PMI Day for Europe, UK & United States

The PMI is a leading indicator of economic health which essentially surveys purchasing managers at businesses that make up a given sector. Digging deeper, the headline PMI is a number from 0 to 100. Anything above 50 represents an expansion when compared with the previous month while under 50 represents a contraction.

It is worth keeping in mind that the direction of the PMI tends to precede changes in the trend of estimates such as gross domestic product and employment. If the PMI is painting an unpleasant picture, this could be an early warning sign for the economy and currency. Alternatively, a positive print has the potential to boost sentiment and raise confidence over the economic outlook.

All eyes on the Euro PMI

European investors will be keeping a very close eye on the latest eurozone purchasing manager’s index (PMI) data for September.

It will be released at 9 am London time and could offer some insight into the health of the region’s services and manufacturing industries in the face of Brexit related uncertainty and second wave of COVID-19 cases. Manufacturing PMI is expected to jump 51.9 in September from the 51.7 in the previous month while services PMI are projected to remain unchanged at 50.5.

What does this mean for the EURUSD?

The Euro has been punished by a resurgent Dollar this week with prices slipping to a two-month low under 1.1675.

A positive set of PMI figures from Europe could inject Euro bulls with enough inspiration to fight back, potentially pushing prices back towards 1.1750. However, if the data fails to meet expectations, the EURUSD could end up sinking to a fresh two month low around 1.1600.

Will pending PMI compound to Pounds woes?

Sterling has woken up on the wrong side of the bed today, weakening against the Dollar and most G10 currencies thanks to Brexit related drama and rising coronavirus cases. Fears over a second lockdown crippling the UK economy remain rife, and this continues to be seen in not only the Pound’s valuation but FTSE100.

The Pounds outlook this week may be influenced by the pending manufacturing and services PMI data due to be released this morning.

Manufacturing activity is projected to slip to 54.1 compared to the 55.2 in the previous month while services are forecast to decline to 56 from the 58.8 in August. A figure that fails to meet expectations is likely to compound to the Pound’s woes and provide permission for anxious investors to drag the currency lower.

Looking at the technicals, the GBPUSD is approaching 1.2650. A breakdown below this level could open the doors towards 1.2500.

Dollar Index breaks above key resistance

It took a four-letter word to push the Dollar Index higher, will the pending IHS Markit’s ‘flash’ Purchasing Managers’ Indices for US manufacturing and services in September support the upside?

Talking technicals, the Dollar Index is turning bullish on the daily timeframe. The solid daily close above 94.00 could encourage a move towards 94.65 and potentially 96.00. Should 94.00 prove to be reliable resistance, the DXY may decline back towards 92.70.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Lukman’s Week Ahead: Market Themes to Watch Out For – Webinar Sep 28

An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders. Enjoy an expert look at: • The key themes driving the financial markets • Technical and fundamental trading ideas on the MT4 platform • How to use the latest FXTM trading signals • Using fundamental analysis to increase your profit potential • What to monitor over the coming week

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FXTM Senior Research Analyst Lukman Otunuga holds a BSc degree in Economics from the University of Essex and an MSc in Finance from London School of Business and Finance. A keen follower of macroeconomic events with a strong professional background in finance, Lukman is well versed in the markets. Read his full profile here.

Mid-Week Technical Outlook: Gold Waits for Fed Decision

Although the central bank is widely expected to leave interest rates unchanged, much of the focus will be directed towards the economic projections, Powell’s press conference and updated ‘dot plot’ forecast of interest rate moves. Given how this will be the first meeting after the Fed announced its new average inflation targeting (AIT) framework, there could be some volatility in the Dollar as investors sift for clarity during the meeting.

Back in June, policy members projected GDP to decline 6.5% in 2020 while unemployment was seen rising 9.3%. However, the current unemployment rate of 8.4% is already below the medium forecast – something that could allow the Fed to express some confidence over the US economy.

Let’s be honest, the US economy is certainly not out of the woods yet despite the improving unemployment rate.

Rising coronavirus cases in major states coupled with the congressional stalemate over a new fiscal package remain major threats to the country’s economic outlook. Markets expect the Fed to signal that interest rates will remain unchanged and close to zero through the end of 2023! But It will still be interesting to hear Jerome Powell’s thoughts on the latest developments, in addition to how high or how long the Fed will allow inflation to overshoot the 2% target.

