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GDMFX - Weekly News
WEEKLY ANALYSIS: THE EUROPEAN CENTRAL BANK TAKES CENTER STAGE: INTEREST RATE DECISION AND PRESS CONFERENCE


EUR/USD


Weekly Analysis: The bulls remained in control and the pair closed last week strongly, on the back of a US Dollar sell-off triggered by weak inflation and retail sales data. However, Friday’s climb couldn’t take out the weekly top at 1.1490.

[Image: L89Wd3G.jpg]

Technical Outlook

Price is now facing a cluster of resistance levels (1.1450 – 1.1490) and the uptrend is overextended, meaning that the pair travelled a long distance without a proper pullback. The Relative Strength Index first became overbought back in April and since then, it never visited the lower levels (now it is approaching overbought on a Weekly chart as well).

All this makes us anticipate a retracement this week, and possibly an encounter with 1.1350, followed by the 50 days EMA. However, it is very important to note that the pair is in a strong uptrend and the RSI has been overbought for a long time and price still continued higher, so the possibility of another bullish week shouldn’t be overlooked. Next strong resistance is in the 1.1600 area.

Fundamental Outlook

The first notable release of the week is the European Final version of the Consumer Price Index, scheduled Monday. Although this version is the least important out of the three, the CPI remains a high impact indicator because it’s the main gauge of inflation for the Eurozone.

Tuesday the only highlight for the Euro will be the release of the German ZEW Economic Sentiment, a survey of about 275 German investors and analysts, focused on their 6-month outlook for the economy. Lately this indicator has lost some of its impact but higher numbers suggest optimism and strengthen the Euro.

Wednesday is a slow day, with the only release being the U.S. Building Permits, an indicator that shows how many permits for new buildings were released during the previous month. It offers some insights into the U.S. house market but the impact is not always high.

Thursday may be the most volatile day of the week as the ECB meets to announce their interest rate and ECB President Mario Draghi will hold his usual press conference. The rate is not expected to change but the press conference usually triggers strong movement, especially if Draghi will offer hints about the next hike.


GBP/USD

After a brief dip below the 50 days Exponential Moving Average, the bulls took control and finished the week more than 200 pips above the open. Most of the climb was generated by weak U.S. CPI and Retail Sales data.

[Image: 4DR9LIQ.jpg]

Technical Outlook

The resistance at 1.3050 was an important level and the breakout seen last week is likely to generate an extended move to the upside. The next resistance is located around 1.3250, followed by 1.3350 and the key level at 1.3450 but price will most likely retrace lower before the first resistance is reached. It’s also very possible to see a re-test of the recently broken resistance and if this re-test is successful (price bounces at 1.3050), then the level will turn into support and the chances of an extended climb will increase.

Fundamental Outlook

The Pound will be affected by only two important releases this week. The first is the British Consumer Price Index, which is scheduled Tuesday and the second is the Retail Sales, coming out Thursday. The CPI is the main gauge of inflation and is closely watched by the Bank of England when they decide the interest rate; on the other hand, sales made at retail levels represent the majority of consumer spending, which in turn accounts for a large part of the entire economic activity, so we can expect to see strong movement when these indicators are released.
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WEEKLY ANALYSIS: HIGHLIGHTS OF THE WEEK AHEAD: FOMC RATE DECISION AND U.S. GROSS DOMESTIC PRODUCT


EUR/USD


The pair posted a strongly bullish week and moved above last year’s high located at 1.1616 on the back of a hawkish Draghi press conference but also due to US Dollar heavy selling.

[Image: 5Cyo9Aq.jpg]

Technical Outlook

After the break of 1.1450 resistance the bulls regained total control over the pair and broke last year’s high, threatening 1.1713, which is the highest level since August 2015. The outlook remains bullish but the Relative Strength Index has become overbought on a Daily chart and even on a Weekly chart, suggesting that a pullback will soon follow. From a short term perspective we expect a re-test of 1.1616 followed by a move into 1.1700 territory.

