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GDMFX - Weekly News
WEEKLY ANALYSIS: THE YEAR COMES TO AN END, THE MARKET REACTS WITH IRREGULAR MOVEMENT


EUR/USD



Weekly Analysis: Last week was bullish overall but price movement was affected by Christmas Eve and Christmas Day when most banks were closed. Prior to that, resistance was touched but not broken.

[Image: xOkn7sp.jpg]

Technical Outlook


The pair touched 1.0980 resistance but failed to break it and this was mostly because liquidity was thin during the past week. However, the bounce lower at resistance also shows that the bulls lack the strength needed to continue the latest impulse and makes us believe that a move lower is next. The first target for this potential move down is located at 1.0825, followed by 1.0800 but New Year’s Eve and New Year’s Day will play a big role by slowing down the market and creating low liquidity. We expect price to remain inside the range created by 1.1040 and 1.0825.

Fundamental Outlook

The week ahead will be still affected by the low liquidity and irregular movement characteristic for the Winter Holidays, but here are the main things to keep an eye on: Tuesday a U.S. Consumer Confidence survey is released, showing the opinions of about 5,000 households regarding overall economic conditions and Wednesday the Pending Home Sales come out, giving us insights into the U.S. housing market.

Thursday German Banks will be closed in observance of New Year’s Eve and on the US Dollar side the only notable indicator is the Unemployment Claims but usually this release does not create strong impact. Friday most banks across the globe will be closed, celebrating New Year’s Day so the market will be practically still, with almost no movement.


GBP/USD

The US Dollar continued to strengthen against the Pound early last week but the gains were erased in the second part of the period and the pair ended up almost where it started.

[Image: lE9SOTu.jpg]

Technical Outlook


The bounce at 1.4830 support suggests that the reign of the bears is coming to an end and that we are likely to see an extended retracement to the upside. If this comes true, the first minor resistance is located at 1.4970, followed by the psychological resistance at 1.5000. The level at 1.4895 is in close vicinity but its role is not clear; the Stochastic is curving upwards, coming from oversold and thus supporting a bullish move. The Relative Strength Index is bouncing on its 70 level, showing some bullish divergence, and this further favors a move north but the passing of the year will surely affect price action.

Fundamental Outlook


The United Kingdom didn’t schedule any major releases for the week ahead and on top of that, Monday and Friday UK banks are closed, celebrating Boxing Day and New Year’s Day respectively. Throughout the entire week ahead we expect slow, choppy and potentially irregular movement but this is a well-known characteristic of the last week of the year.
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WEEKLY ANALYSIS: U.S. NON-FARM PAYROLLS KICK OFF THE TRADING YEAR WITH A BANG


EUR/USD



Weekly Analysis: Last week the pair bounced at resistance and traveled lower on the back of thin volatility. Overall, price movement was affected by the changing of the year so the real market direction will be probably revealed this week.

[Image: 4zAlpIh.jpg]

Technical Outlook

The bounce at 1.0980 shows that the bulls are starting to fade away and the bears are taking over. For that to happen, the support zone between 1.0825 – 1.0800 must be broken and re-tested from below (support must turn into resistance). If this is the case, then we will probably see a move into the zone around 1.0660 once normal liquidity is restored. A rejection at 1.0825 – 1.0800 would suggest that price is headed for 1.0980 – 1.1000 zone once again.

Fundamental Outlook

The week starts Monday with the release of the German Preliminary CPI which as we know is the main gauge of inflation and later in the day the U.S. Manufacturing PMI comes out. This is a survey of purchasing managers regarding the health of the manufacturing sector and can bring US Dollar strength if it posts a better than expected value.

Tuesday the Eurozone CPI is announced but its impact will be somewhat lowered by the earlier release of the German CPI; nonetheless, an increase would be beneficial for the single currency. Wednesday we get a first look into the U.S. jobs market with the release of the ADP Non-Farm Employment Change and later in the day the Fed will release their FOMC Meeting Minutes that will contain insights into the reasons why the interest rate was raised in December.

