Tag: Euro

Categories
Beginners Forex Education Forex Assets

The Fundamentals of the Euro (EUR)

The euro (symbol: €/code: EUR) is said to be used by approximately 341 million individuals each day, thus making it the second most-used currency in the world. The currency’s name was formally adopted in 1995 in Madrid upon then President of the European Commission, Jacques Santer, receiving a letter by Belgian Esperantist Germain Pirlot offering the suggestion. Like other currencies, the EUR used to be a commodity currency before becoming a fiat currency in the 1900s.

The euro (symbol: €/code: EUR) is said to be used by approximately 341 million individuals each day, thus making it the second most-used currency in the world. The currency’s name was formally adopted in 1995 in Madrid upon then President of the European Commission, Jacques Santer, receiving a letter by Belgian Esperantist Germain Pirlot offering the suggestion. Like other currencies, the EUR used to be a commodity currency before becoming a fiat currency in the 1900s.

The euro (symbol: €/code: EUR) is said to be used by approximately 341 million individuals each day, thus making it the second most-used currency in the world. The currency’s name was formally adopted in 1995 in Madrid upon then President of the European Commission, Jacques Santer, receiving a letter by Belgian Esperantist Germain Pirlot offering the suggestion. Like other currencies, the EUR used to be a commodity currency before becoming a fiat currency in the 1900s.

The idea of creating the EUR commenced in 1992 when certain documents were signed to initiate the process. Years passed and in 1998 a number of countries officially decided to gather around the same currency and adopt the EUR. Before this happened, each European country used a different currency: Germany – German Mark, France – French Franc, Italy – Italian Lira, Span – Peso, etc. These old currency notes were after 1998 exchanged over the new currency we now know under the name euro. This change allowed for easier migrations, travels, and commerce within the continent where an hour or two can get you from one country to several others.

Having a central currency helped the member states overcome and bypass many of the barriers that had previously existed. The EUR unites 19 of the 27 European Union member states in a monetary union called the eurozone or euro area. Many countries in the European territory have decided against using the currency, such as the majority of the Scandinavian countries and the United Kingdom, among others. The following Euro area member countries use the EUR: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

Some countries are part of the EU but have yet to meet certain conditions to be able to adopt the EUR: Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, and Sweden. The following European microstates also use this currency: the British Overseas Territory of Akrotiri and Dhekelia, Montenegro, and Kosovo. The EUR is used outside Europe as well, in special territories of EU members, further complemented by other currencies pegged to the EUR. Countries can join the euro area through fulfilling convergence criteria that are binding economic and legal conditions stipulated by the 1992 Maastricht Treaty. The European Commission and the European Central Bank together decide on a country’s candidacy preparedness to adopt the EUR.

After the publishing of the reports stating their joint conclusion, the ECOFIN Council can rectify this decision upon consulting with the European Parliament and Heads of State, formally allowing the adoption process to start. A country’s readiness for euro adoption, the preparedness for the eurozone accession, or the member status may still not grant the full benefits of being a part of such monetary union due to the existence of certain individual financial irresponsibility which causes other countries to suffer. History has shown us how the more responsible member states had to step in in order to help the other struggling countries, and the period between 2008 and 2010 truly pointed to some concern whether the EUR could endure any longer. Greece, Spain, Ireland, and Italy, for example, were debated upon with regards to the question of keeping the membership status or discontinuing the use of the EUR.

Cyprus is another example of a country that would have collapsed a long time ago were it not for the European Central Bank’s approval of emergency funding. The future still has several questions to find answers to – can so many countries with different cultures, ethics, history, economies, and overall individual differences maintain this union, and can the currency survive the continual struggles it undergoes? While the future alone holds these answers, the idea behind so many countries united under the same currency still prevails even in the EUR banknotes ranging in denomination from €5 to €500. The seven colorful bills, Austrian artist Robert Kalina’s work of art, do not display famous national figures but feature Europe’s map, the EU’s flag, and arches, bridges, gateways, and windows, symbolizing the unity of Europe.

European Central Bank (ECB)

European Central Bank (ECB) is one of the seven institutions of the European Union and the governing body responsible for the 19 EU countries which have adopted the EUR. Headquartered in Frankfurt, Germany, the ECB employs more than 3,500 individuals coming from different parts of Europe and collaborates with the national central banks within the euro area (Eurosystem). Unlike the government of the United States, which in contrast only needs to consider its personal interests, the ECB must create monetary policies in a way that would best benefit all countries connected by the EUR. Although directly governed by European law, this institution resembles a corporation due to its structure of three decision-making bodies: the Governing Council, the Executive Board, and the General Counsel.

The ECB is a single-mandate institution tasked with setting the interest rates for the eurozone, managing the eurozone’s foreign currency reserves, ensuring the supervision of financial markets and institutions and the functioning of the payment system, authorizing eurozone countries’ production of the EUR banknotes, monitoring price trends, and most importantly assessing price stability (inflation). Unlike other central banks, the ECB is not responsible for promoting employment or growth; however, this approach appears to be slowly changing, realizing the need to foster economic development. With regards to decision-making, the main body within the ECB responsible for this task is the Governing Council and all decisions are based on the majority of the votes of the body’s members. It consists of the six members of the Executive Board, accompanied by the governors of the national central banks of the 19 eurozone countries.

The Governing Council typically meets twice a month at the premises of the ECB, yet the monetary policy will be announced in only one of these meetings. The current President of the ECB, Christine Lagarde, who was born in Paris, France, has been performing this task since November 2019. The ECB President, who has the tie-breaking vote, bears a variety of responsibilities: heading the executive board, governing different bodies within the ECB, and representing the bank abroad.

Key Economic Reports

Eurozone’s economic reports differ greatly from the ones of other countries outside Europe. Australia, for example, creates a report that only concerns the country in question. When it comes to the Eurosystem, there are as many reports as there are member countries. Nonetheless, only the reports of France and Germany are said to be of importance for forex traders, as the former holds 40% and the latter holds 20% of the eurozone’s GDP, making the two countries 60% holders of the entire GDP of the Eurosystem. Therefore, due to the previously mentioned percentage, the occurrences within Germany and France should carry more meaning than those in smaller countries.

The main reports traders should be concerned with are then the GDP and employment reports of France and Germany. Moreover, apart from these independent reports, traders should also look into the Eurozone’s employment reports, providing information for the entire Eurosystem. Last, French, German, and eurozone inflation reports (CPI and PPI), are also vitally important as the ECB’s main goal is to combat inflation and its monetary policy will cover all territories governed by the EUR. As the eurozone tends to be growing, the reports in question will cover more and more territories, and traders should keep up with the relevant information in order to be on top of the events pertaining to the EUR.

The Most Traded Pairs

The most traded pairs involving the EUR are EUR/USD, EUR/JPY, EUR/CHF, EUR/GBP, EUR/CAD, and EUR/AUD. As the most traded pair in the world, EUR/USD 36% of all trading volume in the world, which is almost half of all transactions worldwide. As traders interested in news events primarily define liquidity, such great interest in this currency pair probably originates from the fact that it has the most liquidity. The second currency pair in line, EUR/JPY, is said to have the most liquidity, alike EUR/CHF which rounds up the three most traded currency pairs that overall do the most business. The other crosses, EUR/CAD and EUR/AUD appear to be quite popular in the currency market due to their overall good movement and predictable patterns, but the liquidity is not as good as with the first three pairs. Unlike EUR/USD, EUR/JPY, and EUR/CHF, these two currency pairs are increasingly more prone to slippage and volatility. Finally, EUR/GBP is believed to be less volatile than other EUR- or GBP-based crosses owing to the economic closeness and mutual dependence, but changes in the currencies’ respective central banks’ monetary policies could render this pair highly sensitive.

EUR Correlations

  • EUR/GBP

A vast quantity of trade the United Kingdom does is with Europe and vice versa, which is what brought on this prominent correlation in the first place in addition to the two both belonging to the eurozone. Despite them using two different currencies, we can with almost absolute certainty predict that if Europe is struggling at a specific point in time, the UK will most likely follow. In the past few years, this correlation has been impacted by various events that took place across Europe. The 2007/2008 financial crisis affected the entire world, but the UK managed to quickly take action to preserve its economy and currency. The UK’s official currency did plummet and the British economy was on the path of collapsing when in late 2008 the GBP reached its all-time low of €1.02. However, they considered revising their monetary policy and offering quantitative easing which eventually helped the country stabilize the economy.

Europe, on the other hand, took more time to come to terms with what had happened and, in the first two years after the crisis had occurred, Europe created the laws that would later prevent them from enacting bailout plans. Changes had to be made and soon after, between 2013 and 2015, Europe would face the emergence of great debt problems in Portugal, Greece, Spain, and Italy. With the announcement of Brexit in June 2016, the GBP suffered the greatest one-day fall of 6.02% against the EUR. Before the COVID-19 pandemic, the GBP was slowly getting back on its feet, but the current ongoing viral threat and the expectation of a new trade deal between the EU and the UK still make the EUR/GBP imitate the strained relationship between the two. The currency pair even went from its worst (1 EUR equaled 0.8301 GBP in February 2020) to its best exchange rate (1 EUR equaled 0.9427 GBP in March 2020) in one month. 

  • EUR/CHF

The correlations between the two currencies have been said to near 100% in particular due to the Swiss policies that have tied the CHF to the EUR. In the times of the EUR crisis, when the currency was plummeting, a great amount of money was directed to Switzerland. The Swiss banks are said to be some of the strongest ones in Europe and their neutral government was believed to be extremely stable, which is why many decided to send their euros in that direction. Owing to this great sell the EUR-buy the CHF movement was reflected in the currency pairs huge moves. At the peak of the crises, the pair would move from 1.40 to 1.05 in a matter of a few months. The moment this happened, the Swiss National Bank (SNB) decided to take action, particularly because their currency was that strong at the time. They put a peg at 1.20 and the chart moved 1500 pips up in approximately one hour. The correlation is still quite high and this generally indicates that the currency pair in question is not the best pair to trade. The EUR/CHF is currently believed not to be the pair from which traders can earn the most because if the EUR moves up, so will the CHF and vice versa. These simultaneous moves will often be of the same amounts and the opportunities to make money are thus limited with this currency pair. Instead of trading this pair, some professional traders believe that one should simply choose to trade other EUR-based pairs due to the greater liquidity of the currency.

Trading the EUR

Country Stability

The JPY and the USD are believed to be the safe-haven currencies, yet the USD may at times exhibit some unfavorable behavior. Traders would in such cases naturally divert to the other currencies with the greatest liquidity, i.e. the JPY and the EUR. The USD generally performs well in times of crisis, while in times of economic prosperity these currency pairs such as AUD/USD or USD/JPY seem to be too small liquidity pools. Naturally, the EUR is a favored alternative due to its high liquidity.

Interest Rates

The interest rates within the eurozone averaged 1.84 percent between 1998 until 2020, with an all-time high of 4.75% reached in October 2000 and a record low of 0% in March of 2016. Currently, the ECB’s interest rate is still set at 0%, last confirmed in July this year. The EUR is typically expected to be in the middle compared to other central banks’ rates (available below) and according to some econometric models the Euro area’s interest rate is projected to trend around 0.00 percent in 2021 as well.

Inflation

The topic of inflation is the European Central Bank’s most important aspect and is, thus, an extremely important indicator to which traders should be attentive when looking into Europe’s reports. Each European country has its individual CPI and PPI, but the same of the eurozone is also extremely important and informative. If inflation is below 2%, the ECB is likely to ease the monetary policy, while the approach may change towards the other end of the spectrum should it exceed 3.5%. 

Trade Deficits

Unlike the GBP or the USD, the EUR generally does not suffer from trade deficits, as this has traditionally not been a cause of concern in trading with foreign countries with regard to this currency.

Economic Activity

In terms of the overall economic activity within the Eurosystem, traders should look into GDP reports discussed earlier in the text and, in particular, Germany as the largest European economy and the biggest driver.

Market Analysis

Currently, we are witnessing a decline in overall market volatility with an impactful momentum building up across the markets. As the market keeps moving up, the volatility appears to be further declining. The pattern we are witnessing now, forming towards the end of the chart below, shows how the price broke out and pulled back only to change direction upwards. The EUR crosses rarely appear to be short of such interesting patterns and they seem to be preferred to the upside.

The EUR crosses seem to be developing really well and the EUR/NZD chart, for example, reveals some moving average crosses towards the end of the chart (see all charts below). The EUR/AUD pair also demonstrates this positive development, although we could potentially see a turn of events should the AUD weaken. The EUR/JPY is revealing a momentum taking place, especially when assessing a wider time frame. The EUR/USD activity is unfolding slowly and should it break at some point soon, the price could potentially exceed 1.20. Generally looking at the EUR basket, there seems to be a great possibility for a breakout very soon.

The market has not been showing a great deal of action in the previous few weeks, thus not pushing traders to enter new trades each day. As the final week of August is about to complete the month, we are looking into September expecting more volatility to break the previous consolation and calm periods. Traders interested in trading news events may need to patiently wait out this quiet period, awaiting new rounds of important reports to come out. The EUR currency pairs are doing well during this period, as it seems from the charts above. Nonetheless, for the time being, it is quite difficult to completely interpret the long-term effects the COVID-19 is going to have on the currency.

The EUR has already undergone crises in the past and yet it has lived to become an even stronger currency. The monetary policy of the ECB seems to be slowly adapting and Europe appears to be working hard to promote the currency and ensure its autonomy. The EUR has never challenged the USD and the EUR’s share in international is significantly lower. Still, the media shows an interest in the development of the EUR in these times of crisis, highlighting the belief that the currency’s potential has not been fully reached on a global scale. The EUR has certainly struggled in the past, in particular when the stronger countries had to step in and provide assistance to the weaker ones.

Despite the global viral threat and the history of this unusual currency, the ECB maintains a positive outlook with regard to the EUR, hoping to further promote the currency through a series of vital steps as well as fiscal and monetary policy changes. Currently, we are looking into the future where the EUR is directed towards stabilizing the monetary union, increasing the currency’s influence, and granting more benefits to the eurozone’s member states.

Categories
Forex Fundamental Analysis

EUR/AUD Global Macro Analysis – Part 3

EUR/AUD Exogenous Analysis

EUR/AUD Exogenous Analysis

EUR/AUD Exogenous Analysis

  • The EU and Australia Current Account to GDP differential

The current account to GDP shows the percentage of a country’s international trade that makes up the GDP. Countries with higher current account surplus have a higher current account to GDP ratio while those running deficits have a negative current account to GDP ratio.

In this case, if the GDP differential is positive, it means that the exchange rate for the EUR/AUD pair will increase. But if the differential is negative, then the exchange rate for the pair will drop.

In 2020, the current account to GDP ratio in the EU is expected to hit 3.4% and -1.5% in Australia. Thus, the current account to GDP differential is 4.9%. We assign a score of 3.

Typically, investors put their money into financial instruments that offer higher interest rates. Therefore, the country with a higher interest rate should be expected to have more inflow of funds than that with a lower interest rate. Note that when foreign investors invest in the local economy, they have to convert their money into the domestic currency. This conversion increases the demand for the domestic currency in the forex market hence increasing its value.

In forex trading, if the EUR/AUD pair has a positive interest rate differential, it means that the exchange rate of the pair will increase. Conversely, a negative interest rate differential implies that the pair has a bearish outlook.

In 2020, the Reserve Bank of Australia cut the cash rate from 0.75% to 0.1%, while the ECB has maintained interest rates at 0%. Therefore, the interest rate differential for the EUR/AUD pair is -0.1%. We assign a score of -3.

  • The EU and Australia Growth Rate differential

In any economy, the value of the domestic currency is mostly determined by the growth of the local economy. Therefore, a country whose economy is growing faster will see its domestic currency appreciate faster.

If the growth rate differential is negative for the EUR/AUD pair, we can expect a bearish outlook. If it is positive, it implies that the exchange rate for the pair will rise.

For the first three quarters of 2020, the Australian economy contracted by 4% and the EU economy by 2.9%. The GDP growth differential is 1.1%. We assign a score of 2.

Conclusion

The EUR/AUD exogenous factors have a score of 2. If the conditions observed in the exogenous factors persist, we can expect that the pair will adopt a bullish trend in the short-term.

The technical analysis of the EUR/AUD shows the weekly price chart bouncing off the oversold region of the lower Bollinger bands. More so, the pair is still trading above the 200-period MA. All the best.

Categories
Forex Chart Basics

If EUR/USD Buying is High, Does That Affect the Fluctuation/Swing in the Chart?

The EUR-USD cross is an intriguing one. With a total of 9.6 million traders in the world, approximately 37% of all volume at the global level is held by this currency pair alone. In fact, not only are the EUR and the USD two of the most traded currencies individually but they also comprise the […]

The EUR-USD cross is an intriguing one. With a total of 9.6 million traders in the world, approximately 37% of all volume at the global level is held by this currency pair alone. In fact, not only are the EUR and the USD two of the most traded currencies individually but they also comprise the […]

The EUR-USD cross is an intriguing one. With a total of 9.6 million traders in the world, approximately 37% of all volume at the global level is held by this currency pair alone. In fact, not only are the EUR and the USD two of the most traded currencies individually but they also comprise the most liquid pair.

Traders from all corners of the planet seem to love the EUR-USD because of tighter spreads and less slippage, but this currency pair is, at the same time, the Holy Grail for major players in the market.

There are no Coincidences

Forex is dominated by the Interbank Market, which is used by various financial institutions to trade currencies between themselves. Interestingly enough, 50% of this Interbank Market is controlled by the largest banks.

Out of approximately 25 000 banking institutions existing in the world, Deutsche Bank, Citi, JP Morgan Chase, and HSBC are some of the most prominent. And, you should know that their interest lies where yours does as well – profit.

How come?

Well, big banks love to manipulate the prices. Have you ever noticed how the price suddenly changed when everyone was certain that it would keep on going in the same direction? There’s the catch.

Big banks focus on the concentration of activity and they step in right where most traders are to take the cream off. To be specific, it is not just where traders are in the chart at that moment but where most of them are headed. 

How the Big Banks Interfere

It is unfortunate what sentiment can do. Many traders keep using the same tools and indicators and they, logically, end up losing. We may not know the extent of tools the big banks use to maintain control and insight, but the same information is accessible to everyone through IG Client Sentiment Indicator or FXCM SSI. 

While the big banks have the power to detect market activity, they cannot see your specific order. They can, however, discover if the majority of orders were long or short, based on which they can manipulate the price.

So, the more the orders push the market in a specific direction, the more likely are the banks to interfere and turn everything around.

USD is a Magnet

The choice of currencies can have an equally strong influence on the trade as well. As the USD is always in demand, it is more likely to be always on the big banks’ radar. Any news events concerning the currency will also stir up the market and set the ground for major turbulence.

The USD is, in fact, so prone to react to any news that any tweets of the previous US president, Donald Trump, caused a commotion in the market. Major US economic reports (GDP, employment, producer and consumer price index, retail sales, and trade deficit reports) are also perfect opportunities for the big banks to take their share of traders’ money.

The EUR is specific because the number of reports concerning the currency is higher due to the number of Eurozone member states. Although related economic reports (especially those of France and Germany) are valuable for traders, EUR pairs seem to do well even when they do come out. 

