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Gold prices took a break

4/19/2017

 

On the daily chart of gold, there is a desperate struggle for an important level $1,286. There is an intermediate 127.2% target in the AB = CD pattern. The bulls' win will lead to the continuation of the rally. In contrast, their defeat can lead to the development of the correction towards $1,260.

 

Screenshot_2017_04_19_06_45_17.png

 

On the hourly chart of gold, buyers need to test the upper border of the ledge in the "Splash and Ledge" pattern ($1,292). The drop of quotes below the support at $1,278 per ounce will activate the expanding wedge pattern and can potentially lead to the pullback towards $1,260.

 

Screenshot_2017_04_19_06_45_33.png

 

Recommendations: hold longs (BUY $1278 SL $1263 TP1 $1312 TP2 $1340),

 

BUY 1260 SL 1245 TP 1300.

 

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Key option levels for Wednesday, April 19th

4/19/2017

 

If you have any questions or requests fill out the feedback form.

 

USD/JPY

 

USDJPY(109).png

 

Main trend Short-term period Medium-term period

Bullish Bearish

Changes in the open interest + 3 438 ? + 1 055 ?

Closest resistance levels 108.80; 109.21; 109.49; 109.83

Closest support levels 108.05; 107.82; 107.63; 107.38

Trading recommendations

Baseline scenario Long USD/JPY above 108.80 or from 108.65, with target points at 109.21 and 109.49

Alternative scenario Moving below 108.05 can be considered as a signal to Sell the pair, with target at 107.82 and 107.63

 

 

USD/CAD

 

USDCAD(141).png

 

Main trend Short-term period Medium-term period

Bearish Bullish

Changes in the open interest + 13 ? + 1 072 ?

Closest resistance levels 1.3437; 1.3484; 1.3548; 1.3624

Closest support levels 1.3405; 1.3376; 1.3335; 1.3308

Trading recommendations

Baseline scenario Short USD/CAD below 1.3405, with the target points at 1.3376 and 1.3335

Alternative scenario Moving above 1.3437 can be considered as a signal to Buy the pair, with target at 1.3484 and 1.3548

 

 

AUD/USD

 

AUDUSD(12).png

 

Main trend Short-term period Medium-term period

Bearish Bearish

Changes in the open interest + 0 + 9 ?

Closest resistance levels 0.7538; 0.7564; 0.7588; 0.7608

Closest support levels 0.7513; 0.7490; 0.7460; 0.7424

Trading recommendations

Baseline scenario Short AUD/USD below 0.7513 (or from 0.7538), with the target points at 0.7490 and 0.7460

Alternative scenario Moving above 0.7538 can be considered as a signal to Buy the pair, with target at 0.7564 and 0.7588

 

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USD/CAD: bears faced with the wedge

4/20/2017
 
On the USD/CAD daily chart, there was a false breakout of the lower border of the upward trading channel. The failure of the bears to keep quotes above the level of 1.3306 showed their weakness. If the bulls manage to test the diagonal resistance in the form of the upper border of the downward medium-term channel, there might be a continuation of the rally. 
 
Screenshot_2017_04_20_08_03_27.png
 
On the USD/CAD hourly chart, the expanding wedge pattern was formed. A rollback of prices towards 23.8%, 38.2% and 50% levels of the 4-5 wave can be used for the opening of long positions. But first, the point 5 should be formed. 
 
Screenshot_2017_04_20_08_03_43.png
 
Recommendations:
 
BUY 1,3425 SL 1,337 TP 1,3575
 
BUY 1,3385 SL 1,333 TP 1,357.
 
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EUR/USD: bulls took a break

4/20/2017

 

On the EUR/USD daily chart, there was a rebound of quotes from the lower boundary of the medium-term rising channel with the subsequent breakout of the upper boundary of the short-term downward channel. Bulls managed to settle above the important level of 1.0695. As a result, an internal bar was formed. A breakout of its upper border near 1.0738 will create prerequisites for the continuation of the rally. In contrast, a successful test of the support at 1.0695 will allow bears to regain their control over the pair.

