What is The Target of The Pound?

In less than a week, the British pound strengthened by 5% to the dollar and 4.3% against the euro to its highest levels in five months. The UK’s FTSE100 added 0.7% during the same period, and this week it is declining due to the strengthening of the national currency, although it rose in dollar terms by more than 4%. This performance better than the S&P500 growth by 3.5% over the same time.

Since last Thursday’s rally, GBPUSD has come a long way from near 1.22 and touched 1.28 last night. At the time of writing, the pound corrected to 1.2750, although the pair remains above the critical 200-day moving average line at 1.2710. It often acts as an essential trend indicator. Fixing the pound above this line at the end of this week will be a necessary signal for the markets to end the devaluation period.

The British pound sold out in July, declining below 1.20 in August and September, reflecting the maximum fear around chaotic exit of Britain from the EU. The appearance of significant signs of progress in the Irish border negotiations was a critical factor in the trend reversal.

If the EU and Britain agree deal on an exit on October 31 during Thursday and Friday summit, and the UK Parliament accepts it at the Saturday session, GBPUSD may quite quickly return to this year highs around 1.32.

The strengthening of the pound above its 200-day average in 2017 triggered a prolonged rally by 13% to 1.43. Fundamentally, the British currency in the coming months may get lift by both higher inflation rates and stronger economic indicators, which may be positively affected by the weakening of the British pound earlier. Without the uncertainty around Brexit, the Bank of England may well be more determined in its fight against inflation. Thus, the lows around 1.20 may well be a bottom for GBPUSD for the foreseeable future.

The EURGBP reached its peak near 0.93 in August, after which it turned sharply down, and now is trading by 7% below its peak levels at 0.8650. As the British and EU deal may have a positive impact not only on the pound but also on the euro, the potential for the weakening of EURGBP is noticeably lower – from 0.85 to 0.8350. Around 0.85, the pair consolidated from March to May, and on the way to 0.8350, it redeemed on the downturns in the period from August 2016 to May 2017, which makes these areas significant attraction points for the markets.

This article was written by FxPro

USD/JPY Fundamental Daily Forecast – Pressured by Renewed Safe-Haven Buying

The Dollar/Yen is trading lower on Wednesday after failing to follow-through to the upside following yesterday’s strong performance. On Tuesday, the Forex pair was boosted by strong demand for risky assets and higher Treasury yields. The rise in share prices was fueled by better-than-expected U.S. earnings reports. The move in yields was driven by optimistic news over Brexit.

At 09:28 GMT, the USD/JPY is trading 108.685, down 0.178 or -0.16%.

Today’s early weakness is likely being fueled by some light hedging pressure triggered by China’s threat of countermeasures in response to a U.S. bill supporting Hong Kong protesters.

China Vows ‘Strong Countermeasures’

Three bills were approved in the House of Representatives Wednesday evening, one supporting the right of individuals to protest, another allowing for the U.S. to check on Beijing’s influence over the territory and a third aimed at preventing U.S. weapons from being used by police against protesters.

“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website. “China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”

Geng said while China was working to restore law and order in Hong Kong, U.S. lawmakers were “disregarding and distorting facts,” by turning criminal acts and violence against police into issues of “human rights or democracy.”

“That is a stark double standard. It fully exposes the shocking hypocrisy of some in the U.S. on human rights and democracy and their malicious intention to undermine Hong Kong’s prosperity and stability to contain China’s development,” said Geng, who urged the U.S. to “stop meddling.”

Brexit Traders Eye Imminent Draft Deal

Perhaps helping to limit losses on Wednesday are optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

IMF Warning

Another factor that could be pressuring the Dollar/Yen is a bearish report from the International Monetary Fund.  The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund (IMF) warned on Tuesday, adding that the outlook could darken considerably if trade tensions remain unsolved.

Daily Forecast

The markets are relatively calm overnight despite the threat of countermeasures by China to the U.S. legislation supporting the Hong Kong protesters. However, investors have taken precautionary steps by buying the Japanese Yen, gold and Treasury bonds for protection.

Keep an eye on this story to see if President Trump responds to the threat. He could trigger a huge break in the Dollar/Yen if he says anything negative about China that would put a trade deal in jeopardy.

Later today, traders will get the opportunity to respond to the U.S. retail sales report for September and the Fed Beige book. Both reports could influence the Fed’s decision on interest rates later in the month.

Bearish numbers will increase the chances of a Fed rate cut, further weakening the Dollar/Yen.

