ForexMart's Daily Market Analysis

[obasifxmart]

EUR/USD Fundamental Analysis: November 21, 2018



The euro major par declined abruptly during the US session and reached a fresh new low at 1.1359. The greenback has strengthened across the market in the last hours of trading especially equity in Wall Street paired against yen and euro and consolidated losses due to a bearish decline. Earlier, the price peaked at 1.1472, which has been the highest since November 7 but pulled back and lost momentum, resulting in a correction and lose over 100 pips. The risk-off sentiment yesterday lead the financial markets with the greenback standing strongly against the common currency as well as other main competitors

The decline is not just about the risk-off sentiment with the euro which also had its weakness that was primarily because of the tension between EU Commission and Italy on the 2019 budget. Moreover, the rhetoric by ECB’s Weidmann saying that policy normalization may take a long time.

This adds high bearish pressure on the common currency with concerns on the possible sanction for the Italian government from EU being lenient to France on budget concerns. Italy pointed out that growing out may lead to an economic slowdown that may affect the whole of Europe.

How the EU reacted may add a bearish pressure to the euro if it turns out against Italy, that could add political tension and reach new highs. However, the yields differential may decline abruptly, raising again the euro to yesterday’s high of 1.1472 if the EU becomes more dovish. As for the headlines, there is no data to be released from the Eurozone but existing homes sales data and core durable goods from the US are scheduled today, as well as the weekly crude oil inventory.

[obasifxmart]

EUR/USD Fundamental Analysis: November 23, 2018



The euro major is moving steadily upward higher than the 1.14 during the Asian session as the sentiment on the common currency shifted by the Brexit optimism and general weakness of the US dollar as markets prepare for the Markit preliminary of November PMI scheduled later from the EU and the US. The euro gained early bids amid thinned market due to holidays. The Asian market supports the Brexit declaration as talked about by the UK and the European Commission for the night that lays out trade relationship prior to the Brexit summer this Sunday.

The weakened US dollar across the market amid trading concerns of the Fed may tighten and slowed down the pace but keeps the currency afloat. Moreover, the euro supported the ECB minutes that showed the central bank pursuing the QE easing program in December in the background of sluggish Eurozone economic growth. On the headlines, the Eurozone flash manufacturing and services PMI reports will boost and Italian budget concern will still have an influence over the euro in the next few days.

[obasifxmart]

EUR/USD Fundamental Analysis: November 26, 2018



The euro is facing various problems including political problems and negative economic data as greenback gains momentum which causes the price movement to be bearishly followed by a weaker Eurozone PMI data and decline from 1.14 to 1.1345. The trading session closed this week with chances to end the latest bullish momentum as price closes lower than the 20-day SMA in favor of the common currency. Various trading factors continue to put pressure on the pair, reaching a 10-day low of 1.1326 during the early Asian session signaled by the drop in Friday to be the sin in ending Euro’s latest recovery rally.

The pair continues to trade range bound close to the weekly lows. Losses during the Friday session can be recovered if the spread between the Italian 10-year government bond yield and its US counterpart continues to minimize. The European Commission promoted an excessive deficit procedure against Italy after the country changed the budget proposals. Concerns on the Italian budget remains to be the main attention of investors amid the minor reduction on budget plans. On the other hand, the greenback resumes having a positive price flow as a boost in equities are anticipated to get better on holidays.

On the fundamentals, there are no major reports from the US that could have a big impact on European markets from ECB President Draghi but releases from eurozone including the German Ifo business climate, German business expectations, and current assessment data, as well as, speeches from ECB President Draghi, Praet, Coeure & Nowotny are likely to affect trading.

[obasifxmart]

EUR/USD Fundamental Analysis: November 29, 2018



Traders reacted as shown on the sharp price reversal of the euro major pair after the dovish rhetorics of the Fed chair Jerome Powell. The rebound was influenced by the decline in the US Treasury yields after the speech of Powell saying interest rates are just lower than the neutral which may translate as the rate hike cycle will almost end.

The chances to postpone the Fed rate hike in 2019 increases sharply which resulted in a decline of the greenback across the market in the core PCE comes out lower than anticipated. In the second half of the day, the market’s attention will be on the release of Fed minutes. On the technical aspect, the euro major pair added a bullish trend outside the candle given the intraday high and price movement on Tuesday. A bullish reversal would confirm if everything turns out positive and needed to close higher than 1.1388. The short-term trades are also seen to be on a bullish trend but traders remain heedful since the price movement today will rely on the data and it isn’t new to trades for any unforeseen events.