Thursday is a light day but Friday will probably be the most important day of the week because the Non-Farm Payrolls are made public, showing how many new jobs were created during the previous month. As always, this is a very important indicator and its impact is potentially huge so caution should be used; a higher than expected number suggests a thriving economy and thus a stronger dollar.


GBP/USD

The Pound weakened substantially against the US Dollar during the last week of 2015, allowing the pair to travel almost 200 pips lower and to break support decisively.

[Image: jeUqY9D.jpg]

Technical Outlook

The current move is likely to extend into the support located at 1.4700 but once this barrier is touched, we expect a bounce higher, possibly into 1.4800. The Stochastic is oversold and curving upwards, supporting such a bounce and the Relative Strength Index is showing bullish divergence (price is making lower lows while the oscillator is just bouncing on the 30 level). These technical factors favor a move up but a lot will depend on the British data released throughout the week and of course, the U.S. jobs report will play a major role for price direction.

Fundamental Outlook


Three important surveys will be this week’s headlines: Monday the Manufacturing PMI comes out, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. All these are leading indicators of economic health for their respective sectors and higher numbers than forecast usually strengthen the Pound. The U.S. events mentioned earlier will have a direct and strong impact on the pair’s movement throughout the week.
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WEEKLY ANALYSIS: U.S. DOLLAR ON SHAKY GROUND; MIXED PERFORMANCE AGAINST EURO AND POUND


EUR/USD



Weekly Analysis: The last weekly candle is a bullish pin bar although the jobs situation in the United States improved and this should have strengthened the US Dollar. The pair dipped below 1.0825 but soon returned above this level.

[Image: iucTjnz.jpg]

Technical Outlook

Last week’s price action created minor support at 1.0710 but now it appears to be headed for the resistance zone between 1.0980 and 1.1040. We expect this zone to be touched in the early days of the week and then the pair will probably start to move lower, towards 1.0825. The chances of this scenario to happen will increase if the Relative Strength Index will reach overbought or will create bearish divergence. Keep in mind that the NFP report was better than expected so we are likely to see US Dollar strength during the week ahead.

Fundamental Outlook

The week ahead is much slower in terms of economic releases and in fact Monday, Tuesday and Wednesday will be quiet days, without major data coming out. Thursday the Eurogroup Meetings take place, attended by the President of the European Central Bank, finance ministers from the member states and other important personalities; the same day the U.S. Unemployment Claims come out, but usually the impact of this release is mild.

Friday will be the busiest day of the week, with the headlines being the U.S. Retail Sales and later in the day the Preliminary Consumer Sentiment survey released by the University of Michigan. The impact of the latter fluctuates and depends on the difference between forecast and actual value but usually higher values for any of the 2 indicators can strengthen the US Dollar.


GBP/USD

The Pound is weakening severely and rapidly against the US Dollar and last week the pair closed below key support on the back of a better than anticipated number posted by the U.S. Non-Farm Payrolls.

[Image: xOia9MN.jpg]

Technical Outlook

The pair is in need of a retracement to the upside and this week we expect it to climb above 1.4565 (this is a key level of support, better seen on a Weekly chart). The Relative Strength Index and the Stochastic on a Daily chart are deep in oversold territory for quite a long time, increasing the chances of a bullish pullback. This potential move up is likely to find resistance in the zone around 1.4700 but the picture is bearish as long as the pair is trading below the 50 period Exponential Moving Average.

Fundamental Outlook

Monday no major indicators are released by the United Kingdom but Tuesday action picks up with the release of the Manufacturing Production which will show changes in the output generated by the British Manufacturing sector. Usually the impact is high, with better numbers showing increased economic activity, thus a stronger Pound. The same day, NIESR will release an Estimate of the British Gross Domestic Product and although this is not a final number, if it’s higher than expected it can be beneficial for the currency.

Thursday the Bank of England will announce their interest rate decision but no change is expected (currently 0.50%). At the same time the Monetary Policy Committee will release a breakdown of the rate votes (showing the stance of each member) and also a summary of their meeting. This cluster of events is likely to create strong volatility, even if the rate will remain the same.
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WEEKLY ANALYSIS: POUND APPROACHING NEAR 6-YEARS LOW, EURO CAPPED BY TECHNICAL LEVELS


EUR/USD



Weekly Analysis: Last week was characterized by choppy movement and a lot of back and forth action, without a clear winner. The pair touched support as well as resistance, but didn’t manage to break either one.