What does this all mean for Gold?

Gold seems to be drawing strength from a softer Dollar this morning as anticipation mounts ahead of the Federal Reserve meeting.

Regardless of the choppiness witnessed over the past few weeks, the precious metal remains underpinned by low-to-negative government bond yields, rising COVID-19 cases in the United States and a tired Dollar.

Price action suggests that the precious metal is in search of a fresh directional catalyst to breakout of the current range. This may come in the form of the Fed meeting today.

After the Federal Reserve’s policy shift to let inflation rip, the big question on the mind of many investors is how will the central bank put this policy to action? Clarity on this could provide Gold a tailwind as the metal is seen as a hedge against inflation. Additionally, a dovish sound Fed could weaken the Dollar, further supporting Gold prices.

Looking at the technical picture, strong support can be found around $1910 and resistance around $1985. The solid daily close above the $1952 intraday resistance level may open the doors towards $1985. If $1952 proves to be unreliable support, prices may decline back towards $1910.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Dollar Slips as Market Mood Improves

It is starting to feel like any vaccine news is good news for investors and this euphoria continues to reflected across global stocks, currency and commodity markets! A major breakthrough in the fight against COVID-19 that produces a cure could inject global markets with a potent dosage of positivity while elevating investor confidence to a new level. Such a development could see the tired Dollar crumble across the board as market players rush to riskier assets at the expense of safe-havens.

The past few months have been rough for the Greenback. It has depreciated against every single G10 currency since the start of Q3.

Although the Dollar’s performance in September thus far has offered some hope to bulls, this could be a technical rebound before bears jump back into the driver’s seat in Q4.

Fundamentally, the Greenback remains pressured by rising coronavirus cases in the United States, repeated rate cuts from the Fed which have eroded differentials between the US and other developed economies and risk of inflation surpassing 2% next year. However, given the Dollar’s safe-haven status and title and world’s reserve currency, it will be interesting to how low the currency falls before a bottom is formed.

Looking at the charts, the Dollar Index is turning increasingly bearish on the monthly with a breakdown below 92.00 opening a path towards 88.60.

We see a similar theme on the weekly charts with prices respecting a bearish channel. The consistently lower lows and lows highs reconfirm the trend, while lagging indicators such as the MACD and moving averages reinforce the bearish setup.

Zooming into the daily, support can be found around 92.20 while there is resistance at 94.00. A breakout/down setup could be in play with 93.00 acting as pivotal level. Weakness below 93.00 may trigger a drop towards 92.20. If 92.20 is breach, the next key level of interest will be found around 91.70.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Mid-Week Technical Outlook: Dollar Bulls Stage a Comeback

The former king of the currency markets is on a mission to reclaim dominance, appreciating across the board after a sell-off in stock markets prompted investors to rush towards safe-haven destinations. Dollar bulls seem to be deriving strength from not only concerns over a possible delay in the Covid-19 vaccine but the recent U.S jobs report showing a decline in the U.S unemployment rate and jump in U.S Treasury yields.

With the Dollar Index trading at levels not seen in four weeks around 93.60 and appreciating over 1.5% since the start of September, are bulls back in the game?

Looking at the technical picture, a rebound may be on the cards on the weekly timeframe following the solid move above 93.00. A weekly close beyond this point could suggest an incline towards 94.00 and 96.00 in the medium term. If 94.00 proves to be reliable resistance, the DXY may find itself sinking back towards 93.00 and 91.15.

On the daily timeframe, prices remain in a wide range with support at 92.20 and resistance around 94.00. A daily close above 94.00 could inject bulls with enough inspiration to target 94.65 which then opens the doors towards 93.00 and beyond.

The question on the mind of many investors is whether the Dollar is able to maintain this current burst of confidence and majesty across the FX space. Although the currency is still considered as a safe-haven currency and the worlds reserve currency, it has weakened against every single G10 currency this quarter.

Negative themes in the form of rising coronavirus cases in the United States and political uncertainty ahead of Novembers presidential election may limit the Dollar’s upside gains. Given the fundamental forces influencing the Dollar’s longer-term outlook, prices still have the potential to decline with a move below 92.00 on the monthly timeframe acting as an early signal.

