Technical Outlook of Important CHF Pairs: 23.05.2018

USD/CHF

While recent risk-off sentiment drove JPY higher, the CHF is another safe-haven that investors seek during uncertainty. As a result, the USDCHF has been observing a short-term descending trend-line that dragged the pair below 0.9920-15 horizontal-line and signals further downside towards the 0.9870 support-line. In case present risk-aversion remains intact for a bit longer and fetch the pair beneath 0.9870, the 0.9815 and the 0.9775 are likely rests that can be availed by the sellers. Alternatively, an upside break of 0.9920 rejuvenates the importance of 0.9955 and the 0.9985 resistances ahead of highlighting the 1.0000 round-figure; however, aforementioned TL, at 1.0020 now, could confine the pair’s additional recovery. Assuming the quote surpasses the 1.0020 barrier, it can quickly rise to 1.0055 and then to the 1.0080 north-side numbers.

EUR/CHF

Alike USDCHF, the EURCHF has also broke an important support, the 200-day SMA here, and is running downwards to test another support, namely nine-month old ascending trend-line, around 1.1555. Should prices continue declining after 1.1555 on a daily closing basis, the 1.1480 and the 1.1445 might entertain the Bears before pleasing them with 1.1360-55 support-area. Meanwhile, pair’s D1 close beyond 200-day SMA level of 1.1645 can activate the pullback targeting 1.1685 and the 1.1720 but the 1.1735, comprising 100-day SMA, might limit its further upside. It should also be noted that the pair’s sustained trading above 1.1735 might not hesitate challenging the 1.1775, the 1.1805 and the 1.1830-35 horizontal-resistance.

GBP/CHF

GBPCHF’s drop to the lowest levels since mid-March might soon be challenged by the 1.3145-35 support-confluence, including 200-day SMA, ascending TL stretched since late-August and an immediate horizontal-line, not to forget about the oversold RSI. Though, increased selling pressure below 1.3135 could make the pair vulnerable enough to plunge towards 1.3030 and the 1.3000 supports. Moreover, pair’s additional south-run under the 1.3000 can have 1.2900 and the 1.2860 as rest-points. On the upside, 100-day SMA level of 1.3340 may act as an adjacent resistance for the pair to clear in order to aim for the 1.3360 and the 1.3470. Furthermore, pair’s ability to achieve the 1.3470 could target the 1.3520-25 resistance-zone, encompassing 50-day SMA & downward slanting trend-line.

AUD/CHF

Irrespective of its latest dip, the AUDCHF is presently testing six-week long ascending trend-line, at 0.7445, which may trigger the pair’s U-turn in direction to the 0.7490, the 0.7515 and the 0.7540. If at all the buyers dominate trade sentiment after 0.7540, the 0.7590-95 and the 0.7600 round-figure could try disappointing them, failing to which might post 0.7625 on the chart. Should the pair refrains to respect the TL support and closes below 0.7445, the 50-day SMA level of 0.7435 and the 0.7415 can mark their presence whereas 0.7395 and the 0.7375 may become crucial to watch afterwards. Let’s say the pair keep weighing down below 0.7375, then the 0.7335, the 0.7300 and the 0.7265 seem gaining attention.

Cheers and Safe Trading,
Anil Panchal

Technical Checks For GBP/USD, GBP/JPY, GBP/AUD & GBP/CHF: 17.05.2018

GBP/USD

Even after trying multiple times during the last one-week, the GBPUSD is still not succeeded in its attempts to conquer eleven-month old ascending trend-line, at 1.3480 now; though, the 200-day SMA level of 1.3555 acts as a strong near-term upside barrier for the pair. Hence, the pair has to provide a daily close clearing either the 1.3480 or the 1.3555 in order to register higher momentum. Considering comparative weakness of the GBP, the pair is more likely to break the 1.3480 mark, which in-turn could quickly drag the quote to 1.3400 and then to the 1.3350 while its further downside can be confined by the 1.3300 – 1.3290 horizontal-area. On the contrary, north-side run above 1.3555 can avail 1.3615 as an intermediate rest ahead of confronting the 1.3710-20 resistance-zone. Should Bulls dominate after 1.3720, the 1.3785-90 & 1.3850 could become their favorites.

GBP/JPY

GBPJPY’s bounce off the 147.00 – 147.05 support presently challenges the 50-day SMA level of 149.80, breaking which it can rise to 150.60-65 resistance-region, including 100-day SMA. In case if the pair manages to surpass the 150.65, the 151.30 and the 152.00 can entertain the buyers prior to questioning their strength by the downward slanting TL figure of 152.55. Meanwhile, the 148.60, the 148.25 and the 147.50 are likely adjacents rests that the pair may avail during its U-turn before testing the 147.05 – 147.00 area again. Assuming the pair’s dip beneath the 147.00, the 146.30 and the 145.85 might grab market attention.

