Daily Market Analysis from ForexMart

The British currency rallied amid Thursday trading session as it reached the 1.30 region. Upon breaking the mentioned area allows the market to lead over the top of 1.3450 in the longer-term.

In doing so, a series of pullback has to be done in the short-term and then, the market is expected to deal with a “buy on the dips” situation. It further requires a bit of cautiousness when purchasing with that high level, however, it does not necessary to sell but should imply more patience.

The Friday would likely to be a quiet session since the presence of volatility in the market is high in the past few trades. Currency markets should take a break at least once in awhile and we believe that this is the perfect timing to do so.

Furthermore, the Canadian and the US independence days are scheduled for the next days which is suspected of draining the liquidity on North America.

With this, there is a possibility that movements are very limited in the next 24 hours which could last until Wednesday next week. However, an upward bias is certainly expected since most market reflects this path.

The most suitable way to engage with this market is to search for the value from pullbacks or waiting for a breakout confirmation.

Headline risks are projected due to divorce proceedings which involve the countries, EU and U.S, nonetheless, the market seems favors the side of the sterling pound.

The British currency went to a volatile session on Thursday and traded sideways, however, returned to the 1.2980 region and test the region 1.2930 another time.

The market also contained significant amount of support under the 1.29 mark and attempts to touch the 1.30 area eventually. This is an area that could offer massive resistance and extends towards 1.3050, but a cut through over that level enable the market to climb higher near the longer-term target at 1.3450

Remember that the Nonfarm Payroll is released every first friday of the month which is today, therefore, the US dollar is expected to have plenty movement in general. An ability to break down from this point, we shall see the 1.28 region to provide support. The area below there will affect the sterling pound.

The pullbacks could possibly have some value opportunities showing a strong uptrend. A break down beneath the 1.28 range will initiate buying the dips on the candles that looks supportive. This could be difficult enough to stay in a trend for a relative amount of time not until a cut over the massive resistance found at the 1.3050 region.

When this happens, winning positions could be improved to the upside. Otherwise, a breakdown under the 1.28 will urge to the market to look for 1.26.

The EURUSD traded sideways during Friday’s trading and experienced a session with high volatility since US job figures took a longer time than the anticipated. Nevertheless, as the session ends it appeared that the pair begins to demonstrate stronger stance once again while the weekly candle generates a hammer formation.

The market would likely make an attempt to reach the 1.15 region where a significant resistance was seen in the past 3 years. Ability to break above it and a daily or weekly close would indicate a bullish sign showing that the market is apt to resume to go near the 1.18 handle.

Having said that, the market is currently in the “buy on the dips” condition in the near-term.
In case that the 1.15 handle was able to be broken down, it will suggest a major signal that the downward trend has ended. On one side, buyers will consider the single European currency in the longer-term or maybe tries to push it up towards the higher levels.

This is a situation where the Fed is thinking about the increase in interest rates, however, the European Central Bank recently mentioned the tightening of monetary policy which is quite surprising. With this, the pair requires some rebalancing which we have been witnessed.

Otherwise, a break down under the 1.1350 area will test the 1.13 level and a breakdown below that point will consider the 1.11 mark eventually.

The overall market seems equal and buyers are currently in the driver’s seat.

The market had a long day yesterday since there are few market drivers present in the market which resulted in a low volatility and low liquidity as well. This naturally occurs during the first day of the week, except when there is a special progress happened over the weekend, but there were none. There are expectations for further actions for this day since traders already recovered from its weekend blues and started to continue trading.

The EURUSD does not move a lot in the past 24 hours by which the pair moved on a certain side of the 1.14 region without any development in a particular direction. The US dollar remained steady and it’s quite surprising that American traders failed to lead the run during a follow-up action on Friday. Moreover, the NFP report showed a moderately strong position that relieved the fears and uncertainties towards the US economy and this also help the greenbacks to stabilize.
On the first part of the day, it is anticipated that US traders will support the USD to gain further, however, unable to accomplish it. The concerns regarding the ability of the Trump administration to implement their policies remain to continue, but there are barriers in every step. The possibility that the United States will face difficulty for the next couple of years increases in consideration with the changes in policy. This also explains the hesitation of investors and traders about not engaging with the greens, even if the employment report was stable.