Pound gets no love as Brexit drama intensifies

Earlier in the week, we discussed the possibility of the Pound extending losses on Brexit related uncertainty and rising fears around the United Kingdom leaving the EU with no deal by the end of 2020.

Since then, it looks like nobody wants anything to do with the Pound which has tumbled across the board.

Buying sentiment towards the currency hit rock bottom after the government renewed the prospect of a no-deal Brexit, with Boris Johnson insisting Britain would “prosper mightily” with or without a deal.

Looking at the technicals, prices are heavily bearish on the daily charts with the first level of interest at 1.2900. Weakness below this level may trigger a decline towards 1.2730.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Technical Outlook, Gold Wobbles as Dollar Fights Back

The precious metal has lost almost 2% since the start of the September and could extend losses in the short term if the Dollar fights for its thrown and “risk-on” remains the name of the game. However, when looking at the key themes influencing Gold, the medium to longer-term outlook points north despite the possible weakness in the near term.

Buying sentiment towards Gold could be dented by a sense of confidence over the world economy recovering quicker than expected, while renewed US-China trade hopes and optimism around a coronavirus vaccine may boost attraction towards riskier assets at the expense of safe-havens.

However, rising coronavirus cases in the United States, political uncertainty ahead of November’s presidential elections and Brexit drama among other negative themes may drain investor confidence, ultimately accelerating the flight to safety.

On top of this, low-to-negative government bond yields, unprecedented monetary stimulus and handsome fiscal packages should continue sweetening appetite for the precious metal for the rest of 2020. Although economic data from major economies have beat estimates, the overall shaky macroeconomic and geopolitical landscape may ensure the Gold remains a hotspot of safety.

Where prices conclude this week could be heavily influenced by the pending US jobs report on Friday. Markets are forecasting Non-farm payrolls rise 1.4 million in August, down from 1.763 million in July and the smallest gain since the recovery began in May. A figure above market estimates could drag Gold prices lower as the Dollar builds on gains.

Looking at the technical picture, prices remain in a wide range on the daily timeframe with support at $1910 and resistance around $1985. It looks like the precious metal is under pressure with $1910 acting as the first level of interest. A breakdown below this point could encourage a decline towards $1890. Should $1910 prove to be reliable support, prices could rebound back towards $1950, before potentially testing $1985.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Lukman’s Week Ahead: Market Themes to Watch Out For – Webinar Aug 31

An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders.

Enjoy an expert look at:
• The key themes driving the financial markets
• Technical and fundamental trading ideas on the MT4 platform
• How to use the latest FXTM trading signals
• Using fundamental analysis to increase your profit potential
• What to monitor over the coming week

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FXTM Senior Research Analyst Lukman Otunuga holds a BSc degree in Economics from the University of Essex and an MSc in Finance from London School of Business and Finance. A keen follower of macroeconomic events with a strong professional background in finance, Lukman is well versed in the markets

Technical Outlook, Time for GBPUSD to Challenge 1.3200?

Investor sentiment towards the currency continues to turn increasingly positive, despite the UK officially entering a recession for the first time in 11 years. Although Brexit related uncertainty and drama remain recurrent themes, there seems to be some complacency in the markets and this continues to be reflected in the Pound’s valuation. With the risk of a hard Brexit growing by the day as negotiations stall, the longer-term outlook for the British Pound still points to further downside.

However, the short to medium-term outlook illustrates a more encouraging picture with bulls in the driving seat. It looks Sterling continues to derive strength from not only a broadly weaker Dollar but the Bank of England’s overly optimistic economic forecasts.

Pound bulls set sights on 1.3200

The GBPUSD remains firmly bullish on the weekly and daily timeframe with the currency pair trading around 1.3160 as of writing. Prices have jumped over 1000 pips since the start of May and have the potential to push higher once 1.3200 is conquered.

A solid weekly close above the 1.3200 resistance level could encourage a move towards 1.3400.

Taking a look at the daily timeframe, the GBPUSD remains in a wide 200 pip range with support at 1.3000 and resistance at 1.3200. A solid daily close above 1.3200 could trigger an incline towards 1.3300. Lagging indicators in the form of the 20 and 200 Simple Moving Averages and MACD marry the bullish setup.

