The Pound Awaits a Political Trigger, Technical Hold in the Sideways Zone

After experiencing a very deep decline over the past few weeks, the pound seems to be stuck in the consolidation area. GBP is still awaiting political certainty after rumors of May’s resignation intensified. The end of last week until the beginning of this week the GBP / USD movement was limited between the first support and resistance every day (Daily S1-R1). Had strengthened, but GBP was again depressed because the market was still worried about a hard-Brexit. The statement of Prime Minister Theresa May, who said he would resign, further strengthened the position of supporters of Brexit.

Although it seems that Boris Johnson, one of the supporters of the opposition party, has reduced the pressure on his controversial statements regarding Brexit, in fact this is not strong enough to lift the Pound. In addition, the strengthening of the USD amid ongoing negotiations between the Trump Government and Xi is increasingly pressing GBP.

Technical Analysis of GBP / USD
Technically, the actual weakening of the GBP has begun to lose power. GBP has made a number of resistance attempts which eventually led the pair to be in a consolidation phase.

On the H1 timeframe, short and medium moving average lines have managed to break the long MA line. A little pressure at the beginning of the week is not enough to bring the MA line back down.

The signal for the increase in GBP against the USD also began to be seen in the Stochastic Oscillator indicator. Short-term Stoch-Osc indicator lines have begun to move leaving the oversold area.

The price is currently in the range of 23.6% – 76.4% when referring to the Fibonacci retracement indicator. Here we can see that the currency movements are not too strong and are still trying to gather momentum, whether to continue the downtrend or reverse direction.

GBU/USD Chart overview on May 28, 2019 before London Session

Daily Trading Forecast
For daily trading, we recommend keeping in mind the latest movements of the GBP / USD pair. The pair, however, is still in a state of uncertainty due to the absence of signs of domestic political certainty. Plus pressure from the USD and market uncertainty about economic conditions after being separated from the Eurozone, it seems that the upward movement is still not strong enough to change the big trend.

Opening a position should not set a profit target that is too large because there is still a possibility that this pair will be depressed again. We recommend that you pay attention to the price position at crucial levels as follows:
R3: 1.28069
R2: 1.27769
R1: 1.27262
S1: 1.26455
S2: 1.26155
S3: 1.25648

The Yen Strengthened Significantly, Yet Was Limited

The Yen again experienced a yen in the starting date of this week. The yen strengthened almost against all currency pairs. This was triggered by market concerns about the possibility of trade war excalation between America and China. Earlier in the week President Trump issued that he would again raise tariffs on import from China.

The administration of US President is expected to declare the extra tariffs on—more or less—300 billion dollars’ worth of Chinese items on Monday. This is another follow up after their last move on Friday when the US dramatically increased the tariff rate on $200 billion worth of Chinese imports, a move intended to punish Beijing for making inversions on past exchange duties.

This statement was responded to by the Chinese Government with the possibility of implementing the same action as an attempt to counterattack.

China’s foreign minister fired back as of revealed that China would not be subject to any pressure from any foreign countries, “won’t be surrender to external pressure.” This is a firm answer to Trump’s statement that China did not respects the agreement between both parties. Previously, Trump issued a threat that China shall not worsen the situation through its trade political moves.

“China should not retaliate-will only get worse!” quoted from Trump’s Twitter. He added that China have to make a deal otherwise they will be hurt badly
As is known before, China withdrew from the agreement to impose international trade rates between the two countries because they were not satisfied with the American proposal.

The Yen is by then the Save Heaven Asset Choice

Market concerns about the increasingly uncertain relationship between the two countries have had a positive impact on the Yen. The market seems to be in droves to shift funds to more stable financial instruments, in this case Yen. The market considers that the Yen is strong enough to not be affected by the influence of trade war between China and America.

Until the end of the New York trading session, the Yen was still monitored to strengthen against the major pair, each of them as much as:

USD 96 pips
GBP 183 pips
EUR 104 pips
Note : (the figures might be different among brokers)

However, given the strengthening of the Yen has been going on for quite a long time, we must be careful of the correction and the possibility of profit taking from market participants. In the range of the next 1-2 days, there is a possibility that the Yen will experience consolidation.

Trade War and Iran Conflict Be the Most Triggering Market-Mover

Since 6 o’clock the USA raises customs duties on certain Chinese products in the volume of approximately 200 billion dollar in the amount of 25 per cent. Beijing has already announced countermeasures, but gave no details.
Since yesterday, the Chinese Vice Premier Liu He is staying for another round of talks in Washington. While today, the negotiators from both sides come together. US President Donald Trump tried to calm markets on Thursday after receiving a “nice letter” from China’s President Xi Jinping, saying that a deal could be signed later this week.