Some reports say that the ECB may not deal with tapering in the next months but it did not bring such impact against the EUR.

Ultimately, there are no major economic releases except for the speech from a Fed member later this day. It is projected for more actions this day on the back of market’s inactivity but the favor remains for the euro-dollar pair.

The U.S. dollar against the Japanese yen has had a bullish trading during the Tuesday session. The 114.50 level is being tested while a massive resistance is seen at the 115 handle. If the market breaks successfully, there will be a “buy and hold” scenario for long-term.
From time to time there will be pullbacks that offer value in the market. However, the speech of Janet Yellen in Congress will put the market into a lackluster and probably turn it into more hawkish.

There will be a higher chance for a breakout in long-term but it may need to gather enough momentum to break through the resistance. If traders successfully do so, then the market will probably reach up to the 118.50 level in the upside.

Selling the pair may not be practical as the floor is strongly supportive below at 114 level. Hence, buyers will take this as an opportunity and if they successfully break down then there will more support found at the 113.50 level below. After some time, the market could break out and reach the upper channel for long positions. The USD/JPY is highly sensitive to global risk appetite and the stock market should then be monitored particularly to the S&P 500.

The interest rate differentials between these two countries favor the U.S. which will persist for long-term and put a bullish pressure into this market after some time. Hence, shorting is not advisable as the pair tries to break out for long-term.

The GBP/USD remained in the pressured area yesterday prior the late recovery that the helped the pair to moved higher and closer the 1.29 level. It further ended the day in an acceptable manner. As mentioned previously, the pound is one of the weakest currencies in the market due to events that continue to impact the GBP. however, there are some signs of recovery and remain to search for ways to have a complete recovery.

The dovish remarks of BOE member, Ben Broadbent pushed the Cable under pressure during the earlier session along with some strong selling in the pair of pound-yen that helped the GBPUSD to reach the 1.28 mark, whereas, the pair started another rally during the afternoon trading.
The Bank of England was able to provide support for the British currency but the market was surprised when Broadbent did not stated hawkish comments as expected. It will be disregarded when the data of average earnings index is released and predicted to helped the GBP to increase, then recovery will continue.

The testimony of Yellen was the major event for this day but there’s nothing hawkish came out based on what she was mentioned previously, hence, this led to further selling of the USD throughout the markets.

It further assisted the pound-dollar to recover and touched the 1.29 mark. It also indicates clear hints about pair recovery and traders should take note of this.

Ultimately, there are no major events or releases from the United Kingdom, aside from the PPI data and Yellen’s speech later this day. Both events mentioned would likely carry some volatility, however, the 1.28 area shows a strong buying support. It can be an interesting trading day today.

As mentioned in the previous forecast, the 1.28 region is suitable for the pair to rebound and the GBP/USD was able to begin its recovery prior it moved higher than the said level. The recovery resumes since the Cable was under the consolidation period showing a bullish sentiment.

The area within 1.29 contains lots of volatility, even the pair trades around a narrow range and unable to reach either side of the range. However, it was obvious that bulls remain in control at this moment and the level 1.28 would be the indicator, in case that bears urge to take the driver’s seat. There is no fundamental news released the previous day from the United Kingdom and it was one of the reasons why consolidation had formed.

The dollar bulls hope to get some support from the hawkish speech of Yellen but the bulls were disappointed as she did not cite any hints about economic strength or the timetable of the next interest hike.

This pushed the greenbacks towards the back seat and further helped the pair to remain to trade in a stable approach which is close to the peaks of the range. The PPI data was mainly on expected lines and did not mess up the markets.

