Daily Market Analysis from ForexMart (Fundamentals)

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EUR/USD Fundamental Analysis: October 8, 2018

The euro major pair persisted holding the level of 1.15 on Friday, which is likely to similarly happen today. The pair bounced up from the low range on Thursday and the support level was further held up by the bulls giving optimistic outlook in the future. Few updates added to bullishness of the currency while some markets, especially stable funds, have thought of the euro downtrend to be limited.

The bulls are able to prop up the support level and probably aim for further purchases to raise the price. It may not be easy for the dollar which is gaining more support because of the Fed, especially with its recent rate hike. Other than that, the dollar currency is also considered to be the good investment in times of crisis which has been for a long time. However, the price just did for a few times.

Furthermore, the price was further supported by the recent talk from the Fed chief Powell who evidently said that there could still be other rate hikes and further boost the dollar. Given this situation, the euro bulls carried took control and held the support area around 1.15 but it may not be easy to further bring the price up. There is not much economic news recently and the euro is likely to consolidate and range almost the rest of the day.

 

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EUR/USD Technical Analysis: October 9, 2018

The euro major pair closed on a bearish sentiment yesterday amid dovish pressure on the currency and escalating trade tensions. There are also some concerns related to Italy’s budget that was just approved last week. European equities also plunged down to multiple months low on Monday while Italian government bond rose to 4-year high. Italy’s deputy PM noted that anti-austerity perspective will get more powerful across the continent. The euro pair comes in flat and steady at the beginning of Tuesday far from 1.15 but close to the short-term lows.

It seems that the euro pair would extend its decline in reference to the chart while the dollar positions to go higher when the market return in full power and the US Treasury yields will surge up. The pair was not able to hold moderate gains steady above the bearish 20-SMA. Currently, a dynamic intraday resistance is found at 1.1500 with the momentum remains at a bearish slope lower than 100. Yet, the RSI indicator moved steadily above oversold area despite limited volume and insufficient momentum. In the technical aspect, the resistance level is at 1.1500, 1.1530, 1.1565 and support at 1.1460, 1.1420, 1.1475.

 

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EUR/USD Fundamental Analysis: October 10, 2018

The euro against the US dollar exhibited a sharp drop during the Tuesday session because of Italian policy news, as well as, deputy PM Salvin rhetorics in plans of maintaining the budget and EU rules are anticipated to change. A strong dollar added more concern, resulting to surge in US Treasury yields. However, the euro begins to take the lead later on as the dollar weakened in the market due to the drop in US bond yield after reaching record highs. Moreover, risk sentiment has just returned in the market giving a positive impact following a hawkish tone in the Wall Street in the global market.

In a technical aspect, a long-tailed Doji candle was observed, implying a sell-off from the September high of 1.1815. A bullish reversal would be confirmed if the spot closes this day higher than the Doji candle of 1.1503. Based on the chart, the descending line has been cleared and trades above the 50- and 100-EMA with the RSI at 55, siding with the bulls. The 4-hour chart shows a bullish RSI divergence. It seems that this will result positively on long-legged Doji candle yesterday, confirming a bullish reversal. Yet, there would be lesser tendency to turn bullish from bearish if the Italian bond yields surge in the European session.

 

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EUR/USD Fundamental Analysis: October 11, 2018

The euro rose during the Wednesday session. A breakout on the level of 1.15 indicates that there is a demand for the currency. There is a “risk on” move with US traders and drive momentum.

We have seen this scenario where just recently the euro got a sell-off and the North Americans will have a steer to move forward in later in the day, of course, taking note of riskier currencies. Similarly, this is how the trading with the S&P 500 futures market and other precious metals. Worries on Brexit will still be apparent, as well as the debt issue with Italy. These bring uncertainty to traders but the US traders will give attention to their own economy.