Since any currency combination is determined by both currencies, the EUR-USD (as the most traded and liquid pair) is that more monitored by the big banks.

The big banks’ involvement can be seen in other crosses involving this pair. For example, the EUR-USD pair has historically exhibited a high correlation with the S&P500 as they both involve the US economy. Interestingly enough, these major banking institutions have no significant dominance over precious metals, which typically dictate what will happen with the pair.

Manipulation at its Best

The number of individual orders, as we can see, does not have the power to drive the market. Individual requests cannot affect market movement per se. The only power that can create an imbalance between buying and selling orders is the big banks. 

Anyone trading the EUR-USD can see these sudden changes in prices, which leave behind many unfilled orders on the supply or the demand level. The big banks will use any opportunity to cause such friction to have their orders filled after the price returns to the zone.

These are the reasons why some forex professionals advise beginners to start trading some other currency pairs that are less susceptible to such interferences.

Indicators’ Predicting Power

Many traders use the sentiment to predict future activity in the market, which is a highly volatile and unpredictable tool. While we cannot control the big bank’s involvement, we can limit their impact by not focusing on the number of orders in the market and avoiding circumstances that these major players deem inviting. 

Any indicator is a result-oriented tool that has no power in predicting the future. News will come out and changes will occur in the world, but our task as traders is to adopt the skills that can raise us above the level of sentiment and provide us with stability.

Instead of focusing on the quantity of orders, supply levels, rather strive to determine the overall market direction and evade the banks’ radar as successfully as possible.

Own your Share of Responsibility

It is important to understand also that if big banks ever disappeared, the nature of this market would change entirely. Maybe the volume could change or forex might start to resemble the stock market. That is why it is important to shift the focus from losses and adopt an opportunistic and proactive mindset. How can you take advantage of the big banks’ existence?

The best solution to this challenge is building your own strategy and learning to trust that system. It should help you avoid the patterns the majority of traders keep repeating. This is a classic contrarian trader view of forex.

Trading currencies requires each trader to let go of the herd mentality. You need to become as independent as possible, especially when it comes to heavily monitored and liquid pairs such as EUR-USD. Your best bet is to invest in learning about trading psychology and letting go of the belief that individuals can impact the market.

Knowledge is Power

If you are still unconvinced that sentiment is not your point of reference, at least aim to use credible sources. 

Twitter, for example, offers an excellent pool of information – you can explore updates about IG Client Sentiment Index on DailyFXTeam, learn about more SSI currency pairs on FXCM_MarketData, or discover some invaluable educational materials on www.forex.academy, and build your unique way of trading. 

Finally remember that it is your skillset and toolbox that will allow you to trade the EUR-USD currency pair successfully – not the news, not the orders, and certainly not the sentiment. Use the traders’ sentiment only to see if there is enough “profit space” for you to take that contrarian trade direction. If 90% of traders are long on EUR-USD, it is hardly going to get higher, do not go into the wall. As the flow in the market is directly managed by external factors, you will primarily benefit from having a system in place that will guide you through any potential volatility caused by news events and the big banks. 

 

Categories
Forex Fundamental Analysis

EUR/GBP Global Macro Analysis – Part 1

Introduction

Introduction

Introduction

A global macro analysis attempts to analyze the endogenous factors that influence the value of a country’s domestic currency and exogenous factors that affect how the domestic currency fairs in the forex market. The endogenous analysis will cover fundamental economic factors that drive GDP growth in the UK and the Euro Area. The exogenous factors will analyze the price exchange rate dynamics between the EUR and the GBP.

Ranking Scale

Both the endogenous and the exogenous factors will be ranked on a scale of -10 to +10. A negative ranking for the endogenous factors means that they had a deflationary effect on the domestic currency. A positive ranking implies that they had an inflationary impact. Similarly, a negative score for the exogenous factors means the EUR/GBP is bearish and bullish when the score is positive.

EUR Endogenous Analysis – Summary

The endogenous analysis of the EUR has an overall score of -3. Based on the factors we have analyzed, we can expect that the Euro has marginally depreciated in 2020.

This is a quarterly measurement of the changes in both part-time and full-time employment in the EU. It includes individuals working for profit or pay and those who perform family work unpaid. Changes in employment help put economic growth in perspective since an expanding economy corresponds to increased employment opportunities and a contracting economy leads to job losses.

In the third quarter of 2020, employment in the EU increased by 0.9% compared to the 2.7% drop in Q2. Up to Q3 2020, employment in the EU has dropped by 2.1 %. Based on correlation with GDP, we assign a score of -5.

  • European Union GDP Deflator

The GDP deflator is an in-depth measure of the rate of inflation. It measures the changes in the price levels of all goods and services produced in an economy. Therefore, it is the perfect measure of the changes in real economic activities. i.e., it filters out any nominal changes in price.

In Q3 of 2020, the EU GDP deflator rose to 107.17 from 106.37 in Q2. Cumulatively, the EU GDP deflator in 2020 has increased by 2.45. We assign a score of 3 based on the weak correlation between the inflation rate and GDP.

  • European Union Manufacturing Production

In the EU, manufacturing production accounts for about 80% of the total industrial output. With most EU economies heavily reliant on manufacturing, the sector forms a significant portion of the GDP and the labor market.

In September 2020, the YoY manufacturing production in the EU decreased by 6.1%. This is an improvement from the decline of 6.3% in August. The overall industrial production reduced by 5.8% during the period.

We assign a score of -5 based on its correlation with the GDP.

  • Euro Area Manufacturing PMI

Markit surveys about 3000 manufacturing firms. The Markit manufacturing PMI comprises five indexes: new orders accounting for 30% weight of the index, output 25%, employment 20%, delivery by suppliers 15%, and inventory 10%. The Euro Area manufacturing is seen to be improving when the index is above 50 and contracting when below 50. At 50, the index shows that there is no change in the manufacturing sector.

In November 2020, the IHS Markit Eurozone Manufacturing PMI was 53.8, down from 54.8 registered in October. The October reading was the highest ever recorded in the past two years. Despite the November drop, the manufacturing PMI is still higher than during the pre-pandemic period. We, therefore, assign a score of 5.

  • European Union Retail Sales

Retail Sales measures the change in the value of goods and services purchased by households for final consumption. In the EU, food, drinks, and tobacco contribute to the highest in retail sales – 40%. Furniture and electrical goods account for 11.5%, books and computer equipment 11.4%, clothing and textile 9.2%, fuel 9%, medical and pharmaceuticals 8.9%, non-food products and others 10%.

In October 2020, the MoM EU retail sales increased by 1.5%, while the YoY increased by 4.2%. Based on our correlation analysis with EU GDP, we assign a score of 3.

  • Euro Area Consumer Confidence

The consumer confidence survey in the Euro Area covers about 23,000 households. Their opinions are gauged from issues ranging from economic expectations, financial situation, savings goals, and expenditure plans on households’ goods and services. These responses are aggregated into an index from -100 to 100. Consumer confidence is a leading indicator of household expenditure, which is a primary driver of the GDP.

In November 2020, the Euro Area consumer confidence was -17.6, down from -15.5 in October. It is also the lowest reading since May – primarily because of the new lockdown measures bound to impact the labor market. Based on correlation with GDP, we assign a score of -3.

  • Euro Area Government Debt to GDP

This is meant to gauge whether the government is over-leveraged and if it might run into problems servicing future debt obligations.

The Euro Area Government Debt to GDP dropped from 79.5% in 2018 to 77.6% in 2019. In 2020, it is projected to hit 102% but stabilize around 92% in the long run. Based on correlation with GDP, we assign a score of -1.

In our very next article, we have performed the Endogenous analysis of GBP to see if it has appreciated or depreciated in this year. Make sure to check that and let us know in case of any questions in the comments below. Cheers.

Categories
Forex Elliott Wave Forex Market Analysis

EURUSD: is 1.22 at Hand?

The EURUSD pair advances in the extreme bullish sentiment range, consolidating the short-term rally that started on November 04th when the price found fresh buyers at 0.15615.

The EURUSD pair advances in the extreme bullish sentiment range, consolidating the short-term rally that started on November 04th when the price found fresh buyers at 0.15615.

The EURUSD pair advances in the extreme bullish sentiment range, consolidating the short-term rally that started on November 04th when the price found fresh buyers at 1.15615.

Technical Overview

The following 8-hour chart shows the short-term participants’ sentiment keeps pushing higher the price action. In this view, the common currency looks to consolidate the pair’s impulsive movement that began in early November.

In this chart, we can see that the current primary trend is clearly bullish. Simultaneously, the accelerated trendline identified with the green line shows the short-term bull market remains intact.

On the other hand, both the intraday sideways channel and the retracement observed in the EMA(60) to Close Index lead to a consolidation of the rally experienced by the common currency during the previous trading sessions.

Therefore, if the price action penetrates below 1.20338, the likelihood of a reversal movement in the EURUSD increases.

Short-term Technical Outlook

The short-term Elliott Wave view for the EURUSD pair unfolded in the next 4-hour chart reveals the advance in an incomplete bullish impulsive wave of Minor degree identified in green.

The EURUSD 4-hour chart illustrates the impulsive rally that began on November 04th when the price found fresh buyers at 1.16025. The price action currently looks to have completed its third wave of Minute degree labeled in black, confirmed by the broadest distance shown on the MACD oscillator. 

On the other hand, the consolidation structure in progress reveals the potential sideways advance of its fourth wave. Considering the Elliott Wave Principle, the fourth wave shouldn’t penetrate below the invalidation level located at 1.19201, which corresponds to the end of wave ((i)) in black.

Also, considering both the second wave, which looks like a simple corrective pattern, and the alternation principle on corrective waves, the fourth wave should be a complex correction. In this context, the fourth wave could be a triangle or a combination of simple waves grouped in a double-three or a triple-three formation.

Finally, the extension in terms of time should indicate the exhaustion of the bullish pressure; thus, the common currency could soon end its bullish cycle.

Categories
Forex Market Analysis

Daily F.X. Analysis, June 9 – Top Trade Setups In Forex – European GDP in Highlights! 

On the news front, the Eurozone is due to release series of high impact events that may drive movements in the Euro related currency pairs. The events like trade balance, GDP, and final employment change will be in the highlights.

On the news front, the Eurozone is due to release series of high impact events that may drive movements in the Euro related currency pairs. The events like trade balance, GDP, and final employment change will be in the highlights.

On the news front, the Eurozone is due to release series of high impact events that may drive movements in the Euro related currency pairs. The events like trade balance, GDP, and final employment change will be in the highlights.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/US prices were closed at 1.12937 after placing a high of 1.3196 and a low of 1.12680. Overall the movement of the EUR/USD pair remained flat throughout the day.

On Monday, the President of the European Central Bank, Christine Lagarde, said that the central bank’s measure to fight the coronavirus crisis was proportionate to the severe risks facing its mandate.

Lagarde said during a hearing at the Committee on economic and monetary affairs of the European Parliament, which was conducted via video conference, that the crisis-related measures were temporary, targeted, and proportionate.

On Thursday in its monetary policy decision, ECB announced an additional 600 billion euros in its pandemic emergency purchase program (PEPP) and scaled up its previous 750 billion Euro, to extend the program till mid-2021.

According to Lagarde, ECB continuously monitors the proportionality of its instruments, and she said that the net effects to be gained by PEPP expansion were overwhelmingly positive. The need for expansion was to avoid any deeper recession and quickening the pathway towards normalization.

When asked about the German court ruling of the ECB’s massive public sector purchase program, she said she was confident that a solution could be found because it was addressed to the German federal government and the German Parliament.

On the data front, at 11:00 GMT, the German Industrial Production showed a decline of 17.9% in April against the expectations of 16% and weighed on shared currency euro. AT 13:30 GMT, the Sentix Investor Confidence from the Eurozone for June decline to 24.8 from the expected reduction of 22.0 and weighed on Euro.

The depressed Euro after inferior to expected German Industrial Production dragged the pair EUR/USD with itself to the low of 1.12680.

Meanwhile, Lagarde’s Speech explaining the benefits of ECB’s latest expansion in PEPP provided strength to Euro, which pushed the EUR/USD pair higher.

Lagarde’s Speech and economic data from Eurozone moved in the opposite direction, and hence, the pair EUR/USD remained flat throughout the day as it closed at the same level it was started with. No data was to be released from the American side, so the pair followed Euro’s directions.

Daily Support and Resistance

  • R3 1.1357
  • R2 1.1338
  • R1 1.1327

Pivot Point 1.1308

  • S1 1.1296
  • S2 1.1278
  • S3 1.1266

EUR/USD– Trading Tip

The EUR/USD is consolidating in a narrow trading range of 1.1370 – 1.1276 level, and right now, it seems to break out of this trading range. On the lower side, the next target level seems to be 1.1185. Currently, the pair is facing immediate support around 1.1274 level, and closing of candles below this level may lead the EUR/USD prices further lower towards 1.1185 level, which is extended by the 50 EMA level. On the higher side, resistance holds at 1.1315 level today. Odds of bearish bias remains solid today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.27235 after placing a high of 1.27358 and a low of 1.26278. Overall the movement of GBP/USD remained bullish throughout the day. The broad-based U.S. dollar selling bias after the positive tone around greenback followed by Friday’s job report vanished pushed the pair GBP/USD higher on Monday. The currency pair GBP/USD raised for the 8th consecutive day on Monday and continued its bullish rally.

The weakness of the U.S. dollar was attributed to weak U.S. yields. The U.S. dollar index (DXY) turned negative on the day and fell back to below 97.00 level. The U.S. stock was high on the back of increased risk appetite.

On the other hand, the E.U. chief negotiator, Michel Barnier, was supposed to present a compromise proposal on access to British waters during the latest round of talks, but at the last minute, he was blocked to present the proposal by its member states with large fishing communities.

E.U. now expects the talks to drag into October, but the U.K. has ruled it out and said that it was unacceptable. E.U. wanted to intensify and accelerate its work to make progress with the negotiations, and the U.K. need to prepare its businesses for a new trading environment.

On the fishing issue, the E.U. wants the U.K. to follow the structures of standard fisheries policy (CFP) from the end of 2020. But British fishing communities claim that the policy left the U.K. with far too few fish to catch, so they want to be an independent coastal state from the end of 2020. On the data front, there was no macroeconomic data to be released from both sides so, the pair continued following its previous day’s trend and posted gains on the back of the risk-on market sentiment.

Daily Support and Resistance

  • R3 1.28
  • R2 1.2765
  • R1 1.2742

Pivot Point 1.2707

  • S1 1.2684
  • S2 1.2649
  • S3 1.2627

GBP/USD– Trading Tip

The GBP/USD’s overall trend is bullish as the pair continues to reach 1.2690 levels, having violated the triple top level on the 4-hour timeframe. The pair is retracing a bit; perhaps, investors are doing some profit-taking before taking any additional buying position in Sterling. Bullish trend continuation leads to GBP/USD prices towards the next resistance level of 1.2760 level. Above this, the next resistance holds around 1.2795 level. Conversely, the support is likely to be found around 1.2665 and 1.2601 level today. Let’s look for selling below 1.2707 and buying above this level today. 

USD/JPY – Daily Analysis

 The USD/JPY pair was closed at 108.426 after placing a high of 109.691 and a low of 108.232. Overall the movement of the USD/JPY pair remained strongly bearish throughout the day. The pair USD/JPY posted a steeper loss on Monday amid the broad-based U.S. dollar weakness and improved Japanese economic outlook. The pair dropped on Monday after posting gains for the previous four consecutive days.

On the data front, at 4:50 GMT, the Bank Lending for the year from Japan increased to 4.8% in May from 2.9% in April. The Final GDP for the quarter decreased by 0.6% against the expected decline of 0.5% and weighed on Yen. At 4:52 GMT, the Current Account Balance for April came short of expectations of 0.33T as 0.25T and weighed on Japanese Yen. The Final GDP Price Index for the year came in line with the expectations if 0.9%. At 10:02 GMT, the Economy Watchers Sentiment, however, came in favor of Japanese Yen as 15.5 against the expected 12.6.

The preliminary reading of Japan’s Q1 GDP moved from -0.9% to -0.6% and came in better, which indicated the readiness of Japanese policymakers with extra stimulus if needed to fight against the pandemic.

Moreover, the better outlook of Japan’s current economic condition supported the Japanese Yen on Monday and weighed on the USD/JPY pair.

On the other hand, despite upbeat economic data from the U.S., the greenback lost its demand due to the drop in risk barometer that day. The rush of traders’ return from riskier assets weighed on the U.S. dollar and made it weak. 

Daily Support and Resistance    

  • R3 110.81
  • R2 110.25
  • R1 109.34

Pivot Point 108.79

  • S1 107.88
  • S2 107.33
  • S3 106.42

USD/JPY – Trading Tips

The USD/JPY fell dramatically to violate the narrow trading range of 109.800 – 109.255, and now it’s trading somewhere around 107.900. On the 4 hour timeframe, the USD/JPY is likely to find support at 107.900, and below this, the upward trendline may extend support around 107.600 level. The Japanese currency pair has already crossed below 50 EMA, favoring selling bias in the pair today. Let’s consider taking selling trades below 108.50 today. Good luck! 

Categories
Forex Market Analysis

Daily F.X. Analysis, June 8 – Top Trade Setups In Forex – Dollar Strengthens Over NFP! 

On the news front, the eyes will remain on the German Industrial Production m/m and ECB President Lagarde Speaks. Both of these may have an impact on the Euro related currency pairs.

On the news front, the eyes will remain on the German Industrial Production m/m and ECB President Lagarde Speaks. Both of these may have an impact on the Euro related currency pairs.

On the news front, the eyes will remain on the German Industrial Production m/m and ECB President Lagarde Speaks. Both of these may have an impact on the Euro related currency pairs.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.12911 after placing a high of 1.13835 and a low of 1.12781. Overall the movement of EUR/USD remained bearish throughout the day. The EUR/USD pair rose to 1.13835 near 13-weeks highest level but failed to remain there and broke its nine days bullish streak and fell on Friday amid U.S. dollar strength across the board after the release of US Non-Farm Employment Change.

The pair EUR/USD was on bullish track after the announcement of an additional 600 billion euros in the emergency package from the European Central Bank on Thursday. The package was announced to cover up the losses faced after the coronavirus induced lockdowns across the globe and its impact on the global economy.

The additional 600 billion euros by ECB in its pandemic emergency purchase program (PEPP) made the total size of aid provided after the coronavirus crisis to 1.35 trillion euros. ECB also said that the updated forecast about GDP showed a contraction of 8.7% this year, and the inflation expectations were to rise by 0.3% this year and 0.8% in next year. EUR/USD moved in an upward direction after the ECB’s PEPP announcement and continued to follow the trend in early sessions on Friday and rose above 13-weeks higher level.

However, after the release of US Non-Farm Employment Change, the pair EUR/USD started to move in the opposite direction at the ending day of the week. At 17:30 GMT, the Non-Farm Employment Change from the United States showed that 2.509M people were hired in May against 7.750M of job loss expectations. A stronger than expected job report from the U.S. gave strength to the U.S. dollar across the board and weighed on EUR/SD pair.