[Image: Yr6NYyq.jpg]

Technical Outlook

The pair bounced higher at 1.0800 support and during the last day of last week, touched 1.0980 resistance but price action lacks clear direction and we expect this ranging period to continue until either support or resistance is broken decisively. The Stochastic and Relative Strength Index are both mixed and don’t show a lot about future direction but the last daily candle shows a long upper wick, which is a sign of rejection (although not very strong on its own). This week’s ECB press conference will probably generate a breakout but the direction is hard to anticipate at the moment.

Fundamental Outlook

Monday we are likely to see a slow day as U.S. banks are closed in celebration of Martin Luther King Day and Europe doesn’t release any major indicators. Tuesday’s headline is the release of the German ZEW Economic Sentiment, a survey of about 275 German investors and professional analysts regarding current economic conditions as well as an outlook for the next 6 months.

Wednesday the World Economic Forum Annual Meetings start in Davos and will continue for the whole week, possibly generating market volatility. The same day we take a look into U.S. inflation with the release of the Consumer Price Index, while Thursday the Euro takes center stage as the ECB will announce the interest rate and ECB President Mario Draghi will hold the usual press conference. Friday’s only notable event is the release of the German Manufacturing PMI, a survey of purchasing managers from the manufacturing sector that acts as a leading indicator of economic health.


GBP/USD

The Pound continued to deteriorate against the US Dollar last week, without any sign of a move up. The Bank of England kept the rate unchanged as expected but the overall stance was dovish, further weakening the currency.

[Image: ZWFzX0t.jpg]

Technical Outlook

The pair is approaching the low reached in 2010, located at 1.4229. Although the level was touched a long time ago, when it was hit it generated a strong bounce, so this time we are likely to see a move up as well. The Stochastic and Relative Strength Index are both in deep oversold territory for a relatively long while and this suggests that a push up is next; however, from a technical point of view this correction to the upside is long overdue, but there’s no trace of it. Nonetheless, the importance of the level at 1.4230 makes us believe that this week we will see bullish price action.

Fundamental Outlook

The first important event of the week for the Pound is the release of the British Consumer Price Index scheduled Tuesday and followed Wednesday by the Average Earnings Index (shows changes in the price paid by businesses and government for labor) and the Claimant Count Change (tracks changes in the number of unemployed people). Both are high-impact indicators and can affect the direction of the Pound so caution is recommended. The last event of the week is the release of the British Retail Sales, scheduled Friday.
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WEEKLY ANALYSIS: BREAKOUT SCENARIOS IN PLAY FOR EURO-US DOLLAR, POUND UNDER PRESSURE


EUR/USD



Weekly Analysis: Last week we saw an almost perfect bounce lower once resistance was touched but also some mixed movement generated by the speech of ECB President Mario Draghi during the press conference. He warned that monetary policy may be adjusted in March and this triggered a move into key support.

[Image: obLESWo.jpg]

Technical Outlook

The support at 1.0800 is a major medium term hurdle that needs to be broken if the pair is going to continue south. After the huge daily candle (early December 2015) that initially broke this level to the upside, the bulls failed to continue the move and the pair entered a ranging period which can come to an end if 1.0800 is broken to the downside. Price bounced at 1.0710 so this is an important level too, but the pair seems to react to 1.0800 much better so we consider this a more important level and if it’s broken, we expect a move towards the low at 1.0525.

Fundamental Outlook

The week opens Monday with the release of the German IFO Business Climate, which is a highly respected survey due to its large sample size of about 7,000 businesses. Representatives of surveyed businesses are asked to give their opinion about current economic conditions as well as an outlook for the next 6 months. Usually, higher than expected numbers are beneficial for the Euro.

Tuesday’s highlight is the United States Consumer Confidence survey and Wednesday the FOMC will release the Rate Statement which also contains their decision on the interest rate. No change is expected for the rate but the document may contain clues about the pace of future hikes and if this is the case, the US Dollar will respond with increased volatility.

