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GBP: Guided by the UK politics

GBP_Guided-by-the-Uk-politics

In view of analysts at ING, GBP has staged a timid rebound after dramatically falling on Tuesday.

Key Quotes

“Brexit fears were partly mitigated by a move by British MPs aimed at averting a Parliament suspension, which may allow the future PM (in all probability Boris Johnson) to force a no-deal solution.”

“Today, a scheduled debate in the House of Commons on the matter may provide more clarity. Add to this a possible rebound in June retail sales, and GBP may stay supported on the day.”

“Nonetheless, we expect the 0.90 level in EUR/GBP to be a solid support for the pair. Looking ahead, we remain highly sceptical that any GBP rally will prove sustainable and expect pressure on GBP to keep mounting.”

Source: fxstreet

In view of analysts at ING, GBP has staged a timid rebound after dramatically falling on Tuesday...

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USD/JPY: Back under pressure

USDJPY_under-pressure_Forex_FXPIG

According to analyst at Commerzbank, USD/JPY has eroded the 107.81 5th June low and is back under pressure.

Key Quotes

“While the market is capped by 108.99 we will maintain a negative bias. The 107.81 5th June low should act as a near term break point to the 106.78 recent low. Our short term target is 105.87, the 78.6% retracement of the move seen this year.”

“Minor resistance lies at the 109.02 mid-May low and also at the 110.84 April 10 low and the 110.75 200 day moving average. These guard the 2015-2019 downtrend at 111.94.”

“We look for the market to remain capped by its 112.01 2015-2019 downtrend. Only above here would target the 114.55 October 2018 high.”

Source: fxstreet

According to analyst at Commerzbank, USD/JPY has eroded the 107.81 5th June low and is back under pressure...

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Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 18.07.2019

Bulls-and-bears_Forex_tech-analysis_18.07.2019_FXPIG

24-HOUR VIEW EUR is expected to trade sideways, likely between 1.1200 and 1.1245. Yesterday, we were of the view the “weakness in EUR is expected to extend lower but major 1.1180 support is unlikely to yield so easily”. While EUR subsequently dipped below 1.1200 (low of 1.1198), it recovered quickly to end the day little changed at 1.1223. Downward pressure has eased with the recovery and the current movement is viewed as part of a consolidation phase. In other words, EUR is expected to trade sideways for today, likely between 1.1200 and 1.1245.


1-3 WEEKS VIEW EUR is expected to trade with a ‘downside bias’ but is unlikely to challenge 1.1100. No change in view from yesterday, see reproduced update below.

After trading in a relatively subdued manner for a few days, EUR staged a surprisingly sudden and sharp decline and tested the bottom of our expected 1.1200/1.1310 sideway trading range (first indicated last Thursday,11 Jul, spot at 1.1255). From here, a move below 1.1200 and the mid-June low near 1.1180 would not be surprising. However, downward momentum is not as strong as we prefer and EUR is unlikely to ‘accelerate’ lower. Overall, EUR is expected to trade with a ‘downside bias’ for now but is unlikely to challenge the year-to-date low near 1.1100 (there is another support at 1.1155). On the upside, only a move above the strong 1.1260 resistance would indicate that the current downward pressure has eased.

GBP/USD:

24-HOUR VIEW GBP is expected to trade sideways, likely within a 1.2400/1.2460 range. Expectation for GBP to “weaken further to 1.2365” did not materialize as it staged a relatively robust and rapid rebound after touching 1.2382. Downward momentum has more or less dissipated and GBP is deemed to have moved into a consolidation phase for now. For today, GBP is expected to trade sideways, likely within a 1.2400/1.2460 range.

1-3 WEEKS VIEW GBP is in a ‘negative phase’, could trade towards 1.2340. GBP edged to a fresh low of 1.2382 before recovering. For now, there is no change to our view from yesterday (see reproduced update below).

We indicated yesterday (16 Jul, spot at 1.2515) that “a dip below 1.2470 is not ruled but GBP has to register a NY closing below 1.2440 in order to indicate that it is ready to move below the year-to-date low near 1.2410”. However, the rapid pace of how the price action evolved was unexpected as GBP plunged to a 27-month low of 1.2396 (before closing -0.89% lower at 1.2405, the largest 1-day decline in almost 4 months). The sharp decline indicates that the ‘sideway-trading phase’ that started last Friday (12 Jul, spot at 1.2525) has ended earlier than expected. From here, GBP is deemed to have move into a ‘negative phase’ and could move to 1.2340. On the upside, only a break of the 1.2490 ‘key resistance’ would indicate that the current downward pressure has eased. On a shorter-term note, 1.2460 is already a strong resistance level.

AUD/USD:

24-HOUR VIEW AUD is expected to trade sideways, likely between 0.7000 and 0.7040. AUD traded between 0.6996 and 0.7025 yesterday, narrower than our expected sideway trading range of 0.6995/0.7040. Momentum indicators are still mostly ‘neutral’ and we continue to expect AUD to trade sideways for now, likely between 0.7000 and 0.7040.

