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


EUR/USD


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

[Image: PObCmU0.jpg]

Technical Outlook

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

Fundamental Outlook

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

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

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


GBP/USD

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

[Image: I4cwCzf.jpg]

Technical Outlook

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

Fundamental Outlook

This week will be focused on surveys of British purchasing managers: Wednesday the Manufacturing PMI will be released, followed Thursday by the Construction PMI and Friday by the Services PMI. All these surveys act as leading indicators of economic health, focused on their respective sector, with higher numbers showing optimism and usually strengthening the Pound. As always, the U.S. releases will have a direct impact on the pair throughout the week.
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WEEKLY ANALYSIS: VOLATILITY HOTSPOTS: ECB RATE MEETING, U.S. NON-FARM PAYROLLS


EUR/USD


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

[Image: yhcmgW2.jpg]

Technical Outlook

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

Fundamental Outlook

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

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

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


GBP/USD

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

[Image: gn7FiZo.jpg]

Technical Outlook

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

Fundamental Outlook

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

The second important release of the week is the British Manufacturing Production, scheduled Friday. The indicator shows changes in the total value of goods produced by the manufacturing sector and acts as a leading indicator of economic activity. As always, the U.S. releases will have a direct and potentially strong impact on the pair’s movement.
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WEEKLY ANALYSIS: FED RATE HIKE IS LOOMING, US DOLLAR PREPARES FOR MASSIVE MOVES


EUR/USD


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

[Image: xWHc6x1.jpg]

Technical Outlook

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

Fundamental Outlook

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

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

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

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


GBP/USD

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

[Image: oyaGQsl.jpg]

Technical Outlook

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

Fundamental Outlook

Two major events will affect the Pound directly this week: Wednesday the Claimant Count Change will show changes in the total number of unemployed people in the United Kingdom and Thursday the Bank of England will announce the interest rate as well as the Monetary Policy Summary. No change is expected for the rate, so unless the Monetary Policy shows some surprising information, the event will just create temporary volatility.
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WEEKLY ANALYSIS: US DOLLAR TAKES A BLOW AS FED RAISES RATE BUT LOWERS EXPECTATIONS


EUR/USD


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

[Image: KBAsx7r.jpg]

Technical Outlook

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

Fundamental Outlook

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

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

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


GBP/USD

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

[Image: puBZhjI.jpg]

Technical Outlook

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

Fundamental Outlook

The Pound will be affected by only two important scheduled releases: the British Consumer Price Index, which is the main gauge of inflation, showing changes in the price paid by consumers for the products they purchase and the Retail Sales, which show changes in the total value of sales made through retail outlets. The first indicator comes out Tuesday, while the second is released Thursday and as always, the pair’s direction will also be affected by the U.S. events.
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WEEKLY ANALYSIS: BEARISH PRESSURE MOUNTS. EUROPEAN INFLATION DATA AND UNITED STATES GDP EYED FOR NEXT DIRECTION


EUR/USD


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

[Image: vN991HP.jpg]

Technical Outlook

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

Fundamental Outlook

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

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

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

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


GBP/USD

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

[Image: OZbmQts.jpg]

Technical Outlook

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

Fundamental Outlook

Almost the entire week lacks important releases and Friday will be the busiest day of the week, with 2 important indicators: the British Current Account, which shows the difference in value between imported and exported goods and services and the Final GDP, which is the main gauge of overall economic performance. Other than this, price action will be mainly driven by the technical aspect and the U.S. releases.
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WEEKLY ANALYSIS: HUGE MARKET-MOVERS FOR THE US DOLLAR: FOMC MINUTES, NON-FARM PAYROLLS


EUR/USD


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

[Image: 8g89EFR.jpg]

Technical Outlook

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

Fundamental Outlook

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

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


GBP/USD

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

[Image: hUMhU8B.jpg]

Technical Outlook

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

Fundamental Outlook

The Pound will be affected by three surveys this week: the Manufacturing PMI, Construction PMI and Services PMI, released Monday, Tuesday and Wednesday respectively. The surveys are derived from the opinions of purchasing managers regarding business and overall economic conditions in each sector and act as leading indicators of economic health. Higher numbers usually strengthen the Pound but the impact is often limited if the actual numbers match analysts’ expectations.
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WEEKLY ANALYSIS: US DOLLAR STRENGTH – A SHORT-LIVED AFFAIR OR THE START OF A DOWNTREND?


EUR/USD


Weekly Analysis: Last week the pair had a very slow start, with choppy and almost sideways price action; however, the last couple of days made up for the previous lack of movement and the bears managed to take the pair below support. 

[Image: tcdwhbc.jpg]

Technical Outlook

After pausing at the 50 days Exponential Moving Average, the pair started to show some determination, making us anticipate a continuation of the current bearish momentum. If this is the case, price will probably move towards the support zone created between 1.0525 and 1.0495, which is also the place where the last move up originated, so it’s an important zone for medium term price action. It must be noted that the Stochastic is below its 20 level and the Relative Strength Index is approaching its oversold level; if both oscillators enter oversold and price reaches strong support, we will probably see a bounce up.