GBP/USD Daily Forecast – Sterling Holds Near Highs Awaiting Further Brexit News

Brexit Talks Resume in Brussels

EU’s chief negotiator Michael Barnier wanted a legal text of a potential deal delivered by Tuesday but after negotiating until 1:30 AM yesterday, an agreement could not be made. Talks resume today, taking it right down to the wire as negotiations are not meant to take place during the EU summit which starts tomorrow.

I suspect GBP/USD will extend gains if we get word later in the day that a legal text was finalized. However, UK Prime Minister Johnson still has his work cut out for him.

If he’s able to come to an agreement with EU negotiators today, the deal will still need to be approved by the member states at the EU summit which takes place on Thursday and Friday.

But more importantly, the UK parliament needs to vote on the deal. Since Johnson has lost his majority, it’s unclear if all his efforts will be fruitful since parliament could turn it down.

If a deal is not reached, Johnson will be required to request an extension under the recently passed Benn act. This could get tricky as the British PM has said several times that the UK will leave on October 31 no matter what. But when pressed for an answer, he has also said that he will abide by the law.

Technical Analysis

GBP/USD is up about 4% since Johnson announced last week that he found a pathway to a potential deal. Although technical indicators are in oversold territory at this point, I think the exchange rate can continue to move higher if there is further positive news.

GBPUSD 4-Hour Chart

The next level I have my eye on is 1.2924. This level was respected on a weekly chart after the referendum that took place over three years ago.

Price action is likely to be volatile and therefore I’m looking at support at 1.2575. Normally, that level would fall well out of the daily range for the pair. However, considering what is at stake, I’m not ruling out a dip towards it.

Bottom Line

  • An announcement might come that a deal has been agreed on with negotiators later today.
  • The legal text of these negotiations would then be put forth to a vote at the EU summit.
  • If approved at the EU summit, it will go to the UK parliament. In a rare move, parliament will convene on Saturday to decide on the next step.

EUR/USD Daily Forecast – Euro Continues to Battle 50-Day Moving Average

Brexit Talks Stand to Drive Volatility to EUR/USD

Price action in the FX markets on Tuesday provided a glimpse of which currencies are likely to see a reaction based on how things progress with reaching a Brexit deal.

Since last week, the British pound has been firmly bid and was last seen trading near highs not seen since June against the dollar. But yesterday’s surge higher in GBP/USD accompanied a bullish reaction in EUR/USD which we’ve not seen before.

EUR/USD had declined below the 1.1000 handle and then rallied nearly 50 pips in 30 minutes on Brexit news. This suggests if Brexit talks are favorable, EUR/USD is likely to continue its recent upward trend.

So far the 50-day moving average has been holding the pair lower on a daily close basis. But the indicator is not likely to be much of a hurdle on positive Brexit news. We are likely to get some market-moving news later today as Brexit negotiations will stop before the EU summit which starts tomorrow.

EUR/USD Little Changed After CPI Data

The consumer price index in the Euro zone was reported to rise at the slowest pace in nearly three years. Meanwhile, core CPI, which strips away volatile items such as food, energy, alcohol, and tobacco, remained unchanged at 1% in the year to September. The exchange rate had a muted reaction to the report.

Technical Analysis

Two items have been capping rallies in EUR/USD. A horizontal level at 1.1059 and the 50-day moving average.

EURUSD Daily Chart

If we get some further positive Brexit news, I’d expect this area to be breached, putting in focus resistance at 1.1129. This is a level that was major support April and in May.

In the absence of news, I expect that sellers will try and drive the pair lower once again. Although we may see buyers step in ahead of yesterdays low just below 1.1000, this continues to be an important area for the pair.

Bottom Line

  • Headlines related to Brexit stand to move EUR/USD and today could be a volatile day for the pair.
  • Euro zone CPI data fell short of expectations but did not have an impact on the exchange rate.

AUD/USD Forex Technical Analysis – Weakens Under .6721, Strengthens Over .6751

The Australian Dollar is trading lower on Wednesday, pressured by fresh tensions between the United States and China after Beijing threatened to retaliate over the passage of measures in Washington aimed at supporting Hong Kong Protesters.

“If the relevant act were to become law, it wouldn’t only harm China’s interests and China-U.S. relations, but would also seriously damage U.S. interests,” said Geng Shuang, China’s Foreign Ministry spokesperson, in a statement on the body’s website.