Looking at the four-hourly timeframe, it’s the same story here. Prices are rangebound with minor resistance at 1.3170 and minor support at 1.3020. If prices are unable to push higher, a decline back towards the 1.3100 pivotal level could be on the cards before bull retry their luck in challenging 1.3200.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Lukman’s Week Ahead: Market Themes to Watch Out For – Webinar Aug 17

An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders.

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Enjoy an expert look at:

• The key themes driving the financial markets
• Technical and fundamental trading ideas on the MT4 platform
• How to use the latest FXTM trading signals
• Using fundamental analysis to increase your profit potential
• What to monitor over the coming week

Lukman Otunuga has been a Research Analyst at FXTM since 2015. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis. His in-depth analysis on global currency and commodity markets is often cited by leading international media, including the Associated Press (AP), BBC, CNBC, CNN, Marketwatch, NASDAQ, and The Telegraph. He has also appeared on Africa’s biggest television network, NTA 2. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance.

UK Economy Nosedives Into Recession

Economic growth during the second quarter of 2020 was a horror show, plunging 20.4% after a 2.2% fall in the first three months of 2020. This was the worst GDP seen in western Europe and clearly illustrated the damaging impacts of coronavirus to the UK economy. To rub salt into the wound, it was only yesterday that data revealed an estimated one million jobs had already been erased during the coronavirus induced lockdown.

Surprisingly, the British Pound offered a fairly muted reaction despite the UK stumbling into the largest recession on record. The currency slightly gained against the Dollar and held its ground against other G10 currencies on Wednesday morning. It looks like the disappointing GDP report was already priced in with investors now evaluating how quickly the UK economy can bounce back. Expect the Pound to become highly sensitive to economic data over the next few weeks as investors access if a V-shaped bounce back could still be on the cards. After today, market players may start questioning whether looser monetary policy and handsome fiscal packages have the ability to revive the UK economy.

Looking at the technical picture, the GBPUSD remains in a wide range on the daily timeframe with support at 1.3000 and resistance at 1.3200. Prices are trading above 20 & 200 Simple Moving Average while the MACD trades to the upside. The trend is bullish but some fatigue looks to be kicking in with bears eyeing the 1.3000 support. It is worth keeping in mind that the GBPUSD has been stuck between these level’s for the past two weeks with bears constantly pressing against 1.3000.

A solid breakdown below 1.3000 could encourage a decline towards 1.2850. Alternatively, if this level proves to be a tough nut to crack, then a rebound towards 1.3130 could be on the cards.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Yen Softens Despite Rising US-China Tensions

In a move that likely to strain US-China relations even further, Beijing slapped sanctions on U.S. officials in response to similar measures enforced by Washington. Despite this, market sentiment remains optimistic with investors keeping a close eye on negotiations over the next coronavirus stimulus package in the US.

With hopes for additional U.S fiscal supporting risk sentiment, safe-haven currencies like the Japanese Yen and even Dollar have struggled to shine despite mounting tensions between the two largest economies in the world.

USDJPY eyes 106.50

Over the past two weeks, the USDJPY has found comfort within a 150-pip range with support at 105.00 and resistance around 106.50.

Given how both the Dollar and Yen are fundamentally bearish, this could be a slow grind higher or lower. Looking at the technical picture, prices remain bearish on the daily chart as the candlesticks are trading below the 20 Simple Moving Average while the MACD trades to the downside. If 106.50 proves to be reliable resistance, prices could end up declining back towards the 105.00 support.

Alternatively, a breakout above 106.50 may open the gates towards 107.50.

EURJPY remains in an uptrend

A picture is worth a thousand words…

Looking at the EURJPY on the daily charts, prices are firmly bullish as there have been consistently higher highs and higher lows.

The currency pair is finding comfort above the 20 Simple Moving Average while the MACD also points to the upside. A solid breakout above 125.50 will confirm the bullish trend with the new higher low around 124.00. The next key point of interest in such a scenario will be found around 127.00. On the other hand, if 125.50 proves to be a tough nut to crack, prices could sink back towards 123.00.

GBPJPY breakout setup in play

It has been the same story with the GBPJPY over the past two weeks as the currency traded within 110 pip range. All eyes will be on the support at 137.90 and resistance at 139.00.

A decisive breakdown and daily close below 137.90 should pave a path towards 135.00. Alternatively, a breakout above 139.00 may inspire a move back towards 141.00.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Lukman’s Week Ahead: Market Themes to Watch Out For – Webinar Aug 03

An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders.

