Thread: Daily Market Analysis from ForexMart

Tips for beginner traders in EUR/USD and GBP/USD on September 23, 2022

Details of the economic calendar for September 22
The Bank of England, as expected, raised the rate by 50 basis points to 2.25%. At the same time, the regulator lowered its inflation forecast. According to their expectations, it may reach 11%, and inflation will peak in October.

The market reaction was zero, because the rate increase by 50 bps has already been taken into account in the quotes. The pound sterling began to weaken.

During the American trading session, weekly data on jobless claims in the United States were published, which recorded a decrease in their total volume. This is positive news for the US labor market.

Statistics details:

The volume of continuing claims for benefits fell from 1.401 million to 1.379 million.

The volume of initial claims for benefits rose from 208,000 to 213,000.

What is pushing the market?
The first is the results of the September Fed meeting, where the regulator clearly indicated that the main goal is to curb inflation, and it is ready to further tighten monetary policy.

The second factor is the Russia-Ukraine situation, where, at the moment, there is a large flow of information that puts speculators into action.

Analysis of trading charts from September 22
The EURUSD currency pair, in the stage of a pullback from the low of the downward trend, locally returned to the previously passed level of 0.9900, where the price rebounded with a reverse move.

The GBPUSD currency pair, after a short pullback, which was caused by a strong overheating of short positions, again moved to the decline. This movement indicates the prevailing downward sentiment among market participants who are in a stage of inertia.

Economic calendar for September 23
Today, a preliminary estimate on business activity indices in Europe, the United Kingdom and the United States is expected to be published. Indices, except for the USA, are expected to decrease. Thus, the dollar may well receive support in the market.

Time targeting:

EU business activity indices – 08:00 UTC

UK business activity indices – 08:30 UTC

US business activity indices – 13:45 UTC

Trading plan for EUR/USD on September 23
With the opening of European platforms, a new round of depreciation of the euro emerged, which led to the price holding below 0.9800. As a result, the speculative-inertial move continues to form, which allows the rate to decline to the subsequent control value of 0.9650, where the lower border of the flat 0.9650/1.0000 passed earlier in history.

It should be noted that the market is already experiencing overheating of euro short positions, which allows for a new technical pullback.

Trading plan for GBP/USD on September 23
The pound sterling, following the euro, continued to decline, which resulted to the breakdown of the level of 1.1200. A stable hold of the price below this level allows the subsequent weakening of the British currency towards the psychological mark of 1.1000. Also, do not forget about the overheating of short positions and possible technical pullbacks.

Tips for beginner traders in EUR/USD and GBP/USD on September 26, 2022​​​​​​​

Details of the economic calendar for September 23
Last week ended with the publication of preliminary data on business activity indices in Europe, the United Kingdom and the United States. The indices came out badly, except for the US.

Eurozone manufacturing PMI fell from 49.6 to 48.5 points, while services PMI fell from 49.8 to 48.9 points.

UK manufacturing PMI rose from 47.3 to 48.5 points, while services PMI recorded a decline from 50.9 to 49.2 points. The composite index fell from 49.6 to 48.4 points.

In the United States, the picture is reversed, with the manufacturing PMI up from 51.5 to 51.8. Services PMI rose from 43.7 to 49.2 points.

The publication of an anti-crisis plan to rescue the UK economy was considered the key event on Friday. The largest tax cut in 50 years, the removal of the 45% surcharge for the highest paid workers, and a sharp reduction in taxes on dividends are expected. Not only that, but the plan includes a long-term freeze on household electricity rates, which experts estimate will cost around £60bn over the six months starting in October.

All these actions are reminiscent of all-in tactics, where huge borrowings will be needed to cover the budget deficit.

This news brought down the value of the British currency by about 8% against the US dollar. Simultaneously with the fall of the pound sterling, the British stock market also collapsed.

This pivotal decision has raised doubts in economic and political circles about the future sustainability of the UK economy and concerns about whether the UK's new economic approach is sustainable.