Thursday we have the German Preliminary Consumer Price Index, which is the main gauge of inflation in Germany and the same day the U.S. Durable Goods Orders (goods with a life expectancy of at least 3 years) are released. Higher than expected values for any of the 2 indicators can strengthen the respective currency although the impact is often mild.

The last important event of the week for the US Dollar is the U.S. Advance Gross Domestic Product, scheduled Friday. Out of the three versions of the GDP (Advance, Preliminary and Final), this is the earliest and tends to have the highest impact, with better than expected numbers strengthening the greenback. The same day the Eurozone Flash Estimate CPI is released, offering insights into the state of inflation throughout the Euro region.


GBP/USD

The pair finally retraced higher last week and came in contact with 1.4350 resistance after establishing a new low at 1.4079, a level last touched in 2009.

[Image: s1UbLps.jpg]

Technical Outlook


The overall downtrend is still strong and moves up should still be considered opportunities to enter short-side trades. The last daily candle is a pin bar (long upper wick, with small body) that touched 1.4350 resistance and this is a strong indication that price will move lower this week, probably into 1.4050 support. As mentioned before, this is a very old support (last visited in 2009) and we cannot be sure how price will react to it but considering that last week price reversed in its vicinity, we assume it still has significance for price action. This week we expect a move into the mentioned support but a break of 1.4350 would invalidate such a scenario.

Fundamental Outlook

Only two major events will affect the Pound directly this week: Bank of England Governor Mark Carney will testify Tuesday before the Treasury Select Committee, with the topic being the Financial Stability Report. His speech and the way he answers questions can have a substantial impact on the Pound so caution is recommended.

The second major event of the week is the release of the British Preliminary Gross Domestic Product, scheduled Thursday. This version is the earliest and usually has the highest impact, with numbers above expectations being beneficial for the Pound. As always, the US events mentioned before will have a direct impact on the pair’s direction.
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WEEKLY ANALYSIS: EURO-DOLLAR STILL IN A RANGE, POUND DOWNTREND WAVERS, OUTCOME DECIDED BY NFP


EUR/USD



Weekly Analysis: The pair climbed slowly towards resistance during the first 4 days of last week but Friday the US Dollar erased almost all losses and now support is once again threatened. The Bank of Japan introduced negative rates and this had a wide effect on the financial market.

[Image: k5d47jO.jpg]

Technical Outlook

If the bears manage to break 1.0800 support, we will see an end of the ranging period and probably a move towards the low at 1.0525 (we don’t expect such a move to happen in one week). We slightly favor the short side but we must note the level at 1.0800 rejected price several times so it is still a strong support and the pair is in ranging mode so another bounce higher is not out of the question.

Fundamental Outlook

The first headline of the week ahead is represented by U.S. Manufacturing data that comes out Monday in the form of the Purchasing Managers’ Index. Tuesday is a slow day, without major announcements and Wednesday we take an early look into U.S. employment situation with the release of the ADP Non-Farm Employment Change. This report is less important than the Government data that comes out 2 days later but nonetheless, a higher than expected number is considered beneficial for the US Dollar.

Thursday no major indicators come out and Friday will probably be the most volatile day of the week as the U.S. Non-Farm Employment Change (also known as Non-Farm Payrolls) is announced. This is considered the most important gauge of employment in the United States and acts as a leading indicator of consumer spending. Almost always the impact is strong and higher numbers strengthen the US Dollar.


GBP/USD

The Pound-Dollar had a back and forth week and all moves were reversed the next day. The bulls didn’t manage to close above resistance and the pair is now near multi-year lows again.

[Image: fiwVUbu.jpg]

Technical Outlook

Price showed rejection several times at 1.4350 resistance and it seems the bears are trying to regain control but this will not be achieved until 1.4125 minor support is broken. A more important target is 1.4050, a level that was last touched in 2009. A bullish break of 1.4350 would make the 50 period Exponential Moving Average the first target and also a place where bearish price action may resume.