[obasifxmart]

EUR/USD Fundamental Analysis: December 3, 2018



The euro major pair is trading close to a fresh midline at 1.1340 during the Monday session after the momentum of risk appetite after the G20 summit over the weekend that allows the broad recovery after the US and China put on hold the tariff increase for another three months as they come to an agreement again. Meanwhile, Italy has been open to negotiating budget plans which can be an obstacle for the euro bulls.

Over the weekend, Italy’s Prime Minister Conte and European Commission’s Jean-Claude Juncker discussed the deal between Italy and the EU while investors are still uncertain about the deficit spending of Italy and growth forecast until solid data has come out. On the headlines, traders should look out for the Eurozone PMI for the month of November while a drop of the German PMI is anticipated right before it.

[obasifxmart]

EUR/USD Fundamental Analysis: December 7, 2018



The movement of the global trades has affected the US dollar being the safe haven and added downward pressure on the euro major pair. Recent headlines about the arrest of top executive and add worries about the US-China relation that reduces appetite for riskier assets on Thursday. The dollar didn’t gain a leverage on the early uptrend but was instead brought down by the negative US employment report, failing to meet the expected figure. It seems that the USD bulls wasn’t swayed as much with optimistic US ISM non-manufacturing PMI data with its sudden uprise.

Moreover, the shift in the US Treasury bond yield curve that signals potential recession that adds pressure to the dollar and adds momentum to the pair’s intraday positive momentum. The price rose higher than 1.1400 handle, close to the weekly high on Tuesday. It has been moving steadily and oscillating in a narrow trading band during the Asian session. Now, investors are monitoring the US NFP monthly jobs reports that could drive a significant momentum today. Yet, trades still have to be heedful with nearing OMC monetary policy decision in the latter days of the month. Thus, there are less expectations for the day and resume its trading range-bound in a broader trading range.

[obasifxmart]

EUR/USD Fundamental Analysis: December 10, 2018



The US dollar dropped below Friday session that has further lower by the unexpected monthly jobs report and shows the economy gained only 155,000 new jobs in November. Dovish comments by the Fed governor Lael Brainard and St. Louis Fed President James Bullard support the comments of the postponement of the Fed rate hike cycle in 2019. Selling greenback has boosted the economy over signs of weaker economic growth in the eurozone and pushed for a steady ascent of the euro major pair, ending the week with optimism, just higher than 1.1400 handle. Another report of the third quarter GDP revision shown an annual growth rate of 1.6 percent, slightly lower than the forecast of 1.7 percent. Nevertheless, this had a few impacts on sales.

Reports on China import and export growth figure published over the weekend that instilled fears of global growth slowdown and chances to postpone the Fed rate hike in 2019. Moreover, worsening trade tension between the US and China, as well as the arrest of top Chinese executive in Canada, has added weight to the sentiment of investors and cap the rally despite important economic reports from the euro or the US. The dollar sell-off will probably continue until the European market hours given the dovish turn of Fed expectation that is favorable for US dollar denominated global currencies in depreciating exchange rate.

Both of the US and European markets are subdued but we can anticipate for the release of job openings reports to be hawkish that could boost the US greenback broad-based market sentiment. On a technical aspect, the pair was able to clear a significant descending resistance trend line and a part of the symmetrical triangle on the daily chart was established.

[obasifxmart]

EUR/USD Fundamental Analysis: December 11, 2018



The euro major pair induced a bearish outside reversal on Monday and was not successful to breakthrough the symmetrical triangle on another Brexit uncertainty. The UK Prime Minister Theresa May postponed the vote on the exit deal which was already anticipated. The added pressure pushed the British currency since April last year and adds pressure to the risky assets resulted in picking up momentum to the safe haven bidding of the US dollar in the broad market. Furthermore, the possibility of a hard Brexit to continue in the past 24 hours. Hence, risky assets may gain more pressure at least until the uncertainty of Brexit was removed. Euro was also pushed down in the broad market yesterday as French President Macron announced economic emergency regarding the yellow vest protests.

The spread between the US 10-year yield and its German counterpart was 260 basis points, which was the lowest level since October 1. On a technical aspect, the sudden overnight retracement resulted in a short-term bullish breakout that may lead to a fake-out. The weakness lower than the area of 1.1350-45, it strengthens the possibility of a breakout and hastens the movement towards another ascending trend-line support. A continuous weakened movement will push the pair in returning to the yearly lows of 1.1215. On the other hand, a breakout in the solid resistance will likely move the pair towards the 1.1500 level.