Trading on mornings around 9 am where there is a momentum on the oversold situation can be advantageous. Eventually this is likely to change its course but for now, it seems to be moving steadily. The euro pair is not that far from forming the bottom for long-term, where both the resistance and support were previously located last year. A psychologically important level was found at the resistance of 1.18 which seems to be the aim of buyers. Moreover, a lot of noise will likely be present and considering the pair, we can expect more buyers below. A breakdown below 1.14 could result in a sharp decline. Nevertheless, it is less likely to occur at the present time.

 

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EUR/USD Fundamental Analysis: October 12, 2018

The euro major pair climbed to the top at 1.1590 prior to the release of the US data, which was the highest since October 3. In regards to recent US president, Donald Trump, the statement on fed’s tightening and plunged down equities influencing weakness of dollar during yesterday’s trading. The pair reached the intra-day high 1.15992 since the US CPI and unemployment reports did not meet expectations, resulting in further bullishness of the trend since today is the last day of the week.

In the beginning of the Asian session, the pair broke the level of 1.16, reaching an intra-day and even the monthly high at 1.16103 from 1.1606, grew by 0.11%. With Japan’s equities proceed to trade in red, other major markets such as India, Singapore, and China sighted equities to have an optimistic price action. The US dollar has been trading at its lowest level in October against other markets on Friday while continue to lose in US Treasury yields bringing pessimistic sentiment on Wall Street. On Friday, the dollar traded at 95 against six major currencies from 96.15 monthly high on Tuesday.

 

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EUR/USD Fundamental Analysis: October 15, 2018

The euro against the US dollar resumes trading in a slow but steady pace while the market focuses on the dollar being unable to grow. Hence, the dollar was able to gain some decent profits since the start of the year but the euro and the pound were able to take their stand against the dollar. Meanwhile, this gives pressure on the dollar but uncertainty is still on the concern if the dollar could still get a lead.

The Fed is doing what it can to bring the dollar up but it is insufficient. They tried to break lower than 1.15 in the past few weeks but there have been strong buying of the pair and fails as it faced strong purchases and bounce over 1.15. The bulls also were not able to push the prices but still keep going that resulted in a flat in the past few weeks.

There are also concerns on US account deficit in a negative state for a long while which is anticipated to resume for medium-term which cannot be changed for the night despite government’s efforts. This adds pressure to the dollar with rising borrowing costs that will worry the dollar bulls in the medium term. For today, the US retail sales data adds volatility while the bulls are trying to take the lead.

 

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EUR/USD Fundamental Analysis: October 18, 2018

The euro major pair was kept at the daily lows after the release of FOMC minutes yesterday. It reached a new weekly low at 1.1510 close and hovered close to it after the release of Fed minutes. On Wednesday, the favor was in the dollar against a basket of currencies since the London trading time. Various local equities added to the political tensions and poor inflation have influenced the common currency, which in turn, benefits the US dollar. The dovish macro data has further given a bearish stand for the euro yesterday. Although the US housing data came in less-than-expected allowed some breathing in the market then the dollar continued its hawkish sentiment across the market.

By the end of the Wednesday session, the euro falls at the bottom below 1.1500 while there is another significant meeting of the EU. Consequently, the euro dropped during yesterday’s trading from the day high if 1.1580. Sellers were able to pick up momentum yesterday after the hawkish reports of the US FOMC minutes. In the economic calendar of the euro, the Wholesale Price Index at 06:00 GMT is anticipated to grow by 0.4% from 0.3% and another report on Swiss Trade Balance for September with a forecast of 2.482 billion from 2.134 billion. Nevertheless, the low-impact data is less likely to boost trading as traders are still on the edge waiting for hints on the EU’s EcoFin meeting in Brussels.

 

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EUR/USD Technical Analysis: October 19, 2018

The euro declined once again during the Thursday session after its bullish sentiment in the beginning. Yet, there is an important support level below which may be just for a short period of time. However, the shooting star pattern below drove the pair lower which something to get worried off. Hence, it is wise to wait on the sidelines, looking for a supportive candle or any bounce to make use of the support.

