EUR/USD Forecast – Why Euro’s Recovery Won’t Be Easy Vs Dollar?

EUR/USD Forecast – Why Euro’s Recovery Won’t Be Easy Vs Dollar?

  • – The Euro climbed above 1.0550 against the US Dollar this week, but remains below a major hurdle.
  • – There is a crucial bearish trend line resistance at 1.0600 on the 4-hours chart, which may stop the current upside move in EUR/USD.
  • – The German Gross Domestic Product released recently for Q4 2016 by the Statistisches Bundesamt Deutschland posted an increase of 0.4% (QoQ), just as the market expected.

 

German Gross Domestic Product

In the Euro Zone, there was a major release recently, as the German Gross Domestic Product for Q4 2016 was published by the Statistisches Bundesamt Deutschland. The forecast was aligned for the GDP to grow by 0.4% in Q4 2016, compared with the previous quarter.

 

The result in line with the forecast, as the total value of all goods and services produced by Germany increased 0.4% in Q4 2016. There was another important release, as the GfK Consumer Confidence was reported for March 2017. The market was expecting a decline from 10.2 to 10.1. However, the result was a bit lower, as the GfK consumer climate forecast for March is at 10.0 points.

 

Overall, there was no major surprise, which resulted in consolidation in EUR/USD.

 

EUR/USD Technical Analysis

The Euro this week declined below 1.0500 against the US Dollar, but later found support at 1.0490 and recovered. The EUR/USD pair bounced back sharply and moved above the 38.2% Fibonacci retracement level of the last decline from the 1.0675 high to 1.0493 low.

 

EUR/USD Technical Analysis Euro Dollar

 

However, the upside is currently facing sellers just below 1.0600. There is a crucial bearish trend line resistance at 1.0600, which is playing its role in acting as a barrier. Also, it looks like the pair is struggling to settle above the 50% Fibonacci retracement level of the last decline from the 1.0675 high to 1.0493 low.

 

So, it looks like the EUR/USD pair is facing a monster barrier at 1.0600 on the 4-hours chart, which won’t be easy to break. If there is no clear break, there is a chance that the pair might move down, and trade below 1.0550 once again. The 4-hour RSI for EUR/USD is currently just above the 50 level, but struggling to gain pace.

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Gold Price Forecast – Here Is Why $1240-43 Is Crucial Resistance

Gold Price Forecast – Here Is Why $1240-43 Is Crucial Resistance

  • – Gold price after trading close to the $1225 support vs the US Dollar found bids.
  • – The price is once again moving higher, but likely to face resistance near a monster resistance near $1240-43.
  • – The US Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics for Feb 2017 (Preliminary) registered a decline from 55.00 to 54.3.

 

US Manufacturing PMI

Recently, the US saw the release of the Manufacturing Purchasing Managers Index (PMI) by the Markit Economics for Feb 2017 (Preliminary). The forecast was aligned for a minor rise from the last reading of 55 to 55.3.

 

The result was a few points on the lower side, as the US Manufacturing PMI came in at 54.3 in Feb 2017 (Preliminary), but still registered an expansion, which was a positive sign. Commenting on the outcome, the Chief Business Economist at IHS Markit, Chris Williamson, stated “The drop in the flash PMI numbers for February suggest that the post-election upturn has lost some momentum. Growth of business output, new orders and hiring all waned, as did inflationary pressures”.

 

Overall, the result was lower than the forecast, but was not bearish for the US Dollar.

 

Gold Price Technical Analysis

Gold price struggled many times near the $1240-43 resistance area against the US Dollar. The recent downside towards $1225 was also a result of the same resistance. The price thankfully found support near a bullish trend line at $1226 and started moving higher.

 

Gold Price Technical Analysis

 

It has moved above the 38.2% Fib retracement level of the last decline from the $1243 high to $1226 low. However, it was seen struggling to stay above the 50% Fib retracement level of the last decline from the $1243 high to $1226 low. So, there is a chance of a minor dip in Gold price before it makes a recovery.

 

On the upside, the highlighted resistance area $1240-43 remains the key. A break above it is needed for further gains. As long as the price is below it, buyers might struggle. On the downside, the trend line support at $1230 is important since the 100 simple moving average is also positioned near it. Overall, it looks like the price has a major support at $1230 and resistance at $1240-43, and we may soon witness a break.