Enjoy an expert look at:

• The key themes driving the financial markets
• Technical and fundamental trading ideas on the MT4 platform
• How to use the latest FXTM trading signals
• Using fundamental analysis to increase your profit potential
• What to monitor over the coming week

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Lukman Otunuga has been a Research Analyst at FXTM since 2015. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis. His in-depth analysis on global currency and commodity markets is often cited by leading international media, including the Associated Press (AP), BBC, CNBC, CNN, Marketwatch, NASDAQ, and The Telegraph. He has also appeared on Africa’s biggest television network, NTA 2. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance.

Mid-Week Technical Outlook: Greenback Primed for Further Weakness

Other negative factors including worsening US-China tensions, uncertainty surrounding November’s presidential elections and shaky economic data have compounded to the Dollar’s pain and misery. With the Dollar Index (DXY) on track for its biggest one month decline since April 2011, it is fair to say that bears remain in the driving seat.

King Dollar could be instore for more punishment this evening if the Federal Reserve reinforces its dovish message and expresses concerns over the US economy. While the central bank is widely expected to keep interest rates unchanged at near zero, much of the attention will be directed towards the policy statement and speech by Fed Chairman Jerome Powell. Given how data from unemployment claims still remains a cause for concern, Powell may reiterate that the Fed will do whatever it can to support the recovery – meaning interest rates may be left at near-zero for even longer.

Looking at the technical picture, the DXY fulfills the prerequisites of a bearish trend on the daily timeframe. Prices are trading within a bearish channel, the MACD has crossed to the downside while the candlesticks are trading well below the 20 Simple Moving Average. If 94.00 proves to be reliable resistance, the DXY may slip back towards 93.50 and 93.00, respectively. A breakdown below 93.00 could open the doors back to levels not seen since August 2018 below 92.20.

USDJPY eyes 104.65 level

Yesterday we discussed the possibility of the USDJPY testing 104.65 after breaking below the 105.00 support level. Prices are under pressure on Wednesday morning and could trend lower if the Dollar weakens ahead of the Federal Reserve policy meeting. Sustained weakness below the 105.00 dynamic resistance could trigger a selloff towards 104.65 and 104.10.

USDCAD breakdown setup in play

The USDCAD is gearing for a breakdown below the 1.3350 on the daily timeframe. Prices are trading comfortably below the 20 and 50 Simple Moving Average while there have been consistently lower lows and lower highs. A solid breakdown below this support could trigger a decline straight towards 1.3200 which is 150 pips away.

AUDUSD rides higher on Dollar weakness

Expect the Australian Dollar to appreciating against a broadly weaker Dollar in the short term. The daily charts suggest that bulls still have some stamina with a breakout above 0.7150 opening a path towards 0.7300. If 0.7150 proves to be a stubborn resistance, prices may decline back towards the 0.6960 regions.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Pound Braces for Drama as Brexit Talks Resume

After officially leaving the European Union (EU) almost 6 months ago, uncertainty remains the name of the game as both sides struggle to make headway on Britain’s future relationship with Europe.

The sixth round of Brexit talks resumes today after the previous disappointment. Sterling may be flung into the direct firing line if the United Kingdom and Europe and unable to bridge their difference on EU’s access to British fishing waters and the UK’s alignment to EU rules.

If you are looking for some action and volatility, Pound crosses could be the place to be amid fears around an extended deadlock leading to a no-deal Brexit outcome by the end of 2020.

The GBPUSD continues to ride higher on Dollar weakness with prices slamming into the 1.2670 resistance level.

Yesterday’s rebound from the 1.2550 resistance levels looks strong, with the daily close above1.2650 signalling further upside in the short to medium term. Technical lagging indicators like the 50 & 100 Simple Moving Average support the upside bias while the Moving Average Convergence Divergence (MACD) has also crossed to the upside. The current bullish momentum may send the GBPUSD towards 1.2750. Alternatively, a move back towards 1.2550 suggests that a technical correction could be in play before prices rebound higher.

GBPJPY clears 136.00

The GBPJPY entered the week on a solid note, jumping over 150 pips to clear the 136.00 resistance level. This currency pair is turning bullish on the daily charts with 137.00 acting as the next level of interest.