If the pair breaks lower than 1.1450 on the 4-hour chart, selling can be an option especially if it closes below it. Overall, we can be just grinding and taking a hint on the next move. There are various things to worry about such as the Brexit, the Italian crisis to name a few. Yet, traders should also keep their eye on the Treasury yields for the 10-year T-note from the US. It implies that the greenback can trade and take advantage of this situation with higher interest rate but would be not so good for the euro.

Volatility will present and then trades should be kept at small positions in case a successful breakout of the shooting star and then move further to 1.1530. Hence, there can be a drive to the upper channel and move towards 1.16.

 

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EUR/USD Fundamental Analysis: October 22, 2018

The euro major pair bounced up after a decline as it moved towards the support level of 1.1531and closed higher on Friday. However, there is a tendency for the pair to face risk and move higher in short-term. A bullish sentiment was established in the outside-day around the level of 1.1432 on Friday, indicating the pullback has stopped from the October 16 high at 1.1622. The European Union tries to lessen the deficit on budget expansion proposal and further strengthen the common currency on Friday. The European Economic Affairs Commissioner Pierre Moscovici said tension can be lessened through constructive conversations after the recent warning letter on criticizing fiscal plans of Italy.

The pair was able to find some sufficient support near the monthly lows at the area of 1.1435-30 and rose for almost 100 pips as a major part of weekly losses. The currency was further strengthened because of the dollar but lost some momentum after the rhetorics of Atlanta Fed President Raphael Bostic. On the other hand, the market received the news on Italy with its stable outlook that puts a limit on any sudden decline.

There is not much fundamental news that could affect trading while investors look for news that could affect the currency rates amid Italy policy concerns and Brexit updates. Moody’s decision was less-than-expected of investors. Thus, a relief rally on Italian markets may take place today. In case the spread between the 10-year Italy and German yields lessened by 300 bps, this could push the euro major pair higher and break through the level of 1.1535. The resistance levels of the pair would be 1.1535, 1.1575 and 1.1600 and the support levels would be at 1.1463, 1.1432, and 1.1400.

 

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EUR/USD Technical Analysis: October 24, 2018

The euro declined during the Tuesday session after the initial attempt of a rally. There is an important support level found below at 1.1450 and it seems that this will resume for some time, especially with all the activities happening in the European Union, we can anticipate testing this area will be around for a while.

After a rebound from the level of 1.1450, the euro dropped during the Wednesday session. This area has been significant previously. The price broke the level of 1.15 which seems to be acting as a resistance and a lot of things around the euro seems to be the problem. It could further go down when a fresh new low is broken. The current levels being tested are previously largely resistive in the past few months.

Retesting the current level resumes but a bit more weaker than a few weeks ago. Meanwhile, the support continues to be tested and traders should monitor this level which will likely be significant. In case the price breaks higher than the recent high, it would probably head further north. For now, the price is likely to move to and fro because of the Italian debt and political problems surrounding EU. There is a chance to short this pair unless we buy on fresh short-term rallies.

 

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EUR/USD Fundamental Analysis: October 26, 2018

The euro major pair has broken the level of 1.1400 and dropped to a new monthly low at 1.1355 yesterday after the ECB monetary policy meeting yesterday. They intend to keep the rates unchanged, which is not surprising after their remarks. Draghi said that he has confidence on both parties with Italy will reach an agreement and said that further stimulus is needed after inflation which will likely gain momentum by the end of the year despite weak activity. The pair was seen to have recovered for a bit during Draghi’s speech and reach as high as 1.1432 during the Asian market and headed towards 1.13. Currently, the pair is trading almost flat with a bearish tone as low as 1.1366 and declined by 0.07% on the day.

The European central bank confirmed of ending the asset purchase program in December despite the budget concerns of Italy, weak data output and Brexit deal negotiation. The euro did not pick up bid price after the Fed officials were not shaken the stock market was not shaken according to Fed vice chair, Richard Clarida, Thus, yield differentials are likely to further increase in favor of the greenback pair.