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EUR/JPY Forecast – Euro Faces Downside Vs Japanese Yen

EUR/JPY Forecast – Euro Faces Downside Vs Japanese Yen

  • – The Euro remained under a bearish pressure vs the Japanese yen and traded below 120.50.
  • – There is a crucial bearish trend line with resistance at 120.65 formed on the 4-hours chart of EUR/JPY.
  • – The Japanese Merchandise Trade Balance Total released by the Ministry of Finance posted a trade deficit of ¥-1,086.9B in Jan 2017, more than the forecast of ¥-636.8B.

 

Japanese Merchandise Trade Balance

Today in Japan, the Merchandise Trade Balance report for Jan 2017 was released by the Ministry of Finance. The market was aligned for the balance amount between import and export to post a deficit of ¥-636.8B in Jan 2017, compared with the previous reading of ¥641.4B.

 

The result was below the forecast, as the trade deficit was ¥-1,086.9B in Jan 2017. Exports increased by 1.3% in Jan 2017, which were lower than the forecast of 4.7%. Imports were more than the forecast, and registered a rise of 8.5%, vs the +4.7% forecast. Looking at the Adjusted Merchandise Trade Balance, there was a trade surplus of ¥155.5B, less than the forecast of ¥356.7B.

 

Overall, the result not as the market expected. It gives an edge to the Euro for a short-term upside move towards 120.50 vs the Japanese yen.

 

EUR/JPY Technical Analysis

The Euro was seen struggling near 121.50 against the Japanese yen, as it represents a major resistance area. It is a confluence zone formed with three things. First, a crucial bearish trend line on the 4-hours chart of EUR/JPY. Second, the 100 simple moving average, and the last one is the 50% Fib retracement level of the last decline from the 123.30 high to 119.33 low.

 

EUR/JPY Technical Analysis Euro Yen

 

So, it is a clear hurdle for EUR/JPY. As a result, the pair failed and moved down towards 119.70 before starting a recovery. The pair is once again correcting higher, but likely to face sellers near the same trend line at 120.65.

 

Moreover, the 50% Fib retracement level of the last decline from the 121.25 high to 119.67 low is also around the same trend line resistance. So, if the pair continues to move higher, it could face sellers near 120.60 and 120.80.

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GBP/USD Forecast – British Pound Under Pressure Post UK Retail Sales

GBP/USD Forecast – British Pound Under Pressure Post UK Retail Sales

  • – The British Pound is facing a lot of bearish pressure against the US Dollar with resistance near 1.2520.
  • – There is a triangle pattern formed on the 4-hours chart of GBP/USD, and the pair is approaching its support at 1.2400.
  • – The UK Retail Sales released by the National Statistics posted a decline of 0.3% in Jan 2017 (MoM) vs the forecast of +0.9%.

 

UK Retail Sales

Today in the UK, there was a major economic release, as the UK Retail Sales for Jan 2017 was published by the National Statistics. The market was aligned for the total receipts of retail stores to increase by 0.9% in Jan 2017, compared with the previous month.

 

The result was on the lower side, as instead of an increase, there was a decline of 0.3%. In terms of the yearly change, there was a rise of 1.5% in Jan 2017, compared with Jan 2016. It was also on the lower side compared with the forecast of +3.4%. The report added that “Average store prices (including fuel) increased by 1.9% on the year, the largest contribution to this increase came from petrol stations, where year-on-year average prices were estimated to have risen by 16.1%”.

 

Overall, the result was disappointing, and the downside reaction in GBPUSD towards 1.2400 was justified. More declines are possible, if there is a close below 1.2400.

 

GBP/USD Technical Analysis

The British Pound recently failed to clear the 1.2520 resistance area against the US Dollar. The stated resistance area was near a trend line of a triangle pattern on the 4-hours chart. Later, the disappointing release of the UK Retail Sales pushed the GBP/USD pair lower below 1.2450.

 

GBP/USD Technical Analysis Pound Dollar

 

The pair is likely approaching the triangle lower trend line at 1.2400. It might be able to hold the downside move for now. However, the bearish pressure is clearly here to stay, and if it stays intact, the pair may break 1.2400 for additional downsides.