Fundamental Outlook

The trading week starts Monday with a couple of medium-impact indicators for the Euro: the Eurozone Manufacturing and Services PMIs, followed the same day by the U.S. Existing Home Sales. We don’t expect substantial movement at the time of release but usually a number above expectations for any of the three indicators, strengthens the respective currency.

Tuesday’s highlight will be the release of the U.S. Consumer Confidence, a survey of about 5,000 households that tries to gauge the overall opinion regarding business conditions, job availability and the economic situation in general.

Wednesday will be the most important day of the week as the Fed meets to decide the interest rate, which this time is not expected to change (currently <1.25%). The FOMC will also release a statement outlining the reasons that determined the rate decision.

Thursday is a slow day, with the only notable release being the U.S. Durable Goods Orders (shows changes in the total value of orders placed for goods with a life expectancy of more than 3 years). Friday we have a busier day, with the focus on the German Preliminary Consumer Price Index (main gauge of inflation) and the U.S. Advance Gross Domestic Product, which is the main gauge of overall performance of the economy.


GBP/USD

After the failed break of resistance, the Pound tumbled and the pair posted a bearish week. One of the main factors that triggered Pound weakness was the British CPI that missed the market consensus and came out below expectations.

[Image: rTalRII.jpg]

Technical Outlook

The pair is still in a choppy uptrend but the bulls are running out of steam and bearish pressure is mounting. This is shown by the failed break of 1.3050 resistance and the long-wicked candle that followed (price tried once more to move above resistance but failed). These facts make us anticipate a move into the 50 days Exponential Moving Average early in the week and the way price behaves there will reveal more hints about future direction.

Fundamental Outlook

The Pound has a very slow week ahead, with the only major release being the British Preliminary Gross Domestic Product, scheduled Wednesday. There are three versions of the GDP – Preliminary, Second Estimate and Final – but the Preliminary tends to have the highest impact, mainly because it’s the first in the series. As always, the U.S. releases will have a direct impact on the pair’s direction.
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WEEKLY ANALYSIS: U.S. NON-FARM PAYROLLS – RECOVERY CATALYST OR ANOTHER BLOW TO A WEAK US DOLLAR?


EUR/USD


Weekly Analysis: Despite being overbought, the Euro pushed higher last week and broke 1.1713, which was a level last reached in August 2015. The Fed maintained a target rate of <1.25% and the Rate Statement was perceived as dovish, so the US Dollar remained on the defensive.

[Image: Fx3WtED.jpg]

Technical Outlook

Last week we saw a perfect re-test from above of the level at 1.1616 (highest price reached in 2016) and also a bullish break of 1.1713 (highest price reached since August 2015). Now 1.1616 is confirmed support and will play an important role in future price action. The pair is in a strong uptrend but the Relative Strength Index and the Stochastic are both overbought on a Daily and even on a Weekly chart, thus warning that retracements may soon follow. To the upside the next notable level is 1.1875 (last reached in 2010) followed by 1.2040 (last reached in 2012) but we don’t expect any of them to be touched this week unless surprising events take place.

Fundamental Outlook

The week starts pretty strong, with the release of the European Flash Estimate CPI and the U.S. Chicago area PMI, both scheduled Monday. Tuesday the main focus will be the U.S. Manufacturing PMI, a survey of purchasing managers from the manufacturing sector that acts as a leading indicator of economic health.

Wednesday we take a first look at the American jobs situation with the release of the ADP Non-Farm Employment Change, which is a report that tracks changes in the number of employed people in the U.S., excluding the farming sector and Government.

The last event of the week will probably be the most important as well: the U.S. Non-Farm Employment Change, scheduled Friday. Unlike the ADP version, this one is released by the Government and has a bigger impact, being considered the most important gauge of employment in the United States.


GBP/USD

The pair continued higher for most of last week, after completing a retracement that found support at 1.2930. Most of the climb was due to US Dollar weakness seen across the board.

[Image: Kixekee.jpg]

Technical Outlook

The resistance at 1.3050 rejected rising price several times in the past but now the pair has moved above it for the second time in a short period, so this second break will probably generate additional movement to the north. If 1.3160 resistance is broken, we expect to see a move into 1.3250 but this week both currencies will be affected by major releases and events, so the technical side will be secondary.