Fundamental Outlook

The first notable release of the week is the German ZEW Economic Sentiment, scheduled Tuesday. The survey shows the opinions of about 275 German professional investors and analysts regarding current economic conditions as well as a 6-month outlook; it acts as a leading indicator of optimism, with higher numbers strengthening the currency but the effect is usually mild.

The next releases are scheduled Thursday and will affect the US Dollar: the Producer Price Index (an indicator that shows changes in the price charged by producers for their goods) and the University of Michigan Consumer Sentiment, a survey of about 500 consumers that tries to gauge their opinions regarding current and future economic conditions.

Friday we take a look at Unites States inflation with the release of the Consumer Price Index and the same day the U.S. Retail Sales come out, showing changes in the total value of sales made through retail outlets. German banks will be closed in observance of Good Friday, so we expect volatility to be affected.


GBP/USD

After another failed attempt to move above 1.2570 resistance, the pair started to drift lower last week, breaking support and shifting short term control towards the short side. However, from a longer term perspective, the pair is still in a range. 

[Image: 9Enwb5V.jpg]

Technical Outlook

The resistance at 1.2570 remains an important level that stopped rising prices once again and triggered a bounce lower, through the 50 days Exponential Moving Average. Even if there are some signs of bearish pressure (bounce at resistance, break of 50 EMA), the control doesn’t clearly belong to either side and the pair lacks momentum. The first level of importance is located at 1.2300, which acts as psychological support (big, round number) but also technical support because price bounced off of it in the past. To the upside, 1.2570 remains the first key level.

Fundamental Outlook

The first release for the Pound is scheduled Tuesday in the form of the Consumer Price Index, which is the main gauge of inflation and usually has a strong impact on the currency, with higher values strengthening it.

Wednesday we take a look at British jobs data with the release of the Claimant Count Change, an indicator that shows the change in the number of people who asked for unemployment related benefits, and usually weakens the Pound if it posts a higher number than expected.

Friday UK banks will be closed in observance of Good Friday and this will probably trigger irregular movement on Pound pairs.
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WEEKLY ANALYSIS: U.S. PRESIDENT TRUMP SAYS DOLLAR IS ‘TOO STRONG’. DO THE MARKETS AGREE?


EUR/USD


Weekly Analysis: The pair climbed last week, following a comment made by U.S. President Trump regarding a “too strong” US Dollar but most of the rise was erased a day after and the week ended with price close to the opening point.

[Image: MRH8401.jpg]

Technical Outlook

It is clear now that price reacts to the resistance at 1.0680, as seen from last week’s bounce, but it must be noted that the sellers couldn’t take the pair below 1.0600 so there is not enough traction on either side. The beginning of this week will be affected by the Easter holidays and we will most likely see alternating periods of low and high volatility but strictly from a technical point of view, our bias is bearish as long as the pair remains below the 50 period Exponential Moving Average and below 1.0680 resistance.

Fundamental Outlook

Monday most European banks will be closed, celebrating Easter Monday and no major economic indicators will come out. Volatility will most likely be affected and price may move erratically, so caution is recommended.

Tuesday the US Dollar will be affected by the release of the Building Permits, but the indicator lately has just a low-to-medium impact; Wednesday we take a look at European inflation with the release of the Final version of the Eurozone Consumer Price Index. Thursday lacks major releases and the week ends Friday with the German Services and Manufacturing PMIs as well as the U.S. Existing Home Sales. Overall we have a rather slow week ahead of us, without high impact market movers, so the main factor for direction will be the technical aspect.


GBP/USD

Last week was mostly controlled by the bulls but the resistance located at 1.2570 stopped the pair’s rise once again. Price remains in a range, without clear control from either side.

[Image: ZYeVCIN.jpg]

Technical Outlook

The rally was hindered by 1.2570 resistance but the short term momentum belongs to the bulls, so it’s very probable that we will soon see a break of the mentioned level. Until the pair moves outside the channel created by 1.2570 or and 1.2420, we expect to see choppy movement, characteristic to range-bound trading. For the time being, our bias is mostly neutral for this pair but given the US Dollar weakness seen last week, we anticipate a break of 1.2570 resistance.

Fundamental Outlook

UK banks will be closed Monday in observance of Easter and the week remains slow until Thursday when Bank of England Governor Mark Carney will deliver two speeches in Washington, one at the Institute of International Finance Policy Summit and the other at a Bank of France event. Friday the British Retail Sales are released, showing changes in the total value of sales made through retail outlets; this is usually a high impact indicator, which strengthens the currency if it posts numbers above expectations.
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WEEKLY ANALYSIS: BRACE FOR A WILD WEEK: FRENCH ELECTION, ECB INTEREST RATE


EUR/USD


Weekly Analysis: Last week the bulls scored an important victory by moving the pair above the 50 days Exponential Moving Average but some of the gains were erased later in the week. Overall, price action was bullish, but key resistance (1.0800) was not broken.