As the market mood improves on coronavirus vaccine hopes and EU leaders striking a deal on a landmark recovery fund, safe-haven assets like the Japanese Yen are likely to weaken. The GBPJPY is likely to ride higher on Yen weakness in the short term, with a breakout above 137.00 opening the doors towards 138.50.

On the other hand, this party could be crashed by bears if Brexit talks fall apart this week. A move back below 135.00 may inspire a decline towards 133.60 and 134.00.

EURGBP slips towards 0.9000

According to the technicals, the EURGBP is still bullish on the daily charts.

There have been consistently higher highs and higher lows while the Moving Average Convergence Divergence (MACD) trades to the upside. However, prices are trading below the 20 Simple Moving Average. A breakdown below the 0.9000 support level could signal a decline towards 0.8850. If 0.9000 proves to be reliable support, the EURGBP has the potential to rebound towards 0.9100.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Lukman’s Week Ahead: Market Themes to Watch Out for – Webinar July 20

Take an in-depth look at the latest developments in the global financial markets with FXTM’s Research Analyst, Lukman Otunuga. An authority on the markets, Lukman is frequently quoted by leading media across the globe, including the BBC, CNBC, CNN Money and Reuters. Join Lukman for expert insights on the latest market movements, potential trading opportunities and what the week ahead has in store for traders.

Enjoy an expert look at:
• The key themes driving the financial markets
• Technical and fundamental trading ideas on the MT4 platform
•How to use the latest FXTM trading signals
• Using fundamental analysis to increase your profit potential
• What to monitor over the coming week

REGISTER FOR FREE

  • Log in or register
  • Click ‘Join Now’ on your chosen Webinar
  • Check your inbox for the webinar link

Lukman Otunuga has been a Research Analyst at FXTM since 2015. A keen follower of macroeconomic events, with a strong professional and academic background in finance, Lukman is well versed in fundamental and technical analysis. His in-depth analysis on global currency and commodity markets is often cited by leading international media, including the Associated Press (AP), BBC, CNBC, CNN, Marketwatch, NASDAQ, and The Telegraph. He has also appeared on Africa’s biggest television network, NTA 2. Lukman holds a BSc (hons) degree in Economics from the University of Essex, UK and an MSc in Finance from London School of Business and Finance.

Vaccine Hopes Fuel Market Optimism, OPEC in Focus

  • Equity bulls powered by vaccine hopes
  • OPEC+ expected to taper production cuts
  • Gold firms above $1800

Wednesday’s trading session has commenced on a positive note, with Asian shares edging higher following news that Moderna’s attempt to produce a coronavirus vaccine was declared safe and produced antibodies in all patients tested in the safety trial. The positive vibe from Asian markets and renewed appetite for risk may power equity bulls in Europe later this morning. With coronavirus vaccine hopes, speculation around more stimulus measures and rebounding growth optimism is likely to keep this party alive, the question is for how long can it be sustained? Given how Q2 earnings are expected to disappoint and coronavirus cases in the United States are now topping 3.5 million, things could get ugly for equity markets. The risk pendulum may then swing back in favour of bears if negative themes in the form of trade uncertainty, geopolitical tensions and fears around global growth trigger a fresh wave of risk aversion.

Will OPEC+ surprise markets?

All eyes will be on the OPEC+ meeting today, as the oil producers are expected to decide on whether to extend the record production cuts of 9.6 million barrels per day (bpd) or taper to 7.7 million bpd starting in August.

In the face of global instability and the uncertainty wrought by the coronavirus pandemic, the cartel enforced record production cuts back in April as the demand for crude evaporated. Initially, the production cuts were planned to run until the end of June, but they were eventually extended to July. Now the question on the mind of many investors is what impact tapering the cuts will have on Oil prices, which appreciated over 30% during the second quarter of 2020. Although the demand for crude has jumped in recent weeks, rising coronavirus cases in the United States along with some cities in other major economies reimposing shutdowns have the potential to hit demand.

Markets seem to be pricing in a taper of production cuts by OPEC+ starting gradually from August. However, should the cartel move ahead with extending the record cuts of 9.6 million bpd beyond this month, this could inject WTI Oil bulls with enough fuel to truly conquer the $40 resistance level.

Commodity spotlight – Gold

Gold continues to shine above $1800 despite vaccine hopes heightening market optimism and boosting risk sentiment.

