Analyst Articles – Forex News 24

Firm ECB to Keep EURUSD Price Bid
GBPUSD, GBPAUD Chart Reversals Brewing?
Australian Dollar Recovery May Have Run Out of Steam

Posted: 08 Jun 2019 09:27 PM PDT

EURO FORECAST – TALKING POINTS

EUR has climbed roughly 1.5 percent so far this month according to the Euro Currency Index (EXY) and could push higher
ECB projected confidence with its firm stance on rates along with upward revisions to 2019 GDP growth and inflation estimates
See real-time trader positioning in EURUSD for insight on biases of market participants with IG's Client Sentiment Tracker

Last week's ECB meeting echoed recent strength in the Euro as President Mario Draghi and the Governing Council communicated a firm stance on monetary policy. The central bank stated that it "now expects the key ECB interest rates to remain at their present levels at least through the first half of 2020." The language crushed rate trader's expectations that the ECB would lower rates by the end of the year which were pricing in a 47.5 percent probability prior to last Thursday's press statement.

EURO CURRENCY INDEX (EXY) PRICE CHART: 15-MINUTE TIME FRAME (MAY 31, 2019 TO JUNE 07, 2019)

The ECB also revealed details of its third round of targeted long-term refinancing operations (TLTROs) such as that itsthird phase of loan offerings, which was announced on March 7, will assess a 10-basis point premium over the key lending rate. TLTRO-IIIwill begin September 2019 and end March 2021, with each quarterly offering having a two-year maturity. The ECB states that TLTROs aim to help “preserve favorable bank lending conditions and the accommodative stance of monetary policy.”

Also, Euro rates likely gained ground last week owing to the ECB's surprising 0.1 percent upward revision to both 2019 GDP growth and inflation estimates to 1.2 percent and 1.3 percent respectively. Although, longer-term outlook turned darker with the central bank lowering its expectations for 2020 economic growth to 1.4 percent from an already-bleak 1.6 percent amid rising risks to global trade.

The relatively hawkish guidance to the ECB’s accommodative policy stance contrasts the string of dovish moves by other major central banks like the RBA who cut rates earlier last week. Meanwhile, market expectations for the Federal Reserve to ease policy have amassed quickly in response to growing uncertainty over US trade policy with China and Mexico in addition to worsening economic data like last Friday's NFP report.

EURUSD PRICE CHART VERSUS GERMAN BUND AND US TREASURY YIELDS

With a firm stance communicated by the ECB and dovish leaning by the Fed, the spread between German Bunds and US Treasuries looks to continue its climb higher, which could boost demand for the Euro and keep EURUSD bid. Next week should be relatively quiet for the Euro, however, with few events and data readings on deck according to the DailyFX Economic Calendar. The Sentix Eurozone Investor Confidence gauge for June will be released Tuesday at 8:30 GMT while April’s Euro Area Industrial Production is due Thursday at 9:00 GMT. Also, ECB President Draghi will give a speech in Frankfurt on Wednesday at 8:15 GMT.

Euro headwinds include the risk that Chair Powell and FOMC members reel in the market’s expectations that the Fed will cut rates soon, which would likely send EURUSD snapping back lower. In addition, the Japanese Yen could find strength and drag EURJPY down if market sentiment sours and appetite for risk ebbs stemming from deteriorating global growth prospects and rising uncertainty from trade wars. As for EURGBP, BOE Governor Mark Carney has stated that rates in the UK could head higher if the British economy continues to perform in line with the central bank’s outlook and is a theme that could limit upside in the Euro against the Pound Sterling. Meanwhile, EURAUD could threatens to head lower if inspiring Aussie jobs data is reported next week.

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

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2019-06-09 04:00:00

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GBPUSD, GBPAUD Chart Reversals Brewing?

Posted: 08 Jun 2019 04:27 PM PDT

British Pound Technical Forecast

Is GBPUSD on the verge of reversing the dominant downtrend?
Pound Sterling is struggling against the Euro, eyeing resistance
GBPAUD attempted a turn higher, will it find follow-through?

Build confidence in your own British Pound strategy with the help of our free guide!

GBPUSD Technical Outlook

Weakness in the US Dollar, recently compounded by a softer-than-expected jobs report, has helped the British Pound advanced against the Greenback. Meanwhile, political conditions in the United Kingdom are clouding the fundamental outlook for Sterling. The Conservative leadership race beings this week to succeed Theresa May with Brexit on the sidelines.