 

Screenshot_2017_04_20_08_02_53.png

 

On the EUR/USD hourly chart, the exit of quotes from the triangle followed by the activation of the inverted Shark pattern increased the risks of implementation of 88.6% target (1.087). But first, the bulls need to break the resistance at 1.0738. 

 

Screenshot_2017_04_20_08_03_11.png

 

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Key option levels for Thursday, April 20th

4/20/2017

 

If you have any questions or requests fill out the feedback form.

 

EUR/USD

 

EURUSD(167).png

 

 

Main trend Short-term period Medium-term period

Bearish Neutral

Changes in the open interest + 66 285 ↑ + 210 054 ↑

Closest resistance levels 1.0785; 1.0808; 1.0846; 1.0872

Closest support levels 1.0738; 1.0688; 1.0651; 1.0603

Trading recommendations

Baseline scenario Short EUR/USD below 1.0738 or from 1.0785, with target points at 1.0688 and 1.0651

Alternative scenario Moving above 1.0785 can be considered as a signal to Buy the pair, with target at 1.0808 and 1.0846

 

 

 

 

USD/JPY

 

USDJPY(110).png

 

Main trend Short-term period Medium-term period

Neutral Bearish

Changes in the open interest + 65 ↑ + 105 ↑

Closest resistance levels 109.33; 109.58; 109.89; 110.27

Closest support levels 108.96; 108.45; 108.08; 107.86

Trading recommendations

Baseline scenario Short USD/JPY below 108.96, with target points at 108.45 and 108.08

Alternative scenario Moving above 109.33 can be considered as a signal to Buy the pair, with target at 109.58 and 109.89

 

 

AUD/USD

 

AUDUSD(13).png

 

Main trend Short-term period Medium-term period

Bearish Bearish

Changes in the open interest + 92 ↑ + 120 ↑

Closest resistance levels 0.7531; 0.7552; 0.7581; 0.7617

Closest support levels 0.7516; 0.7485; 0.7458; 0.7437

Trading recommendations

Baseline scenario Short AUD/USD below 0.7516, with the target points at 0.7485 and 0.7458

Alternative scenario Moving above 0.7531 can be considered as a signal to Buy the pair, with target at 0.7552 and 0.7581

 

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GBP/USD: pound drew an inner bar

4/21/2017

 

On the GBP/USD daily chart, there is a consolidation after a sudden rebound. After a bar with a wide range, two inner bars were formed. These are the boundaries of the trading range of 1.277-1.286. A breakout of the support will increase the risks of the correction towards 1.272 and 1.259. A successful test of the resistance will lead to the continuation of the rally.

 

Screenshot_2017_04_21_07_33_23.png

 

On the GBP/USD hourly chart, the "Splash and ledge" pattern and triangle were formed. A breakout of the borders of the triangle and exit of quotes from the consolidation range of 1.277-1.285 will allow us to determine a further movement of the pair. 

 

Screenshot_2017_04_21_07_33_38.png

 

Recommendations:

 

SELL 1,277 SL 1,2825 TP 1,26,

 

BUY 1,285 SL 1,2795 TP 1,305. 

 

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NZD/USD: bulls were spooked by their own audacity

4/21/2017

 

On the NZD/USD daily chart, the bulls managed to kick the quotes out of the downward trading channel. But the bears were strong enough not to allow the bulls to move higher. There is a consolidation range within 0.696-0.705  levels. A breakout of its lower border will allow us to count on the implementation of 113% and 161.8% targets in the Crab and AB = CD patterns.

 

Screenshot_2017_04_21_07_33_52.png

 

On the NZD/USD hourly chart, the expanding wedge pattern has been formed. A rollback towards 38.2% and 50% levels from the 4-5 wave can be used for opening short positions.

 

Screenshot_2017_04_21_07_34_06.png

 

Recommendations:

 

SELL 0,701 SL 0,7065 TP 0,691,

 

SELL 0,702 SL 0,7075 TP 0,692,

 

BUY 0,7045 SL 0,699 TP 0,715. 

 

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Key option levels for Friday, April 21st

4/21/2017

 

If you have any questions or requests fill out the feedback form.

