Connect with us

Forex

US Dollar Range Continues as Inflation Prints at One-Year Highs

Published

on


US Dollar Range Continues as Inflation Prints at One-Year Highs

Talking Points:

Fundamental Forecast for USD: Neutral

The Quarterly Forecast for the US Dollar has just been released for Q2, Click here for full access to the DailyFX Q2 Forecasts.

The US Dollar started the week on a rough note, continuing the bearish move that started to show around last Friday’s Non-Farm Payrolls report. In short order, DXY had fallen back-below the 90.00 level, and bears remained in force all the way into Wednesday’s US session, at which point a bit of support began to show at a familiar area around 89.50. This was the same zone that held the lows in the Greenback for the first few weeks of March, and this led into a corrective move as prices moved back towards the 90.00 level. The net of this week’s price action has been an indecisive move lower as the intermediate-term range continued.

US Dollar Eight-Hour Chart: February/March Range Continues into April

US Dollar Range Continues as Inflation Prints at One-Year Highs

Chart prepared by James Stanley

US Inflation at One-Year Highs as USD Weakness Stokes Higher Prices

There was a big driver unveiled on Wednesday that helped that support to come into play, and that was the release of US inflation numbers for the month of March. That report showed strength in inflation as both headline and core CPI came-out at one-year-highs, and both data points were above the Fed’s 2% inflation target. Headline inflation remains strong, as we’ve now seen seven consecutive months of inflation at two-percent or more; and even core CPI has crossed the 2% marker, making a stronger case for that fourth hike this year out of the Fed.

US CPI Prints at One-Year Highs; Seven Consecutive Months At-or-Above the Fed’s 2% Target

US Dollar Range Continues as Inflation Prints at One-Year Highs

prepared by James Stanley

Currency Weakness Brings Stronger Inflation – But Lacking Follow-Thru

Normally, stronger rates of inflation bring strength into a currency as market participants look to capture the new, higher rate of return. This is the ‘carry trade’ and it’s one of the most attractive strategies in FX markets when it’s actually at work. That theme has been noticeably missing from the US Dollar over the past year. The Fed remains hawkish and continues to look at tighter policy options. But the US Dollar has continued to show weakness, selling-off by as much as 15% from last year’s high to this year’s low. This indicates that there’s another driver at work, at least on a longer-term basis, that’s acting as a hindrance to a stronger bullish advance. We’ve discussed this multiple times in the recent past, and this point remains as pertinent as we move deeper into 2018.

Next Week’s Economic Calendar

Next week’s economic calendar is noticeably light on US issues. The lone high-impact report that we receive is on Monday morning ahead of the US equity open, and this is the release of retail sales numbers for the month of March. This could certainly help to evoke some near-term volatility in the Greenback, as this is the first look we get at consumer behavior for the most recently completed month; but it’s unlikely to carry enough force to alter the longer-term or bigger picture move. The big question around that release is whether it can help the Dollar firm long enough for resistance to come into play, at which point the bigger-picture down-trend becomes attractive again for continuation.

DailyFX Economic Calendar: High-Impact USD Events for Week of April 16, 2018

US Dollar Range Continues as Inflation Prints at One-Year Highs

prepared by James Stanley

Fundamental Forecast for Next Week

The fundamental forecast for the US Dollar will be set to neutral for next week. While the longer-term bearish trend remains attractive, strength in this week’s inflation print makes the prospect of another hike out of the Federal Reserve this year a bit more likely; and this makes the prospect of a ‘squeeze-type’ of scenario in USD a bit stronger. The Dollar sold-off after the March rate hike as the Fed shared an expectation for an additional two hikes in the year; but the dot plot matrix looked very close to a median expectation of an additional three moves. This week’s inflation print highlights even more price pressure in the United States after last year’s sell-off in the Dollar, and this could put even more motivation behind the argument for three additional hikes (for a total of four in the calendar year of 2018) for this year out of the Fed.

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

— Written by James Stanley, Strategist for DailyFX.com

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Contact and follow James on Twitter: @JStanleyFX

https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2018/04/12/us-dollar-downtrend-pulls-back-eurusd-to-support-after-ecb-minutes-srepstans.html



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Forex

DAX & CAC Technical Outlook – More Strength Ahead?

Published

on

By


DAX/CAC Technical Highlights:

  • DAX yet to show signs of reversing despite resistance
  • Big-picture topping potential remains
  • Strength has the CAC trading in ‘open space’

Check out the DailyFX Q2 Forecasts for the DAX, CAC, Euro, and other major markets; see how our Trading Opportunities for 2018 doing too – DailyFX Trading Guides.

DAX yet to show signs of reversing despite resistance

The DAX rally off the lows found opposition last week after a slight breach above a swing-high in February and just below the 200-day MA, however; the reversal sparked only very minor selling. Yesterday’s turn back higher has the market geared up to take on the 200-day and better.

On a breakout above the 200, a thorough testing of the underside of the double-top from November-January should be in play. The zone extends from 12745 up to the mid-12800s and is likely to prove problematic. How problematic, we’ll need to wait and see.

Should we see a strong rejection, then we’ll perhaps flip the script to a short bias, but if it is anything like what we saw this past week, then we’ll need to respect the trend off the March low. There is still the possibility that we see a long-term top develop should we see a strong turn down in the weeks ahead.

We’ll delve more into the ‘head-and-shoulders’ top scenario at a later time should it become relevant. If this scenario is to come to fruition, it’s worth noting that the DAX shouldn’t climb too much higher from current levels.

See this guide for 4 ideas on how to Build Confidence in Trading.