Adding in the strength on the U.S. dollar was the Unemployment Rate, which came in as 13.3% against the expectations of 19.4% and further dragged down the pair EUR/USD pair.

On the other hand, from the Europe side, at 11:00 GMT, the German Factory Orders for April were also released which showed that factory orders were reduced by 25.8% in April against the expected drop of 20% and weighed on Euro which ultimately dragged the pair in a downward trend.

Daily Support and Resistance

  • R3 1.1357
  • R2 1.1338
  • R1 1.1327

Pivot Point 1.1308

  • S1 1.1296
  • S2 1.1278
  • S3 1.1266

EUR/USD– Trading Tip

The EUR/USD is also following a bearish trend on the back of a stronger dollar. Currently, the pair is facing immediate support around 1.1284 level, and closing of candles below this level may lead the EUR/USD prices further lower towards 1.1244 level, the support, which is extended by the 50 EMA level. On the higher side, resistance holds at 1.1315 level today. Odds of bearish bias remains solid today.

GBP/USD – Daily Analysis

The GBP/USD was closed at 1.26689 after placing a high of 1.26901 and a low of 1.25828. Overall the movement of GBP/USD pair remained bullish throughout the day. The pound rose for 7th consecutive day on Friday amid the rising hopes for a deal between E.U. & U.K. but lost some of its daily gains after the release of U.S. on-Farm Employment Change.

Matt Hancock, the Cabinet Minister of the U.K., said that a trade deal with the E.U. was still possible on very reasonable demands. In the latest rounds, both sides admitted that a little progress was made, and they were very hopeful that no-deal outcomes to the talks could be avoided.

The U.K. & E.U. differences have remained under four key points of fisheries: competition rules, governance, and police cooperation. UK PM Boris Johnson and President of European Commission, Ursula von der Leyen, are expected to meet later this month.

The U.K. has only until the end of June to apply for the extension of the transition period, but Johnson has ruled it out. However, the hopes that U.K. & E.U. will reach a deal after the described little progress in talks from both sides increased, and hence, the pair GBP/USD found traction in the market.

Whereas, the investors think that chances for no-deal Brexit were more than ever because the coronavirus pandemic will lead to one of the worst recessions in modern history, and investors think that hardcore Brexiteers will use the recession as a perfect distraction to get to a no-deal Brexit done.

On the data front, at 12:30 GMT, the Halifax Housing Price Index for May from the United Kingdom was declined by 0.2% against the expected decline of 0.7% and supported British Pound which ultimately pushed the GBP/USD pair on bullish track on Friday and added in the pair gains.

Meanwhile, the U.S. dollar strength after the release of US Non-Farm Employment Change exerted pressure on the rising prices of GBP/USD pair on Friday and made it lose some of its daily gains.

Daily Support and Resistance

  • R3 1.28
  • R2 1.2765
  • R1 1.2742

Pivot Point 1.2707

  • S1 1.2684
  • S2 1.2649
  • S3 1.2627

GBP/USD– Trading Tip

On Monday, the technical side of the GBP/USD seems bullish as the pair continues to reach 1.2690 levels, having violated the triple top level on the 4-hour timeframe. The GBP/USD pair has formed an upward regression trend channel, and it’s driving further buying trend in the Cable. Bullish Continuation of a bullish trend can lead to GBP/USD prices towards the next resistance level of 1.2760 level. Above this, the next resistance holds around 1.2795 level. Conversely, the support is likely to be found around 1.2665 and 1.2601 level today. Let’s look for selling below 1.2707 and buying above this level today. 

USD/JPY – Daily Analysis

The USD/JPY was closed at 109.573 after placing a high of 109.848 and a low of 109.042. Overall the movement of USD/JPY remained bullish throughout the day. The USD/JPY pair surged for the fourth consecutive day on Friday and gained some strong follow-through traction after the release of surprisingly stronger than expected U.S. monthly jobs data. The headline data of Friday, NFP, showed that 2.509M jobs were added in May, whereas the forecast was about 8M job loss.

Adding in the optimism was the unemployment rate, which beat the market expectations and was reported as 13.7% against 19.4% of expectations. Better than expected, data from the U.S. economy raised the bars for recent optimism over the sharp V-shaped recovery for global economic recovery. This increased the already stronger risk appetite In the market and hence, the USD/JPY pair gained for the 4th consecutive day on Friday.

At 4:30 GMT, the Household Spending for the year from Japan was declined by 11.1% against the expected decline of 12.8% and supported the Japanese Yen. At 10:00 GMT, the Leading Indicators from Japan remained flat with the expectations of 76.2%.

From the American side, the Average Hourly Earnings in May was declined by 1.0%, whereas it was expected to rise by 1.0%. The US Non-Farm Employment Change showed that 2.509M people were hired back in May, which were expected to show job loss of 7.750M people. The Unemployment Rate in April fell short of 19.4% expectations and came in as 13.3% and supported the U.S. dollar.

Daily Support and Resistance    

  • R3 109.79
  • R2 109.74
  • R1 109.67

Pivot Point 109.62

  • S1 109.56
  • S2 109.5
  • S3 109.44

USD/JPY – Trading Tips

The USD/JPY is consolidating in a narrow trading range of 109.800 – 109.255. The stronger than expected NFP figures drove buying in the USD/JPY pair on Friday, but now the traders seem to capture retracement in the market. A bearish breakout of 109.280 level can drive selling until the next support level of 109, which marks 38.2% Fibonacci retracement. The 50 EMA and MACD both are supporting the buying trend in the USD/JPY pair, and it can lead the USD/JPY prices further higher today. On the higher side, the resistance holds around 109.850. Let’s wait for a breakout of 109.800 – 109.255 to determine further trends in the USD/JPY pair. All the best for today! 

 

Categories
Forex Market Analysis

Daily F.X. Analysis, June 01 – Top Trade Setups In Forex – ISM Manufacturing PMI In Highlights

On Monday, the fundamentals side is likely to drive no major movement during the European session. Still, the U.S. session may offer some price action on the release of ISM manufacturing PMI figures today.

On Monday, the fundamentals side is likely to drive no major movement during the European session. Still, the U.S. session may offer some price action on the release of ISM manufacturing PMI figures today.

On Monday, the fundamentals side is likely to drive no major movement during the European session. Still, the U.S. session may offer some price action on the release of ISM manufacturing PMI figures today.

Economic Events to Watch Today

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.11032 after placing a high of 1.11450 and a low of 1.10676. Overall the movement of the EUR/USD pair remained bullish throughout the day. The EUR/USD continued its previous trend and finally crossed above 1.11 level on Friday and rose for the 5th consecutive day this week. The pair showed the longest run since late March at the end of this week on the back of Euro’s strength.

At 11:00 GMT, the German Import Prices for April were released as -1.8% against the -1.5% forecasted and weighed on Euro. The German Retail Sales dropped less than expected 12% as5.3% in April and supported single currency Euro. At 11:45 GMT, the French Consumer Spending for April was declined by 20.2% against the forecasted 14.5% and weighed on Euro. The French Prelim CPI for May dropped by0.05 from the expected drop of 0.1% and weighed on Euro.

However, the French Prelim GDP for the quarter dropped less than the expectations of 5.8% decline and came in as 5.3% and supported shared currency Euro. At 13:00GMT, the M3 Money Supply for the whole bloc surged to 8.3% from the forecasted 8.1% and supported Euro.

The Private Loans from the whole bloc for the year dropped to 3.0%from the forecasted 3.5%. At 14:00 GMT, the CPI Flash estimate for the year for the whole Eurozone came in line with the expectations of 0.1%.  

However, the Core CLPI Flash estimate of the whole bloc for the year increased to 0.9% from the expected 08% and supported Euro. The Italian CPI for May came in line with the expectations of -0.1%.

Better than expected GDP and CPI data from Eurozone gave strength to the Euro against the U.S. dollar and supported the upward trend of EUR/USD pair on Friday.

On the other hand, the United States’ economic data was gloomy and weighed on the U.S. dollar, which added in the upward movement of EUR/USD pair. At 17:30 GMT, the Core PCE Price Index for April was dropped more than the expected -0.3% as -0.4% and weighed on the U.S. dollar. Personal Spending also declined more than expectations of 12.6% decline as 13.6% in April and weighed on the U.S. dollar. The Goods Trade Balance for April showed a deficit of 69.7B against the forecasted deficit of 64.8B and weighed on the U.S. dollar. The Prelim Wholesale Inventories for April surged to 0.4% from the expected -0.5% and added in U.S. dollar weakness.

The Chicago PMI at 18:45 GMT came in as 32.3 points against 40.1 of expectations and weighed the U.S. dollar. The Revised Consumer Sentiment from the University of Michigan for May dropped to 72.3 from the expected 73.7 and weighed on the U.S. dollar. The Revised Inflation Expectations from the University of Michigan for May were reported as 3.2% from the previous 3.0%.


Daily Support and Resistance

  • R3 1.1158
  • R2 1.1141
  • R1 1.1129

Pivot Point 1.1113

  • S1 1.1101
  • S2 1.1085
  • S3 1.1073

EUR/USD– Trading Tip

The bullish bias of the EUR/USD continues to prevail in the market as the EUR/USD is heading north towards the next target level of 1.1150 level. A bullish breakout of 1.1150 level may lead the pair towards 1.1220 level today while support holds around 1.1080 level. Bullish bias seems dominant today. Consider taking buying trades over 1.1140 level to target 1.1199. 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.23459 after placing a high of1.23940 and a low of 1.22902. Overall the movement of GBP/USD pair remained bullish throughout the day. The pair GBP/USD reached above its two-week high level on Friday near 1.2400 level but could not stay there and dropped back to 1.2300 level. The drop in sterling was caused by the awaiting speech of U.S. President Donald Trump.

Sterling started its day on firm tone and extended its previous day’s gains on the back of broad-based U.S. dollar weakness due to poor than expected U.S. economic data release. The decline in U.S. Treasury bond yields also added to the fault of the U.S. dollar. The Chicago PMI for May dropped to 32.3 from the expected 40.1 and weighed on the U.S. dollar. The Revised Consumer Sentiment from the University of Michigan for May also dropped to 72.3 against the expected 73.7 and added negative pressure on USD.

Other than economic data, the comments from Fed Chair Jerome Powell also exerted pressure on the U.S. dollar. Powell said that the U.S. economy had crossed many red lines that had never crossed before. He also stated that the Fed was launching Main Street Lending Program, which had not used since the Great Depression. After these comments, the GBP/USD pair started to move upward.

Investors became cautious before U.S. President Donald Trump’s speech on Friday and started selling Sterling, who made the pair lose its early daily gains. However, after his speech, the pair continued its bullish trend and ended its day with a bullish candle. The heat between China and the United States was enhanced after the strong response from U.S. President Donald Trump over the new security bill in Hong Kong by China, which was highly awaited as Trump had announced it before earlier this week.

Daily Support and Resistance

  • R3 1.2388
  • R2 1.2371
  • R1 1.2358

Pivot Point 1.2341

  • S1 1.2328
  • S2 1.2311
  • S3 1.2298

GBP/USD– Trading Tip

The GBP/USD continues trading bullish as it has violated the double top resistance area around 1.2364 level. Bullish crossover of this level is now likely to extend the buying trend until 1.2458, but on the way, the upward channel’s upward trendline is likely to provide resistance around 1.2410, while the support level stays at 1.2370 today. 

On the 4-hour timeframe, the 50 EMA is suggesting bullish bias, and now the MACD is suggesting buying trend in the GBP/USD pair as the histograms are forming above zero levels. Consider taking buying trades over 1.2370 and selling below the same level today.

USD/JPY – Daily Analysis

The USD/JPY was closed at 107.767 after placing a high of 107.894 and a low of 107.077. Overall the movement of USD/JPY remained bullish throughout the day. At 4:30 GMT, the Tokyo Core CPI for the year came in as 0.2% against -0.2% and supported the Japanese Yen. The Unemployment Rate from Japan also decreased in April to2.6% from the expectations of 2.7% and supported Yen.

However, the Prelim Industrial Production for April dropped by 9.1% against the expected drop of 5.5% and weighed on Yen at 4:50 GMT. The Retail Sales for the year from Japan also dropped by 13.7% against the expected drop of 11.2% and weighed on Yen. At 10:00 GMT, the Housing Starts for the year dropped by 12.9% against the drop of 12% expected and weighed on Yen. At 10:02 GMT, the Consumer Confidence for April increased to 24.0 from the expected 213 and supported Yen.

The increased confidence in Japan’s economy and better than expected CPI and Unemployment Rate supported Yen and made it stronger against the U.S. dollar, which dragged the USD/JPY currency pair in earlier Asian trading session on Friday.

 The pair dropped to its two weeks lowest level on Friday at 107.077 on the back of increased demand for safe-haven Yen amid escalating tensions between the U.S. and China. On Friday, the President of the United States, Donald Trump announced to revoke its relationship with WHO due to its mishandling of coronavirus pandemic. The U.S. had warned the WHO to be independent of China, change its reforms, and give it 30 days to do so. However, when on Friday, 30 days ended, and no response came back from WHO, the U.S. declared to end its relationship with it.

Trump said that the U.S.’s funds to transfer to WHO will be given to more deserving other nations where urgent help will be required. The decision came in after China issued and passed a new security bill on Hong Kong, and the U.S. said that it would retaliate.

Continue reading “Daily F.X. Analysis, June 01 – Top Trade Setups In Forex – ISM Manufacturing PMI In Highlights”
Categories
Forex Market Analysis

Daily F.X. Analysis, May 29 – Top Trade Setups In Forex – Fed Chair Powell Speech in Focus! 

The European Commission will post May CPI (+0.1% on-year expected). The European Central Bank will publish the eurozone’s M3 money supply in April (+8.2% on-year expected). The German Federal Statistical Office will report April retail sales (-12.0% on month expected). France’s INSEE will release final readings of 1Q GDP (-5.4% on year expected) and May CPI (+0.3% on-year expected). The U.S. Commerce Department will post April wholesale inventories (-0.7% on month expected), advance goods trade balance (65 billion dollars deficit expected), personal spending (-12.8% on month expected), and personal income (-6.0% on month expected). The Market News International will release May Chicago PMI (40.0 expected). The University of Michigan will report its final data of the May Consumer Sentiment Index (74.0 expected).

The European Commission will post May CPI (+0.1% on-year expected). The European Central Bank will publish the eurozone’s M3 money supply in April (+8.2% on-year expected). The German Federal Statistical Office will report April retail sales (-12.0% on month expected). France’s INSEE will release final readings of 1Q GDP (-5.4% on year expected) and May CPI (+0.3% on-year expected). The U.S. Commerce Department will post April wholesale inventories (-0.7% on month expected), advance goods trade balance (65 billion dollars deficit expected), personal spending (-12.8% on month expected), and personal income (-6.0% on month expected). The Market News International will release May Chicago PMI (40.0 expected). The University of Michigan will report its final data of the May Consumer Sentiment Index (74.0 expected).

The European Commission will post May CPI (+0.1% on-year expected). The European Central Bank will publish the eurozone’s M3 money supply in April (+8.2% on-year expected). The German Federal Statistical Office will report April retail sales (-12.0% on month expected). France’s INSEE will release final readings of 1Q GDP (-5.4% on year expected) and May CPI (+0.3% on-year expected). The U.S. Commerce Department will post April wholesale inventories (-0.7% on month expected), advance goods trade balance (65 billion dollars deficit expected), personal spending (-12.8% on month expected), and personal income (-6.0% on month expected). The Market News International will release May Chicago PMI (40.0 expected). The University of Michigan will report its final data of the May Consumer Sentiment Index (74.0 expected).

Economic Events to Watch Today

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.10771 after placing a high of 1.10934 and a low of 1.09915. Overall the movement of the EUR/USD pair remained bullish throughout the day.

The EUR/USD pair continued its bullish streak for the 4th consecutive day on Thursday and rose near 1.1100level, highest since March 30. On Wednesday, the European Commission proposed an additional $18.2Billion for the European Union’s foreign spending as part of its COVID-19 recovery package. The proposed package gave relief to NGOs that had feared further rate cuts.

This proposal by the European Commission must be approved by E.U. states and would allocate 86 billion euros to the bloc’s development for 2021-2027. The additional resources would be drawn from the 750 billion euro recovery fund, which was also announced on Wednesday, which will be raised by borrowing on financial markets.

On the data front, the German Preliminary Consumer Price Index for May declined by -0.1% against the expected 0.1% and weighed on single currency Euro. While at 12:00 GMT, the Spanish Flash Consumer Price Index for the year came in line with the expectations of -1.0%.

The European Commission indicated that the Consumer Confidence Index in Eurozone edged higher to -18.8 from -22. Still, the Business Climate Index fell to -2.43 from -1.99 and stopped the shared currency from gathering strength against its rivals.

However, the risk-on market sentiment of the market continued to support the EUR/USD pair and weighing on the U.S. dollar. The potential coronavirus vaccines, reopening of economies across the globe, and potential risk for the second wave of corona kept the risk appetite in the market and continued weighing on the U.S. dollar. The weakness of the U.S. dollar gave a push to EUR/USD pair.

On American economic docket, the poor than expected data also kept the U.S. dollar under pressure on Thursday. The jobless claims from the United States for last week rose to 2.123M from the expected 2.1M and weighed on the U.S. dollar. At 19:00 GMT, the Pending Home Sales for April dropped more than expectations and weighed on the U.S. dollar. The actual figure came in as -21.8% against the expected -15%. The closely watched Prelim GDP for the quarter from the United States also weighed on the U.S. dollar when it was released as -5.0% against the expected -4.8%. The EUR/USD pair rose to its 12 weeks highest level on the back of broad-based U.S. dollar weakness on Thursday.

Daily Support and Resistance

  • R3 1.122
  • R2 1.1157
  • R1 1.1117

Pivot Point 1.1054

  • S1 1.1014
  • S2 1.0951
  • S3 1.0911

EUR/USD– Trading Tip

The bullish bias of the EUR/USD continues to prevail in the market as the EUR/USD is heading north towards the next target level of 1.1150 level. The pair have already violated the triple top resistance level of 1.09985, and bullish crossover of 1.1146 level may lead the EUR/USD prices further higher towards 1.12118 level. The closing of three white soldiers in the daily timeframe is also supporting an upward trend in the market.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.23222 after placing a high of 1.23443 and a low of 1.22336. Overall the movement of GBP/USD pair remained bullish throughout the day.

According to the policymaker of Bank of England, Michael Saunders, easing too much rather than easing a little by Bank of England was easier in response to the coronavirus pandemic. He said that the U.K. was at risk of relatively slow recovery than other countries from the coronavirus crisis, and it could prove damaging to the U.K.’s economy.

On Thursday, Saunders added that if Bank of England failed to add more stimulus measures in the economy, than it could slip the economy into an “inflation trap.” Saunders was one of two policymakers of BoE that wanted an expansion inn asset purchases in May. While the other majority wanted to wait, though accepted, more stimulus would be required.

