Thread: Daily Market Analysis from ForexMart

The British pound against the U.S. dollar has been in consolidation for the past 24 hours and it seems that the support is sufficient enough. This somehow gives a hint that the pair is ready to move up since there is a strong support in the 1.30 region. As the month end approaching, it is anticipated for the money flow to be different come to the end of the month and there will be choppiness in trades to keep the traders to be interested in the market.

The pair pushes to reach the 1.30 region and was able to sustain higher than the region majority of the day. For the first day of the week, both the volatility and liquidity was low since there is low trading activity. The pair attempted to reach the 1.3050 level for the day but was countered by strong selling that pushes it back with strong support towards the 1.30. It won’t be long when the next bullish trend happens to move towards 1.31.

Risks and uncertainties are still present in trading the pound amid the Brexit negotiation process and the market as a whole. This is why the GBP/USD pair has still not moved out of its restrictions. Although, the Bank of England supports the British currency through its statements and minutes of the meeting that increases the chances for a rate hike in the succeeding months. Yet just last week, the usual strong economic data from the U.K. has had a choppy trading mixed of good and bad results of the data. This has put pressure on the pound and had a big impact.
For today, there is no major news from the U.K. Even so, month end flows are expected to happen throughout the day that keeps the GBP/USD afloat.

The British pound against the U.S. dollar moved sideways in the beginning of the Wednesday session. There is sufficient support found at the 1.30 level which pushes the trend to the upside. Later on, it is possible for the market to break the current psychological levels with the FOMC announcement to be released in the afternoon. Nevertheless, the markets were quiet as they wait for any hints from the Federal Reserve.

If traders can maintain traders more than the 1.30 level, the GBP/USD pair could move higher towards 1.3125 level and even much higher. There are still buying opportunities on the lows in the market since the British pound became cheaper.

Buying lows in the market are suggested instead of selling until a breakdown occurs below the massive support level. Unless it reaches lower than 1.2950, it is alright to sell the pair. However, if it drops even much lower, it is possible to drop even much more that would change the trend when it happens.

Buyers are more aggressive and it would not take long before they return to the market. If the trend gaps in the upper region, it will most likely reach the 1.3450 level which is possible after some time. Many major events that would come out from politicians could affect the British currency. The uptrend will presumably to continue in the long-term. Also, the pullbacks could offer opportunities in the market at a cheaper level.

The Australian dollar rallied in the beginning of Thursday session. There is sufficient resistance found at the 0.8050 level to reverse the trend and drop lower than the 0.80 level. The 0.7975 handle is being tested as the support level which was the former resistance level.

A pullback gives out a buying opportunity although this has been resistive previously. Yet, the market would not have an easy time to move higher. Although after some time, the pair would continue to move on the upper side as the U.S. dollar will proceed in a subdued manner.

As expected, the gold market will have an impact on the Australian currency.Hence, when it surges, the Aussie will follow. If it can break successfully more the 0.8065 handle, then the market will aim for 0.81 level above as the next target then eventually towards the 0.82 level.

There are opportunities in the volatility of the Australian dollar as it is a strong currency because of gold and the depreciation of the dollar for long-term. After some time, there will be more buyers for the Australian dollar and look for much higher levels.

There is a possibility for a rebound close to the 0.80 handle despite the long-term direction of the market is upward which includes the Australian dollar and not just gold. There has been a pause in the rally of the U.S. dollar that brings some noise in the market as it has been moving subtly over the long-term. There is a likelihood for buyers to return to the market.

The Euro against the British pound surged during the Friday session although there some resistance found close to the 0.8960 level. The market had a roll over for the few hours but was limited by the resistance level. There is much support found below that proceeds to market higher.

The next target would the 0.90 level and if the price breaks more and pushes the price towards 0.92 level for long-term. The 0.89 level below persists to be supportive that makes a breakdown far to happen. As shown in the weekly chart, the market sees the 0.89 level to be the support level.

Traders proceed to buy on the lows as it persists in supporting the euro currency. A breakout of both currencies occurred against the U.S. dollar although the market favors the euro more which is reflected in the pair. After some time, there is a lot of volatility in the market directed upward.

Shorting this pair may not be ideal but the once the price breaks higher than the 0.90 level. Buyers will turn more hostile as the psychological level of resistance. However, if the price gaps below the 0.89 level which is extraordinarily bearish that would adjust the short-term trend.

There is high volatility during the Tuesday session as it reached the 1.3250 level but was reversed later on. It seems that the 1.32 level is being supportive as the trend proceed moving higher.

A break lower would push the market for a support towards 1.3150 level then to 1.31 level. The British pound is going to be sensitive to a lot of noise which is anticipated as amid the negotiations from the European Union and the United Kingdom. Hence, traders should be cautious of the of any abrupt changes in this pair.

The bullishness could persist for the long term. Although, this has been quite extended in the present time. A pullback opens more opportunity to make use of the current value. The market could target for a 1.3450 level above which the peak of the consolidation for the past few months.

However, if the market successfully gaps higher than the 1.3450 level, the next retest would be at 1.35 handle. A breakout would mean large bullish tone but it will not be long before the currency starts to rally once again. There will be high volatility from the start until this period ends.