Fundamental Outlook

Monday the British Manufacturing PMI is released, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. These are all leading indicators of economic strength, focused on their respective sectors but lately the impact is strong only if the actual number shows a hefty difference compared to the forecast.

The most important day of the week for the Pound will be Thursday, when the Bank of England will release the Inflation Report as well as their decision regarding the interest rate and a Monetary Policy Summary that will outline the reasons that determined the rate decision. Later in the day, BOE Governor Mark Carney will hold a press conference, discussing the Inflation Report. As always, the pair’s direction will be directly influenced by the US events mentioned earlier.
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WEEKLY ANALYSIS: BUYERS MEET RESISTANCE, UPWARDS MOMENTUM STARTS TO FADE


EUR/USD



Weekly Analysis: Last week was bullish, with price advancing into 1.1375 but ending on a bearish note, bouncing below 1.1300. Fed Chair Yellen’s 2-part testimony brought some volatility but overall it didn’t have a huge influence on the markets.

[Image: ceAUnqs.jpg]

Technical Outlook

The bearish bounce at 1.1375 followed by the move close to 1.1200 zone shows that the bullish momentum is starting to wane and that we will probably see a move into lower territory. The Relative Strength Index and the Stochastic are overbought and starting to move down, improving the chances of a bearish week. The first barrier is the support around 1.1210, a zone that already rejected price higher last Friday; a break of this level would probably add more sellers to the mix and will take the pair lower, towards 1.1100. To the upside, first resistance is located at 1.1375, followed by the key level at 1.1450.

Fundamental Outlook

Monday U.S. banks are closed in celebration of Presidents’ Day so the New York session is likely to show decreased volatility. On the Euro side, ECB President Mario Draghi will testify before the Economic and Monetary Affairs Committee of the European Parliament and this is likely to strongly affect the single currency so caution is advised.

Tuesday’s headline is the German ZEW Economic Sentiment, which is a survey of about 275 investors and analysts regarding their 6-month outlook for the German economy. Wednesday the US Dollar will be strongly influenced by the release of the FOMC Meeting Minutes and Thursday the Philly Fed Manufacturing Index is the only notable event. The trading week ends Friday with a look at Unites States inflation as the Consumer Price Index comes out; this is an important gauge of inflation, which showed disappointing numbers for a relatively long while so an increase is likely to bring US Dollar strength.


GBP/USD

Last week was characterized by choppy movement and no serious advances were made to either side. All five daily candles show long wicks, suggesting indecision.

[Image: KgHUIAu.jpg]

Technical Outlook

The pair touched three times last week the resistance at 1.4565 and the 50 days Exponential Moving Average but each time it bounced lower. This shows that we are dealing with a strong resistance zone which is likely to drive price lower if it is not broken early in the week; however, the pair is in indecision mode and will remain so until either 1.4565 or 1.4350 is broken. The next direction depends on the direction of this breakout but for extra confirmation, a re-test should follow the initial move.

Fundamental Outlook

The first major release of the week is scheduled Tuesday: the British Consumer Price Index. Numbers above expectations can strengthen the Pound because currently inflation in the UK is considered too low.

Wednesday the British Claimant Count is released, showing the changes in the number of people who applied for unemployment related benefits and the last important event of the week for the Pound is scheduled Friday in the form of the Retail Sales. For most countries, sales made at retail levels represent a major part of overall economic activity, thus a higher number suggests a thriving economic environment and usually a stronger currency.
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WEEKLY ANALYSIS: TECHNICAL SUPPORT PUSHES THE US DOLLAR BACK; BEARS EXPECTED TO STRIKE AGAIN


EUR/USD



Weekly Analysis: Last week most of the pair’s earlier gains were erased and support was threatened. It seems that once again the bull-bear battle is undecided and without a clear winner.

[Image: p0iQPL0.jpg]

Technical Outlook

If the current move south finds good support around 1.1100, we might see a bounce higher and a possible continuation of the previous bullish impulse. The 50 period Exponential Moving Average is in close vicinity and can be another reason for a move up but a break below this technical indicator is likely to bring more sellers into the market; however, we are dealing with a strong support zone (1.1040 – 1.0980) that will be tough to break. As long as price stays above the 50 EMA we favor the long side for a continuation of the earlier move up.