1-3 WEEKS VIEW Sustained AUD strength is only likely if it can move and stay above the major 0.7050/70 resistance zone. There is no change to our view from Tuesday (16 Jul, spot at 0.7040). As highlighted, while upward momentum has improved, we have doubts about the sustainability of the advance in AUD. The concern is primarily due to the major resistance zone of 0.7050/70. The 0.7050 level was tested a few times in the past couple of months and held (see annotations in chart below). The 0.7070 level is the minor peak in April as well as a declining trend-line resistance (not visible in the chart below). The price action in AUD over the past couple of days appears to suggest that AUD is ‘hesitating’ below this major resistance zone. That said, the risk for an upside break is still intact as long as 0.6980 is not taken out (no change in level from Tuesday). Looking ahead, if AUD were to move and stay above 0.7070, it would suggest last month’s 0.6832 low could be a significant bottom and AUD could move beyond the next major resistance at 0.7110 in the coming weeks.

NZD/USD:  

24-HOUR VIEW NZD could strengthen but any advance is viewed as a higher trading range of 0.6710/0.6750. Instead of trading sideways, NZD briefly rose to 0.6745 before easing off. Despite the ‘positive’ price action, upward momentum has not improved by much. From here, NZD could edge above the 0.6745 peak but any advance is viewed as a higher 0.6710/0.6750 range (a sustained rise beyond 0.6750 is not expected).

1-3 WEEKS VIEW Sustained NZD strength only if NZD were to close above 0.6740 in NY. The underlying tone in NZD continues to improve as it touched a 3-month high of 0.6745 before ending the day at 0.6732 (+0.50%). For now, we continue to prefer to wait for a NY closing above 0.6740 (see update from Tuesday, 16 Jul, spot at 0.6720) before adopting a more positive stance. The prospect for such a scenario has improved and would increase further as long as 0.6685 (level was at 0.6670 on Tuesday) remains intact within these few days. Looking ahead, if NZD were to close above 0.6740, a break of 0.6780 would not be surprising.

USD/JPY:

24-HOUR VIEW USD could probe 107.70 but the next support at 107.50 is likely out of reach. Expectation for USD to “test 108.50” was incorrect as it retreated after touching 108.32 and dropped to an overnight low of 107.94. Downward momentum has ticked up albeit not by much and this would likely lead to a probe of 107.70. The next support at 107.50 is likely out for reach. Resistance is at 108.10 followed by 108.35.

1-3 WEEKS VIEW USD is expected to trade sideways. No change in view from yesterday, see reproduced update below.

There is not much to add as USD traded in an ‘erratic’ manner as it recouped most of last Friday’s decline (closed at 108.22, +0.29%). For now, we continue to hold the same view from last Thursday (11 Jul, spot at 108.30) wherein USD is expected to trade sideways within a 107.50/108.95 range. Looking forward, the risk of a break of the top of the range first appears to be higher. However, USD has to close above 109.00 in order to indicate that it is ready to challenge 109.60. Meanwhile, the 107.50/108.95 range could remain intact, at least for a few more days.

Source:efxdata

EUR is expected to trade sideways, likely between 1.1200 and 1.1245. Yesterday, we were of the view the “weakness in EUR is expected to extend lower but major 1.1180 support is unlikely to yield so easily...

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Gold technical analysis

Gold_bears_challange_Foex_FXPIG
  • Gold remained under some selling pressure for the third consecutive session on Wednesday and dropped to one-week lows, around the key $1400 psychological mark in the last hour.
  • The mentioned handle coincides with a key pivotal point - 200-period SMA on the 4-hourly chart, which if broken would set the stage for an extension of the ongoing downward trajectory.

Technical indicators on the mentioned chart have been gaining negative traction and support prospects for an eventual bearish breakdown. However, oscillators on the daily charts - although have been losing positive momentum, maintained their bullish bias and warrant some caution before placing any aggressive bets.

Meanwhile, a follow-through selling is likely to accelerate the fall further towards the $1390 region – marking near one-month-old ascending trend-line support. The said trend-line, along with another descending trend-line constitutes towards the formation of a symmetrical triangle on short-term charts.

The symmetrical triangle is seen as a continuation pattern - bullish in this case and represents a brief pause before the next leg of a directional move. Hence, any dips towards the triangle support, around the $1390 region might still be seen as a buying opportunity and should help limit further downside.

On the flip side, the $1406-07 region now seems to act as an immediate resistance, above which the momentum could get extended towards $1415 supply zone. A follow-through up-tick might stall near the triangle resistance– around the $1421-22 region, which if cleared will set the stage for the resumption of the prior bullish trend.

Source: fxstreet

Gold remained under some selling pressure for the third consecutive session on Wednesday and dropped to one-week lows, around the key $1400 psychological mark in the last hour...

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Forex Tech Targets

Bulls-and-bears_Forex_tech-analysis_17.07.2019_FXPIG

EUR/USD:

24-HOUR VIEW Weakness in EUR is expected to extend lower but major 1.1180 support is unlikely to yield so easily. Expectation for EUR to trade sideways was incorrect as it staged a surprisingly deep decline but the down-move was checked by the strong 1.1200 support (overnight low of 1.1200). Downward momentum has improved and from here, barring a move above 1.1245 (minor resistance is at 1.1225), the weakness in EUR is expected to extend lower but the major 1.1180 support is unlikely to yield so easily (next support is at 1.1155).