Media

"The UK is behaving a bit like an emerging market turning itself into a submerging market," former U.S. Treasury Secretary Larry Summers told Bloomberg TV. "Britain will be remembered for having pursued the worst macroeconomic policies of any major country in a long time."

Analysis of trading charts from September 23
Since Friday, the euro has lost more than 250 points in value against the US dollar. As a result, the quote peaked at 0.9553, last seen in June 2002.

The GBPUSD currency pair did not just collapse by almost 1,000 points (about 8.5%), the quote also broke through all possible levels and updated the lows. History has never seen such low price values.

The cause and effect of the fall is described above.

Economic calendar for September 26
Today, the macroeconomic calendar is empty, the publication of important statistical data is not expected. It is worth noting that the tense information background persists, and market participants will focus on it.

Trading plan for EUR/USD on September 26
At the moment, the formation of a technical pullback is observed on the trading chart, which, under current circumstances, is considered justified in the market due to overheating of short positions in the euro. It is worth noting that the speculative mood prevails in the market, which sets in motion an inertial course. Thus, it is impossible to exclude from the possible scenario the subsequent depreciation of the euro after the pullback, where technical signals will be ignored.

Trading plan for GBP/USD on September 26
The minimum price value that has arisen since the opening of a new trading week is 1.0345. There was a technical pullback relative to it, approximately by 3.8% (400 points), which, like the euro, is justified on the market due to the catastrophic overheating of short positions in the pound sterling. In this situation, despite the historical values, the market retains a high interest in the downward cycle. Speculators, on the occasion of inertia, can still continue to decline, ignoring technical signals. In this case, we can see the price approaching parity—1.0000.

The situation could improve if the BoE postpones planned bond sales and the Treasury is forced to announce a medium-term fiscal consolidation plan to restore market confidence.

In this case, the pullback may turn into a full-scale correction, restoring the exchange rate of the British currency.

Existing analytical skills must be able to be considered properly, this is done so that traders can be more leverage in getting maximum trading security and comfort like what I got from Tickmill.

Tips for beginner traders in EUR/USD and GBP/USD on September 27, 2022

Details of the economic calendar for September 26
The macroeconomic calendar was empty; no important statistics were published. Investors and speculators worked out the information flow of the past week.

The UK Treasury yesterday commented on everything that is happening in the country's economy, the main theses:

- The medium-term financial plan will be presented on November 23.

- The budget plan will set out additional details, including ensuring that the share of UK debt to GDP falls in the medium term.

At the same time, the Bank of England made its comments:

- We closely monitor the market for significant revaluation of financial assets;

- We will not hesitate to raise the interest rate to bring inflation back to the target level of 2.0%.

According to media reports, traders are waiting for an unscheduled rate hike by the Bank of England amid the collapse of the national currency. Perhaps this was the reason for such a significant pullback. There is no confirmation of rumors regarding an unscheduled rate hike. If the regulator does not take any drastic action, the pound will continue to decline.

Analysis of trading charts from September 26
The EUR/USD currency pair opened a new trading week with an update of the low of the downward trend. As a result, the quote reached the levels of June 2002, at 0.9553, relative to which the stage of technical pullback occurred.

The GBP/USD currency pair has set several records at once. The absolute low was updated, the quote overcame the level of 1985, eventually reaching the value of 1.0345. The scale of the pound's collapse from last Friday to the beginning of Monday's trading amounted to almost 1,000 points, while the pullback caused by the fatal overheating of short positions on the pound was about 550 points.

Economic calendar for September 27
Today, data on orders for durable goods in the United States will be published, which may decrease by 0.9%. This is a fairly strong reduction, which foreshadows a noticeable decline in consumer activity, which is the locomotive of the American economy. As a result, these negative data, if confirmed, can put pressure on dollar positions.

Also, U.S. Federal Reserve Chairman Jerome Powell and ECB President Christine Lagarde are scheduled to give a speech. It is worth listening to what they will say, although everything has already been said before.