Ultimately, there are no major releases from the United Kingdom except for the significant CPI and retail sales from the United States which is projected to cause a lot of volatility in the near-term. A strong data is possible to move the greenbacks higher and bring into view the 1.28 mark for the GBPUSD.

The U.S. dollar surged during the Monday session following a drop in trading. Although the 113 level will become resistive while the 112 region is offering as support of the trend. It is possible that there will be a swaying to and fro of stock traders globally as the earnings data from the U.S. will be released soon.

This would have a strong impact on the pair as the stronger stock market will push the pair higher. A “wait-and-see” sentiment would be the current condition but a breakdown lower than the 112 level would further impel the pair to go down close to the 110 region. On the other hand, if the pair breaks out of the 113 level, this could propel the market towards 114.50 level which was the previous high.

For now, there will be a short-term move up and down which would be beneficial to short traders in the upcoming trading sessions. However, a breakover or below from its previous level that psychological levels are an indication of a gain in momentum which is notable in the current movement.

The market will find its pace and resolve which direction to go and there will be more choppiness more than other things. Short-term traders who rely on Stochastics will benefit in the current condition as it moves in small augmentation.

The Euro against the U.S. dollar pair rallied despite the ECB President Draghi rhetorics that could not control euro on its lows longer. It cannot be concluded what will happen to euro for it to breakdown for now. The movement of euro raises concerns while the dollar is performing fine for the U.S. whereby the Fed is not doing anything to curb the fall.

Somehow the weakness of the dollar and the strengthening of euro offsets each other that reverses the correction for the EUR/USD pair and pushed it to higher levels more than what the Bulls have expected. In the morning, the pair had a minor correction and declined lower than 1.15 for a shorter period of time before the headlines that have influenced euro to move.

The rate announcement came in, diverted the focus to Draghi's press conference. There was a hint of bearishness but the market situation has been clearly described that the euro economy is going on strong and pushing down the euro won’t do good. The market understood the situation and pushed the EUR/USD pair to climb higher.

In the start of the U.S. session, part of the headlines is the investigation of Trump’s businesses which would add more pressure to the dollar.There is sufficient signal from the dollar to take place that drove the EUR/USD higher towards 1.16. There was a strong selling observed close to the 1.1640 region but if a breakout occurs, the next target will be at 1.18.

For today, there is no major news to be released from the Eurozone or from the U.S. Thus, the market sentiment yesterday will be continued today as long as the pair sustained below the 1.1640 level, there will most likely be a correction.

The market had a difficulty trading the British pound against the U.S. dollar pair for the past week. After the release of the weaker CPI and retail sales data from the U.S. last week, the pair surged to 1.3030 region and reach beyond the 1.31 region for a short period of time for that day. The traders anticipate the trend last week to be continued since the greenback is not performing well as of now.

The weakened dollar did not help the pound that frustrated traders. The pair underwent correction lower than 1.30 level during the early days of the week which was influenced by the minor recovery of the dollar which was also exhibited by the euro. It resulted to poor performance in the lower channel. Moreover, the less-than-expected economic data from the U.K. deviated the strong trend of data in the past few months. Although, it is anticipated that the market could recover when the dollar depreciated once again but it failed.

The dollar weakened as the end of the week approaches with the outcome of investigations regarding the business transaction of Trump concern rises. Although, most of other currencies take advantage of this situation to move higher. As for the GBP/USD pair, it stays relatively calm. Despite the strong data of retail sales report from the U.K., it was not sufficient to push the pair higher as it closed the week lower than 1.30 level. It seems that there are risks to incur losses in the coming week influenced by the uncertainty from Brexit which continues to affect the British currency.

For today, there are not many economic events for the week as the end of the month approaches and data subsided. For next week, the FOMC statement from the U.S. is anticipated to be announced. Hence, the GBP/USD pair is anticipated to proceed with a weaker trading condition close to the 1.3030 regions as a significant psychological level.