1-3 WEEKS VIEW EUR is expected to trade with a ‘downside bias’ but is unlikely to challenge 1.1100. After trading in a relatively subdued manner for a few days, EUR staged a surprisingly sudden and sharp decline and tested the bottom of our expected 1.1200/1.1310 sideway trading range (first indicated last Thursday,11 Jul, spot at 1.1255). From here, a move below 1.1200 and the mid-June low near 1.1180 would not be surprising. However, downward momentum is not as strong as we prefer and EUR is unlikely to ‘accelerate’ lower. Overall, EUR is expected to trade with a ‘downside bias’ for now but is unlikely to challenge the year-to-date low near 1.1100 (there is another support at 1.1155). On the upside, only a move above the strong 1.1260 resistance would indicate that the current downward pressure has eased.

GBP/USD:

24-HOUR VIEW GBP could weaken further to 1.2365. While we expected GBP to weaken yesterday, the manner by which it crashed through several strong support levels with ease came as a surprise (overnight low of 1.2396). The rapid drop appears to be running ahead of itself but as there is no sign of stabilization just yet, GBP could weaken further to 1.2365. Only a move back above 1.2460 would indicate that the weakness in GBP has stabilized (minor resistance is at 1.2440).

1-3 WEEKS VIEW GBP is in a ‘negative phase’, could trade towards 1.2340. We indicated yesterday (16 Jul, spot at 1.2515) that “a dip below 1.2470 is not ruled but GBP has to register a NY closing below 1.2440 in order to indicate that it is ready to move below the year-to-date low near 1.2410”. However, the rapid pace of how the price action evolved was unexpected as GBP plunged to a 27-month low of 1.2396 (before closing -0.89% lower at 1.2405, the largest 1-day decline in almost 4 months). The sharp decline indicates that the ‘sideway-trading phase’ that started last Friday (12 Jul, spot at 1.2525) has ended earlier than expected. From here, GBP is deemed to have move into a ‘negative phase’ and could move to 1.2340. On the upside, only a break of the 1.2490 ‘key resistance’ would indicate that the current downward pressure has eased. On a shorter-term note, 1.2460 is already a strong resistance level.

AUD/USD:

24-HOUR VIEW AUD is expected to trade sideways, likely between 0.6995 and 0.7040. Despite overall positive indications, AUD was unable to crack the strong 0.7050 resistance (high of 0.7045). Upward pressure has fizzled out with the rapid pull-back from the high and 0.7050 is likely to remain unchallenged for today. The current movement is viewed as part of a consolidation phase and AUD is expected to trade sideways, likely between 0.6995 and 0.7040.

1-3 WEEKS VIEW Sustained AUD strength is only likely if it can move and stay above the major 0.7050/70 resistance zone. No change in view from yesterday, see reproduced update below.

AUD continues with its advance and registered a 4-day gain of 1.62% yesterday (15 Jul), the largest since January. While upward momentum has improved, we have doubts about the sustainability of the current advance. As highlighted yesterday, AUD has to break above the major 0.7050/70 resistance zone in order to indicate that it is ready to move higher in a sustained manner. 0.7050 was near the high registered earlier this month (and in early May) while 0.7070 is the minor peak in late April as well as a declining trend-line resistance (not visible in the chart below). In other words, the levels between 0.7050 and 0.7070 are solid resistance levels and at this stage, the risk for a clear break of this zone is not high. That said, only a move below 0.6980 (level was at 0.6960 yesterday) would indicate that the upside risk has diminished. Looking ahead, if AUD were to move and stay above 0.7070, it would suggest last month’s 0.6832 low could be a significant bottom.

NZD/USD:

24-HOUR VIEW NZD is expected to trade sideways, likely within a 0.6685/0.6725 range. NZD traded between 0.6696 and 0.6738 yesterday, relatively close to our expected range of 0.6700/0.6740. That said, the weak daily closing of 0.6698 suggests upward pressure has eased. From here, NZD is expected to trade sideways to slightly lower, likely within a 0.6685/0.6725 range.

1-3 WEEKS VIEW Sustained NZD strength only if NZD were to close above 0.6740 in NY. No change in view from yesterday, see reproduced update below.

NZD extended its advance and easily moved above the 0.6710 resistance (high of 0.6725). As indicated yesterday, NZD has to register a NY close above 0.6740 in order to indicate it is ready for a sustained advance. The prospect for such a scenario is not high for now but it would continue to rise if NZD can continue to hold above 0.6670 (level was at 0.6640 yesterday) within these few days.

USD/JPY:

24-HOUR VIEW USD could test 108.50 but a move beyond 108.75 is not expected. Instead of trading sideways, USD rose to an overnight high of 108.37. Despite the relatively strong advance, upward momentum has improved by much. That said, USD could test 108.50 but a move beyond 108.75 is not expected. Support is at 108.10 but the stronger level is at 107.90.