“China will definitely take strong countermeasures in response to the wrong decisions by the U.S. side to defend its sovereignty, security and development interests.”

At 08:00 GMT, the AUD/USD is trading .6733, down 0.0025 or -0.37%.

AUDUSD
Daily AUD/USD

Daily Technical Analysis

The main trend is up according to the daily swing chart. However, three days of selling pressure have put the Forex pair in a position to change the main trend to down.

A trade through .6710 changes the main trend to down. A move through .6811 will signal a resumption of the uptrend.

The short-term range is .6671 to .6811. Its retracement zone at .6741 to .6724 is currently being tested. Trader reaction to this zone could determine the next near-term move since buyers will likely try to form another secondary higher bottom.

The main range is .6895 to .6671. Its retracement zone at .6783 to .6809 is resistance. This zone stopped the rally on October 11 at .6811.

Daily Technical Forecast

Based on the early price action and the current price at .6733, the direction of the AUD/USD the rest of the session on Wednesday is likely to be determined by trader reaction to the short-term Fibonacci level at .6724.

Bearish Scenario

A sustained move under .6724 will indicate the selling pressure is increasing. This is followed closely by an uptrending Gann angle at .6721. If this angle fails as support then look for the selling to possibly extend into the main bottom at .6710.

Taking out .6710 will change the main trend to down. This could lead to a possible extension of the selling into the next uptrending Gann angle at .6696. This is the last potentially bullish angle before the .6671 main bottom.

Bullish Scenario

A sustained move over .6425 will signal the return of buyers. Since the main trend is up, buyers may step in on the test of the retracement zone at .6741 to .6724. Furthermore, they may try to defend the trend by protecting the main bottom at .6710.

The first upside target is the 50% level at .6741. This is followed by a downtrending Gann angle at .6781. Sellers came in earlier in the day on a test of this angle. Taking it out could trigger an acceleration into a pair of downtrending Gann angles at .6775 and .6781.

EUR/GBP Morning Star Pattern Should Push the Price Up

Dear Traders,

The EUR/GBP has made a morning star pattern straight off W L3 camarilla pivot support. The price is retracing.

There is still a lot headline risk within the GBP basket. Nevertheless, the GBP has been excellent to trade lately and today I am paying attention to the EUR/GBP. We could see the price going for a retest of the POC zone. This could possibly set up new short trades. 0.8780-0.8815 is the area for possible rejections. Targets are 0.8762, 0.8662 and 0.8632 after the POC retest. Below 0.8632 the price will be strongly bearish with a possible retest of 0.8550 zone.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

AUD/USD, NZD/USD, USD/CNY – Asian Session Daily Forecast

AUD/USD

AUD/USD has lost ground for a third successive day. In Wednesday’s Asian session, the pair is trading at 0.6743, down 0.14% on the day.

Investors Eye Job, Confidence Data

There are no key Australian events on Wednesday, but the markets are waiting for key employment numbers on Thursday. Employment change is expected at 15.3 thousand in September, lower than August but still a decent reading. The unemployment rate is projected to remain steady at 5.3%.

As well, the NAB releases its quarterly business confidence report. Traders should be prepared for stronger movement from the pair on Thursday.

AUD/USD Technical Analysis

AUD/USD continues to move lower and tested support at 0.6760 on Tuesday. Currently, the pair is slightly below this level. If the downward movement continues, support at 0.6710 will be vulnerable. This line is protecting the round number of 67.00, which last saw action in early October.

AUD/USD 4-hour Chart

USD/CNY

USD/CNY is showing limited movement in early Wednesday trade. In the Asian session, the pair is trading at 7.0915, up 0.14% on the day.

USD/CNY Technical Analysis

USD/CNY has reversed directions after the recent rally by the yuan, in which the pair lost close to 1.0%. The pair tested support at 7.0592 on Monday, but this line has since stabilized, with the pair moving higher. Still, this line could be further tested during the week. Below, we find support at the 7.0400 line. On the upside, 7.1100 is relevant and could face pressure if the upward movement continues.

USD/CNY 4-Hour Chart

NZD/USD

NZD/USD has posted slight losses on Wednesday.  In the Asian session, the pair is trading at 0.6285, down 0.14% on the day.

New Zealand CPI Beats Forecast

New Zealand CPI, which is released every quarter, was better than expected in the third quarter. Consumer inflation gained 0.7%, edging above the estimate of 0.6%. NZD/USD has responded to the release with marginal gains.