Fundamental Outlook

The week starts with the British Manufacturing PMI, scheduled Tuesday, followed Wednesday by the Construction PMI and Thursday by the Services PMI. All three are derived from the opinions of purchasing managers and act as leading indicators of optimism and economic health.

Also Thursday, the Bank of England will release their Inflation Report (containing inflation projections for the next 2 years) and will announce the Interest Rate at the same time. Later, BOE Governor Mark Carney will hold a press conference, discussing the Inflation Report and this cluster of events will most likely trigger huge volatility, so caution is recommended.
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WEEKLY ANALYSIS: UPTRENDS SHOW WEAKNESS, US DOLLAR IS STAGING A TEMPORARY COMEBACK


EUR/USD


Weekly Analysis: Last week started in close vicinity of 1.1700 and the pair pushed higher, above 1.1875 but almost the entire climb was nullified Friday after the U.S jobs data came out better than anticipated and strengthened the greenback.

[Image: 3ZH3FGP.jpg]

Technical Outlook

Given last week’s strong drop from 1.1875, this level is now confirmed resistance and will play an important role for future price action. The uptrend was overextended for a relatively long period (RSI and Stochastic overbought), so a drop was needed and the U.S. jobs data helped it materialize.

For this week we expect a continuation of the bearish move started Friday, with 1.1600 as target, followed by the 50 days Exponential Moving Average. It must be noted that the pair is still in a strong uptrend, so a move back up cannot be ruled out; if this is happens, the first target will be the resistance at 1.1875.

Fundamental Outlook

We won’t see any notable release for the Euro and US Dollar during the first two days of the week but action picks up a notch Wednesday with the release of the U.S. Preliminary Unit Labor Costs. This indicator tracks changes in the price that businesses pay for labor, apart from the farming sector, and acts as a leading indicator of inflation (a higher labor cost will eventually translate into a higher price for goods and services).

Thursday the Euro continues to be unaffected by major economic releases and on the US Dollar side we have the Producer Price Index, which tracks changes in the price that producers charge for their goods and acts as another indicator with inflationary implications (higher producer prices are usually passed on to the consumer).

Friday the focus remains on the US Dollar for the release of the U.S. Consumer Price Index, which tracks changes in the price that consumers pay for the goods and services they purchase. This is one of the main gauges of inflation in the United States and usually the release has a high impact on the currency, with higher numbers strengthening it.


GBP/USD

The Pound started to weaken last week after the Bank of England lowered inflation expectations and Governor Mark Carney adopted a dovish stance during his press conference. The U.S. Non-Farm Payrolls added fuel to the fire, strengthening the US Dollar and driving the pair lower, to finish the week below support. 

[Image: 9Ta7856.jpg]

Technical Outlook

The US Dollar is staging a comeback against its counterparts, on the back of better than expected employment data and after a long period of general weakness. For this week we expect further downside, with the 50 days Exponential Moving Average as first and immediate target, followed by 1.2930 and 1.2850. A bounce at the 50 days EMA would invalidate such a scenario and would switch the momentum in the favour of the bulls once again.

Fundamental Outlook

The Pound has a very light economic week ahead, with the only notable release being the Manufacturing Production, scheduled Thursday. The indicator tracks changes in the total value of goods produced by manufacturers and acts as a leading indicator of economic health; its impact is usually high because Manufacturing makes up about 80% of the entire Industrial Production, thus higher numbers usually strengthen the Pound.
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WEEKLY ANALYSIS: RETRACEMENTS OR REVERSALS? US DOLLAR SHOWS MIXED SIGNALS AHEAD OF FOMC MINUTES


EUR/USD


Weekly Analysis: Last week the pair descended into the area between 1.1713 – 1.1700 but worse than expected U.S. inflation data weakened the US Dollar later in the week, so the pair bounced at support, moving higher.