 

On the upside, the triangle resistance at 1.2500-20 is also positioned with the 100 simple moving average (H4). So, it won’t be easy for the GBP buyers to break it going forward.

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EUR/USD Forecast – Euro In Consistent Downtrend Vs US Dollar

EUR/USD Forecast – Euro In Consistent Downtrend Vs US Dollar

  • – The Euro remained under heavy pressure this week and traded below 1.0600 against the US Dollar.
  • – There is a clear descending channel pattern formed on the 4-hours chart of EUR/USD with resistance at 1.0600.
  • – In the Euro Zone, the Spanish Consumer Price Index released by the National Institute of Statistics posted a decline of 0.5% in Jan 2017 (MoM).

 

Spanish Consumer Price Index

Today in the Euro Zone, the Consumer Price Index for Jan 2017 was released by the National Institute of Statistics. The market was aligned for the retail prices of a representative shopping basket of goods and services to decline by 0.5% in Jan 2017, compared with the previous quarter.

 

The result was as expected, as the Spanish CPI declined 0.5%. In terms of the yearly change, there was a rise of 3% in Jan 2017, compared with Jan 2016. The report added that the Transport Cost rate was 7.6%, almost three points above the December, caused by the increase in the prices of the Fuels this month, against the descent in January 2016.

 

Overall, there is hardly anything to cheer for the Euro buyers, which may put further pressure on the EUR/USD and take it lower towards 1.0500.

 

EUR/USD Technical Analysis

The Euro traded sharply lower this week against the US Dollar, and broke the 1.0640 and 1.0600 support levels. The EUR/USD pair is currently following a consistent downtrend, as there is a descending channel pattern formed on the 4-hours chart with resistance at 1.0600.

 

EUR/USD Technical Analysis Euro US Dollar

 

The pair has already broke the 1.236 extension of the last wave from the 1.0619 low to 1.0828 high. So, there are chances of further declines, which could push the pair towards 1.0500.

 

The pair could even test the 1.618 extension of the last wave from the 1.0619 low to 1.0828 high at 1.0490. The 4-hours RSI is well below the 50 level, which is a bearish sign. On the upside, the channel resistance at the moment is at 1.0600. Only a break and close above 1.0620 might negate the current bearish trend line for EUR/USD. Otherwise, we may continue to see declines in the near term.

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Market update – 14.02.2017

Market update – 14.02.2017

Yellen’s semi-annual testimony monetary policy report is going to hold the headlines for today and tomorrow and all eyes will be on the tone she’ll use. A hawkish one should send the U.S. dollar higher.

 

The market shows a mixed picture so far this year. The Australian dollar is by far the best performing currency against its American counterpart, while the Euro is lagging. If this is about to change, chances are it is going to change this week.

 

Coming back to the testimony, the first part of it is the most important one, as usually, the second one is exactly the same so that is no surprise element anymore. Therefore, look for market’s reaction today to be more violent than the one tomorrow. However, there were situations back in time when this statement didn’t hold true.

 

The Federal Reserve’s job or mandate is to create jobs and bring inflation below or close to two percent. Both tasks are done and the pressure is on Fed now to raise the rates.

 

While this is no secret anymore, there are skeptical people doubting the Fed will hike three times this year as mentioned on the last December hike. No matter how you put it, the fact that the Fed is on a tightening cycle should put pressure on other currencies, especially on the ones with negative interest rates, like the Euro or the CHF.

 

Inflation or the CPI (Consumer Price Index) is released on Wednesday and the Core number is the one to watch. While it is projected to come at 0.2%, pressures are for the number to be higher than its forecast. If that is the case, bets for Fed to raise rates in March will increase.

 

After all, this is what matters: what the Fed will do and when it will raise the interest rates. Keep in mind that the U.S. dollar is the world’s reserve currency and when the interest rate is changed, it has a snowball effect on the global economy.

 

Emerging markets are the first ones to be affected as they borrowed at cheap rates and will be forced to pay higher interest rates moving forward. But I would say that this is somehow priced in.

 

What is not priced in is Trump’s administration next move. Tax cuts are being promised for both businesses and regular citizens but it is not known the exact nature of these cuts. More details here should result in even more volatility than the Fed hiking rates or not.