The first speech of Saunders after COVID-19 was encouraging the central bank to cut interest rates to a record low of 0.1%, increase the bond-buying, and boost the capital. However, in response to his speech, British Pound came under pressure on Thursday and fell by 0.2%. On the other hand, the U.S. dollar also remained weak during the day because of risk-on market sentiment along with the poor economic data. The broad-based U.S. dollar weakness overshadowed the drop in GBP and raised the GBP/USD pair.

The closely watched Prelim GDP for the second quarter from the United States was dropped by -5.90% against the expected drop by -4.8% and weighed on the U.S. dollar. At 17:30 GMT, the Unemployment Claims from last weeks also reported higher than expectations of 2100K as 2123K and weighed on the U.S. dollar. At 19:00 GMT, the Pending Home Sales for April also declined by 21.8% against the expected decline by 15%.

Despite reopening all 50 states from coronavirus induced lockdowns, unemployment claims still showed higher than expected figures, which resulted in the broad-based U.S. dollar weakness on Thursday.

On Brexit front, the final round of talks between the U.K. & E.U. before a summit in June will be held next week. Because of the last negotiations that went bad after the exchange of letters between the British negotiator, David Frost, and his E.U. counterpart, Michel Barnier, the hopes for the success of final round talks have decreased. This has raised the bars for no-deal Brexit possibility.

U.K. Prime Minister, Boris Johnson will travel to Brussels for talks with European leaders next month to attempt to revive the negotiations. The two sides were still far apart on fisheries, and the U.K. has said that it would abandon the talks if “shape of a deal” has not emerged by the end of June. The U.K. traders will keep an eye onus data and Brexit updates for further actions.

Daily Support and Resistance

  • R3 1.259
  • R2 1.2477
  • R1 1.2405

Pivot Point 1.2292

  • S1 1.222
  • S2 1.2107
  • S3 1.2035

GBP/USD– Trading Tip

On Friday, the GBP/USD is trading with a slightly bullish bias, facing a double top resistance area around 1.2364 level. Bullish crossover of this level may extend the buying trend until 1.2458. On the 4-hour timeframe, the 50 EMA is suggesting bullish bias, and now the MACD is suggesting buying trend in the GBP/USD pair as the histograms are forming above zero levels. 

Today, the Sterling may find immediate support around 1.2245 levels along with resistance at 1.2360 while the closing of candles above the 1.2360 level may drive buying until 1.2450 level. The violation of support is likely to push the cable further lower until 1.2160 level. Consider taking buying trades over 1.2162 and selling below the same level today.

USD/JPY – Daily Analysis

The USD/JPY currency pair extended its previous 2-days winning streak. They rose to 107.90 marks mainly due to the risk-on market sentiment, which undermined the Japanese yen’s safe-haven demand and exerted some bullish impact on the currency pair. On the other hand, the broad-based U.S. dollar weakness turned out to be one of the main factors that kept a lid on any additional gains in the pair. At this particular time, the USD/JPY currency pair is currently trading at 107.83 and consolidating in the range between 107.69 and 107.91.

However, the reason for the upbeat market sentiment could be attributed to the recent optimism about a possible COVID-19 vaccine and hopes of a global economic recovery, which eventually sent the currency pair higher.

Despite the bullish trend in the currency pair, the USD/JPY pair held well within a near two-week-old trading range. The reason behind the confined trading range could be the escalating tensions between the U.S. and China relations, which kept investors cautious about placing any strong position.

The intensifying tension between the United States and China was further bolstered by the U.S. Secretary of State Mike Pompeo’s statement in which he denied Hong Kong’s special status and said that it was no longer autonomous from China. 

At the USD front, the broad-based U.S. dollar erased its previous day gains and slipped 0.16% to 98.900 on the day due to the rise in Asian shares and U.S. stock futures, which eventually limited the additional gains in the pair. Whereas, The U.S. Dollar Index that tracks the greenback against a basket of other currencies dropped 0.16% to 98.900 by 11:26 AM ET (4:26 GMT). 

Daily Support and Resistance    

  • R3 108.39
  • R2 108.16
  • R1 107.86

Pivot Point 107.63

  • S1 107.33
  • S2 107.1
  • S3 106.79

USD/JPY – Trading Tips

The safe-haven Japanese yen continues to gain bullish momentum in the wake of increased safe-haven appeal for JPY, and it’s dragging the USD/JPY pair lower at 107.120. The odds of selling in pair remains strong as the pair is likely to drop towards the next support level of 106.850. The recent strong selling candle also suggests odds of further selling in the USD/JPY pair today. 

All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, May 27 – Top Trade Setups In Forex – ECB President Lagarde Speaks! 

The U.S. dollar, which behaves like a safe-haven asset during political uncertainty & market turmoil, rose to a one-week high against the basket of 6 currencies, but it started to erase its daily gains in late London Session. Tensions between U.S. &China have increased since the coronavirus outbreak, over which both countries have exchanged accusations of cover-ups and lack of transparency with the world. The signs for easing tensions between the two biggest economies of the world are decreasing day by day and have created an uncertain environment in the market weighing on the market.

The U.S. dollar, which behaves like a safe-haven asset during political uncertainty & market turmoil, rose to a one-week high against the basket of 6 currencies, but it started to erase its daily gains in late London Session. Tensions between U.S. &China have increased since the coronavirus outbreak, over which both countries have exchanged accusations of cover-ups and lack of transparency with the world. The signs for easing tensions between the two biggest economies of the world are decreasing day by day and have created an uncertain environment in the market weighing on the market.

The U.S. dollar, which behaves like a safe-haven asset during political uncertainty & market turmoil, rose to a one-week high against the basket of 6 currencies, but it started to erase its daily gains in late London Session. Tensions between U.S. &China have increased since the coronavirus outbreak, over which both countries have exchanged accusations of cover-ups and lack of transparency with the world. The signs for easing tensions between the two biggest economies of the world are decreasing day by day and have created an uncertain environment in the market weighing on the market.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.09821 after placing a high of 1.09956 and a low of 1.08913. Overall the movement of EUR/USD remained bullish throughout the day. On Tuesday, EUR/USD prices surged and recovered its previous three days’ losses and regained strength in the market on the back of the renewed risk-on market sentiment. The risk appetite after easing of lockdown throughout the world gave strength to the riskier assets like EUR/USD pair and rose them across the board.

The rising hopes for potential coronavirus vaccine added in the risk sentiment and increased expectations for a quick economic recovery. A bid pharmaceutical company, which was the first to make the Ebola vaccine revealed its plans on Tuesday and said that it was working on two potential vaccines and one drug to cure the virus’s infection. The CEO of the company was cautious that it might take a long time to deliver vaccines across the globe.

This raised optimism around the market and raised the bars for riskier assets and moved EUR/USD pairs to recover its previous day’s losses.

On the other hand, in the economic docket, EUR found extra support after the German Consumer Climate from Gfk came in as -18.9 against the expectations of -19.1.

Furthermore, the European Central Bank said that the coronavirus pandemic had amplified the existing vulnerabilities of the financial sector, which will make Eurozone banks face significant losses.

ECB reported that the pandemic had caused one of the sharpest economic contraction in recent history. Still, a wide range of policy measures has been proved helpful in averting a financial meltdown.

Daily Support and Resistance

  • R3 1.1126
  • R2 1.1061
  • R1 1.1021

Pivot Point 1.0956

  • S1 1.0915
  • S2 1.0851
  • S3 1.081

EUR/USD– Trading Tip

On the 4 hour timeframe, the EUR/USD pair is testing triple top level, which is providing resistance around 1.0995 level. Closing of candles below this level may drive selling trades until 38.2% Fibonacci retracement level of 1.0970, and below this, the next support holds around 1.0920, which marks 61.8% Fibonacci area. Overall, 1.0995 is a crucial trading level as above this; the EUR/USD pair may lead it’s prices further higher towards 1.1137. Bullish bias seems dominant today.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.23373 after placing a high of 1.23630 and a low of 1.21807. Overall the movement of GBP/USD pair remained bullish throughout the day. The Pound outperformed on Tuesday and rose to a level 1.236 highest since May 12 on the back of raised optimism about the EU-UK trade deal.

The next round of Brexit talks are due next week, and there have been headlines revolving that British negotiators could seal their first victory in next talks with the E.U. Reports suggested that the European Union was willing to shift its stance on fisheries in the next round of talks with Great Britain next week. If that happens, it would be a significant concession from the bloc in talks with the U.K. on their new relationship after Brexit.

The fisheries were important to the E.U. as most of the fishing takes place in U.K. waters, but the catch goes to E.U. fishers. U.K. wanted to ensure that after Brexit, which will take effect from next year, the U.K. as a newly independent coastal state could be solely in control of its waters and fish.

So far, the European Union has been reluctant to give up U.K. waters and demanded the things to remain the same as they were before in fisheries. However, on Tuesday, an E.U. official said that the bloc’s executive committee, which will negotiate with the U.K. in the name of all 27 E.U. member states, could ease its demand if the U.K. were to move as well.

According to Michel Barnier, surrendering the access to Britain’s fishing waters would be just one of the costs the British government must pay for a trade deal with the bloc. However, he faced pressure from other officials not to surrender to Britain too soon.

Daily Support and Resistance

  • R3 1.259
  • R2 1.2477
  • R1 1.2405

Pivot Point 1.2292

  • S1 1.222
  • S2 1.2107
  • S3 1.2035

GBP/USD– Trading Tip

The GBP/USD prices traded sharply bullish soaring from 1.2200 level to place a high around 1.2360 level. The resistance level of 1.2360 is extended by an upward channel, which can be seen on the 4-hour timeframe. The 50 EMA is bullish, but the MACD is suggesting odds of selling bias in the GBP/USD pair, perhaps because the Sterling is in the overbought zone. Bullish crossover of 1.2360 level may lead Sterling prices further higher towards 1.2460, while support is likely to be found around 1.2289 and 1.2165. Consider taking buying trades over 1.2292 and selling below the same level today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 107.539 after placing a high of 107.921 and a low of 107.399. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair showed a bearish trend on Tuesday but consolidated in a range between 107.3 and 107.9.

At 18:00 GMT, the Housing Price Index for March from the United States was dropped to 0.1% against the forecasted 0.6% and weighed on the U.S. dollar. The S&P/CS Composite-20 HPI for the year advanced to 3.9% against the expectations of 3.4% and supported the U.S. dollar. At19:00 GMT, the Consumer Confidence from Conference Board for May decreased to 86.6 from the forecasted 87.1 and weighed on the U.S. dollar. The New Home Sales for April were recorded as 623K against the expected 429K and supported the U.S. dollar.

The closely watched Consumer Confidence from the United States declined and made the U.S. dollar weak across the board and ultimately dragged the USD/JPY pair on Tuesday. From the Japanese side, at 4:50 GMT, the Services Producer Price Index (SPPI) for the year was dropped to 1.0% against the forecasted 1.3%and weighed on Japanese Yen. At 9:30 GMT, All Industrial activities for March came in line with the expectations of -3.8%. At 10:00 GMT, the Core CPI for the year from Bank of Japan also dropped to -0.1% from the expected 0.0% and weighed on Japanese Yen.

The Governor of Bank of Japan, Haruhiko Kuroda, said that the central bank was ready to ease monetary policy further. To add more stimulus measures, the bank decided to expand its loan programs, cut the rates further, and ramp up the risky asset purchases. In his semiannual testimony to parliament, Kuroda said that Bank of Japan was ready to do whatever it can to ensure markets were stable. He added that the stability of markets was its first importance now because once the pandemic was over, Japan’s economy could resume a solid recovery path.

Daily Support and Resistance    

  • R3 108.39
  • R2 108.16
  • R1 107.86

Pivot Point 107.63

  • S1 107.33
  • S2 107.1
  • S3 106.79

USD/JPY – Trading Tips

The USD/JPY pair continues to trade choppy sessions within the same trading 107.950 – 107.350. Above 107.950 level, we may see USD/JPY prices heading towards the next resistance level of 108.330. The 50 EMA is currently supporting the USD/JPY around 107.350. Breakout of USD/JPY support area of 107.35 can lead the USD/JPY prices towards 106.850. So let’s consider taking buying trades over 107.63 and selling below the same level today. 

All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, May 22 – Top Trade Setups In Forex – ECB Monetary Policy Meeting Accounts Ahead! 

The U.S. Dollar Index (DXY) fell about 0.25% on the day to post the lowest close since May. Powell said that Fed might need to introduce more stimulus measures if the economic lockdown remains there for a long time. He also added that banks should prepare themselves for the bankruptcies of nonfinancial companies. Let’s keep an eye on U.K. Retail sales and ECB Monetary Policy Meeting Minutes.

The U.S. Dollar Index (DXY) fell about 0.25% on the day to post the lowest close since May. Powell said that Fed might need to introduce more stimulus measures if the economic lockdown remains there for a long time. He also added that banks should prepare themselves for the bankruptcies of nonfinancial companies. Let’s keep an eye on U.K. Retail sales and ECB Monetary Policy Meeting Minutes.

The U.S. Dollar Index (DXY) fell about 0.25% on the day to post the lowest close since May. Powell said that Fed might need to introduce more stimulus measures if the economic lockdown remains there for a long time. He also added that banks should prepare themselves for the bankruptcies of nonfinancial companies. Let’s keep an eye on U.K. Retail sales and ECB Monetary Policy Meeting Minutes.

Economic Events to Watch Today

 

 

 

EUR/USD – Daily Analysis

The EUR/USD prices were closed at 1.09777 after placing a high of 1.09988 and a low of 1.09185. Overall the movement of EUR/USD remained bullish throughout the day. The EUR/USD pair remained near 1.1000 after the release of FOMC meeting minutes. The surge in the EUR/USD pair suggested that the pair might break its 7-week range and move further to earn more gains.

The FOMC minutes failed to impress the market as there was no surprise element in Powell’s presentation and was ignored by market participants. It was widely expected that the coronavirus outbreak would continue to weigh on the economy, and the economic outlook would remain somewhat pessimistic. Greenback holds onto its losses as there was no room for surprises in the minutes of the meeting. 

The U.S. Dollar Index (DXY) fell about 0.25% on the day to post the lowest close since May. Powell said that Fed might need to introduce more stimulus measures if the economic lockdown remains there for a long time. He also added that banks should prepare themselves for the bankruptcies of nonfinancial companies.

On the data front, at 13:00 GMT, the Current Account Balance from the Eurozone showed a balance of 27.4B during March against 37.8B of February. At 14:00 GMT, the Final CPI from Eurozone for the year declined to 0.3% against the expectations of 0.4% and weighed on EUR. The Final Core CPI for the year came in line with the hopes of 0.9%. 

At 19:00 GMT, the Consumer Confidence on the Eurozone economic condition showed a decline to 19 forms the forecasted decline of 23 and supported EUR. The market participants ignored the poor than expected CPI from Eurozone, and EUR got its support after the release of consumer confidence, which showed less decline than expected.

Furthermore, the latest Franco-German proposal for a 500 euros fund to fight coronavirus crisis helped EUR pair to gain traction in the market and remain stronger than other currencies; this ultimately supported the upward trend of EUR/USD pair.

Daily Support and Resistance

  • R3 1.1067
  • R2 1.1038
  • R1 1.0994

Pivot Point 1.0965

  • S1 1.092
  • S2 1.0892
  • S3 1.0847

EUR/USD– Trading Tip

On Friday, the EUR/USD prices are holding at 1.0940 as these were facing strong resistance around 1.0993, which marks the triple top resistance level and can trigger selling in the pair. Conversely, the EUR/USD pair may find support around 1.0883, once the 1.0993 level gets violated. The MACD is recently forming selling candles, which suggests the trend of the sale in the pair. So the overall trading range can be from 1.0994 level to 1.0886. On Friday, we can look for selling trades under 1.0965 for 40/50 pips profit. 

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.22225 after placing a high of 1.22495 and a low of 1.21855. Overall the movement of GBP/USD pair remained bearish throughout the day. The GBP/USD pair continued to follow its previous day’s trend of downward movement and dropped on Thursday as well. The decline in currency pair could be attributed to the increasing speculations that the Bank of England will consider to ease monetary policy further. The Governor of Bank of England, Andrew Bailey, said that he had changed his position into negative interest rates given the crisis.

He added that more easing measures from the Bank of England were more likely, but the interest rates were below on his priorities. He said that though it was not the time for negative interest rates, they could not be excluded from options.

Furthermore, on the lack of progress on trade talks with the European Union, the U.K. was driving its way towards no-deal Brexit. This raised fear amongst investors and raised uncertainty about the future relationship of Great Britain with E.U., making GBP weaker on the board. In the current context of coronavirus shutdown, the U.K. economy was already disturbed, and chances for an unfriendly exit from E.U. along with coronavirus would impact highly negative on the common currency. 

On the data front, at 13:30 GMT, the Flash Manufacturing PMI from Great Britain showed a surge in Index with 40.6 points against the 35.1 of forecast and supported GBP. Sterling was also supported by Flash Services PMI, which exceeded the expectations of 24.1 and came in as 27.8. From the U.S. side, the increased Jobless Claims last week by 2.43M weighed on the U.S. dollar. However, the Flash Manufacturing PMI, which was key data on Thursday from the American side, came in support of the U.S. dollar when released as 39.8 against the expectations of 39.3.

The strong U.S. dollar on Thursday amid better than expected PMI data added in the downfall of GBP/USD pair.

Daily Support and Resistance

  • R3 1.232
  • R2 1.2285
  • R1 1.2255

Pivot Point 1.222

  • S1 1.219
  • S2 1.2155
  • S3 1.2124

GBP/USD– Trading Tip

The GBP/USD continues to trade within the same technical levels, which we discussed a day before. The Cable is facing resistance around 1.2269 level, and it continues to develop doji and bearish engulfing candles below 1.2269 zones, which has driven a bearish retracement in the Cable. On the lower side, the Sterling may find support against the U.S. dollar around 1.2170 level. The MACD and 50 EMA are supporting selling bias in the pair. Today, the release of U.K. Retail Sales m/m may help drive further movement in the market. Therefore, the bullish breakout of 1.2270 level can lead the Sterling prices towards 1.2360. While breakout of the support level of 1.2169 may lead the Sterling pair towards the 1.2080 support zone. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 107.604 after placing a high of 107.847 and a low of 107.415. Overall the movement of the USD/JPY pair remained bullish throughout the day. At 4:50 GMT, Japan’s Merchandise Trade Balance for April showed a deficit of 1.0 Trillion Japanese Yen on Thursday. At 5:30 GMT, the Flash Manufacturing PMI came in as 38.4 during May compared to 41.9 of April.

The exports from Japan showed a decline of 21.9% and imports by 7.2%, while overall trade balance showed a deficit and weighed on Japanese Yen. The weak JPY gave strength to the USD/JPY pair on Thursday.

On the American side, the U.S. jobless Claims for the past week exceeded over 2.43M from the expectations of 2.4M and weighed on the U.S. dollar at 17:30 GMT. The Philly Fed Manufacturing Index for May declined by 43.1 against 40.0 expected and weighed on the U.S. dollar.

However, at 18:45 GMT, the Flash manufacturing PMI from the U.S. for the month of May surged to 39.8 against the expected 39.3 and supported the U.S. dollar. The Flash Services PMI for May also exceeded to 36.9 from 32.6 of expectations. 