Time targeting:

Fed Chairman Jerome Powell Speech – 11:30 UTC

ECB President Christine Lagarde Speech – 11:30 UTC

U.S. Durable Goods Orders (August) – 12:30 UTC

Trading plan for EUR/USD on September 27
At the moment, there is a characteristic stagnation, where the pullback stage has slowed down its formation despite the continuing technical signal about the oversold euro. In order for the pullback to be prolonged and become the starting point for a full-size correction, the quote first needs to stay above the value of 0.9700 for at least a four-hour period.

At the same time, the downward scenario will become relevant again as soon as the current low is updated.

Trading plan for GBP/USD on September 27
In this situation, there is still a speculative rush on the market, which allows new price jumps. In order to prolong the current pullback, the quote needs to stay above the high of the previous day at 1.0928. At the same time, the scenario of further decline will be considered by traders if the price holds below 1.0630.

Tips for beginner traders in EUR/USD and GBP/USD on September 28, 2022

Details of the economic calendar for September 27
Orders for durable goods in the United States decreased by 0.2% during the period of August. This is not the best indicator, but they expected a reduction of 0.9%. The divergence of expectations served as a stimulus for the growth of dollar positions. At the same time, data on new home sales in the US were also published, which recorded a strong growth of 28.8% in August.

In addition to macroeconomic statistics, there were quite a lot of comments from the Fed, where everyone unanimously talks about the risks associated with inflation.

Chicago Fed President Charles Evans:

- The average forecast for the interest rate at the end of the year is between 4.25%–4.5% and 4.6% by the end of next year.

- For us, task number 1 is to bring inflation under control.

- The tightening of monetary policy will continue for some time.

- 4.5% unemployment in the United States is still a good level.

- At some point in time there will be a need to reduce the rate of interest rate increases. But now it needs to be further improved.

- This year, our forecasts for an objective increase in interest rates by another 100–125 basis points.

- We see long-term inflation expectations at acceptable levels.

- I expect that the level of inflation will noticeably decrease within two years.

- I expect a slight increase in GDP this year.

Former New York Fed President William Dudley:

- The Fed has made it clear that it intends to fight inflation.

- During the September meeting, the regulator clearly indicated that they are ready to raise the interest rate in order to return inflation to an acceptable level.

- Based on the forecasts of the Fed, GDP growth is expected in the coming years.

- It looks like there is no clear consensus among the Fed representatives on how long they will continue to fight inflation.

St. Louis Fed President James Bullard:

- We have serious problems with inflation in the country.

- The credibility of the inflation targeting regime is under threat.

- The labor market is very strong, which gives us the opportunity to fully focus on inflation.

- We must correctly and timely respond to inflation.

- At subsequent meetings, we certainly must continue to raise the interest rate.

- The possible maximum interest rate is about 4.5%.

- We'll probably have to stick with the high stakes for a while.

Minneapolis Fed President Neel Kashkari:

- We believe that the markets understand what the Fed is doing.

- Representatives of the Fed are united and committed to reducing inflation.

- We are moving at a fast pace, it is dangerous.

- The Fed is working to bring inflation back to 2%. We need to keep raising interest rates.

- We need to further tighten monetary policy to see evidence that we are succeeding in reducing inflation, and move on to slow down.

- I'm not sure that the current monetary policy is tight enough.

Philadelphia Fed President Patrick Harker:

- We are working to achieve an acceptable level of inflation in the country.

- The housing market is a key segment in the growth of inflation

- Inflation in the country is very high in many categories

San Francisco Fed President Mary Daly:

- Our goal is to return inflation to the level of 2.0%.

- The level of inflation is very high, we must properly assess the current situation.

Conclusion based on the comments of the Fed representatives
Based on the above material, a clear "hawkish" approach is visible. The regulator intends to fight high inflation by all possible means, which they point out in their statements. For this reason, we see a further decline in the US stock market, as well as an increase in the value of the dollar against other currencies.

Analysis of trading charts from September 27
The EUR/USD currency pair resumed its decline after a short pullback. As a result, the local low of the downward cycle at 0.9553 was updated, which indicates the prolongation of the main trend.

The GBP/USD currency pair ignores the fact that it is treading water at historical lows. In fact, the technical signal of oversold is covered by a high rush for short positions on the part of speculators.

