Forex Signals Brief for May 11th
Arslan Butt • 3 min read
Over the past couple of days, the global markets have traded quite calmly due to a lack of high impact macroeconomic events. The trading volume and volatility remained very thin. Due to the market consolidating into ranges, there was a lack of trading opportunities. But today the scenario seems a bit different, and we may have some exciting trading opportunities ahead.
Yesterday, the U.S dollar index came under pressure after the news that Donald Trump unexpectedly fired the FBI Director, James Comey. This led investors to increase their demand for haven assets and lower their positions on the equity side. That's why the Gold soared to place a high of $1225. Later the market reverted to its normal shape right after our live market update on Gold Below 50% Retracement Level – Is It Time To Sell?
Major Economic Events To Watch Today
- Manufacturing Production m/m (9:30)
- Goods Trade Balance (9:30)
- BOE Inflation Report (12:00)
- MPC Official Bank Rate Votes (12:00)
- Monetary Policy Summary (12:00)
- Official Bank Rate (12:00)
- Asset Purchase Facility (12:00)
- MPC Asset Purchase Facility Votes (12:00)
- FOMC Member Dudley Speaks (11:25)
- PPI m/m (13:30)
- Unemployment Claims (13:30)
- Core PPI m/m (13:30)
- EU Economic Forecasts (10:00)
- CPI m/m (8:15)
- NHPI m/m (13:30)
EUR/USD – Triple Bottom Pattern
The single currency Euro had mixed trade reactions to the varied comments from the ECB President Mario Draghi. Let me help you understand his remarks by breaking it down into different points:
- He remarked that the downside risks to the Eurozone had waned notably.
- President Draghi added that the inflation pressure consistently prevails as it is yet to show a reasonable upward trend.
- Lastly, in the Q&A session, he answered a question saying that it's not the time to consider ending bond purchases.
Forex Trading Signal
Investors are recommended to keep their buy positions above $1.0850 with a stop loss below $1.0835 and a take profit of $1.0915. Alternatively, investors can have a sell position below $1.0840 with a take profit at $1.0770.
EUR/USD – 4-hour chart
Technical Outlook – Intraday
As we can see in the 4-hour chart, the EUR/USD is consolidating below a triple bottom support level at $1.0850. Above this level, we can expect the pair to pull back up to $1.0910 whereas, if this level were to be broken, it would extend losses to $1.0810 & $1.0770.
Previously, the pair broke below the 50 periods EMA as well as the bullish trend line support of $1.0890. Lastly, the momentum indicators, including RSI and Stochastic held in the selling zone, demonstrating a selling sentiment on the part of investors.
GBP/USD – BOE Monetary Policy In Focus
Today, the GBP/USD will remain the center of attention as investors are waiting for the BOE Monetary Policy Committee, which will be announcing its latest decision on interest rates as well as ABS purchases. The ABS (Asset Backed Securities) refers to the purchase of government bonds to increase the money supply for the purpose of enhancing economic growth. In addition to this, I recommend monitoring the quarterly inflation report along with BOE President Carney's press conference.
In my opinion, the BOE is likely to keep the interest rate unchanged at 0.25%, however, it's worth watching the voting decision.
How To Trade Voting Decision
The MPC Official Bank Rate Votes are expected to be 1-0-8, where the 1st number is how many MPC members voted to increase interest rates, the 2nd number is how many voted to decrease the rates, and the 3rd is how many voted to hold the rates.
Neutral to Bullish= 1-0-8
Bullish GBP = 2-0-7
Bearish GBP = 0-0-9
Forex Trading Signals
Investors are recommended to buy above $1.2955 with a stop loss below $1.2920 and a take profit at $1.2980 and $1.3000.
Alternatively, we need to enter a sell position below $1.2920 with a take profit at $1.2890.
GBP/USD – 4-Hour Chart
Technical Outlook – Intraday
In the 4-hour chart, we can see that the Cable has stuck in the narrow trading range of $1.2925 – $1.2950. Technically, the pair is mildly bullish and the buying trend is supported by the 50 – periods moving average along with the RSI which is holding above 50.
Honestly, the technical side is not suggesting any solid reason to buy or sell the pair. However, the macroeconomic events from the U.K will surely give us further clues about the market. Let's have a look at the technical trading levels for today.
At this moment, most of the instruments are exhibiting choppy trading behavior due to a dull trading week. However, today we can expect potential breakouts and trading opportunities upon the release of economic events from the United Kingdom and the United States. We definitely will keep you informed through our live market update. Stay tuned!