The C.B. Leading Index for April was expected to be declined by 5.5%, but in actual, it showed a decline of 4.4% and supported the U.S. dollar. The Existing Home Sales remain flat with expectations of 4.33M.

Better than expected economic data from the United States gave strength to the U.S. dollar and moved USD/JPY pair in an upward direction to post daily gains. On the other hand, Fed Chairman Jerome Powell showed concerns about the economic indicators to hit their bleakest levels since the Great Depression. He said that the U.S. economy was facing a whole new level of uncertainty amid the coronavirus crisis. 

Daily Support and Resistance    

  • R3 108.21
  • R2 108.04
  • R1 107.83

Pivot Point 107.65

  • S1 107.44
  • S2 107.26
  • S3 107.05

USD/JPY – Trading Tips

On Friday, the USD/JPY continues trading sideways in between 107.630 – 107.350. Above 107.650 level, we may see USD/JPY prices heading towards the next resistance level of 108.130. The ascending triangle pattern was already violated, and the upward trendline is expected to keep the USD/JPY supported around 107.350. Breakout of USD/JPY support area of 107.35 can lead the USD/JPY prices towards 106.850. So let’s consider taking buying trades over 107.350 today. 

All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, May 20 – Top Trade Setups In Forex – European CPI Figures Ahead! 

The U.S. Federal Reserve will release its latest FOMC meeting minutes. The European Commission will post the May Consumer Confidence Index (-23.7 expected) and final readings of April CPI (+0.4% on-year expected). The U.K. Office for National Statistics will release April CPI (+0.9% on-year expected).

The U.S. Federal Reserve will release its latest FOMC meeting minutes. The European Commission will post the May Consumer Confidence Index (-23.7 expected) and final readings of April CPI (+0.4% on-year expected). The U.K. Office for National Statistics will release April CPI (+0.9% on-year expected).

The U.S. Federal Reserve will release its latest FOMC meeting minutes. The European Commission will post the May Consumer Confidence Index (-23.7 expected) and final readings of April CPI (+0.4% on-year expected). The U.K. Office for National Statistics will release April CPI (+0.9% on-year expected).

Economic Events to Watch Today 

 

 

 

EUR/USD – Daily Analysis

The EUR/USD prices were closed at 1.09228 after placing a high of 1.09759 and a low of 1.09020. Overall the movement of the EUR/USD pair remained bullish throughout the day. After gaining almost 100 pips on Monday, the EUR/USD pair rose to near its highest level in 2 weeks of 1.0976 level on Tuesday. The upbeat market mode was derived by the Franco-German recovery fund proposal, which was announced on Monday and provided a boost to the single currency EUR. 

The Vice President of the European Commission, Valdis Dombrovskis, said that the European Stability Mechanism (E.S.) strongly supported the Franco-German proposal. Commission was also looking forward to presenting the proposal in the upcoming European summit on May 27.

Following the previous day’s gains, the EUR/USD pair continued to rise and was further supported by the better than expected economic data release on Tuesday.

At 14:00 GMT, the ZEW Economic Sentiment from the European Union showed that the economic outlook of the Eurozone in the view of institutional investors and analysts increased to 46.0 from the expected27.4 and supported EUR. 

The German ZEW Economic Sentiment also showed an improved economic outlook after releasing as 51.0 against the expected 30.0 during the month of May and supported EUR.

The better than the expected economic outlook of the whole bloc, along with Germany even in the lockdown time, gave a sudden push to the already prevailing bullish trend in EUR/USD and rose its prices above two weeks high. However, pair failed to hold its gains and started to drop in late-session but managed to end its day with a bullish candle.

On the other hand, the greenback lost its demand in the absence of any significant economic data. Only Housing Starts in the month of April were released from the U.S. on Tuesday, which declined to 0.89M against the 0.95 forecasted and weighed on the U.S. dollar.

Meanwhile, the Fed Chair Jerome Powell also refrained from providing any specific surprising remarks about the economy or policy outlook and hence kept the U.S. dollar under pressure. He said that the Fed would remain committed to using its all tools to recover the U.S. economy from a corona-induced crisis. U.S. Dollar Index fell near 99.50 level on that day.

Daily Support and Resistance

  • R3 1.1089
  • R2 1.1008
  • R1 1.0961

Pivot Point 1.088

  • S1 1.0833
  • S2 1.0752
  • S3 1.0705

EUR/USD– Trading Tip

The technical outlook for EUR/USD pair seems bullish as the pair is trading at 1.0938, having formed a bullish engulfing pattern above an immediate support level of 1.0918 level. On the 4 hour timeframe, the pair is also forming a higher high and higher low pattern, which can drive further buying trends in the EUR/USD pair. The MACD is bullish, while the 50 EMA is also supporting the bullish bias among traders. The pair has the potential to trade towards north to target 1.0993 triple top area while support holds at 1.0918 and 1.08850 level today.

GBP/USD – Daily Analysis

The GBP/USD prices were closed at 1.22482 after placing a high of 1.22961 and a low of 1.21839. Overall the movement of GBP/USD pair remained bullish throughout the day. The GBP/USD pair rose for 2nd consecutive day on Tuesday amid the broad-based U.S. dollar weakness and better than expected employment data from the U.K. 

The U.S. dollar was already under pressure the previous day after the announcement of the Franco-German recovery fund proposal, which consists of 500 Billion euros. The increased risk appetite in the market also made the U.S. dollar weaker on Tuesday. 

Furthermore, better than expected U.K. employment data on Tuesday gave strength to GBP and raised GBP/USD prices. The office for National Statistics reported that U.K. Unemployment Rate in April dropped to 3.9% from the expected 4.4% and supported GBP.

Despite the decreased unemployment rate, around 857K people filed for jobless claims in April against the forecasted 675K. The decreased unemployment rate, which covers three months to March, showed that unemployment might have fallen sharply during April considering the increased numbers of jobless claims that month.

Meanwhile, U.K. announced a new tariff regime for Brexit that will remove tariffs on 30 billion pounds worth of imports or about 60% worth of trading coming into the U.K. The latest tariff named U.K. Global Tariff (UKCT) will become effective from January 2021 when the transition period will end.

AT 11:00 GMT, the Claimant Count Change for April showed that almost 856.5K people applied for jobless benefit claims against the expectations of 675.0K and weighed on Sterling. At 11:02 GMT, the Average Earning Index for the quarter showed a decline to 2.4% from the expected 2.7% and weighed on U.S. Dollar. However, the Unemployment rate for March showed a decline to 3.9% against the anticipated 4.4% and supported Pound.

Daily Support and Resistance

  • R3 1.2411
  • R2 1.2319
  • R1 1.2257

Pivot Point 1.2166

  • S1 1.2104
  • S2 1.2013
  • S3 1.195

GBP/USD– Trading Tip

On Wednesday, the GBP/USD traded sharply bullish to trade at 1.2245 level despite the release of worse than expected Labor market reports from the U.K. At the moment, Cable faces resistance around 50 EMA, which holds at 1.2255 level. The closing of candles below 1.2260 can drive selling. Still, considering the recent bullish engulfing and long histograms of GBP/USD pair, we may see a continuation of a bullish trend in the Sterling. On the upper side, the violation of 1.2246 level may lead Sterling towards 1.2318 today.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 107.700 after placing a high of 108.086 and a low of 107.261. Overall the movement of the USD/JPY pair remained bullish throughout the day. The pair USD/JPY moved above 108.00 level on Tuesday, which was the one-month top-level amid increased risk-on market sentiment. The safe-haven Japanese Yen was under pressure after the latest optimism related to the encouraging initial results of coronavirus vaccine trials. Weaker Yen moved the USD/JPY pair in the opposite direction and made it to post gains above 108.00 level.

The intraday selling bias towards the Japanese Yen increased after the Bank of Japan called out for an unscheduled meeting on Friday. This fueled speculations that Bank would announce more easing measures.

The strong positive momentum due to weakened Yen lifted the USD/JPY prices to its highest level since April 13. However, the rally remained limited due to the rising concerns about the US-China relationship.

Another reason behind the limited rally on Tuesday was the fears about the second-wave of coronavirus. Senators questioned the Fed Chair Jerome Powell and the U.S. Treasury Secretary Steven Mnuchin about their stewardship of specific aspects of the $2 trillion package on Tuesday.

The Senate Banking Committee held its first look at spending under the package announced in March to assist people affected by the coronavirus pandemic. Mnuchin and Powell showed different perspectives on the economic outlook. Mnuchin remained optimistic and said that in the second half of 2020, the economy would see an upturn, while Powell suggested that congress might need more than trillions to aid the economy.

Daily Support and Resistance    

  • R3 108.04
  • R2 107.78
  • R1 107.56

Pivot Point 107.3

  • S1 107.09
  • S2 106.82
  • S3 106.61

USD/JPY – Trading Tips

On Wednesday, the USD/JPY mostly remains mostly bearish following a bullish breakout of the choppy trading range of 107.480 – 107.029 level. For now, the pair is holding at 107.630, having immediate support around 107.500. Above this level, we may see USD/JPY prices heading towards the next resistance level of 108.130. The ascending triangle pattern has already been violated, and it’s expected to kee the USD/JPY supported around 107.500. So let’s consider taking buying trades over 107.500 today. All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, May 15 – Top Trade Setups In Forex – U.S. Retail Sales in Highlights!

On the news front, the economic calendar remains busy on Friday. Today’s releases may trigger some price action in the Euro and U.S. related pairs, especially on the release of German GDP, Eurozone Flash GDP, and U.S. core retail sales figures, which are due to come out during European and U.S. session respectively.

On the news front, the economic calendar remains busy on Friday. Today’s releases may trigger some price action in the Euro and U.S. related pairs, especially on the release of German GDP, Eurozone Flash GDP, and U.S. core retail sales figures, which are due to come out during European and U.S. session respectively.

On the news front, the economic calendar remains busy on Friday. Today’s releases may trigger some price action in the Euro and U.S. related pairs, especially on the release of German GDP, Eurozone Flash GDP, and U.S. core retail sales figures, which are due to come out during European and U.S. session respectively.

Economic Events to Watch Today 

 

 

 

EUR/USD – Daily Analysis

During the early Asain trading session, the EUR/USD currency pair flashing green, but remains trading in the confined range around above the 1.0800 level ahead of Germany’s preliminary gross domestic product (GDP) for the first quarter. The broad-based U.S. dollar modest weakness helping the currency pair to stay positive and kept a lid on any additional losses, at least for now. For example, the currency pair is looking directionless as the S&P 500 is sidelined, and the Asian stocks are adding in a mixed performance. 

The EUR/USD is trading at 1.0806 and consolidates in the range between the 1.0798 – 1.0809. However, the traders are keenly awaiting Germany’s preliminary gross domestic product ahead of a strong position.

At the data front, Germany’s preliminary gross domestic product (GDP) for the first quarter, which is scheduled to publish at 06:00 GMT, is anticipated to show the old continent’s biggest economy declined by 2.2%, having increased by 0.4% in the final 3-months of 2019. It should be noted that the GDP prints of -2.2% or lower would be considered the worst reading since the ist-quarter of 2009. 

Germany had declared a secure national lockdown on March 22, which meant the economic activity came to a stop only in the last 8 or 9 of the 1st-quarter. In contrast, Germany is dependent on the dragon nation, which had already faced a sharp recession in the activity in the first two months of the year, mainly due to the coronavirus pandemic.

Therefore, there are many chances that Germany reporting a bigger-than-expected recession in the first quarter will not be rejected. As we already mentioned, the economists are expecting a 2.2% decrease, as per Germany’s DIW economic institute, the economy expected declined by 2% in the first quarter. Alternatively, the DIW expects a 10% decline in the GDP in the second quarter. 

Moving on, the EUR/USD currency pair may not pay any significant attention if the GDP prints in line with estimates as the market already priced in the worst condition of significant economies during the March and more so in April caused by coronavirus outbreak.

The currency pair could be able to take bids only if prints would be a surprise beat on expectations, but the gains would be temporary or short-lived if the risk sentiment turns heavy. Looking forward, market participants now look forward to Germany’s preliminary gross domestic product (GDP) for the first quarter, which is scheduled to publish at 06:00 GMT. The trade/virus updates could also entertain market traders.

Daily Support and Resistance

  • S1 1.0673
  • S2 1.0758
  • S3 1.079
  • Pivot Point 1.0843
  • R1 1.0874
  • R2 1.0928
  • R3 1.1013

EUR/USD– Trading Tip

On Friday, the EUR/USD is trading at 1.0807, bouncing off over the double bottom support level of 1.07756. On the 4 hour chart, the EUR/USD is closing bullish candles above upward channel trendline, but at the same time, the 50 EMA and horizontal resistance seem to drive bearish sentiment for the EUR/USD pair. Extension of selling below 1.0843 level may lead the EUR/USD prices towards 1.07782 level, and below this, the next support is likely to be found around 1.0730. Consider staying bullish above and bearish below 1.0770 level today. 

GBP/USD – Daily Analysis

The GBP/USD currency pair failed to stop its 5-day losing streak and dropped below the 1.2210 level while representing 0.15% losses on the day mainly due to the Brexit worries and coronavirus crisis. The broad-based U.S. dollar over-all bullish sentiment also weighed on the currency pair and kept the pair down. The GBP/USD is trading at 1.2208 and consolidates in the range between the 1.2203 – 1.2237. However, the traders are cautious about placing any strong position as they are keenly awaiting today’s U.S. consumer-centric data.

At the Brexit front, the European Union (E.U.) and the United Kingdom moderators are still pushing to cancel Brexit talk, which decided to happen through video conferences. At the same time, the European Commission’s (E.C.) took legal action against the U.K., which made talks tougher to happen. The European Commission initiated legal proceedings against the U.K. on Thursday, while accusing the U.K. about failing to comply with E.U. law on free movement which eventually keeps the cable currency under pressure and contributes to the pair’s declines.

On the flip side, the UK PM Boris Johnson keeps its preference high toward border checks at the Northern Ireland (N.I.) while the N.I. Secretary Brandon Lewis has repeatedly said there shall not be a border down the Irish Sea.

At the coronavirus front, the infected cases by coronavirus reached around 233 thousand overall in England, including 25 thousand in London,

as per the latest research by the Public Health England (PHE) and Cambridge University. In the meantime, the United Kingdom is talking with Swiss drugmaker Roche Holding AG about to buy an accurate COVID-19 antibody test after getting preliminary approval by the European Union and the United States.

Apart from this, the Bank Of England governor Andrew Bailey showed a willingness to take further action but denied rate cuts. The reason for the pairs bearish moves could also be attributed to the statement of the British central bank’s citizen panel in which they expect COVID-19 to have a large and enduring influence on the economy and society more broadly.

At the USD front, the broad-based U.S. dollar bolsters by the receding expectations of negative Fed rate and the increased probabilities of further stimulus from the government. While the Dollar Index (DXY), a gauge of the greenback versus significant currencies, remains mildly bid around 100.30 by the press time.

Daily Support and Resistance

  • R3 1.2577
  • R2 1.2508
  • R1 1.2422

Pivot Point 1.2353

  • S1 1.2268
  • S2 1.2198
  • S3 1.2113

GBP/USD– Trading Tip

On the last trading day of the week, the GBP/USD is trading sideways at 1.2200 after breaking below the narrow trading range of 1.2320 – 1.2245. The Cable has formed a new range of 1.2245 – 1.2186, however it’s still holding below 50 EMA, which is extending resistance around 1.2260 level today. On the 4 hour chart, the GBP/USD is gaining support at 1.2180 level while the 50 EMA and horizontal resistance stay at a level of 1.2245. 

The violation of the sideways trading range of 1.2245 – 1.2180, and the release of U.S. retail sales may help drive breakout in the GBP/USD pair. 

The GBP/USD pair may lead its prices towards an immediate support level of 1.2190 and 1.2150 in case of positive date; elsewhere, the GBP/USD pair may soar towards 1.2240 and 1.2310. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 107.224 after placing a high of 107.363 and a low of 106.773. Overall the movement of the USD/JPY pair remained bullish throughout the day. After dropping below 107 level on Thursday, the USD/JPY pair regained its strength and posted gains for the day on the back of the improved market sentiment. The increased claims for jobless benefits from the United States during the last week failed to weigh on the U.S. dollar. A total of 2.9M Americans applied for unemployment benefits in the previous week against the expected 2.5M.

At 17:30 GMT, the Unemployment Claims for last week exceeded the expectations of 2500K and came in as 2981K and weighed on the U.S. dollar. The Import Prices for April were declined by 2.6% against the forecasted decline by 3.1% and supported the U.S. dollar.

The U.S. Dollar Index ignored the job data from the United States and moved above 100.40 level on Thursday, which helped USD/JPY pair to stretch its gains. Another factor adding in the upward trend of the USD/JPY pair was the comments from Donald Trump in support of the dollar. He said that a strong dollar was a great thing that could help in fast economic recovery after the coronavirus, this triggered the U.S. dollar buying wave and extended USD/JPY pair’s gains.

From the Japan side, at 4:50 GMT, The M2 Money Stock for the year from Japan was recorded as 3.7% against the forecast of 3.4% and supported Japanese Yen. At 10:59 GMT, the Prelim Machine Tool Orders for the year showed a decline of -48.3% in comparison to the previous -40.7%. 

Daily Support and Resistance    

  • R3 109.37
  • R2 108.57
  • R1 108.12

Pivot Point 107.33

  • S1 106.88
  • S2 106.09
  • S3 105.64

USD/JPY – Trading Tips

The safe-haven Japanese yen continues to trade in line with our previous forecasts. On Friday, the USD/JPY traded bearishly to trade below the support level of 107, which marked the 50% Fibonacci retracement level. The USD/JPY is holding at 107.05, where the 50 EMA is supporting the pair, and it may drop further below the 107 level. At the moment, the 4-hour candle appears to close below 107 support become resistant, and this may drive more selling in the USD/JPY pair. The pair may extend selling until 106.600 level, whereas the closing of buying candles above 107 can trigger bullish bias until 107.50. By the way, bearish bias seems solid today. All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, April 22 – Top Trade Setups In Forex -U.K. Inflation Stabilises! 

On the forex front, the U.S. dollar gained traction against other major currencies, with the Dollar Index climbing 0.3% on the day to 100.20. The U.S. official data showed that Existing Homes Sales fell to an annualized rate of 5.27 million units in March (5.25 million units expected).

On the forex front, the U.S. dollar gained traction against other major currencies, with the Dollar Index climbing 0.3% on the day to 100.20. The U.S. official data showed that Existing Homes Sales fell to an annualized rate of 5.27 million units in March (5.25 million units expected).

On the forex front, the U.S. dollar gained traction against other major currencies, with the Dollar Index climbing 0.3% on the day to 100.20. The U.S. official data showed that Existing Homes Sales fell to an annualized rate of 5.27 million units in March (5.25 million units expected).

The British Consumer Prices Index (CPI), including owner-occupiers’ housing inflation rate, came out at 1.5% in March 2020. Although it’s down from 1.7% in February 2020, it’s not as bad as investors were expecting considering the lockdown in global markets. 