It looks like the precious metal is deriving its strength from a weaker Dollar and this could remain a recurrent theme this week.

The technical picture remains heavily bullish on the daily charts as there have been consistently higher highs and higher lows. Prices are trading within a bullish channel, the candlesticks are above the 20-day Simple Moving Average, while the Moving Average Convergence Divergence has crossed to the upside. As long as prices remain above the $1800 level, Gold has the potential to test $1815 and a fresh multiyear high at $1825, respectively. Should $1800 prove to be unreliable support, the precious metal may experience a technical correction back towards the $1765-$1780 region before bulls gather fresh momentum on risk aversion.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

No Love for Pound as UK Growth Disappoints

This disappointing rebound from the painful -20.4% contraction witnessed in April reveals that the UK economy is recovering much slower than expected, despite the reopening of construction and manufacturing sectors. Any talks of a V-shaped recovery may be swept under the carpet for the time being, especially if data continues to miss market expectations.

On the bright side, there is a sense of optimism around growth in June and July experiencing a sharper rebound due to the re-opening of non-essential shops, leisure and hospitality sector. Regardless, the cost of coronavirus in the UK has been painfully expensive with the economy contracting 25% during March and April. Any signs of rising coronavirus cases in the United Kingdom could trigger fears of renewed lockdowns, ultimately hitting sentiment and threatening growth.

Appetite towards the British Pound is likely to fall further in the near term, as disappointing growth adds to the negative list of negative themes haunting investor attraction.
Looking at the technical picture, the GBPUSD is under pressure on the daily charts with prices trading below 1.2550 as of writing. Sustained weakness below this level may open a path towards 1.2400 and 1.2250.

GBPJPY approaches 134.00.

Expect the GBPJPY to trend lower in the short to medium term, especially after UK economic growth disappointed in May.
The currency pair is under pressure on the daily charts with prices approaching the 50 SMA. A solid breakdown below 134.00 may trigger a decline towards the 131.60 support. If prices can break back above 135.00, the GBPJPY has the potential to test 137.00.

EURGBP approaches 0.9100.

Prices seem to be pushing towards the 0.9100 resistance level. A clean break above this point could trigger a move higher towards 0.9100 in the short term.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Yen Under Fire as Risk Appetite Improves

The Yen has already lost ground against major currencies over the past 36 hours, with the most noticeable losses versus the Euro and Swedish Krona. As investors place their hopes in an economic recovery fueled by unprecedented central bank support and handsome fiscal stimulus packages, the Yen and other safe-haven assets may remain in the direct firing line.

EURJPY finds comfort above 121.00

The EURJPY remains in an uptrend on the daily charts with support at 121.00. An intraday breakout above 122.00 should encourage an incline towards 122.80 and 123.70. Should 121.00 proves to be an unreliable support, the currency pair may retest 119.70.

USDJPY remains in 100 pip range

A breakout opportunity is forming on the USDJPY with a weakening Yen potentially pushing prices towards the 108.00 resistance. A solid breakout above this point may open the doors towards 109.40 and 110.20. If prices end up tumbling below 107.00, expect the USDJPY to challenge 105.90.

GBPJPY approaches 135.00

It has been the same story for the GBPJPY for the past three weeks. Prices remain in a wide 340 pip range with support at 131.600 and resistance at 135.00. A solid close above the 135.00 could trigger a sharp move towards 137.00. Lagging indicators like the 20 and 50 SMA in addition to the MACD are in line with the bullish setup.

AUDJPY slips after RBA decision

We some weakness in the Australian Dollar after the Reserve Bank of Australia left interest rates unchanged at 0.25%. The AUDJPY may weaken towards 72.80 in the short term if an intraday breakdown below 74.40 is achieved. Alternatively, a softer Yen could provide enough support for the currency pair to test 76.50.

Commodity spotlight – Gold

Since we are discussing safe-haven assets, it does not hurt to speak about Gold which is just over $16 away from the $1800 level.

The precious metal may struggle to push higher in the near term amid the improving mood with the next key level of interest around $1765.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Mid-week Technical Outlook: G10 Currencies Gain as Dollar Stumbles

The mighty Dollar has weakened against every single G10 currency this week after positive data from Europe revived hopes for global economic recovery and boosted appetite for riskier assets.