1-3 WEEKS VIEW USD is expected to trade sideways. There is not much to add as USD traded in an ‘erratic’ manner as it recouped most of last Friday’s decline (closed at 108.22, +0.29%). For now, we continue to hold the same view from last Thursday (11 Jul, spot at 108.30) wherein USD is expected to trade sideways within a 107.50/108.95 range. Looking forward, the risk of a break of the top of the range first appears to be higher. However, USD has to close above 109.00 in order to indicate that it is ready to challenge 109.60. Meanwhile, the 107.50/108.95 range could remain intact, at least for a few more days.

Source: exfdata

Weakness in EUR is expected to extend lower but major 1.1180 support is unlikely to yield so easily. Expectation for EUR to trade sideways was incorrect as it staged a surprisingly deep decline but the down-move was checked by the strong...

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EUR/JPY recovers from lows

EURJPY_recovers-from-lows_Forex_FXPIG
  • EUR/JPY reverses recent downside and tests 121.40.
  • EMU final CPI came in at 1.3% YoY and 0.2% MoM.
  • ECB’s Coeure said risks still tilted to the downside.

The ongoing rebound in the demand for the single currency is now lifting EUR/JPY to the area of daily highs in the 121.40/454 band.

EUR/JPY now targets the 121.72/86 band

After three consecutive daily pullbacks, the cross is now attempting a rebound from weekly lows in the vicinity of the 121.00 handle.

US yields are bouncing off daily lows and are bolstering the selling mood in the Japanese safe haven, in turn lending support to the recovery in the EUR/JPY.

In the same line, final June inflation figures in the euro area came in a tad higher than the preliminary readings, showing headline consumer prices now rose at a monthly 0.2% and 1.3% from a year earlier. Core CPI, instead, matched the advanced readings at 1.1%.

Earlier in the day, ECB’s B.Coeure reiterated that risks in the euro region are still tilted to the downside.

Later in the NA session, the Fed will publish its Beige Book, which should shed further details on the recent performance of US regions.

EUR/JPY relevant levels

At the moment the cross is advancing 0.08% at 121.42 and faces the next hurdle at 121.86 (21-day SMA) seconded by 122.32 (high Jul.10) and then 123.35 (monthly high Jul.1). On the other hand, a breakdown of 121.09 (monthly low Jul.16) would expose 120.95 (low Jun.21) and finally 120.78 (low Jun.3).

Source: fxstreet


The ongoing rebound in the demand for the single currency is now lifting EUR/JPY to the area of daily highs in the 121.40/454 band...

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Canada: Housing data in focus

CAD_housing-data-in-focus_Forex_FXPIG

Analysts at TD Securities point out that the Canada’s existing home sales for June will be published at 9:00 ET, with the market looking for sales to remain largely unchanged at +0.1% m/m.

Key Quotes

“Preliminary sales data showed a large pullback in Vancouver home sales, which threatens to drag national sales activity into decline following three consecutive advances through May.”

Source: fxstreet

Analysts at TD Securities point out that the Canada’s existing home sales for June will be published at 9:00 ET, with the market looking for sales to remain largely unchanged at +0.1% m/m.

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Forex Tech Targets

Bulls-and-bears_forex_FXPIG_tech-analysis_15.07.2019

EUR/USD:

24-HOUR VIEW EUR is expected to trade sideways, likely within a 1.1245/1.1290. EUR traded in a relatively quiet manner between 1.1236 and 1.1275, narrower than our expected sideway trading range of 1.1225/1.1280. The price action offers no fresh clue and we continue to expect EUR to trade sideways for now, albeit likely at a higher range of 1.1245/1.1290.

1-3 WEEKS VIEW EUR is expected to trade sideways. EUR did not do much last Friday, dipping to 1.1236 before recovering to end the day slightly higher at 1.1269 (+0.15%). For now, we continue to hold the same view from last Thursday (11 Jul, spot at 1.1255) wherein EUR is expected to trade sideways between 1.1200 and 1.1310. At this stage, there is no early indication on which side of the range is more ‘vulnerable’.

GBP/USD:

24-HOUR VIEW GBP could test 1.2600 but a sustained rise above this level is unlikely. Expectation for GBP to trade sideways was incorrect as it staged a relatively strong advance and touched 1.2580. The up-move appears to be running ahead of itself and while a test of 1.2600 is not ruled out, a sustained rise above this level is unlikely (next resistance is at 1.2630). Support is at 1.2540 followed by 1.2510.

1-3 WEEKS VIEW GBP is expected to trade sideways. We held the view last Friday (12 Jul, spot at 1.2525) that “the recent downward pressure has eased” and that GBP is “expected to trade sideways, likely within a relatively broad range of 1.2440/1.2600”. While there is no change to our view, the rapid pace of which GBP move towards the top of the range at 1.2600 was not exactly expected (high of 1.2580 during NY hours on Friday). Looking ahead, GBP has to move and stay above 1.2630 in order to indicate that it is ready for a more sustained rebound. Meanwhile, we continue to expect GBP to trade sideways, likely within 1.2470/1.2600 (narrowed from 1.2440/1.2600).