[Image: tkw7VDd.jpg]

Technical Outlook

Price is capped to the upside by the resistance at 1.0800 and to the downside by the 50 days EMA as well as several support levels. The last two days show candles with wicks in their upper and lower sides respectively, which is a sign of indecision but the focus early in the week will be on the French Presidential Election, which will generate increased volatility and possibly a strong move in one direction. For this reason, we recommend caution, especially during the first part of the week.

Fundamental Outlook

The first important release of the week is the German IFO Business Climate, scheduled Monday. This is a survey of about 7,000 businesses, derived from their opinions on current and future economic conditions. Also keep in mind that the French Presidential Election held on Sunday will probably have a strong impact on the Euro in the beginning of the week.

Tuesday the focus shifts towards the US Dollar for the release of the U.S. Consumer Confidence survey and Wednesday is a slow day, without any major economic releases.

Thursday will be the most important day of the week for the Euro as the European Central Bank meets to announce the interest rate. Soon after the announcement, ECB President Mario Draghi will hold a press conference, discussing the rate decision and answering journalists’ questions. Usually the conference creates strong volatility and possibly irregular price action.

The trading week finishes Friday with a potential market-mover for the US Dollar: the U.S. Advance version of the Gross Domestic Product. Out of the three versions of the GDP (Advance, Preliminary and Final), this is the earliest and tends to have the strongest impact.


GBP/USD

British Prime Minister May called for a snap General Election that will take place in June and this was the highlight of last week, triggering a huge move to the upside that took the pair above the long time resistance at 1.2770.

[Image: 8zdiFsh.jpg]

Technical Outlook

After breaking the top of the channel that confined the pair for a long time, price stopped between 1.2850 and 1.2770 and remained there for the rest of last week. The bias is now bullish but it must be noted that the Relative Strength Index and Stochastic have both reached overbought and this is an early sign that a bearish pullback will soon occur. The French Presidential will have an impact on the markets and this pair will probably be affected as well, thus we recommend caution, especially early in the week.

Fundamental Outlook

The Pound has a very slow week ahead in terms of economic indicator releases. The only major indicator is the British Preliminary Gross Domestic Product, scheduled Friday. This is the main gauge of an economy’s performance and usually strengthens the currency if it posts higher than expected numbers.
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WEEKLY ANALYSIS: US DOLLAR BIG MOVERS AHEAD: FED INTEREST RATE, NON-FARM PAYROLLS


EUR/USD


Weekly Analysis: After the gap seen a week before, the pair started to move almost sideways and both bulls and bears seem to have lost interest. Part of this slow directional movement can be attributed to the lack of major releases last week.

[Image: XmE8tc8.jpg]

Technical Outlook

After breaking 1.0850 the pair established resistance around 1.0945 and remained between the two levels for the entire week. Now the Relative Strength Index and the Stochastic are both overbought, which is usually an early indication that price may be coming down in the near future. The weekly gap is not closed and usually price returns to where the gap originated, so we may see an extended move down but this is not a certainty; also, the time it takes for the gap to close is unknown. For now the levels to watch are 1.0945 as resistance and 1.0850 as support; a break of either one may trigger an extended move in that direction.

Fundamental Outlook

Monday most banks across Europe will be closed, celebrating Labor Day and this is likely to generate irregular volatility and choppy price action, so caution is advised. On the US Dollar side we have the Manufacturing PMI, which is a survey derived from the opinions of purchasing managers regarding business and economic conditions.

Tuesday is a slow day but action picks up Wednesday when the Fed will announce the interest rate (no change expected from the current <1.00%) and the will release the FOMC Statement, which contains details about the reasons that influenced the rate decision.

Thursday we have another slow day, without major releases and the trading week finishes Friday with the always important Non-Farm Payrolls, an indicator that tracks changes in the number of employed people, excluding the farming industry.


GBP/USD

The pair continued last week the bullish momentum started when British Prime Minister May called for a snap general election, and exited the horizontal channel that confined it for more than a week.

[Image: Aw52tHy.jpg]

Technical Outlook

Although the pair paused and moved sideways for more than a week, we didn’t see a clear retracement to the downside and such a move is due, considering the overbought condition of the Relative Strength Index and Stochastic. The current up move may extend into the resistance at 1.3050 but once and if it gets there, we expect a bounce lower. Also keep in mind that 1.3000 is a big round number and price will probably react to it as well.

Fundamental Outlook

Monday UK banks will be closed in observance of May Day and the rest of the week the Pound will be affected by the release of three Purchasing Managers’ Indexes: Tuesday the Manufacturing PMI comes out, followed Wednesday by the Construction PMI and Thursday by the Services PMI.

These are surveys of purchasing managers from the respective sectors, which act as leading indicators of economic health but usually the impact is low-to-medium; however, numbers above expectations tend to strengthen the Pound. Of course, the pair will be directly affected by the U.S. indicators released throughout the week.
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