Fundamental Outlook

The week ahead begins with the release of the German Manufacturing PMI scheduled Monday and continues Tuesday with the German IFO Business Climate and U.S. Consumer Confidence. All these are surveys that act as leading indicators of economic health and can strengthen their respective currency but often the impact is mild if the actual number matches analysts’ expectations.

Wednesday’s most notable event is the release of the U.S. New Home Sales and Thursday the Durable Goods Orders come out, as well as the European Final version of the CPI. These are medium impact indicators and the market’s reaction depends many times on the overall environment. Friday will be probably the busiest day of the week as the G20 Meetings start and the German Prelim CPI (main gauge of inflation) is released. Also Friday, the United States will announce the Preliminary version of the Gross Domestic Product; this is the first version and tends to have the biggest impact so we may see a hefty US Dollar reaction.


GBP/USD

The pair remained below the 50 days Exponential Moving Average for the entire last week, showing signs that the long term downtrend might be resuming. Friday the bulls erased some of the losses but overall it was a bearish week.

[Image: 2mMIFys.jpg]

Technical Outlook

Last week ended above 1.4350 after a bullish bounce at 1.4230 so this impulse is likely to take the pair into the 50 days Exponential Moving Average. If this line is touched, we expect it to act as resistance and to push price lower. A move above the moving average would show that a significant higher low is created (around 1.4230) and would possibly mark an end to the long term downtrend. A push below 1.4230 would open the door for a move into 1.4125 and thus trend resumption. 

Fundamental Outlook

The Pound has a very slow week ahead, with the only major economic indicator being the Second Estimate Gross Domestic Product, scheduled Thursday. The GDP is the primary gauge of an economy’s overall performance but the Preliminary version, which has been already released, tends to have the biggest impact. As always, the pair will be directly influenced by the U.S. releases mentioned earlier.
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WEEKLY ANALYSIS: US DOLLAR STRONG ACROSS THE BOARD. NFP WEEK TO ‘MAKE-OR-BREAK’ THE NEW TREND


EUR/USD



Weekly Analysis: The greenback made serious advances against its counterparts last week, backed by strong U.S. economic data. Important levels were broken and downside momentum is now starting to pick up.

[Image: jiVF99l.jpg]

Technical Outlook

The break of 1.1040 and 1.0980 seen last week shows that the bears are tilting the balance in their favor and that 1.0800 might be the next target. This is a key support level as seen from previous price action (note the grey rectangles to the left – falling price was rejected higher several times) and if broken, it can affect the long term movement of the pair. The Stochastic has reached oversold but the Relative Strength Index doesn’t show an extreme reading so the picture offered by the oscillators is mixed; a move up is likely to find some resistance at the recently broken levels as well as at the 50 period Exponential Moving Average.

Fundamental Outlook

The week starts with the release of the Flash Estimate version of the Eurozone Consumer Price Index scheduled Monday; this is the main gauge of inflation but the German CPI has been already released last week so Monday’s indicator might lack a strong impact.

Tuesday the US Dollar will be affected by the release of the Manufacturing PMI, an indicator derived from the opinions of purchasing managers regarding business conditions in the manufacturing sector. Action picks up Wednesday with a first look at American jobs situation as Automatic Data Processing will release their version of the Non-Farm Employment Change. Although important, the impact of this indicator is lower than the one of the Government jobs data that comes out 2 days later.

Thursday the Euro will be affected by the Eurozone Retail Sales and Friday is a huge day for the US Dollar as the Non-Farm Employment Change (also known as Non-Farm Payrolls) comes out, showing the change in the number of new jobs created during the previous month. This is by far the most important jobs data released by the United States and usually creates increased volatility and possibly sharp turns.


GBP/USD

Last week the long term support at 1.4050 was broken and thus the downtrend has been resumed. The bears made substantial advances and we are likely to see more downside action.