GBP/AUD

With the three-week long descending TL restricting the GBPAUD’s immediate upside, the pair is re-testing the 1.7915-10 horizontal-support, breaking which it can drop to 1.7855 and the 1.7830 but the 1.7800 could limit its additional south-run. Given the pair’s break of 1.7800, the 1.7730, the 1.7700 and the 1.7670 can please the Bears. Alternatively, 1.8000 round-figure could act as nearby resistance for the pair, breaking which aforementioned trend-line, at 1.8040, seems important to observe. Should the pair’s recovery escalate beyond 1.8040, the 1.8100, the 1.8140 and the 1.8175 could mark their presence on the chart.

GBP/CHF

While the inability to break the 1.3470-60 support-zone is likely fueling the GBPCHF towards month-old descending TL resistance of 1.3590, the pair’s following upside seems doubtful. In case if the pair surpasses the 1.3590, also clears the 1.3600 round-figure, the 1.3650, the 1.3680 and the 1.3720 can come-back as quotes. Let’s say the pair dips below the 1.3460, it can test the 1.3400 and the 1.3355 whereas 100-day SMA level of 1.3325 may find its further declines. It should also be noted that daily closing break of 1.3325 might not hesitate to flash 1.3240 for the traders.

Cheers and Safe Trading,
Anil Panchal

Reports UK is Prepared to Stay Within EU Customs Union Send GBP Higher

The Government agreed on a new “backstop” earlier this week to avoid a hard border on the island of Ireland. This came after rejecting earlier EU proposals ahead of the looming June deadline. This was despite objections from Foreign Secretary Johnson and Environment Secretary Gove. GBP has rallied well and is the strongest currency as we approach the European open, up from 1.34554 to 1.35687 against the USD. EURGBP is down to 0.87206 from yesterday’s high of 0.87823. The USD has weakened somewhat, with EURUSD reaching a high of 1.18373 overnight.

Eurozone Consumer Price Index – Core (YoY) (Apr) came in as expected, unchanged at 0.7%. Consumer Price Index (MoM) (Apr) was also as expected at 0.3%, from 1.0% previously. Consumer Price Index (YoY) (Apr) was also as expected, unchanged at 1.2%. Consumer Price Index – Core (MoM) (Apr) was as expected at 0.2%, from 1.4% prior. CPI data is showing a decrease in the monthly figures, with yearly figures remaining in line with the previous reading. EURUSD fell from 1.18376 to a low of 1.17662 after this data release.

US Housing Starts (MoM) (Apr) were 1.287M against an expected 1.310M, from a previous number of 1.319M, which was revised up to 1.336M. Building Permits (MoM) (Apr) were 1.352M against an expected 1.350M, with the prior reading of 1.354M, which was revised up to 1.377M. This data shows a decrease in activity from previous readings. These data points have been recovering since hitting lows of 0.46M and 0.49M respectively after the financial crisis. GBPUSD halted its decent at 1.34668 when the data was released.


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US Industrial Production (MoM) (Apr) was released, coming in at 0.7%. The consensus was for 0.6% from 0.5% previously, which was revised up to 0.7%. This measure rebounded strongly, to reach the highest reading since December 2014 in March, after slipping below the zero line previously. Capacity Utilization (Apr) was also released at this time, with a reading of 78.0% against the expectation of 78.4%, from 78.0% previously, which was revised down to 77.6%. The readings came in line with previous data, with capacity failing to create a new high and missing expectations. USDJPY rose from 110.056 to 110.341 after the release.

This article was written by FxPro

The British Pound in Need of Support

Investors came to a conclusion that the regulator would be wary regarding the interest rates moving forward.

One of the issues behind that is the slow growth rate of the UK economy early this year. Both the analysts and the BoE board members are, however, sure that this slowdown is a local one and is unlikely to continue.

In its meeting minutes, the UK central bank says that tightening its monetary policy will be in place in case the economy moves in line with the consensus overall. Sonders and McCafferty, both members of the BoE Board, are all for raising the rates to 0.75%, while others are happy with the current situation.

Meanwhile, the BoE consensus regarding the GDP growth dropped from 1.8% to 1.4%, which also acts as a bearish signal for the GBP traders.

As for the long-term outlook, it remained unchanged, as the Bank of England is still looking to raise the rates three times within the following three years. However, with the economy being week in Q1, the BoE may well change the interest rates later on, not in mid-2018 as planned before. This is, of course, another negative factor for the GBP.