[obasifxmart]

EUR/USD Fundamental Analysis: December 12, 2018



The euro major pair is trading within a range after the sudden drop to the overnight lows at 1.1400 below the middle of 1.13. The US dollar reversed the majority of its early losses following the release of the core PPI data which is one of the main factors to influence the overnight decline of the pair. The currency was further pushed lower bu the Italian finance minister Giovanni Tria’s rhetorics over the fixed budget of Italy within the European Commission. Yet, the pair has gotten steady caused by the positivity of the Sino-US session trade talk and reaches close to the previous low.

The US President Donald Trump has said Reuters would get involved if these will support the trade deal with China. Moreover, further negotiations are already taking place via the phone but if necessary, he is willing to meet with President Xi Jinping once again. Consequently, the US dollar weakened as a safe haven in Asia the puts a stop to yesterday’s sharp decline.

On the headlines, the European markets anticipate for the release of the Industrial production data while on the US, the Core CPI & Crude Oil Inventories data are scheduled today. The price action will be highly affected by the ongoing political issues in Europe and US macro data, which will highly likely bring in volatility in the market. Considering the technical perspective, calm bidding was seen during the Asian session after the Nov 13 and 28 lows yesterday. Meanwhile, the rising trend line resulted in a deeper sell-off and a bullish reversal is established when the price goes above the 55-day moving average.

[obasifxmart]

EUR/USD Fundamental Analysis: December 17, 2018



The euro major pair had a reduction triangle breakdown on Friday after the rise of global growth fears, resulting for traders to shift to equities to minimize risks. The pair is currently trading in the flat as investors are looking forward to FOMC as guidance.

Traders continue to draw bids, sending the euro major pair at as lower rate towards the latest low of 1.1215 if the global equities continue to be the solution amid the rising uncertainty of growth internationally. On Friday, weak economic data from China has awakened fears for a global economic slowdown and lessens investor’s appetite for riskier assets. People looking for safety has strengthened the US dollar as a safe-haven that increases the dollar by 1 and a half year high, inducing a strong selling of the EUR/USD pair. The common currency was further dampened by the weakened German and eurozone PMI in December, indicating a prominent slow down from both manufacturing and services. These data confirmed the dovish sentiment of ECB on Thursday and pushed traders to lessen expectation for next year’s rate hike. It further pushes the common currency to break through lower than 1.13.

Yet, the mixed result from the US macro calendar resulted to a decline of both Industrial/Manufacturing production data and PMI despite the retail sales data, prompting sluggish business growth and reduces prospect for fed rate hike in 2019, limiting the euro decline and triggers a rebound from below and hover above 1.13 as market closed for the week. Meanwhile, the broad-based market for the dollar pushes the euro lower. It was able to trade flat during the Asian session starting the trading session for the week. Currently, the euro major pair is trading flat at 1.1307 with an apparent increase of 0.015 on the day. Meanwhile, the pair is showing a positive trend while the upside continues to be restricted by the FOMC update being the major event for the week, which will influence the future trading of the dollar.

[obasifxmart]

EUR/USD Fundamental Analysis: December 19, 2018



The euro major pair stays higher than the mid-level of 1.13 during the Asian session today. Early morning the price grew by 100 pips from Friday last week low of 1.1270 and rebounded from a two-week low and continues to move forward on Tuesday, despite the not-so-good data on German Ifo business climates in December due to broad-based USD sell-off momentum. Meanwhile, Italy has reached an agreement with the European Union regarding the controversial issue on the budget which supported the positive drive for the euro bulls but was not able to induce a bullish breakout.

The dollar sell-off was from the retracement from 1.5 years last Friday that further worsened by the concerns of the slow rate from the Federal Reserve or put on hold with the sharp drop of the dollar index reaching one week low yesterday. The Bearish pressure grew higher after the intervention of the US president on the Fed’s monetary policy that influenced further the weaker sentiment. The pair grew to 1.1400, gaining 40 pips over one week but soon began its decline from highs and settled to 40 pips from a daily swing high. The pair was able to hold range-bound trading in the upper half of 1.13 across the Asian market. On the headlines, traders will give their attention to the anticipated US FOMC interest rates decision while the US Fed is presumed to raise their rates by 25 bps, which was the fourth rate hike this year and look forward to the increase in 2019 on a “dot-plot” which will determine the short to medium term sentiment on greenback and possible give a new direction for the major currency.

[obasifxmart]

EUR/USD Fundamental Analysis: December 26, 2018



The euro major pair began with a lead over the dollar for this week due to various negative reasons such as high tensions with the US government tension concerning the White House and the Federal Reserve. Trading has been calmed during the Asian session amid the holiday season with the majority of the market are closed. Yet, bull traders are heedful given various factors such as geopolitical concerns and a sluggish economy that prompts investors to be careful with the thin market trading and European markets closed and internal crisis with the US.