Technically, where does this leave GBPUSD? On the daily chart below, the pair appears to be in the process of fulfilling a reversal in the aftermath of a Falling Wedge formation, typically seen as a bullish pattern. The breakout through descending resistance occurred after positive RSI divergence formed, which showed fading momentum to the downside.

Keep an eye on the psychological power between 1.2773 and 1.2798 next. If broken, this may set the stage for an extended turnaround in Pound Sterling. Near-term resistance after that appears to be at 1.2866. Otherwise, a resumption of the dominant downtrend since May opens the door to retesting support again at 1.2604 – 1.2582.

GBP/USD Daily Chart

EURGBP Technical Outlook

Against the Euro, the British Pound is struggling. After the Bullish Harami formed in early May, EURGBP proceeded to rally over 4.5%. But, the uptrend has slowed, guided higher by a rising support channel (parallel red lines below). On the 4-hour chart, near-term resistance was taken out at 0.8888, opening the door to testing the next psychological barrier between 0.8923 and 0.8953.

If that area is cleared, we could be looking at EURGBP testing the highs achieved back in January. But, negative RSI divergence persists and indicates fading upside momentum. Still, IG Client Sentiment offers a bullish-contrarian EURGBP trading bias. If there is a turn lower, keep an eye on the outer boundary of near-term support at 0.8811. If broken, losses may ensue.

EURGBP Daily Chart

GBPAUDTechnical Outlook

Meanwhile, the British Pound appears to be attempting to reverse the dominant downtrend against the Australian Dollar. This is because GBPAUD formed a Morning Star bullish reversal pattern this past week above key support (1.8100 – 1.8152). However, an attempt to clear the descending channel of resistance (pink parallel lines below) struggled.

Without confirmation of further closes to the upside, it is too early to say whether GBPAUD is ready to overturn declines seen since the Double Top preceded the 3.8%+ turn lower in early May. Clearing resistance would open the door to testing 1.8434. Otherwise, resuming the near-term downtrend opens the door to testing 1.7992.

For more updates on the British Pound, including on the fundamentals, you can follow me on twitter here @ddubrovskyFX. You may also join me each week on Wednesday's at 00:00 GMT where I will be taking a look at what market positioning has to say about the prevailing trends in currencies, equities and commodities.

GBPAUD Daily Chart

* Charts created in TradingView

FX Trading Resources

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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2019-06-08 22:00:00

Australian Dollar Recovery May Have Run Out of Steam

Posted: 08 Jun 2019 09:10 AM PDT

AUSTRALIAN DOLLAR TECHNICAL FORECAST: BEARISH

AUD bounce brings re-test of Triangle floor support-turned-resistance
Overall trend bias still bearish, near-term positioning hints at topping
Confirmation of downtrend resumption may set the stage to test 0.67

See our free guide for help to gain confidence in your Australian Dollar trading strategy!

The Australian Dollar is retesting support-turned-resistance marking the underside of a broken Descending Triangle chart formation in the 0.6978-0.7021 area. Prices bounced after finding support above the 0.68 figure, marking a bottom with the formation a bullish Morning Star candlestick pattern and a break of trend line resistance set from the mid-April swing high.

A push beyond this barrier would cast doubt on the Triangle breakout's validity as a bearish continuation signal. Neutralizing the near-term downside bias in earnest will probably require a step further to clear downward-sloping resistance capping gains since December 2018, now just above the 0.71 figure. However, zooming into the 4-hour chart hints that upside momentum may already be fading.

AUDUSD put in a dramatic-looking Shooting Star candlestick on a test of resistance at the 0.7008. This coupled with overt negative RSI divergence suggests the move higher has run out of steam. Confirming that the broader downtrend has commenced calls for a break of upward-sloping support guiding gains from late-May lows, now at 0.6951.

If a bearish reversal does materialize – cementing recent gains as corrective in the context of an ongoing decline – then there seems to be scope for significant follow-on weakness. Initial support lines up in the 0.6827-64 area, running from the January 2016 low to last month's swing bottom. Triangle setup calls for deeper losses however, implying a measured move to the 0.67 figure.

— Written by Ilya Spivak, Sr. Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivakon Twitter

AUDUSD TRADING RESOURCES

OTHER TECHNICAL FORECASTS:

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2019-06-08 16:00:00