NZD/USD Technical Analysis

NZD/USD continues to test support at 0.6280, but is having difficulty consolidating below this stubborn line. Below, we find support at 0.6230. On the upside, 0.6357 has remained intact in resistance since mid-September.

NZD/USD 4-Hour Chart

U.S. Dollar Index Futures (DX) Technical Analysis – Brexit Optimism, Strong Sterling Weighing on Dollar Index

The U.S. Dollar is trading slightly lower against a basket of major currencies after posting a wicked two-sided trade early Tuesday. The early session rally was fueled by increasing demand for risky assets as U.S. Treasury yields rose and equity markets soared on the back of upbeat comments over Brexit and better-than-expected U.S. earnings reports.

At 16:11 GMT, December U.S. Dollar Index futures are trading 98.015, down 0.155 or -0.16%.

The upbeat comments over Brexit, however, were a double-sided sword, however, with a surge in the British Pound helping to drive the index lower. The Euro also inched higher against the dollar. However, losses may have been limited by a drop in demand for the safe-haven Japanese Yen and Swiss Franc. The dollar also lost ground to the commodity-linked Canadian Dollar.

Dollar index traders are primarily focused on the British Pound after optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the United Kingdom’s divorce from the European Union was being drawn up.

U.S. Dollar Index
Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top at 99.305 on October 1.

The main trend will change to down on a trade through 97.560. A move through 99.305 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is down. This move confirms the shift in momentum to the downside. A trade through 98.955 will change the minor trend to up.

The short-term range is 96.960 to 99.305. Its retracement zone at 98.135 to 97.855 is currently being tested. This zone provided support on Friday when the selling stopped at 97.885. Trader reaction to this retracement zone will likely determine the near-term direction of the index.

On the upside, 50% resistance levels come in at 98.435 to 58.595. On the downside, the major 50% support level is 97.140.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 98.015, the direction of the December U.S. Dollar Index the rest of the session on Tuesday is likely to be determined by trader reaction to the 50% level at 98.135.

Bearish Scenario

A sustained move under 98.135 will indicate the presence of sellers. This could trigger a further break into Friday’s low at 97.885, followed by the Fibonacci level at 97.855. This is a potential trigger point for an acceleration to the downside with 97.560 the next likely downside target.

Bullish Scenario

Overcoming the 50% level at 98.135 and sustaining the move will signal the presence of buyers. If this creates enough upside momentum then look for an extension of the rally into the 50% level at 98.435.

USD/JPY Price Forecast – US Dollar Continues To Pressure Japanese Yen

The US dollar pulled back a bit during the trading session on Tuesday, showing signs of resiliency by turning around as we approached the crucial 200 day EMA. At this point, it’s very likely that the market is going to try to break above that level, which of course would be an extraordinarily bullish sign. With this in mind, I believe that the market breaking above the highs from the Friday session could open up the door to the ¥110 level, although there is a significant amount of noise just above the 200 day EMA from previous trading. With that in mind, the market could get an external catalyst, perhaps due to earnings season.

USD/JPY Video 16.10.19

The market should find a bit of support based upon the last couple of candlesticks, but if we suddenly get a shift to a major “risk off” scenario, breaking down below the hammer from the Monday session could open up quite a bit of selling. It certainly looks as if the resiliency is something to be paid attention to though, and therefore a breakout is something that you would have to pay a serious amount of attention to. Ultimately, this is a market that should make a relatively strong move sooner or later, which will certainly have a lot to do with earnings season and the general attitude of traders as far as risk appetite is concerned. Keep in mind that the Brexit, US/China trade talks, and a whole host of other issues could have traders running to the safety of the Japanese yen. All things being equal though, it looks as if the buyers are really pressing their luck.

Please let us know what you think in the comments below

GBP/USD Price Forecast – British Pound Continues To Bounce Around

The British pound has shown a significant amount of volatility over the last week or so, and the last couple of sessions have been completely counter to each other. This typically means that the market is trying to catch its breath and will probably consolidate overall. At this point, the market is likely to find a lot of back-and-forth, and it will of course continue to be very concerned about the Brexit. Obviously, the headlines will come fast and furiously over the next couple of weeks, so it’s difficult to get excited about this market for any significant amount of time.