[Image: eU5Bc9M.jpg]

Technical Outlook

Price is in a strong uptrend and the drop from 1.1875 to 1.1713 is considered a normal retracement after a long period of bullish movement. As long as the pair is trading above the 50 days Exponential Moving Average, with price making higher highs and higher lows, we consider the uptrend intact and we anticipate another encounter with 1.1875. If this resistance is broken, the next target will become the psychological resistance at 1.2000 (big, round number) but a bearish break of 1.1713 – 1.1700 would hinder this scenario.

Fundamental Outlook

Monday is a slow economic day for both currencies and Tuesday, French and Italian banks will be closed due to Assumption Day, so we can expect irregular volatility during the European session. The first important release of the week will be the U.S. Retail Sales, scheduled Tuesday.

Wednesday we have the Flash Gross Domestic Product on the Euro side and the US Dollar will be affected later in the day by the FOMC Meeting Minutes, a document that contains the details of the latest FOMC Meeting and reasons for the latest rate vote.

Thursday the U.S. Industrial Production will show changes in the total value of goods generated by the manufacturing, utility and mining sectors. The week ends Friday with the University Of Michigan Consumer Sentiment, which is a survey that tries to gauge the opinions of about 500 consumers regarding current and future economic conditions.


GBP/USD

The pair continued to drop after the bounce at 1.3250 resistance but encountered support at 1.2950 and started to move in a range, without clear direction for most of last week.

[Image: bJU7YqM.jpg]

Technical Outlook

The 50 days Exponential Moving Average is flat and price is trapped inside a horizontal channel with 1.3050 as upper limit and 1.2950 as lower limit. Until one of these barriers is broken decisively, our view is neutral and we expect more of the ranging movement seen last week. Once the pair exits the channel, the first lower target will become 1.2850 followed by 1.2770; the upper target will be 1.3250 but such a big move will have to be supported by some positive British economic news.

Fundamental Outlook

We have a busier week than the one before, with three major releases for the Pound. The Consumer Price Index comes out Tuesday, showing changes in the price paid by consumers for the goods and services they purchase. This is also the main gauge of inflation, so its impact is usually very high.

Wednesday the Average Earnings Index will show changes in price that businesses pay for labor and Thursday the British Retail Sales come out, showing changes in the total value of sales performed through retail outlets. All these are high-impact indicators that will probably trigger strong movement on the pair.
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WEEKLY ANALYSIS: UPTREND WAVERS AS THE US DOLLAR FIGHTS FOR A COMEBACK


EUR/USD


Weekly Analysis: Most of last week’s price action took place around 1.1700 support, which appeared broken several times but the pair returned above it almost immediately. The fundamental scene was pretty dull, and didn’t generate strong moves.

[Image: kM1BgzH.jpg]

Technical Outlook

The uptrend is weakened now because a lower high was printed last week (1.1840) but support is still holding and the latest candles show long wicks in their lower part, which is a sign of rejection. All this creates a mixed picture, without a clear bias but as long as the pair is trading above 1.1700 – 1.1713 and above the 50 days Exponential Moving Average, we expect to see a continuation of the uptrend and a move closer to 1.1875. A break of the mentioned support and a move below the 50 days EMA would be a strong sign that the uptrend is coming to an end.

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 the state of the economy for the next 6-months and usually has a medium impact on the currency.

Wednesday the focus remains on the German economy for the release of their Manufacturing and Services PMIs, which are surveys of purchasing managers regarding the health of the respective sectors. Usually the impact is medium but higher numbers show optimism and strengthen the Euro.

Thursday the Jackson Hole Economic Symposium will start and will be attended by central bankers, finance ministers and other personalities from around the globe. This event is held annually and can have a significant impact, depending on the matters discussed and the attitude of the speakers.

Friday the US Dollar will be affected by the U.S. Durable Goods Orders and the Jackson Hole Symposium will continue in Wyoming, so this can affect other currencies as well, not only the greenback.


GBP/USD

The British Consumer Price Index (main gauge of inflation) missed the market consensus of 2.7% and showed a reading of 2.6%. This triggered the biggest move of last week and brought the pair into the support at 1.2850 but the bearish momentum soon faded and support remained intact.