In regards to the situation of the trade war, a risk-off investor sentiment increases after the Chinese yuan declined to new 21-month low against the dollar, chances of a trade war between the US and China worsening. As fear in the market worsens, risky assets may lose their stand on the last trading session for the week.

 

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EUR/USD Fundamental Analysis: October 29, 2018

The euro major pair had a lot of bids on Friday amid the wide losses in the greenback. Yet, the technical analysis continues to be bearish in 5, 10 and 21-day exponential moving average (EMA) and heads south. Similarly, the 14-day Relative strength index (RSI) and MACD continue to have a bearish sentiment. Meanwhile, the stock markets continue to be on a defense today, putting a lot of bid for the dollar given the Shanghai Composite dropped by 1 percent in Asia. German Chancellor Merkel lost support in the Hesse elections, doubling the greens vote. As for the center-left threatened to leave the coalition.

The pair trading close to the flat level of 1.1395, dropping by 0.06% on the day. This is not good for the common currency given the weakness of Merkel as it limits the capacity of Brexit deal negotiation and with Italian budget crisis at hand. A strong bearish pressure is present after last week ended with a dovish sentiment. Hence, traders remained careful on the weekend. The European calendar remains to be subdued except for the recent publication of EU economic forecast and Finnish Consumer & Industrial confidence data. Nonetheless, these data are not likely to have a big impact on the trading activity.

The market anticipates the release of Core PCE Price index, PCE Deflector data and consumer spending data from the US which will bring volatility during the North American session. At the same time, expectations of Fed tightening was limited by the risk aversion in the US stocks that are anticipated to continue and appeals bidding for the EUR/USD pair.

 

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EUR/USD Fundamental Analysis: November 5, 2018

The euro major pair was strongly bid on Friday, taking advantage of the rising momentum because of the broad weakening of the US dollar amid lack of fundamental support but positive non-farm payrolls data. With the uncertainty caused by the US-China trade deal, the greenback was on the lead upon the opening of the trading session for the week. Most of the answers in the survey say that the Democrats will probably win back the house while the Republicans is highly likely to keep the Senate. Thus, Congress is still divided which is what the market anticipates.

The previous week ended in a downward trend following good two-way moves on Friday. It looks the price is set within the falling wedge pattern. In case of a Republican victory in both houses but it may require a fiscal stimulus while a breakout on falling wedge is still far from happening. However, a Democrat victory in both chambers may have an impact to the greenback and result to a falling wedge breakout and a change from bearish to bullish sentiment. As for today, the risk ahead by the midterm elections will probably keep the euro major pair in a flat line.

Furthermore, the reports from ECB add more pressure after another round of a long-term refinancing operation at LTRO, which in turn will support the European banks in the December meeting. Meanwhile, the problem on Italy’s budget hasn’t yet been resolved, as wells as, concerns on big sovereign debt holdings. There is no expected major economic report, therefore, the dollar will highly depend on the technical aspect prior to the release of the US ISM non-manufacturing PMI during the US trading session.

 

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AUD/USD Fundamental Analysis: November 6, 2018

Unless an unexpected statement comes out, not much reaction is expected to the RBA statement. The focus will be centered on the inflation of RBA and growth forecast. We can also expect on chances for tightening of lending requirement which may raise concern for some policymakers.

The Australian currency looks to be trading flat shortly prior to the release of the central bank of Australia decision and once again, it is anticipated to keep the cash rate at 1.5 percent. At the same time, traders are hoping for the central bank to stay positive but still gives a neutral policy outlook.

Forecast of the RBA on the employment forecast is being sought after because of the recent decline to 5%, as mentioned by NAB. Meanwhile, only minor short-term changes to GDP forecasts are anticipated and keep the inflation rate of the RBA forecast to be the same.