GBP/USD Video 16.10.19

Ultimately, short-term back and forth range bound systems should continue to work for a short-term smash and grab type of trades, with the obvious ceiling being the last couple of days. If we were to break above the highs from the last couple of sessions, then the market probably goes looking towards the 1.28 level. Otherwise, we could break down towards the 1.25 level which of course is a large, round, psychologically significant figure, and it should also be noted that the 200 day EMA is slicing through the last couple of candles as well. Ultimately, this is a market that is trying to figure out what to do after the recent explosion higher, so that being said it makes quite a bit of sense that we will see a major “flush lower” if we break down below the 1.25 handle.

Please let us know what you think in the comments below

GBP/JPY Price Forecast – British Pound Consolidating

The British pound has been very noisy as of late, obviously due to the Brexit and the never-ending headlines. With that being the case, it makes quite a bit of sense that we will continue to see a lot of confusion in this pair as it is so sensitive to risk appetite, and of course is going to be very sensitive to the Brexit itself.

GBP/JPY  Video 16.10.19

Keep in mind that the Japanese yen is a major safety currency, so if there are concerns around the global financial system, then typically money will run towards it. Brexit certainly falls in that scenario, but there are also other concerns such as the US/China trade talks, and many other things like that. At this point in time the technicals probably are going to lead the way as the 200 day EMA is right in the middle of trading action, and therefore a lot of longer-term traders are going to be looking at this as both potential support and resistance. If we break above the candle stick on Friday, then I suspect that this pair is going to go screaming to the ¥140 level.

On the other hand, if we were to break down below the hammer from the session on Monday and of course take out the psychologically important ¥135 level, then it’s likely that this market breaks down towards the 50 day EMA which is currently trading at the ¥133 handle. All things being equal, if you are short-term trader then you need to be looking at range bound traits. If you are a longer-term trader then you need to see either Monday or Friday get broken.

Please let us know what you think in the comments below

EUR/USD Price Forecast – Euro Rolls Over Again

The Euro fell during the trading session after initially trying to rally during the Tuesday session. The 50 day EMA has offered a bit of resistance, and it does look very much like a market that is trying to break down towards the lows again. The market has been very choppy but more importantly, it has been very negative.

EUR/USD Forecast Video 16.10.19

The 1.10 level of course will attract a lot of attention, as the round figure typically do. This is an area that has been crossed several times though, so the resiliency of the 1.10 level probably has lost some bigger. With that being the case, I do think that we continue to slice lower and test the lows yet again. The 61.8% Fibonacci retracement level is far above, so that typically means that we are going to go looking towards the 100% Fibonacci retracement level.

The Euro of course suffers at the hands of a potential recession, while the United States has been growing the entire time. With this, money continues to flow in the United States, and of course Brexit will have its way with the Euro and all things European related currently. All things being equal, this is a market that is simply continuing to grind back and forth, showing signs of choppiness but one thing that has been a longer-term factor is that sellers continue to return. With that, it’s very likely that we will see rallies faded, just as we have seen at the crucial 50 day EMA. The short-term ceiling above is the 1.11 level, so that should be paid attention to as well.

Please let us know what you think in the comments below

AUD/USD Price Forecast – Australian Dollar Breaks Down

The Australian dollar has rallied initially during the trading session on Tuesday only to fail again. By doing so, the market looked bullish at first, but then turned around to break down and show signs of exhaustion. The 0.6750 level of course is an area that causes quite a bit of interest as it has been “fair value” for the market as we go back and forth. At this point in time, the 0.67 level is the beginning of massive support, while the 0.68 level has offered significant resistance.

AUD/USD Video 16.10.19

Looking at the choppiness of this market, it’s very likely that the Australian dollar continues to be very noisy and difficult to deal with, unless of course you are looking at a “reversion of the mean” on a short-term timeframe. Keep in mind that the pair is highly sensitive to the US/China trade situation, and that of course continues to be very noisy. With that being the case, it’s very unlikely that this pair can take off to the upside for anything along the lines of a significant trade without the trade deal coming back into vogue. Right now, it looks as if we are nowhere near getting some type of solution, so with that it is likely that we continue to see a lot of choppy action, without a whole lot conviction one way or another. With this, I feel that this pair is still only to be traded by those who can watch short-term charts.

Please let us know what you think in the comments below

USD/JPY Fundamental Daily Forecast – Investors Shedding Safe-Haven Yen Amid Upbeat Brexit Comments

The Dollar/Yen is trading higher and in a position to take out last week’s high at 108.626 after a string of better-than-expected earnings reports offset concerns over U.S.-China trade relations. A reversal to the upside in U.S. Treasury yields and increased demand for risky assets are also driving investors away from the lower-yielding Japanese Yen.

