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Forex forecast for the week 10/05/2015 - 09/10/2015: The uncertainty is amplified! Euro and Pound are trying to recover!
Euro \ dollar: the end of last week and the forecast for the week.
The movement of the euro / dollar last week, largely in line with expectations and forex forecast, although it is characterized by high volatility of the price range. Forex forecast assumed - the continued growth of the euro to the US dollar set price levels. In fact, what happened!
Last week, after the opening of trading the euro against the dollar is really turned around from a previous decline and under the influence of negative data from the US (which demonstrated the decline of volumes of unfinished home sales, reduced income levels, as well as the decline in exports and a sharp increase in foreign trade deficit) resumed its rise by fixing on the rise interim high of 1.1281. But buyers are not able to keep the upward trend of quotations of European currency, the rate of which in Germany after the negative data on consumer price inflation (according to new decline in inflation and the shift indicator in the zone of deflation) resumed its decline and test the minimum level of the week at 1.1135. However, and this movement was short-lived. The next day the rate of euro / dollar regained their previous achievements, and tested again on the rise 2-week high and fixing the top ascent at a price level 1.1318. The driver of the rapid rise of the currency was the publication on Friday of failed jobs data in the US disappointed the market and drastically reduce standby imminent interest rate increase by the Fed.
As a result, at the end of the week the euro was able to realize customers on the rise almost four target level of our forecast (1.1225; 1.1277; 1.13; 1.1330).
The forecast of the euro for the week: On the currency market the situation remains uncertainty. Against the backdrop of the fall of the US dollar, the euro strengthened. Despite the turmoil in the world economy (the source of which is a slowing of the Chinese economy), they did not have any impact on the euro area, as direct trade and financial ties with China, the euro area are limited and constitute only 3% of European exports. The main negative point for Europe is a very low level of inflation, which for the first time s for the six months was negative and gave rise to a new wave of speculation about the possible reaction of the ECB. According to forecasts of the international rating agency «Standard & Poor's», European Bank under these conditions can continue to implement the program of financial incentives Eurozone and after September 2016. In this case, the volume of financial investments, according to experts, may reach 2.4 trillion. euros, twice the originally planned 1.1 trillion. euro. This dramatically increase the pressure on the euro and lead to a reduction of new couples.
Against this background, the prospects for US greenbacks are not encouraging. The weak labor market statistics in the United States last week, forex traders forced to revise their expectations. The slowdown in job creation and reduction of the average wage, along with the negative dynamics in the industrial sector can make FOMC refrain from raising interest rates this year. In addition, the high rate of the greenback has become a major factor in the growth of foreign trade deficit in the United States. And in the end, the removal of trade barriers between Europe and the United States is capable of even more exacerbate this problem. In these circumstances, it is not necessary to expect that the Fed will rush to tighten monetary policy. Based on this, bidders are expected repricing until the 2nd quarter of 2016. As a result, support for the dollar fell sharply and at auction last week, the dollar was down at each attempt to return to an upward trend.
In this context, the lack of positive prospects for growth and the euro buyers, and buyers of the dollar increases the uncertainty in the direction of trading for this pair, defining the main driver of its price dynamics - technical factors.
However, the technical picture in the pair euro / dollar supported continued decline in prices. Closing level eurodollar in the last week (1.1210) was lower than the weekly and daily pivot points, indicating that the impact of the continuation of the downward momentum in the price movement of the pair. Technical indicators on the daily and weekly chart also warn about the downward movement of currency. In addition, the continuation of reduction signals and the wave structure of the couple.
Report Commodity Futures Trading Commission on the single European currency (as of last week) again demonstrates the growth of the aggregate "net" position to sell the euro, which speaks of strengthening "bear" market sentiment. In addition, the ratio of the price dynamics of the pair, trading volume and open interest (the positioning of traders) also warns of the continuing depreciation of the single European currency.
The euro dollar forecast for the week, on the basis of fundamental data and technical picture in the pair euro / dollar, as well as on the basis of technical and wave analysis of the price movement of quotations, we assume - a short-term appreciation of the euro, and then - the renewal of reduction of quotations euro dollar to price levels: 1.1185; 1.1150; 1.1130; 1.11; 1.1070; 1.1034; 1.10 and possibly lower towards 1.0950.