 

EUR/USD

 

EURUSD(168).png

 

Main trend Short-term period Medium-term period

Bearish Neutral

Changes in the open interest + 131 841 ? + 576 006 ?

Closest resistance levels 1.0737;1.0785; 1.0808; 1.0846

Closest support levels 1.0720; 1.0686; 1.0650; 1.0603

Trading recommendations

Baseline scenario Short EUR/USD below 1.0720 or from 1.0737, with target points at 1.0686 and 1.0650

Alternative scenario Moving above 1.0737 can be considered as a signal to Buy the pair, with target at 1.0785 and 1.0808

 

AUD/USD

 

AUDUSD(14).png

 

Main trend Short-term period Medium-term period

Bearish Bearish

Changes in the open interest + 95 ? + 21 ?

Closest resistance levels 0.7549; 0.7590; 0.7622; 0.7661

Closest support levels 0.7515; 0.7480; 0.7454; 0.7421

Trading recommendations

Baseline scenario Short AUD/USD below 0.7515, with the target points at 0.7480 and 0.7454

Alternative scenario Moving above 0.7549 can be considered as a signal to Buy the pair, with target at 0.7590 and 0.7622

 

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MORNING BRIEF FOR APRIL 24

06:39 24.04.2017

 

The biggest winners from the French elections were probably the pollsters who managed to forecast the outcome of the runoff. Let’s pat them on the back; they did a great job having predicted that centrist Emmanuel Macron will face off against far-right National Front leader, Marine Le Pen on May 7. The euro jumped the most in a month in Tokyo session. Exchange rates across the trading desk moved sharply in the thin liquidity conditions. The yen retreated; volatility ebbed, and gold slumped significantly; most of the major currencies opened with the gaps.  

 

82U1X18ZF.png

 

Source: Bloomberg.com

Then, we saw a gap filling across the trading desk. EUR/USD tumbled to 1.0820 from 1.0917 hit in the early trading hours. Towards the end of the week, the single European currency may extend its losses as European Central Bank’s ultra-loose stance is set to remain unchanged at the upcoming monetary policy meeting.

USD/JPY was one of the biggest gainers after the French election results were published. The pair rallies to 110.60, then retraced to 109.80 as traders turned to rising tensions on the Korean peninsula once French election tumult disappeared. There is talk that North Korea may test an intercontinental ballistic missile or even nuclear device tomorrow celebrating the 85th anniversary of the founding of its military forces. The yen may flex its muscles throughout the day; it may extend its gains to at least 108.85 (near 200-day MA and 50% Fibo level traced from last year low).

Aussie fell from its earlier high of 0.7585 to 0.7535. It may slide further towards 0.7520 (100-day MA). An additional drop may come after Trump delivers more details on his pro-growth and tax policies.

The British pound was also a loser of the Asian session. It dropped to 1.2778 after rallying to 1.2845. UK PM minister Theresa May will likely have to negotiate new EU-UK terms of cooperation/trade with a ?lose-knit, team minded Merkel/Macron team. And these two EU leaders will be the hard nuts to crack. The economic calendar for the pair is light today.

Loonie gained some strength in Tokyo morning. USD/CAD dipped to 1.3460 on the session. There is a scope for extension its gains.  Oil prices recouped of last week’s hefty losses as the OPEC-led committee was said to back prolonging supply cuts. Crude oil futures will be vulnerable this week as Trump is set to sign several executive orders on energy and the environment this week whicha would make it easier for the US to develop energy on and offshore. In the preceding weeks, US production and inventory growth was the major headwinds for oil prices. 

 

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USD/JPY: BULLS BENEFITED FROM THE GAP FORMATION

06:57 24.04.2017

 

On the USD/JPY daily chart, the bulls with the help of a gap reached the resistance at 110.2. It corresponds to the lower boundary of the 110.2-111.55 consolidation range. As a result, the Wolf Waves pattern was formed. A breakout of 110.2 and 111.15 levels can lead to the implementation of 112.5 and 112.9 targets.

 

Screenshot_2017_04_24_06_58_31.png

 

On the USD/JPY hourly chart, there is a formation of the Dragon reversal pattern. Update of the high of today's trading day (110.55) or closing of the gap with a subsequent rebound from the upper boundary of the previous downward trading channel will create the prerequisites for opening long positions.