At 15:33 GMT, the USD/JPY is trading 108.801, up 0.402 or +0.36%.

Upbeat Brexit Outlook

Positive news over Brexit is also reducing demand for the safe-haven Japanese Yen. This move is being fueled by the latest comments on Brexit from European negotiator Michel Barnier sounded an optimistic tone.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

Treasury Yields Rise

U.S. Treasury yields are on the rise on Tuesday after opening lower, making the U.S. Dollar a more attractive asset. Traders are saying the move is being fueled as investors dump safe-haven assets like the Japanese Yen amid increasing hopes for a Brexit deal.

U.S. Equities Strengthen

The Japanese Yen is being further pressured by a sharp rise in U.S. equities as corporate earnings season go off to a strong start. The early rally was ignited by strong performances in the banking and health care sectors.

Shares of J.P. Morgan Chase jumped 3.8% after its third-quarter numbers topped analyst expectations. The company’s revenue also hit a record, boosted by home and auto loans along with credit cards.

UnitedHealth posted a quarterly profit that topped analyst expectations by 13 cents per share. The company’s results got a boost from growing pharmacy benefits. UnitedHealth also hiked its full-year earnings guidance. UnitedHealth shares climbed 8%.

Increasing demand for risk is good for the U.S. Dollar because of the carry trade, whereby investors sell borrowed Yen from Japanese banks to buy U.S. equities.

Kuroda Speaks

Earlier today, the Bank of Japan (BOJ) raised its assessment for one of the country’s nine regions and stuck to its sanguine view on the rest, though frail factory production and exports suggested pressure for more stimulus is unlikely to ease anytime soon.

BOJ Governor Haruhiko Kuroda said on Tuesday the central bank would not hesitate to take additional easing steps if risks to the economy grow and threaten momentum toward its 2% inflation target.

“We need to pay closer attention to the possibility that momentum toward achieving our price target will be lost,” Kuroda said in a speech at a quarterly meeting of the central bank’s regional branch managers.

GBP/USD, USD/CAD, USD/MXN – North American Session Daily Forecast

After an impressive late-week rally, GBP/USD has settled down early this week and is range-bound. In the North American session on Tuesday, the pair is trading at 1.2646, up 0.29% on the day.

Brexit Negotiations Continue

Negotiations continue at a feverish pace, as London and Brussels and continue to try and hammer out a withdrawal agreement, with only two weeks to go before the U.K. is scheduled to depart the EU. The main sticking point continues to be the Irish border, with the EU insisting on a customs border between Ireland and Northern Ireland, which would be a problematic arrangement for the U.K. Can the sides come up with a creative solution? The pound soared last week on news that the sides were close to an agreement, and traders can expect further volatility this week, as the sides rush to reach an agreement before the October 31 deadline.

Technical Analysis

GBP/USD has been range-bound since Friday. The pair tested resistance at 1.2653 earlier on Tuesday. Above, there is resistance at 1.2750. On the downside, there is support at 1.2585.

GBP/USD 4-Hour Chart

USD/CAD

USD/CAD recorded sharp losses to end the week, but has leveled off this week. In Tuesday’s North American session, the pair is trading at 1.3234, up 0.06%.

Investors Brace for Soft Cdn. CPI

Canadian consumer inflation contracted in August, marking the second decline in three months. The September data will be published on Wednesday. The markets are expecting another decline, with an estimate of -0.3%. Traders can expect pressure on the Canadian dollar is inflation declines for a second straight month.

Technical Analysis

USD/CAD remains range-bound this week. The pair is putting strong pressure on resistance at 1.3240 and could test this line later on Tuesday. On the downside, there is immediate support at the round number of 1.3200. The pair tested this line on Friday but has since retraced upwards.

USD/CAD 4-Hour Chart

USD/MXN

USD/MXN is flat in Tuesday trade. In the North American session, the pair is trading at 19.26, down 0.03% on the day.

Technical Analysis

After gains of above 1.0% last week, the Mexican peso continued its downward movement and tested support at 19.30. This level had remained intact since early August. The pair is within striking distance of support at 19.20 and with the trend pointing down, this level could be tested during the week. Above, there is resistance at 19.45.

GBP/USD is in a Strong Bullish Trend Targeting 1.2785 and Above

Dear Traders,

The GBP/USD is strongly bullish and we should see a continuation of the move.