Economic calendar for September 28
Today the macroeconomic calendar is empty, all hope is for the information flow, where speeches by the Fed and ECB representatives are expected again.

Trading plan for EUR/USD on September 28
Stable price retention below 0.9550 will lead to a subsequent decline. In this case, the technical signal about overheating of short positions can be ignored by market participants. A possible prospect of a move is a decline towards the lows of 2001 and 2000.

An alternative scenario of market development is considered by traders in the form of another price rebound from the 0.9550 value area, as it happened at the beginning of the trading week.

Trading plan for GBP/USD on September 28
In this situation, keeping the price below the 1.0600/1.0630 area in a four-hour period may well lead to a subsequent decline towards the recent local low. It is worth noting that with such overheating of short positions, spontaneous consolidations may occur, which, in turn, will lead to a technical pullback.

Until the quote is stable below the control area, the risk of the subsequent formation of the amplitude of 1.0630/1.0930 remains.

The selection of the existing broker must be able to be considered carefully, this is done so that traders can be more leverage in getting maximum trading security and comfort like what I got from Tickmill.

USD/JPY: When will Groundhog Day end?

The USD/JPY pair continues to tread in the 144-145 range, in which it has been stuck since the beginning of the week. Consolidation is pretty boring for both bulls and bears, but there is no trigger on the horizon yet.

This year, the Japanese currency has fallen in price relative to its American counterpart by more than 20%. The reason for the weakening of the yen was the strong monetary divergence between the US and Japan.

Last week, the dollar-yen pair set another high-profile record. After the Federal Reserve raised rates again, and the Bank of Japan left the indicator unchanged, the quote jumped to a new 24-year high at 145.90.

The sharp fall of the yen forced the Japanese government to intervene in support of its national currency for the first time since 1998. As a result of the intervention, the USD/JPY pair went into a steep peak.

However, the asset did not stay as a loser for long. It only took a couple of days for it to get back on track leading to the main goal for today – level 145.

Since the beginning of this week, the dollar-yen pair has already come close to the cherished mark several times, but each time it rolled back.

According to analysts, the main deterrent for dollar bulls at the moment is the risk of repeated currency intervention.

Given the huge number of warnings from the Japanese authorities, traders still prefer not to get into trouble. However, the situation may change dramatically if a particularly powerful trump card in favor of the dollar appears on the market.

You may ask: isn't it here now? Indeed, the dollar received strong support from the Fed last week. The US central bank not only raised rates, but also made it clear that it intends to tighten its monetary policy in the future.

This week, American politicians have further intensified hawkish rhetoric, which contributed to the explosive growth of the dollar. The greenback has reached a new 20-year high, showing impressive dynamics in almost all directions, but not paired with the yen.

The psychologically important 145 barrier still remains impregnable for the USD/JPY asset. This suggests that the market has already taken into account the further growth of discrepancies in the monetary policy of the Fed and the BOJ.

Now traders need specifics: how big the gap in US and Japanese interest rates can become.

If in the near future American officials again talk about raising the indicator by 100 bps, perhaps this will be the very impetus for the dollar, which will move it from the dead point.

– Of course, the Japanese Ministry of Finance is aware of the current vulnerability of the yen. Probably, the authorities will continue to intimidate traders with interventions to deter speculators, Rabobank analysts warn. – Nevertheless, we are still guided in our 3-month forecast for the USD/JPY pair to the level of 147.

As for the short-term dynamics of the asset, do not expect miracles in the coming days. Most experts believe that the dollar-yen pair will remain in the zone of broad consolidation.

The technical picture for the USD/JPY
200-day exponential moving average at 141.20 scales higher. This indicates that the long-term trend is still stable.

At the same time, the relative strength index (RSI) fluctuates in the range of 40.00-60.00, which indicates that the movement continues within the current range.

For a decisive bearish reversal, the asset needs to fall below the previous week's low at around 140.35.

Dollar bulls may push the pair higher after overcoming the previous week's high at 145.90.

This may lead the quote to the August 1998 high at 147.67. And its breakthrough will send the dollar even further upward – to psychological resistance in the area of 150.00.