High Fear Market
On Wall Street, this provided relief: During the course of the day, the Dow Jones was -1.7 percent temporarily dropped to its lowest level since the end of March. The final bell was a discount of 0.5 percent. Similar losses recorded the Nasdaq 100. With the increased nervousness, the fear barometer VIX shot temporarily well above the threshold of 20 percent and thus to annual high.
Safe havens such as bonds are sought: the yield on ten-year US government bonds fell to 2.45 percent, and for the first time since March the yield curve has been back inverse. Swiss Franc and Japanese Yen are popular on the foreign exchange markets. By contrast, gold barely profited most recently and costs $ 1,285. In Asia, the Nikkei narrowly fell into negative territory, while China’s stock exchanges rose by around three percent.
Investors are also worried about excalation in the Iran conflict, not only on the oil market. The US recently increased military and economic pressure, while Tehran in part canceled the nuclear deal. Brent conquered the threshold of $ 70 in Asian trade.

Post remains on course
In Frankfurt, the DAX presents itself as friendly at the beginning, with banks rating the market 0.9 percent higher at 12,090 points in early business. Mostly good news came from Deutsche Post. In the first quarter, the logistics company increased its profits disproportionately to sales. The goals for the current year and 2020 have been confirmed.
In addition, the focus is on the largest IPO of the year on Wall Street: Today, the car broker Uber wants to get started, the issue price was set to $ 45. This puts the issue price at the lower end of the range. The overall rating reaches 80 billion dollars.

Yen is Still Strong, The world is Feared by Trade War Again (May 9, 2019)

Another Safe-haven assets other than gold is yen. Lately, yen are quite superior and attract current market players. The warming of political conditions in some countries made the yen chosen by investors.

Quoting Bloomberg on Wednesday (8/5), at 10:30 a.m. WIB, the USD / JPY currency pair weakened 0.15% to 0.1600.

It is said that with heated geopolitical conditions, the yen is now flooded with buyers. Even the yen is preferred over the US dollar because of trade wars.

Just a note, in the two-day interest rate review that ended March 15, the Bank of Japan (BOJ) maintained monetary policy to remain stable despite trimming its assessment of exports and output amid rising global economic risks.

According to our source, President Donald Trump’s statement about the 25% increase in import tariffs on Chinese goods was enough to shake the market.

“Global economic growth is feared to be dragged down as well. So that the yen is considered to have a lower risk,” said Sakti.

We also projected USD / JPY pairing will move in the range of 109.98 to 110.69. From a technical standpoint, JPY-based cross forex is still diverse and has limited potential for weakness.

Volatility also decreases with the downward direction. Indicator VI leads down too. While the TSI indicator leads down. So it is recommended that the selling price is below 109.98 and buy above 110.70.

Yen Opened in Down Gap in the Starting Week (May 6, 2019)

Forex market opens today with a large gap for some pairs, especially in the Yen pair. GBP / JPY opened with a down gap of 88 pips, while EUR / JPY opened with an 80 pips gap. The gap on other main pair pairs as follows:

GBP / USD 15 pips
EUR / USD 21 pips
USD / JPY 47 pips
USD / CHF No Gap
AUD / USD 53 pips
(Remarks: this value may vary among brokers)

After a high increase on Friday due to the influence of the NFP release, it looks like the market responded by pulling prices down to “normal” movements.
There are several reasons for this move. The release of the US employment report was very strong in describing continued economic strength and helping to give a solid lift to USD. As is known, the movements of several currencies on Friday exceed the general daily range, especially in currencies that pair with US Dollar. The effect of NFP that rises above the forecast (from Previous 189K to Actual 263K compared to 181K) and the Unemployment Rate that falls below the forecast (Previous 3.8% to Actual 3.6% compared to Forecast 3.8%) gives a very positive sentiment even though month per month Average Hourly Earnings (m / m) fall below the estimate (Actual 0.2% Forecast 0.3% Previous 0.2%).

Japanese Yen Become An Alternative Escape
The Japanese Yen was triumphant in trading earlier this week (6/5/19) due to an increase in demand for the currency as a safe-haven investment after a heightened relationship between the US-China which put pressure on the stock market.
Currency paired with the yen, such as USD / JPY and EUR / JPY opens trades with a gap down, conditions where there is a significant decline between the opening level today and the close of trading on Friday (6/5/19).
On Sunday (6/5/19), US President Donald Trump said he would increase import duties from China due to the Chinese nation being accused of trying to re-negotiate. The effect of Trump’s statement, China plans to cancel trade negotiations this week.