The POC comes within 1.2560-80. As long as the price is supported above it we should see an uptrend. The pair is targeting 1.2690 and 1.2786. If we see a 4h or daily close above 1.2786, there is a possibility for a further target M H5 camarilla/ Wizz 6 confluence at 1.2930. Pay attention to momentum as we might see good volatility due to ATR (5), which is 177 pips.

The analysis has been done with the CAMMACD.MTF template.

For more daily technical and wave analysis and updates, sign-up up to our ecs.LIVE channel.

Many green pips,
Nenad Kerkez aka Tarantula FX
Elite CurrenSea

EUR/USD Mid-Session Technical Analysis for October 15, 2019

The Euro is trading lower against the U.S. Dollar shortly after the U.S. opening. Earlier in the session, the single-currency traded higher, helped by more positive vibes about a Brexit deal and as dimming optimism over a U.S.-China trade deal kept the greenback in a range.

In other news, the German ZEW headline numbers for October came in better-than-expected at -22.8 versus an estimate of -27.0 and the previously reported -22.5.

It’s another light day in the U.S. with FOMC member speakers George and Bullard on tap. Traders are likely to continue to focus on any new developments over U.S.-China trade relations. If conditions continue to sour then look for the U.S. Dollar to strengthen due to safe-haven buying.

At 11:09 GMT, the EUR/USD is trading 1.1012, down 0.0015 or -0.14%.

EURUSD
Daily EUR/USD

Daily Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since October 1.

The minor trend is up. A trade through 1.1063 will indicate the buying is getting stronger. A move through 1.0941 will change the minor trend to down, shifting momentum back to the downside.

The main range is 1.1164 to 1.0879. Its retracement zone at 1.1021 to 1.1055 is resistance. This zone stopped the rally at 1.1063 last Friday.

The minor range is 1.0879 to 1.1063. Its retracement zone at 1.0971 to 1.0949 is the next downside target.

Daily Technical Forecast

Based on the early price action and the current price at 1.1021, the direction of the EUR/USD the rest of the session on Tuesday is likely to be determined by trader reaction to the main 50% level at 1.1021.

Bearish Scenario

A sustained move under 1.1021 will indicate the presence of sellers. This could trigger a break into the uptrending Gann angle at 1.1001, followed by an uptrending Gann angle at 1.0979. If this angle fails to hold then look for the selling to possibly extend into 1.0971 to 1.0949.

Bullish Scenario

A sustained move over 1.1021 will signal the presence of buyers. If this move can create enough upside momentum then look for the rally to possibly extend into a resistance cluster at 1.1055.

GBP/USD Daily Forecast – Sterling Little Moved After UK Jobs Report

Sterling Volatility Could Jump Higher Ahead of EU Summit

It is an important week for the United Kingdom as a potential deal could be announced as soon as today, that will facilitate an orderly exit from the EU.

Negotiations between the EU and UK will end ahead of the EU summit that takes place on Thursday and Friday. For that reason, if a deal is to be made, it should be announced relatively soon.

On the other hand, if the two parties are not able to reach a deal, the most likely scenario is that the UK will ask for an extension. This would accompany an election and all sorts of uncertainty.

For this reason, the Sterling exchange rate is likely to be very volatile over the next two sessions. Traders will be closely watching their news feeds for any incoming data and repricing the exchange rate accordingly.

Technical Analysis

The markets started pricing in a premium for a no-deal exit even before Boris Johnson was elected as Prime Minister. At this point, it looks like there is a bit of an unwinding of this position following news last week that the UK is moving closer towards a deal.

In this context, I expect the British pound will be well bid in the absence of news. To be clear, there have been negative headlines since the start of the week, but I am speculating it will take something concrete that suggests a deal won’t be reached to trigger a reversal in the Sterling rally.

GBPUSD 4-Hour Chart

From a technical perspective, the pair broke to a 3-month high on Friday and carries a bullish near-term bias. Last week, the pair was held lower by the 1.2700 level. I see some further resistance at 1.2738.

The pair certainly looks strong and any indication that Brexit talks are going smoothly might just offer the markets a reason to bid it up further. I see some potential for the pair to extend gains towards resistance at 1.2924.

In yesterday’s forecast, I was looking at a horizontal level at 1.2575 to the downside. The level had already been breached but buyers lifted the pair back above in the New York session and the pair regained strength. I’m still looking at this same level for downside support.