Technically, GBP/USD is still trading within a descending channel, with the support being at 1.3459, the last week and four months low. The bears have got a chance to push the UK currency even lower as long as it fails to come above 1.3600 or 1.3650.fun.

This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex

Ahead of the Bank of England’s Interest Rate Decision

With a growth rate of only 0.1%, the U.K. economy post Brexit faces headwinds challenging to overcome with a high-interest rate. Hence, chances for the Bank of England to raise rates at this meeting dropped significantly.

The March 2018 vote took many by surprise. Two members favored an increase in the interest rate level, from the current 0.5%.

It took everyone by surprise, and the GBP/USD was one of the pairs that gained the most, printing well above the 1.43 level. However, bulls ignored technical analysis pointing to significant resistance ahead.

Double Top Against Dynamic Resistance

The pair evolved in a bullish channel from the 2016 flash crash, and many hoped it’ll entirely reverse the Brexit move.

However, the daily chart tells a bearish story, with the recent move higher forming a double top against the upper side of the rising channel.

GBP/USD
GBP/USD

If anything, that wasn’t a place to be long anymore, and it coincided with the weak GDP announcement.

Now that the ascending channel is broken, the only question that makes sense is where the drop stalls and what can the Bank of England do?

Inflation Doesn’t Help

Bank of England targets inflation around the 2% level. Like any modern central bank, it raises and cuts the rates with the rise or fall in inflationary pressures.

Economic studies have shown that moderate inflation stimulates growth. Hence, it is no wonder central banks focus on moderate inflation levels for economic growth.

Yet, the U.K’s inflation already sits at 2.5%, above Bank of England’s target. However, the GDP shows little or no economic growth.

It makes this Thursday’s decision very difficult. While traders don’t focus on the bank rate as the outcome is priced in, they’ll look for changes in the vote.

If any of the two votes for a rate increase will disappear, the GBP is poised to make another leg lower.

Bullish Flag on EUR/GBP?

One of the weakest currencies on the Forex dashboard lately, the Euro seems to form a bullish flag against the GBP. The cross traded recently in tight ranges, creating a slightly descending channel typical for bullish flag formations.

EUR/GBP
EUR/GBP

If that’s the case, a break of the upper side of the channel will end a consolidation that lasted for more than six months and will animate the other GBP pairs too.

The risk here is that such a break will trigger a move beyond 0.93 as the measured move points to new highs.

Conclusion

This week’s Super-Thursday has the potential to impact all GBP charts.

With inflation already above the target, Bank of England faces a tough call: raise the rates when growth is close to zero or stay put and watch inflation rising.

Either way, the economy is too fragile to permit complacency.

This article was written by AMarkets

Markets Consolidate This Morning After Recent Volatility

The USD strengthened further, with USDJPY reaching the key 109.500 level and GBPUSD consolidated under 1.40000. The EUR settled into a tighter range as we await the ECB Rate Decision and Press Conference later today. This meeting is expected to be a preamble to the serious business on future policy is done at the June meeting. Today’s meeting should largely address recent economic data weakness but the risk is that any comments will create a volatile move in the EUR.

Swiss ZEW Survey – Expectations (Apr) were 7.2 against a prior reading of 16.7. This data has been weakening since a reading of 52.0 was recorded in December 2017. A reading under 16.7 had not been recorded since December 2016. This illustrates the drop in Economic expectations in Switzerland. GBPCHF fell from 1.37100 to 1.36924 after the data release.

US EIA Crude Oil Stocks (Apr) data was released, coming in with a build of 2.170M against an expectation for a draw of -2.043M barrels, from a previous reading of -1.071M barrels. Oil prices sank on Tuesday, from a high of $69.30 to $67.49, as the private inventories data suggested a surprise build of 1.099M against a consensus of -2.250M and the French and US Presidents discussed a new Iran deal. This build was borne out in this release and prices fell to the $67.05 support, where buyers stepped in and have carried the price back to $68.40. A drop under $67.00 may force downward pressure on prices, but, for now, it marks the bottom of the range up to $69.50.

Bank of Canada Governor Poloz testified along with Senior Deputy Governor Carolyn Wilkins before the Standing Senate Committee on Banking, Trade, and Commerce, in Ottawa. They said that people needed to be prepared for higher interest rates and that they needed to get the timing right to counter inflation. The comment was also made that fiscal stimulus had helped avoid a lower path for rates. USDCAD fell during this event from 1.28657 to a low of 1.28308 as a result but currently is trading at 1.2856.

This article was written by FxPro