The European yields declined, even though the European stock markets acquired broad gains, hence this maintained the stability of the EURUSD pair.

The downward revision on the Eurozone manufacturing PMI put pressure on German yields, as the euro remained with an upright position and the growth rate of EMU Q2 GDP is steady at 0.6% quarter over quarter. While the unemployment figures in Germany fell which enable the ECB to manage the reduction of asset purchases next year.

In Europe, the strong euro holds over the 1.18 region against the USD will turn the cautious approach of Draghi against QE tapering, despite the prevailing strength of Q2 growth, the PMI numbers remain to present strong growth while the jobless figures resumed its decline.

The EUR/USD pair consolidated and generated an inside day which suggests indecision. The EU yields continue to buoy and the interest rate differential points towards a higher euro-dollar pair.

The support can be seen at 1.1689 level, close to the 10-day moving average. The resistance highlighted the 1.1845 mark near the peaks of July. The pair’s momentum hovered in the positive zone and the moving average convergence divergence (MACD) index prints in the black with an ascending trajectory driving through a higher exchange rate.

The main focus for today will be on the sterling pound as there are an expected economic releases and other data from the United Kingdom for this day. We await for the UK inflation hearings along with the rate announcement of the Bank of England to be issued. Also, BOE Governor Mark Carney will conduct his speech, therefore these events would likely cause high volatility for the GBP/USD.

The central bank of England was hawkish during their last meeting which led few markets to think that rate hike is possible sooner or later. There are three BOE members who agreed for a rate increase which triggered confidence for some markets, however, this only accounts a small portion of the market because the majority still believes that the bank will maintain its benchmark.

This is considered a logical approach regarding the continuous financial circles of Britain which could be a turmoil caused by the Brexit procedures. Moreover, a lot of things remain unclear, particularly the results of the referendum process in determining if it will a soft or hard Brexit. Due to many uncertainties, it is absurd for the BOE to make an increase and most likely, they want to see first the effect of the Brexit negotiations prior making such decisions.

The pound-dollar resume to consolidate yesterday and the range near the highs of its range are expected for this very important day. In case that the BOE decided to kept rates steady, the Cable is anticipated for further correction. The 1.3250 level serves as the ceiling at this moment.



GBPUSD03.jpg

The results of the European yields were mixed as it restricted the uptrend of the euro which signifies that Draghi has successfully kept the rates low. The ECB sees the need for the continuous support because of the less than expected result of the PMI. The European retail sales set in stronger than anticipated but this was countered by high jobless claims.

The EUR/USD was not able to surpass yesterday’s range but was able to increase the support level. Nevertheless, the trend persists to be positive with the support close to the 10-day Moving Average at 1.1747. The resistance level is seen close to the weekly highs at 1.1910.

Overall, the momentum is optimistic with the MACD histogram shown a black indicator with an upward sloping direction that could lead to a higher exchange rate. The RSI positioned higher with the price indicating a positive momentum upward. Currently, the price is set at 77 which is higher than the trigger level 70 to enter the overbought area. Hence, a correction is possible to occur.


EURUSD04.jpg

British consumers lessened their expenditures for the third month in July, leading them into the worst decline in four years or longer. This also causes another economic impact at the beginning of the quarter.

According to a report published on Monday, IHS Markit and Visa said that the decline in spending was 0.8 percent year-on-year which appeared to be wide-ranging as the apparel, foods, household goods and transport suffered the hardest hit.

The downturn is compelled by consumers belt tightening because of the inflation rise over wage growth and shoppers’ concerns regarding the extensive outlook after the economic slowdown during the Q1 in 2017.

The negative report was issued after the Bank of England decided to lower its forecast for the economy. BOE Governor Mark Carney gave a warning about the uncertainty of Brexit that puts pressure towards businesses and households.

The consumer figures for July showed a 6 percent growth in spending on hotels, bars, and restaurants. The Markit mentioned that this may be somewhat relative to the expansion of “staycations,” as the sterling pound weakened which makes overseas holiday become more costly.


longestdeclineinuk.jpg

The U.S. dollar weakened slightly on the start of Monday session but was reversed to move in the upper channel. It might be difficult to challenge the 111 level but it is possible to break above it with the strong jobs data from the U.S. At the same time, the pair is highly reliant to 10-year bonds from both countries.

The interest rates are anticipated to rally in the bond markets since it seems that the Federal Reserve will be forced for a rate hike as of now. This would favor the U.S. dollar. Nevertheless, the Japanese yen is the choice in funding currency. The very low rates make it probable to extend gains with the next target at 112.50 level above which is appealing lately.

The pair continues to move lower where it still remains valuable for every drop in price. Besides the Japanese currency, the U.S. dollar is about to be behind of various currencies. The Canadian dollar has been slumped in the past few days which persists to be the situating. The bond market between Canada and the U.S. is also appealing.

The 110 level is being supportive which could proceed to move in the upside. In the past 4 months, the market tries to change the direction of the trend and it seems that it is getting stronger to move in the upside. Traders could wait for some months, those who are willing to wait.


USDJPY08.jpg