[Image: BSwoqbY.jpg]

Technical Outlook

The pair is trading below the 50 days Exponential Moving Average, a fact which makes the short-to-medium term outlook bearish. However, we can see that for several days the bears have tried to break 1.2850 support and each time they failed, so this level will be this week’s main “player”. A bearish break will make 1.2770 the immediate target, followed by 1.2630 in the longer run. A bounce at 1.2850 will take the pair into the 50 EMA, followed possibly by 1.3050.

Fundamental Outlook

Tuesday the British Office for National Statistics will release the Public Sector Net Borrowing, which is a report that shows the difference between spending and income for the government and public corporations. A higher deficit usually weakens the Pound but the impact is not very high.

Thursday the Second Estimate British Gross Domestic Product is released, showing changes in the total value of goods and services produced by the economy. The GDP usually has a high impact on the currency so we expect to see increased volatility. The same day the Jackson Hole Symposium starts and British representatives will attend so the Pound may be affected.
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WEEKLY ANALYSIS: US DOLLAR FALTERS AGAIN, NON-FARM PAYROLLS EYED FOR NEXT BIG MOVE


EUR/USD


Weekly Analysis: Last week the pair reached the highest level since January 2015 on the back of a hawkish speech delivered by ECB President Mario Draghi at the Jackson Hole Symposium. Key resistance was broken and now the uptrend is resumed.

[Image: PHYbWvT.jpg]

Technical Outlook

After a choppy start of the week, price finally broke out and moved above 1.1875, fueled by Draghi’s speech. Also, the market expected Fed Chair Yellen to be more hawkish but her speech at the Jackson Hole Symposium was disappointing and did not help the US Dollar.

Given the current situation we expect to see a move into the key psychological level at 1.2000, followed possibly by 1.2040, which is a level that last acted as support in 2012 (that’s a long time ago so we don’t know if the pair will react to it). A re-test of the recently broken level (1.1875) is very possible but the overall picture is clearly bullish.

Fundamental Outlook

The first notable release of the week is the CB Consumer Confidence, scheduled Tuesday. This is a survey of about 5,000 U.S. households that asks respondents to rate the overall level of economic conditions, both current and future. Consumer confidence is an early indicator of consumer spending so a higher number usually strengthens the US Dollar.

Wednesday we take a look at German inflation with the release of the Preliminary German CPI and later in the day the greenback will be affected by the ADP Non-Farm Employment Change and the U.S. Preliminary Gross Domestic Product.

Thursday the European Flash Estimate Consumer Price Index is released, showing changes in the price that consumers pay for the goods and services they purchase. This is the main gauge of inflation but its importance is dimmed by the fact that other EU member states have released inflation data earlier.

Friday the U.S. Non-Farm Payrolls come out, showing changes in the number of employed people, excluding the farming industry. This is widely considered the most important jobs data in the United States and its impact is always very high so caution is advised.


GBP/USD

The US Dollar had a great start of the week against the Pound, moving the pair into the support at 1.2770 but Yellen’s speech triggered a wave of US Dollar selling across the board and the pair climbed above 1.2850.

[Image: zMVVWaa.jpg]

Technical Outlook

The bounce at 1.2770 support and the break of 1.2850 makes the short term bias bullish, anticipating a move into the 50 days Exponential Moving Average and the resistance at 1.2950. The way price behaves in that zone will decide the next direction: a bullish break will make 1.3050 the target and a bounce will probably take the pair back below 1.2850. The oscillators are moving up, coming from the lower levels and this increases the chance of a move into the 50 EMA.

Fundamental Outlook

Monday British banks will be closed due to Summer Bank Holiday and no economic data will be released. This will most likely affect volatility and price action.

Wednesday the Net Lending to Individuals will show changes in the total credit issued to individuals but the indicator is not known to have a high impact. A more important indicator is released Friday: the Manufacturing PMI. This is a survey of purchasing managers that gauges their opinion regarding the state of the manufacturing sector and acts as a leading indicator of economic health. As always, the U.S. data released throughout the week will have a direct impact on the pair’s movement.
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WEEKLY ANALYSIS: ECB INTEREST RATE AND PRESS CONFERENCE. SHOULD WE EXPECT A SURPRISE FROM DRAGHI?