Economic Events to Watch Today     

 

 

 EUR/USD – Daily Analysis

The EUR/USD fell by nearly 0.1% to trade at 1.0865. While Spain’s central bank announced, the country’s GDP could fall by 6.8% to 12.4% this year. Later in the today, the major focus will stay on the German ZEW Current Situation Index for April will be released (-75.0 estimated).  

After the Eurozone divided on community debt, most of the analytes are worried that the finance ministers’ may unable to provide a suitable fiscal stimulus to support growth. So, the shared currency could remain under pressure ahead of the Thursday summit.

At the coronavirus front, as per the latest report, the number of confirmed coronavirus cases grew to 145,694, with 4,879 deaths reported in Germany so far. As the cases increased by 2,237 in Germany, a 1.6% rise picking-up pace from Tuesday’s 1.3% increment, the death toll moved sharply up by 281 vs. 194 a day before.

Looking forward, the upbeat Eurozone Consumer Confidence, which is scheduled to release at 14:00 GMT, may put a bid under EUR/USD currency pair. However, the pair trend will remain sluggish until the pair break the trading range of 1.0897 to 1.08616. 

Daily Support and Resistance

  • S1 1.0724
  • S2 1.0788
  • S3 1.0823

Pivot Point 1.0852

  • R1 1.0887
  • R2 1.0916
  • R3 1.098

EUR/USD– Trading Tips

On Wednesday, the EUR/USD is trading sideways at 1.0825, as investors seem to wait for a solid reason to enter the market. The overall bias remains bearish as the EUR/USD prices are holding below 50 EMA, which is extending resistance around 1.08945 level. Continuation of a selling trend below 1.08945 level can continue selling until the next support area of 1.0772, but on the way, the pair may find support around 1.0815 level. 

The EUR/USD is likely to find support around 1.0772, but below this, the next support prevails around 1.0652 level. The pair may find an immediate resistance level of around 1.09230, where the bullish breakout of this level can extend buying until the next resistance level of 1.1036. Conversely, we should look for selling trades below 1.0894.  

GBP/USD – Daily Analysis

The GBP/USD soared 0.3% to trade at 1.2318 as the British Consumer Prices Index (CPI), including owner-occupiers’ housing inflation rate, came out at 1.5% in March 2020. Although it’s down from 1.7% in February 2020, it’s not as bad as investors were expecting considering the lockdown in global markets. 

 At the USD front, investors prefer to choose the U.S. dollar because of its safe-haven-demand in the market due to the fears of economic fallout, which is caused by the coronavirus outbreak. The dollar index, which measures the worth of the greenback against majors, rose 0.20% to levels above 100.00.

The reason behind the decline in GBP/USD pair could also be the immediate rise in COVID-19 cases, with the curve still not notably peaking. It indicates that there is still a high chance that lockdowns could last longer than expected, while the Bankruptcy and bad loans will likely boost the risk-off sentiment in the market and provide further support to the U.S. dollar again.

Apart from the U.K., U.S. President Donald Trump suggested that approximately 20 states ready for re-open while also showing a willingness to sign the bill that stops immigration into the U.S. for 60 days. As in result, the risk sentiment remains under pressure.

The reason behind the risk-off market sentiment could also be the early Asian news surrounding the U.S. Senate’s passage of $484 billion COVID-19 relief package and BOJ’s likely decline of economic and price forecasts. Moreover, statements from the BOE’s Bailey were also necessary to remark during the early Asian session.

As in result, the U.S. 10-year Treasury yields declined by 2-basis points (bps) to 0.55%, after dropping 4-bps on Tuesday, while the most stocks in Asia-Pacific flashing losses by the pres time.

    

Daily Support and Resistance

  • S1 1.1974
  • S2 1.2148
  • S3 1.2223

Pivot Point 1.2322

  • R1 1.2397
  • R2 1.2496
  • R3 1.2671

GBP/USD– Trading Tip

Yesterday, the GBP/USD fell sharply to trade at 1.2250 after violating the horizontal support level of 1.2424. On the 4 hour chart, the Cable has closed Doji candle above 1.2250 level can drive bullish bias until 1.2350. On the upper side, the Sterling may find next resistance around 1.2426, it’s the same level that supported the pair previously, and now it’s likely to drive selling bias in the GBP/USD pair. On the lower side, the violation of the 1.2265 level can lead the GBP/USD prices towards 1.2175. The 50 EMA and MACD are both are suggesting selling bias in the Cable. So let’s look for selling trades below 1.2322 and bullish above the same level today. 

USD/JPY – Daily Analysis

On Wednesday, the USD/JPY is trading around 107.500 level, mostly exhibiting sideways trading due to a lack of major economic events in the market. The U.S. dollar index slipped to the fresh lows of 100.07 ahead of recovering some ground, still bearish by 0.15% on the day.

The Japanese yen seems to suffer due to a lack of confidence when the state of emergency is being lifted in Japan. While drop-in, the domestic macroeconomic indicators are expected to keep the Japanese yen’s in a bearish mode while maintaining the USD/JPY bullish. Lately, the uptrend in the JPY could be limited due to the forecast of the Bank of Japan (BOJ) support measures to boost funding for the companies due to be announced next week. 

The U.S. Treasury prices advanced as investors continued to seek safe-haven assets. The benchmark 10-year U.S. Treasury yield declined to 0.571% from 0.625% Monday.

On the negative side, the greenback gained ground due to the oil price crash triggered a dash for cash. The high uncertainty in the market also boosted the greenback demand. So, if that trend continues during the ay ahead, the yellow metal could come under pressure.

Daily Support and Resistance    

  • S1 105.92
  • S2 106.84
  • S3 107.44

Pivot Point 107.76

  • R1 108.36
  • R2 108.69
  • R3 109.61

USD/JPY – Trading Tips

The USD/JPY is trading mostly sideways within a narrow trading range of 108.020 – 107.300 zones. At the moment, it’s holding at 107.597, having formed a descending triangle pattern on the 4-hour timeframe. The triangle pattern is extending resistance around 107.850, along with support around 106.980.  

In case, the USD/JPY violates the descending triangle pattern; we may see pair dropping towards 106.200. While on the upper side, a bullish breakout of 108 can lead USD/JPY prices towards 109.100. The leading indicator, such as MACD and 50 EMA, are supporting bearish bias in the market today. Let’s wait for a breakout before taking more trades today.

All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, April 21 – Top Trade Setups In Forex – Economic Sentiment in Highlights! 

On the forex front, the U.S. dollar firmed against its major peers, with the Dollar Index gaining 0.2% on the day to 99.95. The ZEW survey results of April will be released for Germany (current situation at -75.0, expectations at -42.0 expected) and the Eurozone.

On the forex front, the U.S. dollar firmed against its major peers, with the Dollar Index gaining 0.2% on the day to 99.95. The ZEW survey results of April will be released for Germany (current situation at -75.0, expectations at -42.0 expected) and the Eurozone.

On the forex front, the U.S. dollar firmed against its major peers, with the Dollar Index gaining 0.2% on the day to 99.95. The ZEW survey results of April will be released for Germany (current situation at -75.0, expectations at -42.0 expected) and the Eurozone.

The U.K. Office for National Statistics will report a jobless rate for the three months to February (steady at 3.9% expected). While in the U.S., the National Association of Realtors will report March existing home sales (5.30 million units expected).

Economic Events to Watch Today     

 

 

EUR/USD – Daily Analysis

The EUR/USD fell by nearly 0.1% to trade at 1.0865. While Spain’s central bank announced, the country’s GDP could fall by 6.8% to 12.4% this year. Later in the today, the major focus will stay on the German ZEW Current Situation Index for April will be released (-75.0 estimated).  

European stocks were mostly trading higher, with the Stoxx Europe 600 Index surging 0.7%. Both Germany’s DAX and the U.K.’s FTSE 100 added 0.5%, and France’s CAC was up 0.7%, which are somehow supporting the Euro, the single currency. 

As of now, the market participants seem very concerned about the negative impact of the oil prices Monday’s declines and keeps their eyes on it. As in result, the U.S. dollar could continue to gain ground during the Europan trading hours ahead while the S&P 500 futures are now reporting a 0.65% drop. 

The additional bearish pressure could arise from President Trump’s decision to delay immigration to the U.S. to control the coronavirus outbreak. Let’s brace to trade ZEW survey results of April will be released for Germany (current situation at -75.0, expectations at -42.0 expected) and the Eurozone. 

Daily Support and Resistance

  • S1 1.0758
  • S2 1.0813
  • S3 1.084

Pivot Point 1.0869

  • R1 1.0896
  • R2 1.0924
  • R3 1.098

EUR/USD– Trading Tips

Technically, the EUR/USD is trading with a slightly bearish bias at 1.0825, exhibiting a bearish crossover below 50 EMA, which is now extending resistance around 1.0903 level. Continuation of a selling trend below 1.0903 level can extend selling until the next support area of 1.0772, but on the way, the pair may find support around 1.0815 level. The EUR/USD is likely to find support around 1.0772, but below this, the next support prevails around 1.0652 level. The pair may find an immediate resistance level of around 1.09230, where the bullish breakout of this level can extend buying until the next resistance level of 1.1036. Conversely, we should look for selling trades below 1.0870.

GBP/USD– Daily Analysis

The GBP/USD slid 0.5% to 1.2442. Investors will focus on the U.K. jobless rate for the three months to February due later in the day (steady at 3.9% expected). The United Kingdom and European Union Brexit drama keep moving while the latest news recommending to keep a check of Britain’s £39 billion has also been underlined by the cost of dealing with coronavirus, especially the economic £250 billion rescue package announced by Chancellor Rishi Sunak to protect jobs and businesses.

At the USD front, investors prefer to choose the U.S. dollar because of its safe-haven-demand in the market due to the fears of economic fallout, which is caused by the coronavirus outbreak. The dollar index, which measures the worth of the greenback against majors, rose 0.20% to levels above 100.00.

Later today, the U.S. dollar could continue to gain ground during the Europan trading hours ahead due to high safe-haven demand in the market in the wake of intensifying coronavirus fears while the S&P 500 futures are now reporting a 0.65% drop. 

On the other hand, the reason behind the cable’s pair declines could also be the immediate rise in COVID-19 cases, with the curve still not notably peaking. It indicates that there is still a high chance that lockdowns could last longer than expected, while the Bankruptcy and bad loans will likely boost the risk-off sentiment in the market and provide further support to the U.S. dollar again.

Looking forward, traders are keenly waiting for the key U.K. data which is scheduled to release during this day ahead As well as, the coronavirus related headlines also will be key to watch for taking fresh directions in the U.S. dollar.

    

Daily Support and Resistance

  • S1 1.2298
  • S2 1.2374
  • S3 1.2407

Pivot Point 1.245

  • R1 1.2483
  • R2 1.2526
  • R3 1.2601

GBP/USD– Trading Tip

Taking a look at the 4-hour timeframe, the GBP/USD is trading at 1.2394 level, violating the support level of 1.2400 level. A bearish breakout of 1.2400 support area is expected to trigger a sell-off until 1.2310. The 50 periods EMA is also keeping the GBP/USD pair under pressure while extending resistance around 1.2430. Thus, the bounce off above this level can lead the GBP/USD pair towards the next resistance level of 1.2657. While bearish breakout of 1.2460 can open up further room for selling until the next support area of 1.2220. 

USD/JPY – Daily Analysis

On Tuesday, the USD/JPY is trading with a selling bias around 107.350, due to intensifying coronavirus fears as increased risk sentiment is driving the demand for the safe-haven currency. The slump in the Japanese exports for March keeps Japanese yen down, which also supports the currency pair to stay at the upside. 

The U.S. dollar extends taking bids mostly due to its safe-haven demand in the wake of intensified coronavirus fears. Considering the fresh report that the United States death toll surged over 40,000, whereas SkyNews mentions the U.K. has a bit over 16,000 people who died from the virus.

Looking forward, the North Korean leader’s health and oil moves will be key to watch, and coronavirus updates could be the driver seat for taking fresh directions. Alongside, the trader will keep their eyes on the U.S. dollar dynamics.

Daily Support and Resistance    

  • S1 105.92
  • S2 106.84
  • S3 107.44

Pivot Point 107.76

  • R1 108.36
  • R2 108.69
  • R3 109.61

USD/JPY – Trading Tips

The USD/JPY is trading slightly bearish at 107.339, having formed a descending triangle pattern on the 4-hour timeframe. The triangle pattern is extending resistance around 107.850 along with resistance around 106.980. As we know, the descending triangle pattern usually breakout on the lower side, and if this happens, the violation of 106.980 level may send the USD/JPY currency pair towards 105.850 level. 

All the best for today! 

Categories
Forex Assets

Everything About The EUR/RUB Forex Asset

Introduction

Introduction

Introduction

The EUR/RUB is the abbreviation of the Euro Area’s Euro against the Russian Ruble. This is an exotic-cross currency pair. The volatility and volume in this pair are good enough for traders to day trade this currency. Here, the EUR is the base currency, and the RUB is the quote currency.

Understanding EUR/RUB

The price in the exchange market of the EUR/RUB specifies the value of RUB that is needed to purchase one Euro. It is quoted as 1 EUR per X RUB. For example, if the value of EUR/RUB is 85.769, this much of Rubles are required to buy one Euro.

Spread

The price of buying is not the same as the price for selling. One must pay the ask price for buying and bid price for selling. And the difference between the bid price and the ask price is called the spread. This value varies based on the type of execution model used by the broker.

ECN: 42 pips | STP: 44 pips

Fees

Like in the stock market where you pay commission on both sides of your trade, in the forex market as well, you must pay few pips of fee for your trade. This could be between 5-10 pips. Note that the fee on STP accounts is nil.

Slippage

Due to the volatility in the market and the broker’s execution speed, there is a difference in the price at which you execute the trade and price, which is actually given by the broker. This is known as slippage.

Trading Range in EUR/RUB

The depiction of the minimum, average, and maximum volatility in the market for different timeframes is given in the below table. These values help us in assessing the risk of trade for a specified time frame.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/RUB Cost as a Percent of the Trading Range

The cost of trade changes as the volatility of the market also changes. In the below tables, we have illustrated the cost variation in the trade-in different timeframes and volatilities for both ECN and STP model account.

ECN Model Account

Spread = 42 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 42 + 3 = 48

STP Model Account

Spread = 44 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 44 + 0 = 47

Trading the EUR/RUB

The EUR/RUB is one of the most traded exotic-cross currency pairs. The volatility in this pair is pretty high. However, a retail trader can still trade it.

Consider the above two volatility tables. We can see that the values are large in the min column and small in the max column. This means that the costs are more when the volatility is low, and less when the volatility is high.

Traders looking to trade with low cost can consider trading when the volatility is high. And traders who need low volatility will have to bear higher costs. There are traders who look for a balance between the two. Such traders can trade when the volatility of the market is around the average values. This will ensure enough volatility as well as low costs.

Another simple way to reduce cost is by placing orders using limit and stop instead of the market. This will take away the slippage on the trade. Hence, this will reduce the total cost of the trade. So, in our example, the total cost will reduce by three pips.

Categories
Forex Assets

What Should You Know Before Trading The EUR/RON Forex pair

Introduction

Introduction

Introduction

The abbreviation of the Euro Area’s euro against the Romanian Leu is written as EUR/RON. This pair is classified as an exotic currency pair. The volume traded in this pair is pretty low. Here, the EUR is the base currency, and the EGP is the quote currency.

Understanding EUR/RON

The value of the EUR/RON determines the value of RON equivalent to one EUR. It is quoted as 1 EUR per X RON. For example, if the value of EUR/RON is 4.8512, then exactly 4.8512 RON is required to buy one Euro.

Spread

The difference between the bid and the ask price for that currency pair is referred to as the spread. The spread is different on ECN and STP accounts.

ECN: 75 pips | STP: 80 pips

Fees

The fee is simply the commission on the trade. One has to pay a few pips of fee on the trade for entering as well as exiting the trade. However, this is only on ECN accounts. On STP accounts, there is no fee.

Slippage

The slippage is the difference between the trader’s required price for execution and the price the broker actually gave the trader. There is this difference due to the volatility of the market and the broker’s execution speed.

Trading Range in EUR/RON

A Trading range is the illustration of the pip movement of a currency pair in different timeframes. The values are obtained from the average true indicator. The volatility values help us in determining the number of pips our trade can move in a given time frame.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/RON Cost as a Percent of the Trading Range

With the volatilities values obtained above, we can even determine the variation in the cost of the trade. Below are the cost variation tables for ECN and STP accounts.

ECN Model Account

Spread = 75 | Slippage = 5 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 5 + 75 + 3 = 83

STP Model Account

Spread = 80 | Slippage = 5 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 5 + 80 + 0 = 85

Trading the EUR/RON

Which timeframe to trade?

Consider the below chart on the 1H timeframe. We can clearly see that the volatility in this pair is very high. There is hardly any movement for a few hours, but a big spike up/down suddenly. And this type of movement is very risky for business. Hence, it is recommended to avoid trading smaller timeframes of this pair.

Nonetheless, considering the 1D chart of EUR/RON, we can see that the volatility is decent enough. Hence, this becomes a tradable timeframe for us. In fact, any timeframe above the daily can be traded efficiently.

How to manage costs?

In the trading cost table, we can see that the percentage values are large in the min column and small in the max column. This means that the costs are high for low volatilities and small for high volatilities. So, to have a balance between the volatility and costs, one may trade when the volatility is around average values.

Furthermore, trading through limit orders is another way to reduce costs. In doing so, the slippage on the trade will not be applied to the total costs.

Categories
Forex Assets

Understanding The EUR/EGP Exotic Currency Pair

Introduction

Introduction

Introduction

The Euro Area’s euro against the Egyptian Pound is abbreviated as EUREGP. This is an exotic-cross currency pair in the forex market. In this pair, the EUR is the base currency, and the EGP is the quote currency.

Understanding EUR/EGP

The market price of the EUREGP depicts the value of EGP that is equivalent to one euro. It is simply quoted as 1 EUR per X EGP. So, for example, if the market price of this pair is 17.8341, then exactly 17.8341 Egyptian Pounds is required to purchase one Euro.

Spread

The difference between the bid price and the ask price is referred to as the spread. These two values are set by the brokers. Hence, it is different for different brokers. The spread also varies based on how the orders are executed.

ECN: 100 pips | STP: 111 pips

Fees

The fee is simply the commission paid on the trade. There is no fee on STP execution model but a few pips on the ECN execution model. However, the fee absence on STP accounts is usually compensated by higher spreads.

Slippage

Slippage is the difference between the price which was wanted by the trader and the price the broker actually gave the trader. It is typically not possible for brokers to give the exact price intended by the traders due to reasons:

  • Broker’s trade execution speed
  • Market volatility

Trading Range in EUR/EGP

Trading range is an illustration of the pip movement in a currency pair for different timeframes ranging from 1H to 1M. These volatility values help in assessing the risk involved in a trade. Basically, it acts as an effective risk management tool. Another application to it is discussed in the subsequent section.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/EGP Cost as a Percent of the Trading Range

This is a very helpful application of the trading range. In the cost as a percent of the trading range, we combine the volatility values with the total cost on the trade and observe how the cost varies for changing volatilities.