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USD/JPY Forecast – US Dollar Looking To Outperform Yen

USD/JPY Forecast – US Dollar Looking To Outperform Yen

  • – The US Dollar after a downside wave towards 111.60 against the Japanese yen found support.
  • – The USD/JPY pair started a recovery, and currently looking to break a bearish trend line at 114.00 on the 4-hours chart.
  • – The Japanese Gross Domestic Product released by the Cabinet Office posted an increase of 1% in Q4 2016 (annualized and preliminary), less than the forecast of 1.1%.

 

Japanese Gross Domestic Product

Today in Japan, the Gross Domestic Product report was released by the Cabinet Office. The market was expecting the monetary value of all the goods, services and structures produced in Japan to increase by 1.1% in Q4 2016 (preliminary), compared with the same quarter a year ago.

 

However, the result was below the forecast, as the Japanese GDP grew by 1% in Q4 2016. When we look at the quarterly change, the Japanese GDP grew by 0.2% in Q4 2016 (preliminary), compared with the previous quarter. This was again below the forecast of 0.3%.

 

Overall, the result was not as the market expected, resulting in a minor bearish pressure on the Japanese yen and a push for USD/JPY towards 114.00.

 

USD/JPY Technical Analysis

The US Dollar was seen trading lower this past week against the Japanese yen, as it fell towards 111.60. Later, the USD/JPY pair found support and consolidated above the 111.60 confluence area.

 

USD/JPY Technical Analysis US Dollar Japanese Yen

 

Once the consolidation pattern was complete, there was an upside move in USD/JPY. The pair traded higher, and broke a bearish trend line on the 4-hours chart at 112.60. Moreover, the pair also broke the 100 simple moving average (H4), and the 50% Fib retracement level of the last decline from the 115.37 high to 111.60 low.

 

At the moment, the pair is facing sellers near another bearish trend line at 114.00. The same area also coincides with the 61.8% Fib retracement level of the last decline from the 115.37 high to 111.60 low. So, it won’t be easy for the US dollar buyers to break 114.00. However, the USD/JPY pair is currently trading with a positive bias, which means there is a chance of a break higher for a move towards 114.50.

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AUD/USD Forecast – Aussie Dollar Forming Breakout Pattern

AUD/USD Forecast – Aussie Dollar Forming Breakout Pattern

  • – The Aussie dollar mostly consolidated versus the US dollar this week with support at 0.7610-20.
  • – There is a major contracting triangle pattern formed with support at 0.7625 on the 4-hours chart of AUD/USD.
  • – The Chinese Trade Balance figure for Jan 2017 released by the General Administration of Customs of the People’s Republic of China posted a trade surplus of $51.400B.

 

China’s Trade Balance

Today in China, the Trade Balance figures were released for Jan 2017 by the General Administration of Customs of the People’s Republic of China. The market was expecting a trade surplus of $47.900B (balance between exports and imports of total goods and services).

 

However, the result was better than the forecast, as the trade surplus was $51.400B in Jan 2017. Imports of goods and services rose 16.7%, more than the forecast of 10.0%, and above the last +3.1%. Exports of goods and services increased 7.9%, more than the forecast of 3.3%, and much better than the last revised decline of 6.2%.

 

Overall, the result was positive, helping the risk sentiment and AUDUSD to stay above the 0.7620 support. There are chances of more gains in AUD/USD if the pair sentiment remains intact, and it stays above the 0.7620-00 support zone.

 

AUD/USD Technical Analysis

The Aussie dollar after trading as high as 0.7694 against the US Dollar started a correction. It traded as low as 0.7605 where it found support, and then a consolidation phase was initiated. The AUD/USD pair started trading in a range with support at 0.7620-00.

 

AUD/USD Technical Analysis Aussie US Dollar

 

Currently, there is a major contracting triangle pattern formed with support at 0.7625 on the 4-hours chart. On the upside, the range breakout resistance is at 0.7650-60, and on the downside, the triangle support is at 0.7625. The range resistance also coincides with the 50% Fib retracement level of the last decline from the 0.7694 high to 0.7605 low.

 

So, if there is a break higher, there are chances of AUD/USD retesting the last high at 0.7694. The current pattern can be considered as consolidation ahead of the next break higher. However, the pair needs to stay above 0.7600 if it has to move higher.