EUR/USD


Weekly Analysis: After breaking above 1.2000 for the first time since 2015, the bulls failed to continue upside momentum in the latter part of last week and now the pair is trading close to support, ending the week with small losses.

[Image: npAn3LV.jpg]

Technical Outlook

The pair is still in a strong uptrend but it seems like it is about to enter a bearish phase. This is signaled by the very long wicks of the last few candles but also by the bearish divergence seen on the Daily chart above: price is making higher highs but the Relative Strength Index is only making lower highs.

This makes us anticipate a drop into the confluence zone created by the 50 days Exponential Moving Average and the support near 1.1700. On the other hand, a bullish bounce from the current support level (1.1875) will make 1.2000 the first target, followed by last week’s high at 1.2070.

Fundamental Outlook

Monday U.S. banks will be closed, celebrating Labor Day and the Euro will not be affected by important economic data either, so we expect a rather slow and possibly ranging session. The only notable data released Tuesday will be the U.S. Factory Orders (shows changes in the value of orders placed with manufacturers) and Wednesday things remains slow, with the ISM Non-Manufacturing PMI being the only notable release.

Action picks up Thursday when the European Central Bank will announce the interest rate (no change expected – currently 0.00%) and ECB President Mario Draghi will hold the usual press conference, which is known to create high volatility almost always. His attitude and answers will be carefully scrutinized by market participants but sometimes are misinterpreted and that’s when sudden changes of direction occur.

Friday will be another day without major economic releases, so the technical aspect will prevail.


GBP/USD

The pair had a very choppy week, climbing multiple times above 1.2950 resistance and then dropping below the 50 days Exponential Moving Average. The balance of power shifted several times but the week ended close to where it started.

[Image: GLgHCdg.jpg]

Technical Outlook

Last week’s price action shows indecision from both sides and offers very little clues about the next direction. Usually, after a period of indecision, price shoots strongly in one direction or the other so we can expect a breakout to be followed by an extended move in that direction. To the upside 1.3050 is the first target and to the downside 1.2770 is key support. Once price reaches one of these targets, we may see pullbacks.

Fundamental Outlook

The first notable release of the week is the British Construction PMI scheduled Monday and followed Tuesday by the Services PMI. Both are surveys of purchasing managers from the respective sectors that act as indicators of optimism, with a medium impact on the Pound.

The last release of the week will be the Manufacturing Production, scheduled Friday. The indicator shows changes in the total value of goods produced by manufacturers and usually strengthens the Pound if it posts higher numbers.
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WEEKLY ANALYSIS: US DOLLAR GOING DOWNHILL. LOOKING TO INFLATION AND RETAIL SALES DATA FOR A BOOST


EUR/USD


Weekly Analysis: The Euro continued to strengthen last week, fueled by a positive ECB outlook regarding economic expansion. The pair breached the previous high and created a new one at 1.2092 but retraced lower in the last day of the week.

[Image: SLDRMAD.jpg]

Technical Outlook

Price is in a strong uptrend but at the same time, it looks overextended. This suggests that we will likely see a pullback or a consolidation period before the pair can make significant new advances. The first resistance is located at 1.2070, followed by 1.2100 but currently rejection is present (long upper wick of the last candle, RSI shows bearish divergence) so we expect to see a ranging phase, with price spending some time between 1.2000 and 1.1875.

Fundamental Outlook

The first part of the week will be very slow, without notable releases on either side of the Atlantic. The U.S. Producer Price Index (PPI) will be the first major data release of the week, scheduled Wednesday and action picks up even more Thursday with the release of the U.S. Consumer Price Index, which is the main gauge of inflation, showing changes in the price paid by consumers for the goods and services they purchase.

Friday the U.S. Retail Sales numbers come out, showing changes in the total value of goods sold through retail outlets and later in the day the University of Michigan will release their Consumer Sentiment, which is a survey that gauges consumers’ opinions about economic conditions. Higher numbers for any of the indicators released throughout the week have the potential to strengthen the greenback.