Today’s report is significant but most of the investors will probably focus on the US midterm election this Tuesday.

 

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EUR/USD Fundamental Analysis: November 7, 2018

The euro major pair is a continuous changing across the Asian market session as US midterm elections would be on headlines. A steady support was found at the level of 1.14 but continues to move up and down with elections being the US headlines. A sudden decline occurred by 70 pips in early Asian market from highs of 1.1473 to 1.1398 with the probability of Democrats taking the lead and if Democrats win, the dollar will likely bounce off from a sudden decline. As of now, the Euro major pair is trading at 1.1463, gaining 0.33% on the day.

Most of the analysts, as well as investors, expect for a split result on the election, which resulted in the probability of the house majority to push through investigations of Trump’s administration ties with Russia and financial affair while the Republican Senate is struggling to pass any new major legislation Consequently, the pair turned within the range at 1.145 and anticipated to continue trading in a slow range price action until final results are announced. On the technical analysis, it seems that the euro major pair breaks through to exit a falling wedge, changing from a bearish to a bullish trend on the daily chart. Bullish patterns are executed between the 5-day and 10-day SMA, ascending 50-, 100-, and 200-hour SMAs. Higher lows are also achieved on the hourly and 4-hour chart and indicators are leaning on a bullish sentiment.

 

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EUR/USD Fundamental Analysis: November 8, 2018

The euro major pair faced a bearish drop after the result of split congress which is already anticipated by the market and momentum of the pair starting to become insufficient after the final outcome was announced. The Republicans kept the Senate and Democrats took the House. Although, House will probably pressure Trump concerning taxes whom he pledged to fight back with investigations being out. Meanwhile, the eurozone resulted in a positive macro data which had no impact on price action as momentum yesterday were dominated by the US elections results and the pair has had important gains. Yet, the US dollars recovered in the broad market during the Asian session, as well as late American hours following a major loss against euro yesterday.

There is a probability for the dollar to become dovish if the policy statement shows a sensitive reaction to the recent declines in the stock market. Looking at the technical perspective, the euro against the US dollar 25 delta risk reversals grew to -0.575, which was the peak since August 1. The means that the demand or the implied volatility premium for the cheaper money of euro is presently at the lowest in more than three months. The falling demand for the bearish bets of the euro would mean that investors are anticipating for a stronger recovery rally for the euro major pair. Meanwhile, the greenback starts to kick-off on the 4-hour and daily chart implying the bullish momentum to remain intact, demonstrated that price continues to move higher than the level of 1.14.

 

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EUR/USD Fundamental Analysis: November 9, 2018

The euro major pair has been moving steadily after the release of the FOMC report since there is a bearish pressure on both currencies. Aside from rising tensions in Europe, the hawkish sentiment remains with market expectations that adds pressure on the common currency. Various political tensions such as Brexit, tensions between Brussels and Rome are anticipated to heighten tension in the next few weeks, yet Brexit is likely to move in a sluggish pace. The issue between EU and Italy influence the spread between Italy and Germany to 300 bps. Other than that, the two major coalition partners in Italy proceeds to take action in limiting immigration that also affects the euro across markets.

These economic events limit the progress of the euro while in the US, uncertainty has pushed investors to side on the US-dominated assents and the greenback. The EUR/USD pair grew modestly after the release of the FOMC statement and rise to 1.1409. It declines immediately and broke the previous slows. The price declined below 1.1350 during the Asian trading session as the US central bank kept the funds' rate at 2.25% to 2.00. At the same time, the recent statement remained the same from the September meeting, providing a solid bullish support. Meanwhile, the Italian bond yields yesterday night after the EU commission’s forecast saying that Italy has undergone inadequate and partial analysis.