ECN Model Account

Spread = 100 | Slippage = 10 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 10 + 100 + 3 = 113

STP Model Account

Spread = 111 | Slippage = 10 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 111 + 0 = 114

Trading the EUR/EGP

The EUR/EGP is an exotic-cross currency pair. This pair is highly volatile, but the trading volume is pretty low. However, this pair can still be traded in certain situations.

Firstly, we can see that the spreads on this pair are high. This is because the volatility in this pair is very high. For example, the average pip movement in the 1H timeframe is over 400 pips. So, we can’t really say that the spread of this pair is high.

Consider the table representing the variation in the costs. We can see that the percentages are highest in the min column. And the values are considerably small in the average and max column. If we were to interpret this, the cost of the trade reduces as the volatility of the market increases. So, based on the type of trader you are, you can choose to enter the market. For example, if you’re concerned about the high costs, then you may trade when the volatility of the market is at its peak. If you’re a conservative trader who needs petty low volatility, then you may use it during low volatilities, but you’ll have to bear high costs for it.

Furthermore, there is a way through which you can bring down your existing cost on the trade. This is simply by executing trades using limit or stop orders instead of the market. In doing so, the slippage will be nullified. So, in our example, the total cost would reduce by ten pips.

Categories
Forex Assets

EUR/MXN – Analyzing The Costs Involved While Trading This Exotic Pair

Introduction

Introduction

Introduction

EUR/MXN is the abbreviation for the Euro Area’s euro against the Mexican Peso. It is classified as an exotic-cross currency pair. Here, the EUR is the base currency, and the MXN is the quote currency.

Understanding EUR/MXN

The market value of EURMXN determines the value of MXN that is required to buy one euro. It is quoted as 1 EUR per X MXN. So, if the market price of this pair is 24.4733, then these many units of Mexican pesos are required to buy one EUR.

Spread

The spread is the difference between the bid price and the ask price. These two prices are set by the brokers. The pip difference is through which brokers generate revenue.

ECN: 46 pips | STP: 49 pips

Fees

A fee is simply the commission you pay to the broker on each position you open. There is no fee on STP account models, but a few pips on ECN accounts.

Slippage

Slippage is the difference between the price at which the trader executed the trade and the price he actually got from the broker. This changes based on the volatility of the market and the broker’s execution speed.

Trading Range in EUR/MXN

The amount of money you will win or lose in a given amount of time can be assessed using the trading range table. This is a representation of the minimum, average, and maximum pip movement in a currency pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/MXN Cost as a Percent of the Trading Range

The cost of trade varies based on the volatility of the market. This is because the total cost involves slippage and spreads apart from the trading fee. Below is the representation of the cost variation in terms of percentages. The comprehension of it is discussed in the coming sections.

ECN Model Account

Spread = 46 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 46 + 3 = 52

STP Model Account

Spread = 49 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 49 + 0 = 52

Trading the EUR/MXN

The EURMXN is a very volatile pair. For instance, the average pip movement on the 1H timeframe is only 335 pips. Note that the higher the volatility, the lower is the cost of the trade. However, this is not an advantage as it is risky to trade highly volatile markets.

Also, the larger/smaller the percentages, the higher/lower are the costs on the trade. So, we can infer that the costs are higher for low volatile markets and high for highly volatile markets.

To reduce your risk, it is recommended to trade when the volatility is around the minimum values. The volatility here is low, and the costs are a little high compared to the average and the maximum values. But, if you’re priority is towards reducing costs, you may trade when the volatility of the market is around the maximum values.

Advantage from Limit orders

When orders are executed as market orders, there is slippage on the trade. But, with limit orders, there is no slippage as such. Only trading fees and the spread will be taken into consideration to calculate the total costs. Hence, this will bring down the cost significantly.

Categories
Forex Assets

Costs Involved While Trading The EUR/CZK Forex Pair

Introduction

Introduction

Introduction

EUR/CZK is the abbreviation for the Euro Area’s euro against the Czech Koruna. This pair is an exotic-cross currency pair. Here, the EUR is the base currency, and the CZK is the quote currency.

Understanding EUR/CZK

The price of this pair in the exchange market determines the value of CZK equivalent to one euro. It is quoted as 1 EUR per X CZK. So, if the value of this pair is 26.0896, these many Korunas are required to purchase one EUR.

 

Spread

Spread is the difference between the bid and the ask price offered by the broker. This value is different on the ECN account model and STP account model. An approximate value for the two is given below.

ECN: 45 pips | STP: 47 pips

Fees

A fee is another term for the commission of the trade. There is no fee on STP accounts, but a few pips on ECN accounts.

Slippage

Slippage is the difference between the price intended by the trader and the price the trader actually received from the broker.

Trading Range in EUR/CZK

The trading range is the tabular representation of the pip movement of a currency pair in different timeframes. These values are useful for determining the profit that can be generated from a trade before-hand. To find the value, you must multiply the below volatility value with the pip value of this pair.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/CZK Cost as a Percent of the Trading Range

This is the representation of the cost variation of trades for different timeframes and volatilities. The values are obtained by finding the ratio between the total cost and the volatility value and are expressed as a percentage.

ECN Model Account

Spread = 45 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 45 + 3 = 51

STP Model Account

Spread = 47 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 47 + 0 = 50

Trading the EUR/CZK

The larger the percentage values, the higher is the cost of the trade. From the above tables, we can see that the values are large in the min column and comparatively smaller in the max column. This means that the costs are high when the volatility of the market is low.

It is neither advisable to trade when the volatility of the market is high, nor when the costs are high. To have a balance between both these factors, it is ideal to trade when the volatility of the pair is in the range of the average values.

Furthermore, to reduce your costs even further, you may place trades using limit orders instead of market orders. In doing so, the slippage will not be included in the calculation of the total costs. And this will bring down the cost of the trades by a decent number. An example of the same is given below.

Spread = 45 | Slippage = 0 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 0 + 45 + 3 = 48

Categories
Forex Assets

Analyzing The EUR/PLN Exotic Currency Pair

Introduction

Introduction

Introduction

EUR/PLN is the abbreviation for the Euro Area’s euro against the Polish Zloty. This European currency is classified as an exotic-cross currency pair. In this pair, the EUR is the base currency, and the PLN is the quote currency.

Understanding EUR/PLN

The value of this pair simply represents the value of PLN equivalent to one Euro. It is quoted as 1 EUR per X PLN. An example of the same is shown below.

Spread

The spread is a popular terminology used in the forex industry, which is defined as the difference between bid and ask prices in the market. This is not the same on all brokers but varies based on the execution model they use.

ECN: 30 pips | STP: 34 pips

Fees

A Fee is similar to the commission that is paid to the brokers. Fee on ECN accounts is between 5-10 pips, while it is nil for STP accounts.

Slippage

Slippage is the difference between the price wanted by the client and the price they actually received from the broker. There is this difference due to two reasons:

  • Broker’s execution speed
  • Market volatility

Trading Range in EUR/PLN

A trading range is a table that represents the minimum, average, and maximum volatility of the market for various timeframes. With these pip movements from the past, we can determine the profit/loss that can be made from a trade.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/PLN Cost as a Percent of the Trading Range

In calculating the total costs, spread and slippage are variables. These values change as the volatility of the market changes. And below, we have represented the variation of the costs by applying the values from the trading range table.

ECN Model Account

Spread = 30 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 30 + 3 = 36

STP Model Account

Spread = 34 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 34 + 0 = 37

Trading the EUR/PLN

Trading the EURPLN is not a hurdle. Though this pair is a major/minor currency pair, its characteristics are similar to that of majors/minors.

Firstly, the spread is around 30 pips, which are lower compared to other exotic-cross currencies involving EUR as the base currency. Secondly, the volatility of this pair is pretty decent. It is neither too high nor too low.

Coming to the above two tables, we can see that the percentage values are large in the min column and gets smaller as we move towards the max column. Since the values in the min column are significant, it is not advisable to trade this pair during low volatility. To have enough volatility with inexpensive costs, one may trade when the volatility is around the average values.

Placing orders through ‘limit’ and ‘stop’ would further decrease the costs. In doing so, the slippage on the trade will be nullified, and this will, in turn, bring down the total costs.

Categories
Forex Assets

Everything About EUR/TRY Forex Currency Pair

Introduction

Introduction

Introduction

EUR/TRY is the abbreviation for the Euro area’s euro against the Turkish Lira. This pair is classified as an exotic-cross currency pair. In this pair, EUR is the base currency, and TRY the quote currency.

Understanding EUR/TRY

The price of this pair determines the value of TRY, which is equivalent to one euro. It is quoted as 1 EUR per X TRY. For example, if the value of this pair is 6.5552, then about 6.5 Turkish Liras are required to purchase one euro.

EUR/TRY Specification

Spread

Spread is simply the difference between the bid price and the ask price in the market. This value is controlled by the brokers. This value varies on the type of execution model used for executing the trades.

Spread on ECN: 40 pips | Spread on STP: 44 pips

Fees

The fee in Forex is similar to the one that is pair to stockbrokers. Note that, there is no fee on STP accounts, but a few pips on ECN accounts.

Slippage

The slippage on a trade is the difference between the price that is demanded by the trader and the price that is actually executed by the broker. Market volatility and the broker’s execution speed are the reasons for slippage to occur.

Trading Range in EUR/TRY

A trading range is the representation of the minimum, average, and the maximum volatility of this pair on the 1H, 4H, 1D, 1W, and 1M timeframe. Using these values, we can assess our profit/loss margin of trade. Hence, this proves to be a helpful risk management tool for all types of traders.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/TRY Cost as a Percent of the Trading Range

With the volatility values obtained from the above table, we can see how the cost varies as the volatility of the market varies. All we did is, got the ratio between the total cost and the volatility values and converted into percentages.

ECN Model Account 

Spread = 40 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 40 + 3 + 3 = 46

STP Model Account

Spread = 44 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 44 + 3 + 0 = 47

The Ideal way to trade the EUR/TRY

The EURTRY is a pair with enough volatility and liquidity. Hence, this makes it simpler to trade this exotic-cross currency.

From the above table, we can see that the percentage values are all within 200%. This means that the costs are low irrespective of the timeframe and volatility you trade.

Digging it a little deeper, the costs are higher when the volatility of the market is low and lower for higher volatilities. However, we cannot ignore the fact that this pair is highly volatile. For example, the maximum volatility on the 1H timeframe is as high as 456. So, traders must be cautious before trading this pair.

When it comes to the best time of the day to trade this pair, it is ideal for entering this pair during those times of the day when the volatility is in between the average values because this will ensure decent volatility as well as low costs.

Furthermore, traders can easily reduce their costs by placing orders as ‘limit’ and ‘stop’ instead of ‘market.’ In doing so, the slippage on the trade will not be considered in the calculation of the total costs. So, in our example, the total cost will reduce by three pips.

Categories
Forex Assets

Exploring The EUR/THB Exotic Currency Pair

Introduction

Introduction

Introduction

EUR/THB is the abbreviation for the Euro area’s euro against the Thai Baht. This pair is classified as an exotic currency pair. In this pair, EUR is the base currency, and THB is the quote currency.

Understanding EUR/THB

The market value of this pair represents the value of THB equivalent to one EUR. It is quoted as 1 EUR per X THB. For example, if the current market price of this pair is 35.345, these many units of THB are required to purchase one euro.

EUR/THB Specification

Spread

The algebraic difference between the bid and the ask price is referred to as the spread. Spread is determined by the brokers and varies based on the execution model they use.

Spread on ECN: 25 pips | Spread on STP: 28 pips

Fee

The fee is simply the commission paid on the trade. However, this fee is levied only on ECN accounts, not STP accounts.

Slippage

When you execute orders by market, the price you receive from the broker is different from the price you trigger your order. This happens solely due to the changes in the market volatility and the speed with which brokers execute the trades.

Trading Range in EUR/THB

The trading range is the representation of the range of pip movement in a currency pair. These pip values help in assessing the profit/loss in a trade, even before opening positions. In the below table, we have included six timeframes, ranging from 1H to 1M.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/THB Cost as a Percent of the Trading Range

The cost as a percent of the trading range is the representation of the cost variation in the trade. The cost varies based on the volatility of the market. Having an idea of the cost variation, we can find our ideal times of day to trade in the market with reduced costs.

ECN Model Account

Spread = 25 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 25 + 3 + 3 = 31

STP Model Account

Spread = 28 | Slippage = 3 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee = 28 + 3 + 0 = 31

The Ideal way to trade the EUR/THB

Before getting right into it, let’s comprehend the above tables. To analyze the tables, we consider the magnitude of the percentages. The higher the percentages, the higher is the cost of the trade. Conversely, lower percentages imply lower costs.

The costs in the min column are higher compared to the max column. This means that the costs are high when the volatility of the market is low, and the converse holds true as well.

The ideal way to trade this pair is completely dependent on the type of trader you are. For instance, if you are a trader looking for low costs, then you may trade when the volatility is high. Since the majority of the traders need a balance between the two, they may trade when the volatility of the market is somewhere around the average values in the trading range table.

Another simple technique to reduce costs is implementing strategies such that orders are executed using limit orders instead of market orders. In doing so, the slippage will be completely eradicated, and the total costs will be reduced by a decent number.

Categories
Forex Assets

EUR/NOK – Everything You Should Know Before Trading This Currency Pair

Introduction

Introduction

Introduction

EUR/NOK is the abbreviation for the Euro Area’s euro against the Norwegian Krone. This pair is classified as an exotic-cross currency. Here, EUR is the base currency, and NOK is the quote currency.

In this asset article, we shall understand what the value of this pair means, the volatility in different timeframes, the cost variations, and finally, the ideal way to trade this pair.

Understanding EUR/NOK

The value of this pair represents the value of NOK equivalent to one EUR. It is quoted as 1 EUR per X NOK. For example, if the value of this pair is 10.4373, approx. 10 Krones are required to purchase one euro.

EUR/NOK Specification

Spread

The difference between bid and ask prices set by the brokers is referred to as the spread on the trade.

There are two types of trade execution models in forex, namely, ECN and STP. The spread on both vary.

  • Spread on ECN: 55 pips
  • Spread on STP: 57 pips

Fees

For every position you take on your account, you are required to pay some fee for it. This fee is typically between 5-10 pips. Moreover, there is no fee as such in STP accounts.

Slippage

When orders are executed by the market, the trader will not receive the exact price at which he triggered the button. The difference between the actual received price and the triggered price is called the slippage.

Trading Range in EUR/NOK

A Trading range is a tabular representation of the pip movement in a currency pair for different timeframes. Below is the same table for the EURNOK currency pair. From these values, we can assess our profit/loss on a trade beforehand. All you must do is, find the product of the volatility value and the pip value ($0.95).

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/NOK Cost as a Percent of the Trading Range

This is an application to the above trading range table. By clubbing these values with the total cost of a trade, we can determine the cost variations for changing volatilities.

ECN Model Account 

Spread = 55 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 55 + 3 + 3 = 61

STP Model Account

Spread = 57 | Slippage = 3 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee = 57 + 3 + 0 = 60

The Ideal way to trade the EUR/NOK

Trading the EURSEK is similar to trading any other exotic-cross pair. This pair has pretty high volatility with liquidity lesser than major/minor pairs. This is the reason for its spreads to be at 55 pips. Yet, this pair can still be traded.

From the above cost percentage table, we can infer that the magnitudes are large in the min column and small in the max column. This means that the costs are more for low volatilities are less for high volatilities. It is neither preferable to trade during high volatilities nor when the costs are less, for obvious reasons. So, to maintain equilibrium between costs and volatility, it is ideal for entering this pair when the volatility is more or less near the average values in the trading range table.

Another simple way to bring down your costs is by placing orders by ‘limit’ and ‘stop.’ When trades are not executed as market orders, the slippage is cut off. Hence, the total cost is reduced by a decent percentage. An example of the same is given below.

Spread = 55 | Slippage = 0 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 55 + 0 + 3 = 58

Categories
Forex Assets

Analyzing The Costs Involved While Trading The EUR/DKK Forex Pair

Introduction

Introduction

Introduction

The Euro Area’s euro against the Danish Krone, in short, is written as EURDKK. This is an exotic pair in the forex market. Typically, this pair is traded with low volumes. Here, EUR is the base currency, and DKK is the quote currency.

Understanding EUR/DKK

The current market price in the exchange of this pair depicts the value of Danish Krone equivalent to one euro. It is simply quoted as 1 EUR per X DKK. For example, if the current value of EURDKK is 7.4702, then about 7.5 DKK are required to buy one euro.

EUR/DKK Specification

Spread

In the foreign exchange market, spreads are the primary source through which brokers make money. They set a different price for buying and a different price for selling the same currency pair. This difference is referred to as the spread. This spread varies from broker to broker and also from the type of execution model used.

Spread on ECN: 40 pips | Spread on STP: 42 pips

Fee

This fee is the same fee is paid to the stockbrokers. In other terms, this is the commission that is paid to the broker. The fee on ECN accounts is between 5-10 pips, while it is nil on STP accounts.

Slippage

The difference between the price at which the trader executed the trade and actual executed price is called the slippage on the trade. This happens only on market orders, due to two reasons – Market volatility & Broker’s execution speed

Trading Range in EUR/DKK

As the name partially suggests, the trading range is a range of pip movements in a currency pair in different timeframes. Pip movement is also referred to as the volatility values. These values are extremely helpful in figuring the gain/loss that can be made on a trade.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/DKK Cost as a Percent of the Trading Range

The total cost of the trade is determined by summing up the slippage, spread, and the trading fee. And this cost is not fixed. It varies based on the volatility of the market. Below is the tabular representation of the cost variation, which is signified in percentages.

ECN Model Account

Spread = 40 | Slippage = 3 | Trading fee = 3

Total cost = Spread + Slippage + Trading Fee = 40 + 3 + 3 = 46

STP Model Account

Spread = 42 | Slippage = 3 | Trading fee = 0

Total cost = Spread + Slippage + Trading Fee = 42 + 3 + 0 = 45

Note: The costs may seem significantly high because of the Spreads. As we know, these Spreads keep changing from time to time. At times we have seen the spreads for this pair being as low as 12. But we have considered maximum spread to give you the maximum cost percentages.

The Ideal way to trade the EUR/DKK

Trading the EURDKK is different from trading the major/minor currency pairs. And this can be easily figured out from the percentage values.

From the table, we can infer that the percentage values are extremely high on the 1H, 2H, and 4H timeframes. This means that the costs in these timeframes are super-high. Hence, trading this pair on these lower timeframes is a bad decision.

However, if we look at the next three rows (1D, 1W, and 1M), we can see that the percentage values are significantly lower than the above values. Hence, this makes this pair tradable on the daily, weekly, and monthly timeframes.

Consider the charts of EURDKK on the 1H and the 1D timeframe. On the 1H timeframe chart, we can see that there is barely any movement in the price. Also, volatility is high here.

On the other hand, on the 1D timeframe, there is enough movement in the prices, and the volatility is not very high as well. Hence, making it the ideal timeframe to trade.

Moreover, a simple and effective way to reduce costs is by trading using limit and stop orders instead of market orders. In doing so, the slippage will be completely nullified. Hence, the total cost will significantly reduce.