GBP/USD

The US Dollar suffered heavy selling last week and was surrounded by an overall negative sentiment, so it weakened against most of its counterparts. The Pound capitalized on this weakness and made substantial advances, taking the pair 300 pips higher.

[Image: 4mvI4tL.jpg]

Technical Outlook

Early in the week we will probably see a touch of the resistance at 1.3250 but soon after, we expect a pullback. The pair has traveled a long distance in a short period of time and this type of price action is usually followed by a retracement. Also, the Relative Strength Index and Stochastic are both overbought, thus increasing the probability of a move lower. If 1.3250 is surpassed, the next destination will be the long term resistance at 1.3450 but after said pullback will occur.

Fundamental Outlook

Tuesday the British Consumer Price Index will offer information about the state of inflation in the United Kingdom and Wednesday the Average Earnings Index will show changes in the price that employers pay for work. Both these indicators usually have a high impact and higher numbers are beneficial for the Pound.

Thursday will be the busiest day as the Bank of England will announce the interest rate (currently 0.25%, no change expected) and will release a Monetary Policy Summary, outlining the reasons that determined the rate vote. As always, the U.S. data released throughout the week will have a direct impact on the pair’s movement.
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WEEKLY ANALYSIS: POUND BOOSTED BY RATE HIKE SPECULATION, US DOLLAR ON THE ROPES AHEAD OF FED MEETING


EUR/USD


Weekly Analysis: After failing to stay above 1.2070, the EUR/USD dropped and breached 1.1875 support, coming close to the 50 days Exponential Moving Average. The economic scene was calm for the Euro and the data for the US Dollar was mixed, with a better than expected CPI but disappointing Retail Sales.

[Image: 8ZEPfKU.jpg]

Technical Outlook

It looks like the pair completed a retracement and is now bouncing at 1.1875 support, aiming for 1.2000 as immediate target. The uptrend is still in place but it has clearly lost some steam, so if the pair doesn’t break 1.2070 decisively this week, we will probably see a drop through 1.1875 and into the 50 days Exponential Moving Average. An important role will be played by the FOMC Meeting scheduled this week and Fed Chair’s press conference that follows.

Fundamental Outlook

The first release of the week is the Final version of the European Consumer Price Index, scheduled Monday. The CPI is the main gauge of inflation but the final version is the last in the series, so its impact is often muted by the earlier data.

Tuesday the German ZEW Economic Sentiment will show the opinions of about 300 German investors and professional analysts about a 6-month outlook for the economy and on the US Dollar side the Building Permits will be the most notable release.

Wednesday will be the most important day of the week as the FOMC will announce the interest rate, the economic projections and will release a rate Statement outlining the reasons that determined the rate decision. Half an hour later, Fed Chair Janet Yellen will hold a press conference discussing the rate outcome and answering journalists’ questions. This is when the US Dollar usually shows huge volatility, so caution is recommended.

Thursday’s only notable event is the U.S. Unemployment Claims and the economic week ends Friday with the German Manufacturing and Services PMIs, which are surveys of optimism among purchasing managers from the respective sectors.


GBP/USD

The Pound had a tremendous week, climbing more than 450 pips on the back of hopes that a rate hike will come sooner than expected. Inflation in the United Kingdom has increased and this boosted expectations that the Bank of England might hike until the end of the year. 

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Technical Outlook

It’s clear that the Pound is enjoying a positive market sentiment, boosted by rate hike speculation. This is the highest point reached since the Brexit referendum but usually a move like the one seen last week will retrace before continuing higher. The first potential support is located at 1.3450 but this seems like a too distant target, given the Pound strength seen lately. However, we expect to see bearish moves (pullbacks) or a small period of consolidation before a stronger move can take place.

Fundamental Outlook

The Pound has a very slow economic week ahead, with the only major release being the British Retail Sales scheduled Wednesday. The indicator shows changes in the total value of sales made at retail level and usually has a high impact on the currency because retail sales represent a major part of consumer spending, which in turn accounts for a big part of overall economic activity.
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