a more hawkish tone and also by positive news coming from the German political scene, later in the week. All this triggered a huge climb, breaking last year’s high.

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Technical Outlook

The break of 1.2092 shows that the long term uptrend has resumed and this makes 1.2280 the next target. This is a long term resistance that hasn’t been reached in a long time so we don’t know exactly how price will react once and if it touches it. Last week the pair has traveled a long distance to the upside and this usually calls for a retracement or a period of consolidation but as long as the pair remains above 1.2100, the bias is bullish.

Fundamental Outlook

Monday US banks will be closed in observance of Martin Luther King Day and no economic data will be released. Tuesday will be another slow day and action picks up a bit Wednesday with the U.S. Industrial Production and European Final CPI. These are indicators with a medium impact so we don’t expect huge movement at the time of release.

Thursday’s highlights will be the U.S. Building Permits and the Philly Fed Manufacturing Index but again, these have a low-to-medium influence on the greenback so the impact may be overlooked. The final release of the week will be the University of Michigan Consumer Sentiment scheduled Friday. This a survey that shows the opinions of consumers regarding economic conditions and it is important because a confident consumer is likely to spend more and this boosts the economy but it is not known as a strong market mover.
 
GBP/USD

US Dollar weakness was present across the board last week, allowing the Pound to make substantial advances to the north after a ranging period.

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Technical Outlook

The break of 1.3616 resistance marks the possible beginning of an extended period of bullish movement. The strong breakout will most likely be followed by a small retracement south but overall the pair is moving up and the US Dollar offers little resistance. The next resistance and target for the week is located at 1.3860, where we expect a bounce lower.

Fundamental Outlook

The Pound will be affected by only two major releases this week: the British Consumer Price Index scheduled Tuesday and the British Retail Sales scheduled Friday. The former is the main gauge of inflation in the UK, while the latter has a strong impact because sales made at retail levels represent the biggest part of consumer spending. Numbers above expectations for either one of them have the potential to strengthen the Pound.

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WEEKLY ANALYSIS: WORLD ECONOMIC FORUM MEETINGS START IN DAVOS. STRONG MARKET IMPACT EXPECTED

EUR/USD

Weekly Analysis: Last week we saw several attempts to move above the resistance at 1.2280 but all resulted in bounces lower. Overall the pair remained consolidation phase, but pressure is mounting for a stronger move.

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Technical Outlook

It is now clear that 1.2280 is a strong resistance zone, so a break or bounce here will be important for medium term price action. The pair is in an uptrend, so there’s a high possibility of a move above 1.2280 – 1.2300, which would open the door for 1.2500, which is a psychological level (such a move will likely take more than one week). On the other hand, the RSI is showing bearish divergence (price is making higher highs and the oscillator is showing a double top) and this is a warning sign that a deeper move south will follow. If this is the case the first support is located at 1.2092.

Fundamental Outlook

Price action during the week ahead will likely be influenced by the World Economic Forum (WEF) Meetings held in Davos. The meetings will last all week so caution is recommended. Apart from this, the Euro will be affected by the ZEW Economic sentiment released Tuesday, while Wednesday the focus will be on the US Dollar for the release of the Existing Home Sales.
Thursday the ECB will announce the interest rate, which is not expected to change but ECB President Draghi will hold a press conference shortly after and this is usually a reason for high volatility. Friday the most notable release will be the US Advance version of the GDP, which is the main gauge of overall economic performance.
 
GBP/USD

Last week the bulls remained mostly in control and took the pair to a high at 1.3942. However, later in the week price rebounded and approached the previous resistance at 1.3860.

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Technical Outlook

Although the pair is on an upwards trend, it bounced twice at 1.3942 and the Relative Strength Index is still in overbought territory, which means that we will probably see a move south this week. If 1.3860 is broken, the first potential support is located around 1.3600 but such a long move will need some support from the fundamental side. On the other hand, a break of 1.3942 will take the pair into the key psychological resistance at 1.4000.

Fundamental Outlook

The Pound will only be affected by two major releases this week: the Average Earnings Index scheduled Wednesday and the Preliminary version of the Gross Domestic Product, scheduled Friday. Also Friday, Bank of England Governor Carney will participate in a panel discussion at the World Economic Forum and this could be another reason for increased volatility.

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WEEKLY ANALYSIS: BIG WEEK FOR THE US DOLLAR: FED RATE DECISION AND NON-FARM PAYROLLS
  
EUR/USD

Weekly Analysis: US Dollar weakness continued throughout the entire last week and the pair made substantial advances to the north, reaching the key psychological level at 1.2500.

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Technical Outlook

The pair is in a clear uptrend but the last two candles are showing long upper wicks and rejection at 1.2500; also the pair has traveled a long distance to the upside, taking the Relative Strength Index into overbought territory. All this suggests that we will see a move lower this week, possibly into the support at 1.2300 but a lot will depend on the key US data released during the week.

Fundamental Outlook

The week starts with a slow Monday but action picks up Tuesday when we take a first look at German inflation with the Consumer Price Index. Later the same day the US Consumer Confidence survey comes out, showing the opinions of consumers regarding overall economic conditions.
Wednesday President Trump will deliver a speech in Washington DC and although this may go mostly overlooked by the market, caution is still recommended. The FOMC will also release their interest rate Statement the same day. No change is expected for the rate but if the Statement contains hints about the next rate hike, the US Dollar is likely to react strongly.
The final cluster of events is the US jobs data scheduled Friday: the Average Earnings Index, the Non-Farm Payrolls and the Unemployment Rate. All these have a huge impact on the greenback and create volatility almost each time they are released, so caution should be used.
 
GBP/USD

Similar to the Euro, the Pound posted large gains last week, partly due to US Dollar weakness and partly due to increased hopes for a “smooth” Brexit.

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Technical Outlook

Since the bounce at 1.3450, the pair has moved straight up, without a proper pullback, which makes it extremely overextended and in need of a move lower. The Relative Strength Index is deep in overbought territory and the last candles are showing long wicks, which is another sign of rejection, so we will probably see a touch of the zone between 1.4050 – 1.4000. After this possible retracement is complete, bullish movement will probably resume.

Fundamental Outlook

The Pound has a lackluster week ahead, with only a few notable events. Tuesday BOE Governor Carney will testify before the House of Lords Economic Affairs Committee; Thursday the British Manufacturing PMI comes out, followed Friday by the Construction PMI. Carney’s testimony could be a strong market mover but the PMIs usually have just a minor impact on the Pound unless the actual figure differs a lot from expectations. As always, the US releases will have a direct and possibly strong impact on the pair.

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