Bottom Line

  • GBP/USD is well bid as investors view the odds of a no-deal scenario lessening.
  • Sterling is likely to see a jump in volatility as there are just two days left for negotiating a deal.
  • A break above 1.2738 could see the pair rally all the way to 1.2924.

EUR/USD Daily Forecast – Euro Consolidates Below 50 DMA

EUR/USD Rally Stalls

Last week EUR/USD rallied above an important technical resistance confluence that I’ve talked about in my last few daily forecasts. At this point, it will be important to asses whether the breakout is real, or just a trap for buyers.

One important aspect is assessing technical developments is the longer-term trend. For EUR/USD this is certainly to the downside even though price action has been choppy for the past year or so.

For that reason, additional confirmation would provide further conviction that the pair has indeed put in a bottom, or at least, a near-term one.

Currently, resistance from a horizontal level at 1.1059 has been holding the upside and daily closes have been held by the 50-day moving average. I suspect this will continue to be major resistance over the near-term.

A bit of a support confluence is developing in around 1.1000 as the 200 and 50 moving averages on a 4-hour chart have converged toward the level. Further, a rising trendline from October lows and the 20-day moving averages are also nearby. If the pair were to break below this area, I would assume that last week’s upside break was a bull trap.

Daily Technical Outlook

With a relatively light economic calendar in the session ahead, I suspect that the pair will continue to trade within the roughly 1.1000-1.1050 range.

EURUSD Daily Chart

There was some selling pressure around the European open and this might keep the pair well offered, at least until the North American session gets underway. In this context, I see important resistance at 1.1033.

EUR/USD briefly traded below yesterday’s low in early trading, likely taking stops from weak hands. If the pair remains under pressure, I think it will try and trigger further stops below Friday’s low of 1.1001. However, the psychological 1.1000 handle is likely to draw buyers. I see it as major support for the session ahead.

EURUSD 4-Hour Chart

On the other hand, if we reverse sentiment a bit and start to get bullish, I’m looking at 1.1059 to continue capping gains in the near-term.

Bottom Line

  • EUR/USD has been ranging with the 50-day moving averages holding the pair on a daily close basis.
  • I suspect the pair will continue holding in this range considering the light economic calendar.
  • Strong selling pressure at the European open suggests a slight bearish bias for the session ahead.

Guessing The Brexit Door

It is important to remember that the events around Brexit affect not only the British pound but also the euro, not to mention UK stock markets and shares around the world.

Today, October 15, EU ministers will meet in Luxembourg to discuss the latest changes to the deal proposed by the British Prime Minister and discussed with the Prime Minister of Ireland. At this level, the current agreement seems to be working and is unlikely to meet obstacles or negative responses. And that may become quite good news for the pound. But it will be harder in the future.

On October 16, the deal proposals wood need to be finalized before the crucial EU summit. A critical test is a meeting between Macron and Merkel, whose feedback may stall or give further impetus to the discussion. The pound and markets may have to survive a few hours in the background of heightened nervousness. At the EU summit on 17-18 October, Brexit’s discussion is likely to overshadow all issues, including defence, security and climate change. The most important question is whether the European Union will approve Britain’s proposals. Hints and comments from officials long before the final press conference may cause a strong market reaction.

If Brussels and London reach agreement, this new plan should also be approved by the UK Parliament. Prime Minister Johnson hopes that PMs will do this on the special session on a Saturday. Although the markets have met news on Brexit’s postponement very positively earlier, at this stage, the deal will drastically reduce uncertainty and could dramatically increase the purchase of British currency. In this case, Sterling could potentially return to the area above 1.32, where it was in March, from 1.2660 now.

Without the deal approval from the EU, or UK Parliament and MPs, Johnson will have to make an official request to the EU for another three-month postponement. First of all, it will be a return to uncertainty. Markets have a very negative perception of uncertainty so that the initial reaction could be a sell-off of the British currency.

However, there is also a greater chance that during the new deferral Brexit’s opponents may put on a vote an amendment requiring a public vote on the deal with the EU, or even a call for new general election. In the latter case, the chances of Britain’s exit from the EU are reducing, which may have a positive impact on the British currency and return the purchase of risky assets to the markets.

Formally, there is still a realistic chance that Britain may exit from the EU on October 31 without having a finalized deal. Analysts estimate the chances of such an outcome at 5-10%. This scenario could be a black swan for the British markets, like the unexpected outcome of the referendum in 2016. In this case, GBPUSD can decline below 1.20 very quickly, causing a shock wave in the markets.

This article was written by FxPro