AUD/USD:

24-HOUR VIEW Scope for AUD to test the major 0.7050 resistance but a sustained rise above this level is unlikely. The strong gains in AUD that hit a high of 0.7025 last Friday came as a surprise. While the rapid rise appears to be running too fast, too soon, there is scope for AUD to test the major 0.7050 resistance. For today, a sustained rise above this level is unlikely (next resistance is at 0.7070). On the downside, a break of 0.6985 would indicate that the current upward pressure has eased (minor support is at 0.7000).

1-3 WEEKS VIEW AUD is expected to trade sideways. While there is no change to our view from last Friday (12 Jul, spot at 0.6975) wherein AUD is expected to “trade in an undecided manner within a broad 0.6910/0.7050 range”, the rapid pace of which AUD move towards the top of the range was not exactly expected (high of 0.7025 during NY hours on Friday). For now, we continue to hold the same view unless AUD break above the major 0.7050/70 resistance zone. At this stage, the risk for a clear break of this zone is not high but it would continue to rise if AUD can continue hold above 0.6960 within these few days.

NZD/USD:

24-HOUR VIEW Up-move is overbought but NZD could extend its gain to 0.6710. Against our expectation for sideway-trading, NZD rose to 0.6697 before ending the day on a firm note at 0.6696. While overbought, NZD could extend its gain but for today, the prospect for a sustained move above 0.6710 is not high (next resistance is at 0.6725). On the downside, a break of 0.6670 would indicate that the current upward pressure has eased.

1-3 WEEKS VIEW NZD is expected to trade sideways for a period. While NZD is approaching the top of our expected sideway-trading range of 0.6610/0.6710 (high of 0.6697 last Friday), upward momentum has not improved by all that much. That said, NZD could edge above 0.6710 but it has registered a NY closing above last week’s peak near 0.6740 in order to indicate that is ready for sustained advance. The prospect for such a scenario is not high for now but it would continue to rise if NZD can continue to hold above 0.6640 within these few days.

USD/JPY:

24-HOUR VIEW USD could extend its decline and test the strong support at 107.50. The rapid and sharp decline in USD last Friday came as a surprise. Downward momentum has improved and from here, barring a move above 108.25 (minor resistance is at 108.10), USD could extend its decline and test the strong support at 107.50.

1-3 WEEKS VIEW USD is expected to trade sideways. Despite the relative sharp decline last Friday (107.89, -0.54%), we continue to hold the same view as from last Thursday (11 Jul, 108.30) wherein USD is expected to trade sideways within a relatively broad 107.50/108.95 range. A test of the bottom of the range would not be surprising but a sustained decline below the next support at 107.20 is unlikely.

Source:efxdata

EUR is expected to trade sideways, likely within a 1.1245/1.1290. EUR traded in a relatively quiet manner between 1.1236 and 1.1275, narrower than our expected sideway trading range of 1.1225/1.1280....

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EUR: ECB-related uncertainty lingers

ECB-related_uncetainaty_Forex_FXPIG

EUR investors may take a wait-and-see attitude today ahead of the ZEW survey tomorrow and, most importantly, the inflation report on Wednesday, writes FX Strategist at ING.

Key Quotes:

“Implied volatility on EUR/USD remains quite sluggish (1M vols below 5%) ahead of the European Central Bank meeting, signalling some reluctance in the market to see a major shift in policy stance just yet. EUR/USD may be trapped in a narrow range today, with the 1.1255 100-day moving average likely to be a solid support. A dovish ECB may continue to keep EUR gains broadly capped ahead.”

Source: fxstreet

EUR investors may take a wait-and-see attitude today ahead of the ZEW survey tomorrow and, most importantly, the inflation report on Wednesday, writes FX Strategist at ING...

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Forex Week Ahead

USDCAD_Fed-cut-pressure_forex-week-ahead_FXPIG

USD/CAD Canadian Dollar Higher as Dollar Faced Fed Cut Pressure

The Canadian dollar rose on Friday and on a weekly basis gained 0.40 percent versus the dollar. The loonie is trading at 1.3026 despite the Bank of Canada (BoC) holding the Canadian benchmark untouched and injecting a maple dose of dovish rhetoric into the market. In a battle of dovish central banks, the Fed took the lead by already signalling an upcoming rate cut since its last meeting in June. The testimonies of Fed Chair Powell and other high-profile members, as well as the publication of the minutes from said FOMC June meeting has the market fully pricing in the Fed lowering the interest rate at the end of the month.

Oil prices rose on supply disruptions and a weaker dollar, making the case for a stronger Canadian currency. Monetary policy divergence is keeping the CAD higher and will continue to be a factor as the Fed is expected to cut more than once, while the BoC could wrap up 2019 without a single rate move. For that scenario to happen there has to be a resolution to trade disputes and their negative effect on global growth.

Dollar on Back Foot as Fed Dovish Rhetoric Continues

The US dollar is lower across the board against major pairs. The greenback is on its way to three consecutive losing trading sessions after Fed members went full dove in their comments this week. Fed Chair Jerome Powell was the biggest factor on the dollar’s decline by testifying twice this week in Washington about monetary policy. Powell kept up the dovish rhetoric and has the market fully pricing in a rate cut at the end of the month. The timing seems no longer in question, but the size of the cut is still open to speculation.