Technical Analysis of GBP/USD for October 3, 2022

Exchange Rates analysis
Technical Market Outlook:

The GBP/USD pair has bounced 9.11% from the lowest level since 1985 located at 1.0352 and is approaching the technical resistance located at 1.1210. The next technical resistance is located at 1.1410 and only a sustained breakout above this level would change the outlook to bullish. Please notice, the level of 1.1410 is the target for the wave 5 as well, so a corrective cycle might occur after this level is hit. On the other hand, the next target for bears is located at the parity level of 1.0000, so please keep an eye on this level. The intraday technical support is seen at the level of 1.0929. The momentum remains strong and positive, so the short-term outlook is bullish.

Weekly Pivot Points:

WR3 - 1.15812

WR2 - 1.13861

WR1 - 1.12966

Weekly Pivot - 1.1191

WS1 - 1.11015

WS2 - 1.09959

WS3 - 1.08008

Trading Outlook:

The bears are still in charge of Cable market and the next target for them is the parity level. The level of 1.0351 has not been seen since 1985, so the down trend is strong, however, the market is extremely oversold on longer time frames already. On the other hand, in order to terminate the down trend, bulls need to break above the level of 1.2275 (swing high from August 10th).

Existing analytical skills must be able to be considered properly, this is needed so that traders can be more leverage in getting the security and comfort of trading like what I got from Tickmill.

Tips for beginner traders in EUR/USD and GBP/USD on October 4, 2022


Details of the economic calendar for October 3
Data on the European manufacturing sector came out worse than the preliminary estimate. The index fell during the period of September from 49.6 to 48.4, despite the expected decline to 48.5 points.


In the United Kingdom, manufacturing PMI for September rose from 47.3 to 48.4 but was predicted to rise to 48.5 points.


Meanwhile, the United States manufacturing PMI rose to 52.0 from 51.5, with forecast growth of 51.8.


There was no market reaction to the statistical data for the reason that all the attention of traders was focused on the information and news flow.


So the leverage for speculators was the rumor that the UK intends to cancel the plan to reduce the tax rate from 45% to 40%. This rumor was subsequently confirmed by UK Finance Minister Kwasi Kwarteng via Twitter.


"We get it, and we have listened," he wrote.


Based on this information, there was speculative interest in the position of the pound sterling, which locally jumped in value by 180 points, pulling the euro along with it.


Analysis of trading charts from October 3
The EURUSD currency pair, during the corrective movement, reached the resistance level of 0.9850, relative to which there was a reduction in the volume of long positions on the euro. As a result, there was a rebound in the market, which eventually turned into stagnation within the 0.9750/0.9850 range.


The GBP/USD currency pair continued to form a corrective move from the local low of the downward trend. As a result, in about a week, the British currency recovered its value by 10%, which is more than 1,000 points.


Economic calendar for October 4
Today, the euro may receive support from buyers as producer prices in the EU may accelerate from 37.9% to 43.6%. That is, with such data, inflation in Europe will continue to grow, which will lead to further tightening of the ECB's monetary policy. That is, interest rates will continue to rise.


During the American trading session, data on the Job Openings and Labor Turnover Survey (JOLTS) for August in the United States will be published, which is expected to decline. This is a negative factor in the labor market.


Time targeting:


EU Producer Price Index (Aug) – 09:00 UTC


US JOLTS Job Openings (Aug) – 14:00 UTC


Trading plan for EUR/USD on October 4
With the opening of European platforms, a breakdown of the upper limit of stagnation occurred. This step led to the prolongation of the corrective move in the market. A stable hold of the price above 0.9850 may eventually lead to a move towards parity.


Trading plan for GBP/USD on October 4
Despite such impressive price changes, which herald a technical overbought signal, the pound still has an upside margin. For this reason, holding the price above the level of 1.1410 in a four-hour period may lead to a subsequent increase in the volume of long positions. This process will lead to the prolongation of the current cycle.


If the level area of 1.1410 has a proper impact on sellers, then the first thing that will occur is a slowdown, relative to which a reverse price movement will be considered.