[Image: fG5NsbG.jpg]

Technical Outlook

Volatility increased and the pair traveled a long distance south, breaking 1.4050 and then re-testing it from below. This level can now be considered resistance and the next potential support is located at 1.3655. However, price last visited the mentioned level in 2009 so we cannot accurately predict how it will react on another touch. The fact that a long distance was covered in a relatively short while makes us believe that some sort of bullish retracement will follow, or at least a period of choppy, sideways movement but the primary trend is clearly bearish.

Fundamental Outlook

This week the Pound’s movement will be influenced by three important indexes: Tuesday the Manufacturing Purchasing Managers’ Index (PMI) comes out, followed Wednesday by the Construction PMI and Thursday by the Services PMI. These indexes are derived from the opinions of purchasing managers from the respective sectors and act as leading indicators of economic health. Usually, higher than anticipated numbers strengthen the Pound and the opposite is true for lower numbers. As always, the pair will be directly influenced by the U.S. data that comes out during the week.
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WEEKLY ANALYSIS: MAJOR EVENTS AHEAD: ECB EXPECTED TO FURTHER EASE MONETARY POLICY, BOE GOVERNOR CARNEY TO TESTIFY ON BREXIT


EUR/USD



Weekly Analysis: Although last week begun on a bearish note, the pair soon started to move to the upside, after a bounce near 1.0800 key support. The U.S. jobs market showed improvement and the effects are likely to be seen this week.

[Image: jzfDtWs.jpg]

Technical Outlook

On a daily chart the pair moved above the 50 period Exponential Moving Average and touched the resistance at 1.1040. The moving average is not completely broken but the Stochastic and Relative Strength Index are starting to gain upside momentum, moving out of oversold territory. This suggests that we will probably see more bullish movement, possibly above 1.1100 and into 1.1200 zone. A lot will depend on ECB’s decision regarding rates so we are likely to see choppy, ranging movement until Thursday.

Fundamental Outlook

The week ahead is very slow in terms of economic releases and in fact, apart for the ECB Interest Rate announcement scheduled Thursday, there’s not much action. Monday the Eurogroup Meetings take place, followed Tuesday by the ECOFIN Meetings but usually these meetings are closed to the press so volatility will increase only if some participants talk to journalists during the day. Once the meetings have concluded, formal statements will be released.

Wednesday is a slow day for both the Euro and the US Dollar and Thursday will probably be the most important day of the week as the European Central Bank will announce the Interest Rate and ECB President Mario Draghi will hold a press conference which is known to create a lot of movement on Euro-pairs, especially during the questions-and-answers session. The interest rate is not expected to change but the deposit rate might go further into negative territory. How this will affect the Euro remains to be seen but it could generate huge movement so extra caution is recommended.

The only notable indicator released Friday is the German Final version of the Consumer Price Index but this is the third and last version in the series and usually doesn’t create strong movement.


GBP/USD

The pair had a completely bullish week, creating a low at 1.3835 and bouncing strongly from there. The British economic data released throughout the week was rather disappointing, suggesting that the climb was generated by technical reasons.

[Image: aSx3opM.jpg]

Technical Outlook

The current bullish move shows good momentum and is likely to extend into the resistance zone created by the 50 period Exponential Moving Average and the level at 1.4350. When two or more technical indicators are in close vicinity of one another (in this case the moving average and 1.4350), a confluence zone is formed and usually these zones are tough to break; considering this, we expect price to bounce lower once the said zone is reached. A potential break of the confluence zone will open the door for a move into the zone near 1.4565. Currently the main trend is still bearish.

Fundamental Outlook

Similar to the Euro and the US Dollar, the Pound has a lackluster week ahead, but an important event takes place Tuesday: Bank of England Governor Mark Carney will testify before the Parliamentary Committee with the topic being United Kingdom’s European Union membership. This speech is expected to create strong and maybe irregular moves on Pound related pairs. Caution is recommended!

The British Manufacturing Production is scheduled for release Wednesday. The indicator tracks changes in the overall volume produced by the Manufacturing sector, with better numbers showing increased economic activity and possibly a stronger Pound. Other than this, Friday the British Trade Balance comes out, showing the difference between imported and exported goods. The indicator usually creates only mild movement but if the actual value differs substantially from analysts’ forecast, volatility is likely to increase.
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