US economic indicators remain mixed and inflation although subdued is holding its ground, putting question marks around a 50-basis points rate cut. St. Louis Fed Chief Bullard was the lone supporter of a rate cut in June and even he seems to think 50 basis point would be too much at this point in time. US retail sales data to be published on Tuesday, July 16 at 8:30 am EDT is another opportunity to validate an easing move by the Fed if the pessimistic forecasts are met or potentially missed. The flip side could be a surprise rebound of retail sales, putting even more doubt around the number of rate cuts and the depth of the monetary policy easing.

EUR/USD Fed Rate Cut Puts Downward Pressure on Dollar

The euro gained 0.41 percent versus the dollar in the past five trading sessions. The single currency is trading at 1.1271 after rhetoric from the U.S. Federal Reserve continues to signal a rate cut in July. Major central banks have all gone over the dovish side, but the fact the Fed managed to end its easing cycle and started a tightening one, means it can be more active.

The Fed is forecasted to reduce rates by 75 basis points this year, something the European Central Bank (ECB) cannot match as the European interest rate is zero, leaving only negative rates and quantitative easing as realistic options this year. That rate cushion the Fed can cut into means the dollar could fall further than the euro if the Fed once again takes point on slashing rates.

US stocks are no strangers to lower rates and continue to rack up to record territory after the Fed is near a full 180 degree turn on monetary policy. The US central bank hiked rates 4 times in 2018, but market conditions and a mixed economic picture with growing trading headwinds has forced the hand of the Fed into reducing the benchmark rate.

OIL – Crude Rises on Soft Dollar and Weather Disruptions

Oil prices rose slightly on Friday but had solid gains on a weekly basis. West Texas Intermediate gained 4.75 percent and Brent 4 percent on the back of Middle East tension, Gulf of Mexico weather disruptions and dollar softness after a rather dovish week for the Fed.

US inventories recorded a larger than expected drawdown of 9.5 million barrels boosting prices higher in the short term, even as there are serious concerns about future demand. The OPEC and the IEA both downgraded energy demand for next year, and with rising US production prices could be facing a supply glut.

Source: marketpulse

The Canadian dollar rose on Friday and on a weekly basis gained 0.40 percent versus the dollar. The loonie is trading at 1.3026 despite the Bank of Canada (BoC) holding the Canadian benchmark untouched and...

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USD: Less of a safe haven now

USD_less-of-a-safe-heaven_forex_FXPIG

According to the global head of strategy at ING, narrative on the US dollar is slowly moving onto its next chapter as the Fed has connected the dots between Trump’s trade war and US business confidence, it seems that any news on increased trade tension is having a diminishing marginal positive impact on the dollar.

Key Quotes

“It seems the market is slowly but surely gaining confidence that the dollar is coming to the end of its eight-year bull run. Here, other banks have joined our view that President Trump might consider direct intervention to weaken the dollar later this year. The dollar also failed to gain any real benefit after a very rare 0.3% month-on-month rise in US core CPI yesterday. Instead, focus on the US fiscal position may be growing.”

“There’s only US PPI today and a Fed speaker (Charles Evans 16CET), but it looks as though the market is confident of a 25 basis point Fed cut on 31 July – especially with what we read as a pretty dovish set of June FOMC minutes. We think the investor dollar mindset has now shifted to ‘sell the rally’. DXY to drift to 96.35/50.”

Source: fxstreet

According to the global head of strategy at ING, narrative on the US dollar is slowly moving onto its next chapter as the Fed has connected the dots between Trump’s trade war and US business confidence, it seems that any news on increased trade tension is having a diminishing marginal positive impact on the dollar...

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Forex Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 12.07.2019

Bulls-and-bears_Forex_FXPIG_12.07.2019

EUR/USD:

24-HOUR VIEW Immediate bias is for EUR to test the bottom of the expected 1.1225/1.1280 sideway trading range. Our view yesterday was that there is “room for EUR to test 1.1285 but a move beyond 1.1310 is not expected”. In line with expectation, EUR touched 1.1285 during early NY hours before easing off to end the day little changed (1.1252, +0.03%). Upward pressure has eased and the current movement is viewed as part of a consolidation phase. In other words, EUR is expected to trade sideways for today even though the immediate bias is for it to probe the bottom of the expected 1.1225/1.1280 range.

1-3 WEEKS VIEW EUR is expected to trade sideways. There is not much to add to the update from yesterday as EUR retreated after touching 1.1285 and ended the day little changed. As indicated yesterday (11 Jul, spot at 1.1255), EUR is expected to trade sideways for now, likely between 1.1200 and 1.1310. At this stage, there is no early indication on which direction is more ‘vulnerable’.

GBP/USD:

24-HOUR VIEW GBP is expected to trade sideways, likely within a 1.2485/1.2555 range. While we expected GBP to “extend its gains” yesterday, we were of the view that “a break of 1.2550 is unlikely”. However, GBP surged to 1.2571 before dropping back quickly. Upward momentum is patchy at best and the risk for GBP to move beyond the 1.2571 high is deemed as low. From here, GBP is more likely to trade sideways to slightly lower, expected to be within a 1.2485/1.2555 range.