 

Screenshot_2017_04_24_06_58_48.png

 

Recommendations: BUY 110,55 SL 110 TP 112,5, BUY 109,5 SL 108,95 TP1 111,45 TP2 112,5. 

 

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USD/CHF: FRANC IS TRYING TO HIT PARITY LEVEL

07:03 24.04.2017

 

On the USD/CHF daily chart, the "bears" failed to settle down below the important support at 0.9945. It was a signal of their weakness. The bulls can realize the Wolf Waves pattern. For this to happen they need to rise above the parity level, and then successfully test the resistance at 1.004.

 

Screenshot_2017_04_24_07_03_21.png

 

On the USD/CHF hourly chart, after the realization of the downward triangle, the expanding wedge reversal pattern was formed. To complete it, the high at point 3 (parity) should be updated. It will be a basis for opening long positions.

 

Screenshot_2017_04_24_07_03_37.png

 

Recommendation: BUY 1, SL 0,9945 TP 1,002. 

 

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EUR/USD: HUGE "BREAKAWAY GAP"

07:29 24.04.2017

 

24-4-2017-EUR-H4.png

 

We’ve got a huge “Breakaway Gap”, so the downtrend has been broken. Bulls faced a resistance at 1.0872, so we’ve got a bearish correction. Therefore, there’s an opportunity to have another upward price movement towards the next resistance at 1.0910, which is strengthened by the “Wedge’s” upper side. If a pullback from this level happens, the pair is likely going to test a support at 1.0759 – 1.0736.

 

24-4-2017-EUR-H1.png

 

The last downward “Pennant” has been broken, so we’ve got a “Breakaway Gap”. Also, there’s a “V-Bottom” pattern, so the market is likely going to test the nearest resistance at 1.0905 – 1.0910. If we see a pullback from this area, there’ll be an opportunity to have a decline towards a support at 1.0777 – 1.0737.

 

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GBP/USD: BULLISH "PENNANT"

07:35 24.04.2017

 

24-4-2017-GBP-H4.png

 

The price is consolidating between the levels 1.2911 – 1.2774. Also, we’ve got a “Pennant”, so the market is likely going to achieve the closest resistance at 1.2911 – 1.2945 in the short term. If we see a pullback from this area, there’ll be an opportunity to have a bearish correction in the direction of the nearest support at 1.2774 - 1.2727.

 

24-4-2017-GBP-H1.png

 

There’s a consolidation, which is taking place between the nearest resistance at 1.2865 and the 34 Moving Average. At the same time, we’ve got a “Pennant” pattern, so bulls are likely going to test the next resistance at 1.2900 – 1.2911. However, if a pullback from these levels be on the table, bears will probably try to reach the 55 Moving Average.

 

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OIL MARKET OVERVIEW

10:24 24.04.2017

 

Oil prices regained their footing on Monday following substantial losses they experienced last week as an OPEC-led committee pledged to back extension of the supply cut deal and as investors favored riskier assets after the first round of the election. Emmanuel Macron securing a spot in the second round avoided the horrific scenario of a contest between anti-EU Le Pen and the far-left Melenchon. The threats for the Euro area had been eliminated, and investors embraced more risk. A collective sense of relief that the Eurozone is over another hurdle resulted in a short-term risk-on rally.

U.S. West Texas Intermediate (WTI) crude oil futures jumped above $50 from $49.18 seen last Friday.

Brent oil futures peaked to $52.95 after following $51.55 last week.

To the present day, OPEC and non-OPEC members struck a tentative agreement to sideline their production beyond June, but there is still no consensus on the timing of the agreement and countries’ individual commitments. The next meeting of the OPEC members will be held in Vienna on May 25.

Just a small reminder, OPEC countries and other major oil producers are committed to reducing oil stockpiles and all signatory parties participating in the output cut deal are committed to restoring the market’s stability in November, 2016.  Up to date, compliance with the cuts has improved in March compared to the previous month (compliance to supply curbs was more robust in March (98%) compared to February’s 90% estimate).