 

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Gold Price Forecast – More Gains Likely Towards $1245

Gold Price Forecast – More Gains Likely Towards $1245

  • – There were sharp gains in Gold price recently, as it traded above $1230 against the US Dollar.
  • – There is a solid ascending channel pattern formed on the 4-hours chart with support at $1225.
  • – Recently in the US, the JOLTS Job Openings figure published for Dec 2016 by the US Bureau of Labor Statistics posted 5.501M, compared with the 5.568M forecast.

 

US JOLTS Job Openings

Recently, the US JOLTS Job Openings number, which represents a survey done by the US Bureau of Labor Statistics to evaluate job vacancies was released for Dec 2016. The market was aligned for 5.568M in Dec 2016, compared with the last reading of 5.522M.

 

However, the result on the lower side, as the US JOLTS Job Openings came in at 5.501M in Dec 2016. Moreover, the last reading was revised down to 5.505M. The report added that “Over the month, hires and separations were also little changed at 5.3 million and 5.0 million, respectively. Within separations, the quits rate was little changed at 2.0 percent and the layoffs and discharges rate was unchanged at 1.1 percent“.

 

On the other hand, the Economic Optimism Index, released by The Investor’s Business Daily (IBD) TechnoMetrica Institute of Policy and Politics (TIPP) posted a rise from 55.6 to 56.4 in Feb 2017. Overall, there was nothing fundamentally to stop gold price from moving higher, which means it might soon test $1245.

 

Gold Price Technical Analysis

There was a nice uptrend initiated from the $1180 low in gold price against the US Dollar. The price gained pace, and broke many hurdles on the way up like $1200 and $1220. The price traded with a bullish bias, and settled above the 100 simple moving average (H4 chart).

 

Gold Price US Dollar Forecast

 

There is currently an ascending channel pattern formed on the 4-hours chart with support at $1225. It may continue to take the price higher. It is already above the last swing high of $1220 and the 1.236 extension of the last decline from the $1220 high to $1180 low.

 

So, the chances are high of gold price testing the 1.618 extension of the last decline from the $1220 high to $1180 low at $1244. Overall, the price may continue to trade higher as long as the $1220 support is active.

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Market Update – February 7, 2017

Market Update – February 7, 2017

We are in the second trading month of the year and ranges are still dominating the Forex market. No matter where you look, with a few exceptions, markets are consolidating and it feels like everyone is expecting for something to happen.

 

In a way, a lot of things happened as economic news/releases were scheduled as usual. Already we had one ECB (European Central Bank) and FOMC (Federal Open Market Committee) meeting, not to mention two NFP’s (Non-Farm Payrolls) releases.

 

However, markets are not moving and the perfect example comes from the most popular currency pair of them all, and the most liquid one: the EURUSD. Volatility levels are almost at historical lows and, despite the fact that the ECB still buys bonds on a monthly basis under its quantitative easing program and the fact that the Bundesbank is forced to buy below the deposit rate of 0-40%, the EURUSD pair is not moving.

 

From the start of the year, the EURUSD was bid on every dip, but the pattern looks like a corrective one, due to reverse hardly. Fundamentally speaking, the ECB and the Federal Reserve are on two different paths: the first one is still engaged in a major easing cycle, while the Fed started a tightening one.

 

While there was no rate hike at the last Fed meeting, things are about to chance moving into the March decision. Next week we’re going to see Mrs. Yellen semi-annual testimonies and we’ll have more clues about what’s in store for the dollar.

 

Until then, the RBA (Reserve Bank of Australia) just decided the other day to keep the interest rate steady at 1.5%. This comes as a surprise to me as part of the RBA’s mandate is to keep inflation below or close to two percent.

 

However, inflation in Australia, the trimmed one (the one that doesn’t consider energy and transportation prices as these are considered to be extremely volatile) came at 0.4%, far from the central bank’s target. I guess the monetary policy statement that is about to follow in a couple of days will have to have a dovish tone to illustrate that.

 

Gold surging is certainly helping the AUDUSD pair as there is a direct correlation between the two. But I would say the next U.S. dollar move is the one that will define how currency pairs will trade this year.

 

After Mr. Trump’s election in the United States, the dollar only corrected for almost two months now: the USDJPY, AUDUSD, EURUSD and USDCHF pairs did exactly that. What if those corrections are completed?

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