Fundamental Currency Overview: EUR/USD, GBP/USD, EUR/GBP, Gold, U.S. Oil
Anton Kolhanov | Feb 15, 2017 03:56AM ET
FUNDAMENTAL CURRENCY OVERVIEW:h3 Positive and negative factors for the currency:/h3
Dollar
+ words of Trump about significant tax cuts for business that he will announce in 2-3 weeks;
- because of the tax cuts, to support the economy, US can begin quantitative easing (QE), which will lead to a weakening of the dollar;
- Trump's desire to weaken the dollar;
- US % rate increase in March is not expected, and during the year we can expect only 2 increase, the same time we have a risk to decline further raising expectations of rates or postponement to a later date, because of Trump words on the need to weaken the dollar;
- decrease in retail sales and consumer confidence indicators, which have been published in the last week.
Euro
- risk of France exit from EU zone in case of victory in election of Mary Le Pen;
- rumors, that Italy will have to have exit from EU too, followed by France;
- problems with Greece, which is unable to pay the debt on the loan, which was granted in aid to support the economy and reforms;
- no words from ECB about reduction of ECB QE in the near future, even on the contrary, a words about possible extension and increase, if necessary.
Pound
+ words of Kristin Forbes, member of monetary policy committee, who is concerned about inflation acceleration and she prepared to vote for a rate hike at the next meeting. She also noted the stability of the labor market and overall positive macroeconomic background;
+ a large number of positive economic indicators over the past week.
CONCLUSION
Perhaps the market will be very difficult to determine the direction of the trend, if it ever will be. As Trump essentially squeezes the dollar sideways, at the same time strengthening the dollar with decreasing taxes, but weakening it with desire to reduce the overall dollar rate and termination of % rates raising. At the same time, with tax cuts, FRS can begin QE to support the US economy, which would reduce the dollar.
Euro is very negative because politics risks and will also continue its QE. The euro and the dollar markets are becoming too complicated for analyze and trade, so it is best to look at the alternative pairs/markets, such as: eur/gbp (where gbp power is already higherthen in euro), gold and agriculture markets.
If in the next week Yellen does not say anything positive about strengthening of % rate, or her words are neutral, the market will continue to stay sideways awaiting of Trump words about future of US business tax decreasing.
Important news of this week:
MONDAY
no important news
TUESDAY
- German GDP;
- US CPI !!!;
- EU and German ZEW Economic Sentiment;
- EUR GDP !;
- US PPI;
- US Fed Chair Yellen Testifies !!!;
Get The News You Want
WEDNESDAY
- GBP Average Earnings Index and Claimant Count Change;
- US Core CPI !!!;
- US Retail Sales;
- US Fed Chair Yellen Testifies !!!;
- Crude Oil Inventories !!!
THURSDAY
- US Building Permits and Philadelphia Fed Manufacturing Index
FRIDAY
- GBP Retail Sales;
TECHNICAL OVERVIEW
EUR/USD
Main scenario:
The market is trading along a downtrend with target on 1.0540/20, that ay be expected to continue, while market is trading below resistance level 1.0700.
Alternative scenario:
An uptrend will start as soon as the market rises above resistance level 1.0700, which will be followed by a move up to resistance level 1.0750/80.
Main scenarion:
The market is trading along a downtrend with target on 1.2345/1.2415, that may be expected to continue, while market is trading below resistance level 1.2515/50.
Alternative scenario:
An uptrend will start as soon as the market rises above resistance level 1.2515/50, which will be followed by a move up to resistance level 1.2670.
Fundamental overview:
We have more positive factors of pound strengthening, when at the same time euro has too many politics risks, so I'm expecting that pound will be rising against euro and this pair looks good for selling.
Main scenario:
The market is trading along a sideways trend between support 0.8480 and resistance 0.8545. A downtrend will start as soon as the market drops below support level 0.8480, which will be followed by a move down to support level 0.8360/90.
Alternative scenario:
An uptrend will start as soon as the market rises above resistance level 0.8545, which will be followed by a move up to resistance level 0.8625/65 and if it keeps on moving up above that level, we may expect the market to reach resistance level 0.8735 and 0.8890.
Fundamental overview:
Last week Trump, with words of the tax cuts for the US business, sharply knocked upward trend of gold, which was moving in the direction to the resistance 1251. At the moment, the markets still have a chance to continue this upward trend to resistance 1251, due to the weakness of the Euro zone and the lack of confirmation of Trump tax words.
But 1251 is a strong resistance and if its achieving will match with words of Trump or Yellen, when she will say that the % rate will rise more rapidly, we can have start of downward trend with target to 1217 and beyond 1191. Otherwise, if the word Yellen will remain neutral and Tram will reduce taxes much lower then expected, gold can go up to the next resistance at 1292.
Main scenario:
The market is trading along an uptrend with strong potential for downtrend, while market is trading below resistancec 1242 - 1251. Target will be support 1217/21 and then 1191.
Alternative scenario:
The uptrend may be expected to continue in case the market rises above resistance level 1251, which will be followed by reaching resistance level 1292.
Fundamental overview:
OPEC fulfill its agreement on the permanent reduction of production by 90%, while the US continues to increase the volume of oil rigs, which follow market to the balance and trade is going sideways between the resistance 54.30 and support 52.10. Exit from this range is possible in the case of OPEC policy change, or with the arrival of spring (April), when fuel demand is increases.
Main scenario:
The market is trading along a sideways trend between resistance 53.80/54.30 and support 52.10, where local downtrend is trarting from resistance 54.30 with target on support 52.10.
Alternative scenario:
An uptrend will start as soon as the market rises above resistance level 54.30, which will be followed by a move up to resistance level 55.20 and 56.50.
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