Further, upon completion of corrective decline is expected resumption of growth in the euro in the new cycle of the upward movement of the pair.
Pound \ Dollar: Results of last week and the forecast for the week.
The dynamics of the pound / dollar at the forex trading last week, largely in line with expectations, although it has managed to implement only the initial options forex forecast. Forecast pound dollar imagined - the completion of reduction of quotations of the British, and then - turn and rise in the sterling exchange rate established target levels. In fact, what happened, although trade pair Pound Dollar for the week was characterized by extremely low activity and formed in a rather narrow flat. After the opening of the weekly trading forex pair Pound Dollar rate resumed its decline actually quotes the driver of which was the output of forecasts, economic development Albion until 2020. Forecasts confirmed probability in the UK economic slowdown, weak GDP growth and low inflation, and became evidence that the Bank of England to raise interest rates in such circumstances are likely not going to, at least until the middle of next year (although the previous forecast pointed in February as the start date of the monetary policy tightening). In this regard, the pound dollar exchange rate by mid-week tested (in a very moderate dynamics) week low at around 1.5106. However, it should be noted that the subsequent release in the UK of weak data on business activity in the manufacturing sector, had virtually no impact on the dynamics of the pair pound dollar exchange rate which, despite the increase in selling pressure, and not out of narrow flat. On the contrary, the rate of the pound / dollar began to rise, reaching a high of 1.5236 and marketing, so the first target of our forecast on the rise (1.5240) .Vpolne likely that formed the basis of the British pound and the decline is now at the initial stage of corrective reversal to upward movement from which we expect to further implement the goals set by our forecast.
Pound Dollar on a new week: Economic activity in Albion remains rather limited, and the inflationary pressures - a moderate. Due tems that consumer price inflation in the Eurozone last week (first six months) I went into a deflationary zone it is possible that the Bank of England, the ECB and after China's central bank, will be decided before the end of the year to further easing of monetary policy.
While the weakening of the US currency for the continuation of decrease in pair quotes the Briton needed a more significant reason than the probability of monetary easing. Economic statistics from the UK last week, wore a rather controversial mixed character and, therefore, could not become a driver for the pound downward movement. Moreover, the inability of the "bulls to push the dollar lower than a couple of key support level of 1.51 is likely suggests that the pound / dollar is at an early stage of pullback correction is required for activation of the catalyst is a fairly strong fundamental nature. The disappointment of investors from the US report on employment, published on Friday, just can give a strong enough impetus to continue the recovery of the British currency.
Technical pound dollar exchange rate forecast is also warning about the likelihood of resumption of growth in sterling. By the end of the week the pound dollar reached on lifting the weekly pivot point that indicates a change in price trends and the likely reversal in the upward movement of the pair. Signals are indicators on the daily timeframe begin to unfold on the rise. Daily indicators also signal the upward movement of currency (daily Stochastic is oversold and on the indicator MACD, once in 3 timeframes, formed "bullish" divergence). In addition, based on the previous correction downward movement of the pair formed a specific candlestick patterns "long-legged doji" (hour timeframe) and "Inverted Hammer" (daily timeframe), also warning about the spread movement. The same cautions us and wave structure of the couple.
Against this background, the traders is realistic to expect completion of the current decline in quotations pound and the resumption of growth of the British to the US dollar in a new cycle of its upward movement.
Forecast pound dollar for the week: on the basis of fundamentals and the technical picture in the pair GBP /USD, we assume - the growth of the British in tandem with the US dollar to the target levels: 1.52; 1.5230;1.5268; 1.53; 1.5321; 1.5360; I1.54 1.5386.
At the same time we continue to monitor the lower limit of correctional model "Flag" -1.5070. If bears pound still be able to overcome the resistance of buyers in this price level, the downward correction to continue in the direction of the key support levels of 1.50 and 1.49, where the couple are expecting a new turn to the above objectives.
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