As energy ministers of the output deal cut signatories remind the markets about their intentions to curb oil supply, the oil prices will be heading upwards. Refusals to adhere to the cuts would become their headwinds.

The current oil rally will likely be faltered once again as we see more signs of the US crude oil production revival.

Last week, U.S. drillers added 5 rigs to oil fields, bringing them up to the count of 688, according to data from Baker Hughes Inc.

 

86Jl3fqWM.png

 

US crude stockpiles fell last week said Energy Information Administration last Wednesday. But it happened mainly because US refineries increased their output (the gasoline stocks have increased).

Another headwind for oil futures might be the issuance of the Trumps executive orders on energy and the environment later this week. The orders will make it easier for the US develop energy industry offshore, and will lead to increased production of US crude oil. 

 

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EUR/USD: BULLISH "WINDOW"

13:00 24.04.2017

 

2404eurusdH4.png

 

There’s a new “Window”, but we’ve got a bearish “Belt Hold” at the local high. Nevertheless, the middle of the last huge black candle is likely going to act as a resistance. If a pullback from this level happens, there’ll be an opportunity to have a decline towards today’s “Window”.

 

2404eurusdH1.png

 

We’ve got a “Three Black Crows”, which has been confirmed. Also, the price has tested the upper side of today’s “Window”. Therefore, the market is likely going to test the closest resistance level during the day.

 

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USD/JPY: BULLS GOING TO TEST LAST HIGH AGAIN

13:03 24.04.2017

 

2404usdjpyH4.png

 

A new “Window” has just arrived, but the price faced a resistance on the 55 Moving Average. Also, we’ve got a “Belt Hold”. If this pattern confirms and a pullback from the 89 Moving Average happens, there’ll be an opportunity to have a local decline.

 

2404usdjpyH1.png

 

The last “Belt Hold” has been confirmed enough. However, there’s a bullish “Hammer”, so the market is likely going to test the local high once again. If any reversal pattern arrives afterwards, bears will probably try to achieve today’s “Window”.

 

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EUR/USD: WAVE 2 ON THE WAY

14:45 24.04.2017

 

Image20170424173754001.png

 

Wave 2 has been continued, so there’s a new local high. Previously, we’ve got a wedge pattern in wave 1. The main bullish target is 5/8 MM Level, which could be a departure point for wave 3.

 

Image20170424173725001.png

 

As we can see on the four-hours chart, there’s a possible diagonal triangle in wave [c] of 2. Wave (iii) has been ended near 7/8 MM Level. Therefore, bears are likely going to deliver wave (iv) in the short term.

 

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EUR/NZD RISING INSIDE INTERMEDIATE IMPULSE WAVE (3)

15:41 24.04.2017

 

EUR/NZD rising inside intermediate impulse wave (3)

Next buy target - 1.5700

EUR/NZD continues to rise inside the intermediate impulse wave (3) – which started earlier from the support area lying between the key support level 1.5100, lower daily Bollinger Band, 38.2% Fibonacci correction of the sharp upward impulse (1) from February and the 50-day simple moving average. The price earlier broke the daily down channel from March – which accelerated the active impulse wave (3).

EUR/NZD is expected to rise to the next buy target at the key resistance level 1.5700 (which reversed the price in last October, as can be seen from the daily EUR/NZD chart below).

 

8c97zzJUG.png

 

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EUR/USD: EURO NEEDS A CORRECTION

05:15 25.04.2017

 

Technical levels: support – 1.0800; resistance – 1.0900.

Trade recommendations:

1. Sell — 1.0860; SL — 1.0880; TP1 — 1.0800.

2. Buy — 1.0800; SL — 1.0780; TP1 — 1.0900; TP2 – 1.0930.

Reason: bullish Ichimoku Cloud, but Senkou Span A and B are horizontal; a cancelled golden cross of Tenkan-sen and Kijun-sen, the lines are horizontal; the prices are under strong resistance on daily timeframe; the local market is overbought

 

8q0Fc3eo6.png

 

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AUD/USD: BULLS ARE STOPPED BY CLOUD

05:16 25.04.2017

 

Technical levels: support – 0.7550; resistance – 0.7570.