Potential Daily Strategy:
Down gaps on GBP / JPY and EUR / JPY provide opportunities for daily traders for short-term opening. After trying to close the gap at the beginning of the market opening, then again pressed down to saturation, the daily trader can take advantage of opportunities by taking a long position with a target of gap distance.
GBP / USD is being corrected to the position of the pivot price. The uptrend potential of GU is strong enough so that the right daily strategy is short selling towards a pivot level price.
EUR / USD does not show a significant potential for movement so it is likely that this pair will move in the sideways range between Support (S1) and Resistance (R1).

The EUR / USD Seems to be Still Affected by the German’s IFO

The EUR / USD pair seems to be still affected by the Institute of Economic Research (IFO) German business-confidence-index yesterday which fell to the level of 99.2. This figure is below the market consensus at 99.9 levels.
In Thursday trading market (25/4) at 14.46 ECT, the EUR / USD was observed weakening by 0.19% at the price of 1.1133. The euro weakened to the lowest level since May 2017 against the USD.

IFO data reflects the weakness of this country with the largest country with economic support in Europe. The weakening of the IFO business-confidence-index was below predictions in the poll which predicted a rise to 99.9. The bleak conditions in German business activity are also increasingly emphasized by the index of IFO expectations which fell from 95.6 to 95.2.

This index underscored the negative outlook on the European region’s economy.
Inevitably, market sentiment towards the euro was hit and finally weighed on the currency’s movements in opposition to its main rivals the US dollar. In addition to disappointing German data releases, the euro was also pressured by the US dollar strength that dominated other major pair/currencies.

The dollar index touched the highest level for the past twenty-three months at 98.19 levels. Trade negotiations between the US and China planned to be completed this month also seemed to provide positive sentiment for the US dollar to continue to strengthen.

In daily graphical technical analysis where the xponential moving average indicator (EMA) widens with the course of the exchange rate falling. Then on the vortex idicator (VI) with a broad blue over red condition where the course of the rate has the potential to strengthen.

Furthermore, the true strength indicator (TSI) indicator is in the negative area 13 which indicates the exchange rate is not having enough strength to go down. In general, EUR / USD still has the potential to continue the correction in the next trade.

We recommend selling for the GBP / USD pair as long as the price is below 1.1116. The support level is between 1.1120 – 1.1086 – 1.1001. While resistance is between 1.1206 – 1.1258 – 1.1344.

European Markets Start the Week Upward

European equity markets start the week up as  the US and China are making progress in their negotiations, said US Treasury Secretary Steven Mnuchin. Furthermore, European stock markets moved higher at the start of the session, taking advantage of the latest encouraging signs on the evolution of Sino-US trade negotiations and the global economic situation. The Empire State manufacturing indicator rebounded stronger than expected on Monday. A trade agreement thus appears very close between the first two world economic powers.

In addition, companies have generally delivered better than expected results since the start of the earnings season, but forecasts remain mixed, like IBM or Netflix.

Investors are on the lookout for any signal that confirms the recovery in March or on the contrary would strengthen the fear of recession.

Investors will be watching the US corporate earnings season, including Citigroup and Goldman Sachs on Monday.In Europe, a series of important economic indicators is expected this week with the PMI culminating Thursday. On Tuesday, the main European economic meetings are the British job market (10:30) and the Zew index of economic sentiment in Germany (11am). In the United States, the session will be punctuated by the figures of industrial production (15:15), a Robert Kaplan speech of the Fed (20h) and the results of companies: Bank of America, Blackrock, J & J and United Health before the opening as well as Netflix and IBM after closing.

The rise of the euro to more than $ 1.17 does not benefit metals in the commodities market. Brent’s barrel also sank at $ 71 after hitting a high since early November at nearly $ 72.

The Euro Weighs on the Trend – Keeping Position to Maximize Profit

European equity markets are falling early in the session as the euro continues to rise to more than $ 1.20 in the aftermath of the European Central Bank meeting. Mario Draghi vaguely mentioned a slowdown in asset purchases, which was enough to boost the growth of the single currency.

In addition, European stock markets are picking up on their momentum at the start of the yesterday session, investors are still rather confident as the US Congress and the White House have reached an agreement to raise the US federal debt ceiling for three months. This makes continuation of positive sentiment to Eurozone.

China, book and boreholes

At the economic level, China’s foreign trade figures for August were mixed. Imports jumped 13.3% but exports slowed significantly with 5.5% growth. The pound sterling rose slightly as manufacturing output grew 0.5% in July in the UK, better than expected. On the other side of the Atlantic, investors will pay close attention to the monthly report on employment in Canada (2.30 pm), a speech by a member of the US Federal Reserve (2:45 pm), inventories of wholesalers in the United States (4 pm) and the weekly evolution of the number of oil drilling in North America (19h).

Reference rates down

In the bond markets, benchmark rates continue to decline. The yield on the 10-year Bund returned 0.3% for the first time since June. In the United States, the 10-year Treasury yields only 2.02%, the lowest since the election victory of Donald Trump last November.