 

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GBP/USD Fundamental Analysis: November 12, 2018

Brexit remains to be the center for today’s Asian session since UK Prime Minister Theresa May canceled the emergency meeting to approve the Brexit deal this week. The meeting was postponed but the resistance from the cabinet remains strong, added to Brussels concerns, which delays the Brexit talks and lessen the possibility of the expected meeting in November. In this case, the Sterling bulls are on the less favorable situation. Market hopes for a miracle to relieves the pressure amid the heavy headlines with the Brexit as the main concern over the weekend causing more tension in the market. It seems that the market declined by 0.46% from this morning price level of 1.2911.

There is no major economic event for the UK, hence, traders can expect for thin trading volumes given that there is less US money market for the long Thanksgiving weekend but Tuesday seems to offer UK Average Earnings and GBP/USD traders are looking for something an early event to the headlines prior to major economic data. The dollar was strengthened by last week’s gains and grew to a 16-month high on Monday as traders anticipate for the US Federal Reserve to tighten monetary policies and the bullish tone of the greenback with the ongoing Brexit talks to further escalate the bullish situation. As for the technical perspective, the implied volatility premium grew sharply while an increasing demand for the British pound puts a bearish pressure while traders are anticipating for a much bigger decline of the currency. The risk appetite has also lessened during the Asian trading session as the EU’s situation worsened.

 

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EUR/USD Fundamental Analysis: November 13, 2018

The euro influenced the appreciation of greenback during Monday trading session with political uncertainty affecting the European market. The euro major pair dropped to 1.1239 soon after the opening of the London session in the background of tension with the Italian budget as rejected by the EU commission in the previous week. The Italian government submitted again a fiscal plan in correspondence with the EU rules and risk an economic sanction. Yet, it seems that there is no intent to change the budget. The pair is declining across the European and North American hours reaching a fresh 16-month low due to the bearish pressure from both sides of Atlantic.

Lack of progress in the Brexit negotiation adds pressure on the bearish tone to the common currency added to the Italian budget concerns. The White House also intends to reconsider auto tariffs against Europe which gives a dovish sentiment for the investors, further adding a bearish pressure to the common currency in the future. Reconsideration of tariffs on the European market despite ending it a few months after meeting between the US and Europe, which can be because of various reasons such as the global trade war and renewed Iran sanctions and criticism of “America first” in the Trump administration.

There are bids for the EUR/USD pair in Asia and an optimistic view of the renews US-China trade. Yet, the change in budget still questions the Italy that could affect the spread between the high-spend budget to the European Union today will likely increase the spread between the Italian 10-year government bond yield and its German counterpart to the recent high of 325 basis points. Om case that market expectations. If Italy submitted an unchanged budget for euro, traders can anticipate the resumption of a bearish pressure. As for the fundamental data, investors are eyeing on the German CPI data scheduled today which is expected to remain the same. However, in case it turns out positive, this could drive momentum for a relief rally on the euro major pair.

 

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EUR/USD Fundamental Analysis: November 16, 2018

The euro major pair did not have an optimistic trading overnight with UK ministers exiting their roles attesting as a protest in the negotiation deal of Prime Minister Theresa May with the EU not meeting UK’s electorate vote. Being against the authority of Theresa May raising uncertainty in the European politics that further raises the chance for the Brexit to be no deal that affects both economies. Nevertheless, the euro major pair rise despite higher forecast of 0.8% by the U.S. Census Bureau US retail sales data in October, higher than the 0.5% market expectation. Meanwhile, the action moves with the reversal on Wall Street that resulted in a rally of the euro and retreating of long yen as the EUR/JPY pair recovered.

Moreover, the greenback also received more bearish pressure after the profit taking on the trade talk news between the US and China, giving America the lead and raising risk appetite. Investors now wait for the speech from ECB president Draghi and a drive on strong bid can take place if Draghi is able to act on the Italy budget crisis and confirm plans on ending the QE program. If Draghi becomes heedful, the price may drop below 1.30 and bet on a delay of the rate hike in 2019. The Eurozone CPI data is anticipated to be released, as well as the data on Industrial production.