Trade recommendations:

1. Sell — 0.7540; SL — 0.7560; TP1 — 0.7470; TP2 — 0.7430.

Reason: bearish Ichimoku Cloud, horizontal Senkou Span A and B; a new golden cross of Tenkan-sen and Kijun-sen, but the lines are horizontal; the prices are under strong resistance of the Cloud.

 

8q1WVr1Ge.png

 

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MORNING BRIEF FOR APRIL 25

06:26 25.04.2017

 

Safe-haven assets, including the yen and gold, are still under pressure as investors whet their appetites for the riskier assets after centrist Macron qualified for the May 7 runoff alongside far-right nationalist Marine Le Pen. While polls show, Macron winning the May 7 contest by 20-30% points, the risk for Macron that voters will be turned off is still in place especially after his and his supporters’ drinking spree at La Rotonde resto. It was a huge mistake to make ahead of the second round of the election, according to Thomas Guenole, professor politics at the Sciences Po institute. “Macron needed to show himself as a real statesman and instead he comes across as a child king,” the academic said.

 

8rdOaib2E.jpg

 

EUR/USD was trading a bit lower at 1.0870 after jumping to as high as 1.0935 on Monday. There is a room for a further upside towards the psychological level at 1.1000.

While markets are still lingering in the glow of relief after the French election in the first half of this week, the second one will likely put Donald Trump in the forefront. The US President is poised to unveil his tax reform plan on Wednesday that should be a significant driver for the markets. Also, the administration flagged that it is ready to fight desperately for its planned Mexican border wall. It seems that Trump’s team is straining to demonstrate progress achieved on key campaign promises like money for a border wall, increased military spending, cut tax. But any of these measures require bipartisan support, and Democrats refuse to budge raising the prospects for a shutdown.

Today may take the heat off as there should be a very light day for economic data. North Koreans may make some waves though as they might test an intercontinental ballistic missile or nuclear device today celebrating the 85th anniversary of the Korean People’s Army.

The Canadian dollar was the biggest loser of Tokyo session. It fell after the US announced new duties averaging 20% on Canadian softwood lumber imports. USD/CAD spiked to the highest level (1.3560) last seen in December 2016. On the upside, there is a sturdy resistance at 1.3600.

Australia and New Zealand are closed for the Anzac Day holiday.

Aussie edged down to 0.7550 after hitting 0.7570 on Monday. AUD/USD will likely be trading sideways in the upcoming sessions having moved into a consolidation phase. On the downside, we see several supports at 0.7520, 0.7430 (the lower border of consolidation range). If there is a rebound, the prices might face a hurdle at 0.7610 (the upper border of the range). Tomorrow’s focus will be on the Australian CPI figures which are expected to confirm that the pronounced pulse of inflation in Australia is still weak. This might become a drag for AUD.

USD/JPY is hovering around 110.10 level. The technical outlook for the pair is neutral despite the salient surge seen on Monday. A daily closing above 110.60 would open the way towards 111.55. In the early trading hours, we heard some interesting comments from deputy governor of the Bank of Japan Iwata, saying the BoJ is conducting simulations on the exit strategy, but not willing to disclose the facts to the press.

In commodities markets, oil prices traded higher to almost $52.30, although gains were capped by fears that the OPEC members might fail to extend output cuts beyond June 30, as Russia claimed that it will lift output if the deal on curbs lapses.

 

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GOLD CAME ACROSS THE WEDGE

06:49 25.04.2017

 

On the daily chart of gold, the bulls failed to settle down above the important resistance level of $1,287 per ounce. There might be a pullback towards $1,260 and $1,250. To restore the uptrend, buyers need to update the April high. If they succeed the target 200% in the AB=CD pattern will be fulfilled. 

 


 

On the hourly chart of gold, the expanding wedge pattern has been formed. The correction towards  38.2%, 50% and 61.8% from the wave 4-5 can be used for the formation of short positions. But we should bear in mind, that there are positions of large buyers near $1,250. 

