Analys från DailyFX
Upbeat BoE Lifts British Pound Across the Board
Talking Points:
– BoE’s tone moves forward policy calendar by one year.
– Light calendar this week offers little by way of data on Tuesday.
– British Pound may benefit most against Euro, Japanese Yen.
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INTRADAY PERFORMANCE UPDATE: 11:35 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.04% (+1.10% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The British Pound surged against its major counterparts this morning after the release of the Bank of England’s Quarterly Inflation Report (QIR). The QIR struck a more hawkish tone than anticipated, with the BoE upgrading its labor market forecast considerably.
In August, the QIR detailed the central bank’s forward guidance strategy that implied that rates would remain low unless the Unemployment Rate hit 7.0% by the 3Q’16; this assessment today was upgraded to the 3Q’15.
While the inflation forecast was downgraded after yesterday’s softer CPI report, the tone struck in the QIR was that of a more optimistic BoE, with Governor Carney even suggesting that it’s hard to ignore that the “glass is half full.” Accordingly, with British Pound strength developing this morning, there are two potential trades on the horizon:
EURGBP Daily Chart: January 16 to Present
– The EURGBP has set a lower high after breaking the uptrend from July 2012, and price has pierced sideways channel support (dating back to January).
– A new descending channel may be emerging; confirmation below 0.8300.
– Rebound from 0.8300 sees daily RSI (21) capped by 50; structure remains bearish.
– Weekly close 0.8300 suggests move into 0.8175/0.8225 by year end.
GBPJPY Daily Chart: April 30 to Present
– The GBPJPY remains supported by an uptrend dating back to November 2012, and a more concerted uptrend since April 2013.
– Price has consolidated in an ascending triangle since September; daily RSI (21) has held above 50 during this stretch, suggesting momentum remains bullish.
– Market has become extremely choppy past two-weeks (several hundred pip swings in a few hours); preference is to trade ‘outside of price.’
– Longs eyed once price establishes itself above 160.00 on a weekly basis.
Read more: Euro Hobbled by ECB, NFPs – Will 3Q GDP Reports Confirm Fears?
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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