There is no expected macroeconomic data to influence trading even for just a short period of time that has also put a limit to liquidity in the market. The EUR/USD pair is presumed to resume its bullish trading in favor of the greenback across the trading hours. Meanwhile, investors are focus on the US CB Consumer Confidence data and new home sales data scheduled to be released on Thursday, followed by the German CPI data on Friday that may give short-term opportunities.

The pair continues to move higher for the week on a broad-based weaker dollar but may face a strong resistance that may be difficult to surpass because of lack of momentum in the market. Technical trading continues to move with not much changes since the beginning of the week.

[obasifxmart]

EUR/USD Fundamental Analysis: December 27, 2018



After the holidays, the pair has moderate gains while the pair undergoes pressure on Wednesday, removing weekly gains. However, despite no macroeconomic data releases and thin trading sessions, the dollar strengthened amid the rising US Treasury bond yields. It was able to move steadily above the level of 96.50, which supports the greenback and declined lower than 1.14 and further moved as low as 1.34. The risk appetite has restricted the losses after the Wall Street rally and optimistic Asian equity market by the year-end trading session. To some level, this sustains the volatility and recoup from losses and return to the level of 1.38.

Fundamental data are expected from the ECB and two economic data namely the dovish CB Consumer Confidence and new home sales data that is anticipated to give a rising forecast for the month of November. Nonetheless, no matter how the data came out, the pair is likely to move range-bound amid the thin market for holidays which may limit any major upward movement. Next week’s forecast will probably be the same during the holidays for this week.

On a technical aspect, the price continues to have a bearish pressure in the present and future trading. Short-Term support was found close to the 200-SMA and base of the weekly range with some sort of bearishness to 20-SMA. However, below the midlines lacking any strength gives a neutral stance with uncertain direction.

[obasifxmart]

EUR/USD Fundamental Analysis: January 10, 2019



The euro major pair was successful to have a bullish breakout in a wider price range for the past three months. It was driven mainly by a dovish Fed meeting after an update in China-US trade deal which was being followed by almost everyone. During the American session, the long-term resistance was broken at 1.14985 giving a good momentum after a bullish breakout as the price ranges at 1.15 followed by consolidation at Asian hours. Meanwhile, the Fed minutes pushed the price for a breakout which then underwent a bearish bias before the release of the Fed minutes given the dovish rhetorics from various FOMC members.

Some of the committee members are supports the rate hike amid the continuous slowdown since December throughout the world market, as well as, the US economy. Moreover, this shows that the majority of the members monitors the market carefully, considering the sluggish pace of rate increase along with the investor’s expectations to pause the rate hike plans this year. On a long-term perspective, this engages major fund flow in the market as a safe-haven currency with a risk of a recession for short-term due to Fed plans of multiple rate hikes. This greatly impacted the USD bulls and foster risk appetite in the market.

Meanwhile, investors attention are now on the ECB’s most recent minutes of the meeting as they look forward to the economic slowdown in the European market or hints on the possibility of an early rate hike by the central bank in 2019. This could further strengthen the euro bulls to break higher than the 1.16 mark.

As for the fundamental reports, the initial jobless claims, new home sales data and a speech from Fed Chair Jerome Powell are anticipated today from the US market that would likely bring short-term profit opportunities for retail traders.

[obasifxmart]

EUR/USD Fundamental Analysis: January 15, 2019



The euro was able to close yesterday with optimism despite risk-off trading that is predominant in the market after a disappointing release from Chinese import and export data. Today, we can expect the pair trading range-bound with a bit of a positive bias but not a major increase as traders are still careful with the upcoming Brexit approval vote in the UK House of Commons. The output is anticipated to have a strong impact on short-term price movement between the British pound and the euro in the broad market. Although, the general forecast in the market is expecting a rejection in the vote today unless it goes against public anticipated outcome. If so, the euro will struggle with any big changes in the price movement.

After the parliament vote on Brexit but not optimistic to Theresa May limit volatility in the market to a certain degree. The market already positioned and expected the rejection of Brexit will win over May’s, which the headlines will give fundamental support to euro. The US greenback is leasing against broad-based risky sell-off yesterday. However, the US dollar in calm given the partial shutdown of the US government added to the dovish bias of the Fed's policy rate hike that adds pressure to the greenback on the broad market.

On the headlines, three data are expected including French CPI & HICP data, French GDP data & Euro area trade balance data. An increase in French GDP is anticipated to rise in monthly readings while others remain the same. From the US, data on Trade balance and PPI are anticipated to be released with a dovish bias compared to the previous numbers. Traders are anticipated to look for short-term opportunities given the expected speech of ECB Draghi in today’s US session and FOMC member Robert Kaplan, which will likely bring high volatility in the market.