1-3 WEEKS VIEW GBP is expected to trade sideways. After GBP dropped to 1.2439 on Tuesday, we indicated on Wednesday (10 Jul, spot at 1.2465) that we “prefer to wait for a NY close 1.2440 before adopting a more negative stance”. The strong recovery in GBP yesterday (11 Jul) took out the strong resistance at 1.2550 which suggest that the recent downward pressure has eased. In other words, the risk for a sustained decline in GBP has been alleviated. From here, GBP is expected to trade sideways, likely within a relatively broad range of 1.2440/1.2600

AUD/USD:

24-HOUR VIEW AUD could drift lower to 0.6950. AUD traded between 0.6955 and 0.6988 yesterday, narrower than our expected 0.6935/0.6985 range. Upward momentum appears to be ‘struggling’ but it is too early to expect a significant pull-back. From here, barring a move above 0.7000, AUD could drift lower to 0.6950.

1-3 WEEKS VIEW AUD is expected to trade sideways. AUD touched a high of 0.6988 yesterday, just a couple of pips below the 0.6990 ‘strong resistance’. The price action is enough to indicate that our view from Wednesday (10 Jul, spot at 0.6930) for AUD to “trade with a downside bias towards 0.6880” is incorrect. From here, the outlook for AUD is not clear and it is likely to continue to trade in an ‘undecided’ manner within a broad 0.6910/0.7050 range (the range for the past couple of weeks).

NZD/USD:

24-HOUR VIEW NZD is likely to stay below 0.6690 but any weakness is viewed as part of a 0.6640/0.6690 range. Expectation for NZD to trade sideways was incorrect as it rose to a high of 0.6688 before easing off. Despite the relatively strong advance, upward momentum has not improved by much. While NZD is likely to stay below 0.6690 from here, any weakness is viewed as part of a 0.6640/0.6690 range and not the start of a sustained down-move.

1-3 WEEKS VIEW NZD is expected to trade sideways for a period. No change in view from yesterday, see reproduced update below.

We indicated yesterday that NZD is likely to trade with a ‘downside bias’ towards 0.6560. NZD subsequently briefly dipped to 0.6567 before staging a robust rebound and came close to taking out the 0.6560 ‘strong resistance’. The price action suggests that NZD could have made a short-term bottom at 0.6567. The outlook from here is not very clear and NZD could trade sideways between 0.6610 and 0.6710 for a period of time.

USD/JPY:

24-HOUR VIEW Rapid and robust rebound in USD has scope to extend higher but a sustained move above 108.95 is not expected. While our view that USD “could test 108.00 but a move below 107.75 is unlikely” was not incorrect, the subsequent surge from a low of 107.85 came as a surprise. The rapid and robust rebound has scope to extend higher but at this stage, a sustained move above 108.95 is not expected. Support is at 108.35 but the stronger level is at 108.15. The 107.85 low is not expected to come into the picture.

1-3 WEEKS VIEW USD is expected to trade sideways. No change in view from yesterday, see reproduced update below.

Our view from yesterday (10 Jul, spot at 108.90) wherein USD is expected to move to 109.30 was proven wrong quickly as it plummeted after touching a 5-week high of 108.98. The rapid drop took out the 108.35 ‘key support’ (overnight low of 108.33). From here, USD is deemed to have moved into a sideway-trading phase and is likely to trade within a relatively broad range of 107.50 and 108.95.

Source: efxdata

Immediate bias is for EUR to test the bottom of the expected 1.1225/1.1280 sideway trading range. Our view yesterday was that there is “room for EUR to test 1.1285 but a move beyond 1.1310 is not expected”...

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BOE’s Vlieghe:

BoE_need-to-raise-rates_Forex_FXPIG

More comments are crossing the wires from the Bank of England (BOE) external MPC member Gertjan Vlieghe, as he continues to speak at Thomson Reuters in London this Friday.

Policy outlook could easily go in either direction with a cliff-edge Brexit.

Public uncertainty about BOE policy reflects general political and economic uncertainty.

Don't have to see much of a hit to demand to justify cutting rates to near zero

More likely than not rates would reach lower bound after a no-deal Brexit.

Says that 0.25% is not the lower bound for UK rates, it is lower.

But says it is possible BOE may need to raise rates if inflation expectations are deanchored by a no-deal Brexit outcome.

Source: fxstreet

Policy outlook could easily go in either direction with a cliff-edge Brexit; Public uncertainty about BOE policy reflects general political and economic uncertainty...

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Gold technical analysis

Gold_failed-to-capitalise-Forex_FXPIG
  • Gold failed to capitalize on the early uptick to weekly tops and dropped to fresh session tops in reaction to hotter-than-expected US core CPI print.
  • Weakness below 23.6% Fibo. level of this week's up-move from the $1385 region to $1419 area was seen as a key trigger for intraday bearish traders.

However, the intraday downtick managed to find some support near 38.2% Fibo., which should now act as a key pivotal point for the precious metal's next leg of any meaningful intraday momentum.

Meanwhile, the occurrence of a Golden Cross on the 1-hourly chart - 50-hour SMA crossing above 200-hour SMA, remains tilted in favour of bullish traders and support prospects for a further appreciating move.