As investors refocused their attention towards stock markets and riskier currencies, buying sentiment towards the Dollar dropped. The Dollar Index (DXY) which measures the value of the Greenback relative to a basket of foreign currencies, extended losses yesterday with prices sinking as low as 96.32.

In regards to the technical picture, the DXY remains in a downtrend on the daily charts as there have been consistently lower lows and lower highs. A solid breakdown and daily close below 96.00 may open a path back towards 94.70 in the medium term.

Alternatively, a rebound back towards 97.80 could be on the cards if a daily breakout above 97.15 is achieved.

USDSEK breaks below 9.3050

The Swedish Krona has appreciated over 2% against the Dollar this week with prices back below 9.3050 on the charts.

Sustained weakness below 9.3050 may send the USDSEK towards 9.1430. Lagging indicators such as the MACD and 20 Simple Moving average points to further downside if 9.1430 is breached.

More upside for the AUDUSD?

The AUDUSD is in the process of breaking out above the 0.7000 resistance level. Once this move is confirmed, prices are seen rising towards 0.7070 and 0.7170 in the short to medium term. If 0.7000 proves to be reliable resistance, prices may slip back towards 0.6850.

GBPUSD hovers around 1.2500

Who would have thought that the Pound would stage a sharp rebound after the taking a beating last week? Given how the primary driver behind the GBPUSD’s rebound is based around Dollar weakness, the GBPUSD has scope to sink lower. If 1.2500 proves to be a strong resistance level, the currency pair may descend back towards 1.2340. On the other hand, an intraday breakout above 1.2550 may trigger a jump towards 1.2650 and 1.2700, respectively.

USDCHF approaches 0.9400

It looks like the USDCHF is gearing for a steep decline on the daily charts. Prices are trading comfortably below the 20 Simple Moving Average while the MACD also trades to the downside. A solid daily close below 0.9400 may signal a move lower towards 0.9315.

USDJPY bearish trend confirmed

The solid breakdown and daily close below 107.00 have confirmed the bearish trend on the USDJPY. Expect the 107.00 to become a dynamic resistance that encourages a decline towards 105.90 and 105.00, respectively.

USDCAD balances above 1.3500

Expect the USDCAD to stage a modest rebound towards 1.3600 as bullish investors exploit the 200 Simple Moving Average around the 1.3500 support. Prices are likely to range in the short term until a fresh directional catalyst is brought into the picture. If prices end conquering the 1.3500 support level, the next key point of interest will be around 1.3300.

Alternatively, an intraday breakout above 1.3630 could open a path back towards 1.3730.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Sentiment Whipsaws on US-China Trade mixup

A wave of risk aversion threatened to engulf financial markets during early trading on Tuesday after White House trade advisor Peter Navarro said that any trade deal with China was “over”. However, President Donald Trump came to the rescue by tweeting that the trade agreement with China is “fully intact”.

Asian shares were thrown on a rollercoaster ride following the trade confusion but the clarification offered by Trump may support European markets ahead of the latest Purchasing Manager Index (PMI) data for France and Germany.

Speaking of the Euro, expect the EURUSD and other crosses to turn volatile ahead of the pending PMIs. As discussed on Monday evening, the currency pair has staged a strong rebound thanks to a weaker Dollar. A disappointing set of data from Europe may weaken buying sentiment towards the Euro, essentially dragging the EURUSD back towards 1.1200. Alternatively, a solid break above 1.1280 could trigger an incline towards 1.1300 in the short term.

Since we are discussing the Euro, keep a close eye on the EURGBP which has broken out the 150 pip range on the daily charts. The daily close above 0.9000 may encourage an incline towards 0.9120 in the short to medium term. Technical indicators like the Moving Average Convergence Divergence and 100 SMA suggest that bulls remain in a position of power. Should 0.9000 prove to be unreliable support, prices may sink back towards 0.8800.

Commodity spotlight – Oil

Oil gained over 10% last week despite the rising coronavirus cases in China and the United States.

Prices seem to be rising higher on-demand optimism and commitment by OPEC+ to rebalance Oil markets, especially members who overproduced in April. Regardless of the current gains, the path of least resistance remains south. With the core fundamental themes weighing on market sentiment still present, the current rebound on Oil could be nothing more than a dead cat bounce. Looking at the technical picture, WTI Crude has broken above $40 and may challenge $42 in the short term.


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.