 

Screenshot_2017_04_25_07_42_22.png

 

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EUR/USD: BULLS GOING TO TEST MONDAY'S HIGH

07:03 25.04.2017

 

25-4-2017-EUR-H4.png

 

There’s a “V-Top” at the last high, so the price is consolidating between the levels 1.0872 – 1.0828. Therefore, bulls are likely going to test the nearest resistance at 1.0918. If a pullback from this level happens, there’ll be an opportunity to have a decline towards a support at 1.0759 – 1.0736.

 

25-4-2017-EUR-H1.png

 

We’ve got a “Pennant” pattern, so the market is likely going to reach the next resistance at 1.0905 – 1.0918. However, if we see a pullback from this area, bears will probably try to achieve the 89 Moving Average, which could act as a support.

 

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GBP/USD: "PENNANT" PUSHING PRICE HIGHER

07:08 25.04.2017

 

25-4-2017-GBP-H4.png

 

The market is consolidating between the levels 1.2911 – 1.2774. Also, there’s a “Pennant” pattern, so the pair is likely going to move up towards the nearest resistance at 1.2945. At the same time, if we see a pullback from this level, there’ll be a chance to have a decline in the direction of the closest support at 1.2774 – 1.2727.

 

25-4-2017-GBP-H1.png

 

The price is moving up and down in a range of the “Pennant”. The 34 Moving Average is acting as a support. In this case, the market is likely going to test the next resistance at 1.2911 – 1.2945 during the day. If a pullback from these levels happens, bears will probably try to reach the 55 Moving Average.

 

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EUR/USD SHORT-TERM AND LONG-TERM FORECASTS FROM BANKS

08:37 25.04.2017

 

Now, when political risks amid French presidential elections have faded, euro traders will focus on the Thursday’s European Central Bank monetary policy meeting and press conference. The market participants will be eager to know whether the ECB officials announce the withdrawal of the strong support they have lent to the Eurozone economy over recent years or not. It seems that they won’t do it and say that they are happy with their current monetary policy settings. In the face of a still subdued inflation outlook, prudence will prevail, the ECB won’t introduce any changes to its forward guidance and announce a slow pace of tapering in the next year, no cuts in the near-term future.

The major banks would probably agree with the aforementioned scenario for the ECB meeting. In the remaining part of the article, you may find some clues the banks’ strategists give you on the further direction of the euro.

The Bank of Tokyo-Mitsubishi UFJ

The banks' strategists note that the result of the first round of the French presidential elections was in line with markets’ expectation of a quite limited rally. They believe that the elections won’t have much further impact on the euro in the near-term.

In the longer term, the euro will be supported by the strong economic fundamentals coming from the Eurozone countries. The improving economic outlook of the EMU countries will prompt the ECB officials to adopt a less dovish monetary policy stance in the next quarters and don’t renege on their promise to taper QE at the end of the year.

The long-term outlook of the BTMU EUR/USD is a gradual drift higher towards 1.1200 by year end.

Societe Generale

SocGen analysts believe that EUR/USD bearishness is behind us and that there is a development of the uptrend.

The reasons behind the aforementioned conclusion:

The tightening gap between the US Treasury/Bund yield differentials. SocGen strategists note that the low in EUR/USD were registered when real yields were down at -120bp in Germany, and +50bp in the US. The following divergence is not relevant anymore; the gap narrowed to 105bp by the end of the past week. If the US/German real yield differential continues narrowing, the bank counts on the EUR/USD appreciation towards 1.24.

Additional tailwind for the euro – the Euro Area’s current account surplus.   

Credit Agricole

The European single currency rallied sharply in response to the market-friendly results of the first round of the French elections.

EUR/USD could stay for a quite long time at its current levels near the high of the year.

The further upside will depend on how constructive President Draghi will be while presenting the ECB’s updated outlook for the Eurozone on this Thursday.

Danske

Danske Bank analysts expect a slightly dovish tone from the ECB President on Thursday,

They believe that Draghi will probably reiterate the phrase he dropped earlier “a reassessment of the current monetary policy stance is not warranted at this stage.” This would be perceived as dovish and send EUR lower.

Danske believes the change in ECB’s forward guidance on policy rates will probably be introduced at the CB’s meeting in June.

 

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