DAX Daily Chart

DAX daily chart with price levels

Strength has the CAC trading in ‘open space’

Of the two big Euro-zone indices, the CAC has been an absolute monster off the late-March low. Nothing has provided any real opposition, not the 200-day MA, not the late-Feb swing-high. Looking higher, there isn’t much preventing the index from trading higher towards the January high, 2007 trend-line.

This doesn’t mean the index will necessarily get there without set-backs, or at all, but as far as quality price levels to lean on, resistance is difficult to come by. As long as we don’t see a strong turnabout in momentum, the benefit of the doubt remains with the long-side. Support first clocks in at the Feb swing-high around 5363.

Heads up, the ECB meets on Thursday. For live coverage, you can join my colleague Nick Cawley at 11:30 GMT time.

CAC Daily Chart

CAC daily chart

Forex & CFD Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

To receive Paul’s analysis directly via email, please SIGN UP HERE

You can follow Paul on Twitter at @PaulRobinsonFX



Source link

Continue Reading

Forex

Key Reversal Targets 2017 Slope Support

Published

on

By


The British Pound has fallen more than 3% off the yearly highs with the decline taking out the April opening range lows. While the broader outlook does remain constructive, near-term the risk for a pullback in price has us looking for a possible exhaustion lower down near structural support.

GBP/USD Daily Price Chart

GBP/USD Price Chart - Daily Timeframe

Technical Outlook: In my last Weekly Technical Outlook we noted that Cable was approaching the 2018 highs at 1.4346 with a breach above this threshold needed to keep the broader long-bias in play. Price posted an outside-weekly reversal off this threshold before break below the objective April opening range lows yesterday. The decline also validates a break of the November slope line and leaves the risk lower while below the monthly open at 1.4024.

Note that yesterday’s close marked the fifth consecutive daily decline – three of the last five instances of such an occurrence saw a slight reprieve (a day or so) before registering a new low. That said, look for initial support along the lower parallel.

New to Forex Trading? Get started with this Free Beginners Guide

GBP/USD 240min Price Chart

GBP/USD Price Chart - 240min Timeframe

Notes: A closer look at price action sees Cable trading within the confines of a near-term descending pitchfork formation extending off the March highs with this week’s decline slipping below the monthly range lows / 61.8% retracement at 1.3965. IF this break is legit, topside advances should be capped by the weekly highs / monthly open resistance at 1.4024/31. A break lower from here targets the lower parallel / 100-day moving average at 1.3854/67 with broader bullish invalidation for the multi-year uptrend at the March low-day close at 1.3775.

Why does the average trader lose? Avoid these Mistakes in your trading

Bottom line: The British pound has broken below the monthly opening range but looks like the decline may be losing some steam here near-term. From a trading standpoint, we’ll favor fading strength while below median-line of the descending pattern with the decline to ultimately offer more favorable long entries near long-term slope support.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

GBP/USD IG Client Positioning

GBP/USD Client Sentiment

  • A summary of IG Client Sentimentshows traders are net-long GBPUSD- the ratio stands at +1.33 (57.0% of traders are long) – weak bearishreading
  • Long positions are 15.2% higher than yesterday and 83.1% higher from last week
  • Short positions are 0.5% lower than yesterday and 42.6% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger GBPUSD-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in GBP/USD retail positioning are impacting trend- Learn more about sentiment!

Relevant Data Releases

GBPUSD Economic Calendar

Other Setups in Play

– Written by Michael Boutros, Currency Strategist with DailyFX

To receive Michael’s analysis directly, sign-up to his email distribution list

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com

https://www.dailyfx.com/forex/education/trading_tips/daily_trading_lesson/2017/06/09/Introduction-to-Basic-Pitchfork-Median-line-Analysis.html?ref-author=Boutros



Source link

Continue Reading

Forex

Respect New Uptrend For Now

Published

on

By


Talking Points:

  • The ASX 200 is climbing again
  • Range trade has given way to a new upside channel
  • That channel will take it up to 6000, however, and there bulls should probably worry

Join our analysts for live coverage of all major Australian economic data at the DailyFX Webinars

The ASX 200 broke out of its ascending channel to the downside mid month, but price action since suggests that its subsequent consolidation may have been mere prelude to another upward foray.

The index has been admittedly rangebound since, trading between. April 16 and 17’s intraday low of 5831.1 and the intraday high of April 23 and 19 at 5904.9. At the time of writing (0100 GMT Tuesday) that range is history, if only just with the index a bare half dozen points above the top.

ASX 200 Technical Analysis:  Respect New Uptrend For Now

If it can close above there, then the 5934-5971 region last traded in mid-March could form the next target for the bulls. However above that the 6,000 level beckons and that barrier has proved too much for the index so often, both in the recent past and, indeed, for the past decade, that it’s probably wise to expect plenty of cashing out should it get there again.

Downside support may come in at the base of a new, nascent uptrend channel, which is at 5857.8 on Tuesday. Below that there is likely to be a cluster of near-term props forming in sum a band between April 10’s highs around 5848 and April 2’s closing low of 5686.

ASX 200 Technical Analysis:  Respect New Uptrend For Now

Still the uptrend should probably be respected for the moment, with the ASX currently in the middle of it. The Sydney stock benchmark’s simple moving averages fail to suggest anything obviously amiss, with the 20-50- and 100 day version in rank order and nicely spaced. The index’s Relative Strength Index is nudging higher, as you’d probably expect given the nice little run-up seen this month. However at a stolid 59 it doesn’t suggest any vicious overbuying.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

— Written by David Cottle, DailyFX Research

Follow David on Twitter@DavidCottleFX or use the Comments section below to get in touch!



Source link

Continue Reading

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.