Moreover, technical indicators on hourly/daily charts have managed to hold in the positive territory, further reinforcing the constructive outlook and suggesting some dip-buying interest at lower levels.

Hence, any subsequent slide below daily lows is more likely to remain limited and attract some fresh buying near the $1407 confluence region - comprising of 50-hour SMA and 50% Fibo. level.


Source: fxstreet

Gold failed to capitalize on the early uptick to weekly tops and dropped to fresh session tops in reaction to hotter-than-expected US core CPI print....

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Forex Tech Targets

Bulls-and_bears_forex_FXPIG_11.07.2019

EUR/USD:

24-HOUR VIEW Room for EUR to test 1.1285 but a move beyond 1.1310 is not expected. EUR surged during NY hours and took out a couple of strong resistance levels with ease. While the advance appears to be running ahead of itself, there is room for EUR to test 1.1285. At this stage, a move beyond 1.1310 is not expected. Support is at 1.1225 followed by 1.1200. The latter level is a solid support now and is unlikely to come into the picture.

1-3 WEEKS VIEW EUR is expected to trade sideways. The ‘downside bias’ in EUR highlighted on Monday (08 Jul, spot at 1.1225) has fizzled out as the strong overnight rebound took out the ‘strong resistance’ at 1.1255 (high of 1.1263). The price action was not exactly surprising as we noted yesterday (10 Jul, spot at 1.1200) that “downward momentum remains lackluster” and the weakness in EUR “lacks urgency”. From here, EUR is expected to trade sideways, likely between 1.1200 and 1.1310.

GBP/USD:

24-HOUR VIEW GBP could extend its overnight gains but a break of 1.2550 is unlikely. Instead of “weaken further”, GBP rebounded strongly to an overnight high of 1.2521. The recent weakness appears to have stabilized and a short-term bottom is likely in place. That said, the current GBP strength is viewed as a ‘corrective recovery’ and it is too early to expect a sustained up-move. From here, GBP could extend its overnight gain but the prospect for a break of the strong 1.2550 resistance is not high. On the downside, 1.2465 is expected to be strong enough to hold any intraday pull-back (minor support is at 1.2485).


1-3 WEEKS VIEW A NY close below 1.2440 would indicate GBP could weaken further to 1.2350. No change in view from yesterday, see reproduced update below. After yesterday’s rebound, the prospect for further weakness has diminished but only break of 1.2550 would indicate downward pressure has eased.

The relatively strong decline in GBP yesterday that tested the minor support at 1.2440 was not exactly expected (low of 1.2439). Our view from Monday (08 Jul, spot at 1.2645) was that while GBP is “under pressure”, the “the odds for a fresh year-to-date low are not high”. Shorter-term indicators are oversold and from here, we prefer to wait for a NY close below 1.2440 before adopting a more negative stance. Looking ahead, if GBP were to close below 1.2440 in NY, it would indicate that it could weaken further to 1. 2350. All in, the downward pressure in GBP is deemed as intact until it can move above 1.2550 (strong resistance was at 1.2590 yesterday).

AUD/USD:

24-HOUR VIEW AUD is likely to trade at a higher range of 0.6935/0.6985. While our view that “a break of 0.6900 is unlikely” was not wrong (low of 0.6911), the subsequent strong overnight rebound was not exactly expected. The advance is running ahead of itself even though a move above the overnight high of 0.6969 would not be surprising. That said, any AUD strength is viewed as higher 0.6935/0.6985 range (a sustained rise beyond 0.6985 is not expected).

1-3 WEEKS VIEW AUD is expected to trade with a downside bias towards 0.6880. For now, we hold the same view as yesterday (see reproduced update below).

Our view from Monday (08 Jul, 0.6985) was for AUD to trade sideways within a 0.6920/0.7030 range. The rapid pace of which AUD tested the bottom of the range (overnight low of 0.6920) was not exactly expected. Downward pressure has increased quickly and from here, AUD is expected to trade with a ‘downside bias’ towards the strong support at 0.6880. At this stage, the June’s low of 0.6832 is likely ‘safe’. All in, AUD is expected to stay under pressure unless it can move above the strong resistance at 0.6990.

NZD/USD:

24-HOUR VIEW NZD is expected to consolidate its gains and trade sideways, likely within a 06630/0.6675 range. The strong overnight surge that hit an overnight high of 0.6657 came as a surprise. While NZD could edge above the overnight high, a sustained advance is not expected. Overall, NZD is more likely to consolidate its gains and trade sideways at these higher levels, expected to be within a 0.6630/0.6675 range.

1-3 WEEKS VIEW NZD is expected to trade sideways for a period. We indicated yesterday that NZD is likely to trade with a ‘downside bias’ towards 0.6560. NZD subsequently briefly dipped to 0.6567 before staging a robust rebound and came close to taking out the 0.6560 ‘strong resistance’. The price action suggests that NZD could have made a short-term bottom at 0.6567. The outlook from here is not very clear and NZD could trade sideways between 0.6610 and 0.6710 for a period of time.

Source: efxdata

Room for EUR to test 1.1285 but a move beyond 1.1310 is not expected. EUR surged during NY hours and took out a couple of strong resistance levels with ease. While the advance appears to be running ahead of itself, there is...

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