Categories
Forex Assets

Trading Costs Involved While Trading The EUR/SGD Exotic pair

Introduction

Introduction

Introduction

EUR/SGD is the abbreviation for the Euro area’s euro against the Singapore Dollar. This is one of the most traded exotic currency pairs in the world. In this pair, EUR is the base currency, and SGD is the quote currency.

Understanding EUR/SGD

The price of this pair represents the value of SGD, which is equal to one EUR. It is quoted as 1 EUR per X SGD. For example, if the value of this pair is 1.5552, then about 1.5 Singapore Dollars are required to purchase one euro.

EUR/SGD Specification

Spread

The spread is the difference between the bid and the ask price in the market. These two prices are set by the brokers. And it depends on the type of execution model used by the brokers.

Spread on ECN: 10 pips | Spread on STP: 11 pips

Fees

On ECN accounts, for every position you open, there is some fee involved with it. This is different for different brokers. However, on STP accounts, there is no fee as such.

Slippage

To put it in simple words, slippage is the difference between the trader’s demanded price and price given by the broker. The trader does not get his intended price due to two reasons – Broker’s execution speed & Market volatility

Trading Range in EUR/SGD

With the trading range table, we can assess our gain/loss on a trade in a given timeframe even before we open positions for it. This is done by considering the past volatility of the market.

Now, to determine the profit/loss on a trade, all you must do is, multiply the volatility value with the pip value ($7.25).

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/SGD Cost as a Percent of the Trading Range

This is an excellent application to the above volatility table. By considering the pip movement values, we can determine the cost variation of a trade as well. To do so, we find the ratio between the total cost and volatility value and convert it into percentages. Below are the cost variations for ECN and STP accounts models.

ECN Model Account 

Spread = 10 | Slippage = 3 | Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 10 + 3

Total cost = 16

STP Model Account

Spread = 11 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 11 + 0

Total cost = 14

The Ideal way to trade the EUR/SGD

Comprehending the costs : Large/Small percentage -> High/Low costs

From the above the tables and the implications, we can conclude that costs are high when the volatility of the low and high when the volatility is low. And when it comes to the ideal way to trade this pair, conservative traders may trade it during those times when the volatility values are at or above the average values. This will ensure enough volatility as well as affordable costs. And other aggressive traders may trade during any of the extremes.

Also, traders can reduce their total costs by trading using limit orders and stop orders. Unlike the market orders, limit and stop orders do not include slippage on the trade. Hence, this will reduce costs considerably.

Categories
Forex Assets

Asset Analysis – EUR/HKD Exotic Currency Pair

Introduction

Introduction

Introduction

EUR/HKD is the abbreviation for the Euro area’s euro against the Hong Kong dollar. It is classified as an exotic currency pair that usually has high volatility and low trading volume. Here, the EUR is the base currency, and the HKD is the quote currency.

Understanding EUR/HKD

The current value of the pair represents the value of HKD that is equivalent to one USD. It is quoted as 1 EUR per X HKD. For example, if the value of this pair is 9.8764, then these many units of HKD are required to buy one US dollar.

Spread

In trading, the difference between the bid price and the ask price is referred to as the spread. Spread typically varies from broker to broker. The approximate spread on ECN and STP accounts is given below.

ECN: 17 pips | STP: 18 pips

Fees

The fee is the commission you pay to your broker for each position you open. The value of this, too, is in the hands of the broker. However, note that there are no fee STP accounts.

Slippage

Slippage is the difference between the price at which the trader executed the trade and the price he actually received from the broker. Essentially, slippage depends on two factors:

  • Broker’s execution speed
  • Market’s volatility

Trading Range in EUR/HKD

Knowing how much profit you can make or how much loss you can incur in a trade in a specific time frame is vital. The Trading Range can be assessed using the table given below. It represents the minimum, average, and maximum pip movement in EURHKD in different timeframes.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can determine a large period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/HKD Cost as a Percent of the Trading Range

Total cost is not constant for every trade you take. It varies based on the volatility of the market. And the variation of it can be obtained from the two tables given below.

ECN Model Account

Spread = 17 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 17 + 3 = 23

STP Model Account

Spread = 18 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 18 + 0 = 21

The Ideal way to trade the EUR/HKD

Exotic currency pairs tend to have high volatility and low volume. And it is not ideal to trade during these times. So, let us find out the best times of the day to trade this currency pair by comprehending the above tables.

The higher percentages depict higher costs on the trade. It can be ascertained that the percentages are on the upper side in the min column. Hence, we can conclude that the costs are high when the volatility of the market is high and vice versa.

And, when it comes to determining the right time to enter the market, one may open positions when the volatility of the market is around the average volatility. This method will ensure both decent volatility and low costs.

Market orders result in slippage, and limit orders do not. Hence, placing limit orders is another way through which one can considerably reduce their total costs on the trade.

Categories
Forex Assets

Understanding The EUR/JPY Asset Class

Introduction

Introduction

Introduction

The Euro area’s euro against the Japanese yen, in short, is termed as EURJPY. This pair, too, like the EURCHF, EURNZD, EURCAD, EURGBP, etc. is a minor or cross currency pair. It is one of the most traded currency pairs in the forex market. Here, the EUR is the base currency, and JPY is the quote currency. The value of this pair is quoted in terms of the quote currency.

Understanding EUR/JPY

This currency pair is precisely quoted as 1 EUR per X JPY. In simple terms, the value determines the units of the quote currency (JPY) required to buy one unit of the base currency (EUR). For example, if the market value of EURJPY is 121.00, it basically means that these many yen are required to purchase one euro.

EUR/JPY Specification

Spread

Spread is the difference between the bid price and the ask price set by the broker. This value is not constant and varies from broker to broker. It also varies on the type of account model.

Spread on ECN model: 0.6

Spread on STP model: 1.5

Fees

Spread is not the only way through which brokers generate their revenue. They charge some fee (commission) on each trade as well. Fees again vary from broker to broker and account model. Typically, there is no fee on an STP account. However, there are a few pips or fees on an ECN account as their spread is lesser than an STP account.

Slippage

Slippage is the difference between the trader’s asked price and the actual price given to him. Two factors majorly affect slippage on a trade; one, the volatility of the market, and two, broker’s execution speed. The slippage is usually within 0.5 to 5 pips. For major currencies, the slippage is much lower.

Trading Range in EUR/JPY

The trading range is the illustration of the minimum, average, and the maximum number of the pips the currency pair has moved in a given time frame. These values help assess the profit/loss potential of a trade. For instance, if the max volatility on the 1H is 10 pips, then one can expect to win or lose a maximum of $92 (10 pip x 9.20 value per pip) in an hour or two.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can determine an extensive period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/JPY Cost as a Percent of the Trading Range

In addition to assessing the profit/loss in a timeframe ahead of time, we can use these values in determining the cost variation in different timeframes and volatility as well. The cost as a percent of the trading range tells the min, average, max costs by considering the timeframes and volatility as its variables.

ECN Model Account 

Spread = 0.6 | Slippage = 2 | Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.6 + 1 = 3.6

STP Model Account

Spread = 1.5 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.5 + 0 = 3.5

The Ideal way to trade the EUR/JPY

Above are the costs of each trade in terms of percentages. Note that they do not represent the actual cost on trade in terms of dollars, but are magnitude values which can be used for comparing with other values. The higher the magnitude of the percentage, the higher is the cost on the trade for that particular timeframe and volatility. From the tables, it can be ascertained that the values are highest on the min column and lowest on the max column. This, in turn, implies that the costs are higher when the volatility is low and vice versa. Talking about the timeframe, the costs are high on the lower timeframes and low on the higher timeframes. So, a day trader may preferably trade on the 2H/4H when the volatility is around the average values. And long-term traders may trade the 1W/1M whatsoever be the volatility of the market.

Furthermore, a trader may reduce their costs by entering and exiting trades using limit order instead of market orders. This will completely erase the slippage on the trade. An example of the same is given below.

Total cost = Spread + trading fee = 0.6 +1 = 1.6

Categories
Forex Assets

Everything About EUR/CAD Currency Pair

Introduction EURCAD is the abbreviation for the currency pair Euro area’s euro and the Canadian dollar. This is a cross-currency pair, as it does not involve the US dollar. In EURCAD, EUR is the base currency, and CAD is the quote currency. The price of this pair basically tells the value of CAD w.r.t EUR. […]

Introduction EURCAD is the abbreviation for the currency pair Euro area’s euro and the Canadian dollar. This is a cross-currency pair, as it does not involve the US dollar. In EURCAD, EUR is the base currency, and CAD is the quote currency. The price of this pair basically tells the value of CAD w.r.t EUR. […]

Introduction

EURCAD is the abbreviation for the currency pair Euro area’s euro and the Canadian dollar. This is a cross-currency pair, as it does not involve the US dollar. In EURCAD, EUR is the base currency, and CAD is the quote currency. The price of this pair basically tells the value of CAD w.r.t EUR.

Understanding EUR/CAD

The current market price of EURCAD determines the required Canadian dollars to purchase one euro. It is quoted as 1 EUR per X CAD. For example, if the CMP of EURCAD is 1.4700, it is as good as saying that 1.4700 CAD is needed to buy one EUR.

EUR/CAD Specification

Spread

The algebraic difference between the bid price and the ask price set by the broker is known as the spread. Spread varies from time to time and broker to broker. The approximate spread value on an ECN account is 0.8, and on an STP account is 1.8.

Fees

For every position that a trader opens, there is some fee associated with it. And it depends on the type of account model. It is seen that there is no fee on STP accounts and a few pips on ECN accounts.

Slippage

Slippage is terminology in trading, which, by definition, is the difference between the trader’s wished price and the real executed price. That is, the trader does not get the exact price he had intended for. There is some variation due to the volatility of the market and the broker’s execution speed. It usually varies from 0.5 to 5 pips on these minor currency pairs. The slippage is typically lesser on major currency pairs.

Trading Range in EUR/CAD

The trading range is an illustration of the minimum, average, and maximum pip movement in EURCAD. It determines the volatility of the market. The volatility of the market is a vital piece of information in trading, as one can assess the time that can be taken on each trade. And by applying more variables to it, one can determine the cost varies on the trade as well.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/CAD Cost as a Percent of the Trading Range

Cost as a percent of the trading range is a simple yet very effective application of the above volatility table. There is a cost on every trade you take. The total cost of a trade is the sum of slippage, spread, and trading fee. This total cost is divided by the volatility values and is expressed in terms of a percentage. And the percentage values are used to figure out the best times of the day to enter and exit a trade with marginal cost.

ECN Model Account 

Spread = 0.8 | Slippage = 2 | Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.8 + 1 = 3.8

STP Model Account

Spread = 1.8 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.8 + 0 = 3.8

The Ideal way to trade the EUR/GBP

To determine the ideal way of trading the EURCAD, let us first comprehend what the percentage means.

High percentage => High cost

Low percentage => Low cost

Min column => Low volatility

Max column => High volatility

From the table, we can infer that the percentages are high in the min column and low for the max column. So,

Min column => High percentage

Thus, Low volatility => High cost

Max column => Low percentage

Thus, High volatility => Low cost

It is not ideal during low volatility as costs are high. Also, trading during high volatility is not a good idea as it is quite risky. Hence, to have a balance between both volatility and cost, it is ideal to trade when the pip movement on the currency pair is at the average values.

Another simple hack to reduce the costs is to trade using limit orders instead of market orders. Doing so, the slippage will be automatically cut off from the trade, and the total cost will significantly reduce.

Categories
Forex Assets

Asset Analysis – EUR/NZD Forex Currency Pair

Introduction

Introduction

Introduction

EURNZD is the abbreviation for the Euro area’s euro and the New Zealand dollar. It is classified under the minor/cross currency pairs. In EURNZD, EUR is the base currency pair, and NZD is the quote currency. As a matter of fact, in all currency pairs with euro in it, EUR is the base currency.

Understanding EUR/NZD

The value of this pair defines the New Zealand dollars required to purchase one euro. It is quoted as 1 EUR per X NZD. For example, if the value of value in the market is 1.6650, it implies that to buy one euro, the trader has to pay 1.6650 New Zealand dollars for it.

EUR/NZD Specification

Spread

Spread is a very popular term in the forex industry. This is the way through which the broker makes revenue. Spread is simply the difference between the bid price and the ask price. It differs from the type of account model. The spread on ECN and STP is given below.

ECN: 0.9 | STP: 1.7

Fees

For every position that a trader opens, there is some fee associated with it. And it depends on the type of account model. It is seen that there is no fee on STP accounts and a few pips on ECN accounts.

Slippage

Slippage is the difference between the price the trader had demanded and the actual price the trade was executed. Slippage happens when trades are taken using market orders. Slippage has a significant load on the total cost of the trade. More on this shall be discussed towards the end of this article.

Trading Range in EUR/NZD

A part of the analysis in trading is knowing the volatility of the market. Volatiltiy will give an close idea on the number of pips the currency pair will move in a given timeframe. The trading range depicts the minimum, average, and maximum pip movement in a specified time frame. Below are the values for EUNZD.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/NZD Cost as a Percent of the Trading Range

Cost as a percent of the trading range represents the cost percentage that a trader is bearable for each trade they take. The percentage is obtained by finding the ratio between the total cost and volatility. With these percentage values, we come into the conclusion of the best time to enter and exit the market with minimal costs.

ECN Model Account 

Spread = 0.9 | Slippage = 2 | Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.9 + 1 = 3.9

STP Model Account

Spread = 1.7 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.7 + 0 = 3.7

The Ideal way to trade the EUR/NZD

By analyzing the percentages obtained above, we can find ways to reduce risk and cost on every trade of EURNZD. Firstly, the percentage tells the cost variation for different volatilities in different timeframes. The values are large in the first (Min) column. Meaning, the costs are high in the min column. Also, since this column represents low volatility, it implies that costs are high when the volatility is low and vice versa. In the average column, the costs are neither too high nor too low. And the volatility is under balance as well. Hence, this turns out to be the ideal time to trade in the market.

Moreover, another feasible technique to reduce cost is by placing limit orders. By the use of limit orders, a trader will eradicate the existence of slippage on the trade, and, in turn, reduce the total cost on the trade considerably. An example of the same is given below.

Comparing this table with the previous table, it is evident that the percentages have almost halved. Hence, entering and exiting trades using limit orders can prove to be very advantageous to reduce costs on trade.

Categories
Forex Assets

Understanding The EUR/AUD Forex Currency Pair

Introduction

Introduction

Introduction

EURAUD is a minor/cross currency pair traded in the forex market. EURAUD is the abbreviation for the euro area’s euro and the Australian dollar. The left currency, EUR is the base currency and the one on the right, AUD is the quote currency. The price of EURAUD basically tells the value of the Australian dollar.

Understanding EUR/AUD

The exchange rate of EURAUD shows the Australian dollars required to purchase one euro. It is quoted as 1EUR per X AUD. For example, if the value of EURAUD is 1.5995, it means that these many units of AUD are to be possessed by the trader to buy one unit of EUR.

EUR/AUD Specification

Spread

Spread is the way through which brokers make money. It is merely the difference between the bid price and the ask price set by the broker. These prices are often different from broker to broker. The spread differs based on the volatility of the market as well. The approximate spread on an ECN account and an STP account is given below.

ECN: 0.9 | STP: 1.7

Fees

For every trade a trader takes, there is some fee associated with it. And this fee is charged only by ECN type brokers. Typically, there is no fee on STP type brokers. The fee range is usually between 6 pips and 10 pips.

Slippage

A trader can place trades using either market order or using a limit order. In the case of market orders, the trader doesn’t get the exact price at which he executed the trade. The real price he received is different. This difference in the price is referred to as slippage.

Trading Range in EUR/AUD

As a professional trader, it is vital to know how many pips the currency pair moves in each timeframe. It gives the trader an idea of how long he must wait for his trade to perform. Traders can also assess their profit/loss in a given time frame. For example, if a trader takes a trade by analyzing the 1H timeframe, and the min market volatility is three pips, then he can expect to win or lose at least $20.91 (3 pips x $6.97 value per pip).

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/AUD Cost as a Percent of the Trading Range

Apart from knowing the potential profit/loss from the volatility of the market in different timeframes, one can also determine the cost variation by considering the volatility and the timeframe. For this, the ratio between total cost and volatility is taken into account. It is then expressed in terms of percentage. The magnitude of the percentage determines the cost of each trade.

ECN Model Account

Spread = 0.9 | Slippage = 2 | Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.9 + 1 = 3.9

STP Model Account

Spread = 1.6 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.7 + 0 = 3.7

The Ideal way to trade the EUR/AUD

Now that we’ve got the values from the above table, here is our ideal way to trade the EUR/AUD.

The higher the magnitude of the percentages, the higher is the cost of the trade on that particular timeframe. Comprehending this to the above table, it is seen that the percentages are highest and lowest on the min and max columns, respectively. This, in turn, implies that the costs are high when the volatility of the market is feeble. And the costs are low when the volatility is high. So, it is ideal to trade on any timeframe, given the volatility of the market is above average volatility. This will ensure the fairly high volatility with affordable costs.

Furthermore, the costs can be made much lower by placing limit orders instead of market orders because this will reduce the slippage on the trade to zero. As an example, the cost percentage table is given by ignoring the slippage value.

Thus, comparing the two tables, it is evident that the costs have reduced by 50%.

Categories
Forex Assets

What Should You Know About The EUR/CHF Forex Pair?

Introduction

Introduction

Introduction

EURCHF is the abbreviation for the Euro area’s euro and the Swiss franc. This currency pair is a minor/cross currency pair. Here, EUR is the base currency, and CHF is the quote currency. Trading the EURCHF is commonly called trading the ‘swissie.’

Understanding EUR/CHF

The value of EURCHF determines the number of units of Swiss francs required to purchase one euro. It is quoted as 1 euro per X francs. For example, if the value of 1.3000, it means that one must pay 1.3000 francs to buy one euro.

EUR/CHF Specification

Spread

Spreads are the way by which brokers make their money. There is a separate price to buy a currency pair and a separate price to sell it. To buy, one must refer to the ask price, and to sell, one must refer to the bid price of the currency pair. The difference between these two prices is known as the spread. This spread usually differs from account type. The average spread on ECN and STP model account are as follows:

ECN: 0.9 | STP: 1.6

Fees

The fee is nothing but the commission charged by the broker on a single trade. The fee also varies base on account type.

Fee on STP account: NIL

Fee on ECN account: 1 pip

Note: The fee depends from broker to broker. Here, we have taken the average value by referring to some brokers.

Slippage

Slippage in trading is the difference between the trader’s desired price and the real executed price by the broker. The slippage value depends on two factors:

  • Broker’s execution speed
  • Currency pair’s volatility

Trading Range in EUR/CHF

The trading range in EURCHF is the representation of the minimum, average, and maximum pip movement in different timeframes. These values can be used to assess one’s approximate profit or loss in a given time frame. For example, if the volatility on the 1H timeframe is five pips, then one can expect to be in a profit or loss of $50.25 (5 pips x $10.05 value per pip) in an hour or two.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/CHF Cost as a Percent of the Trading Range

Apart from assessing your profit and loss, one can find the best time of the day to enter and exit a trade. For this, another table is inserted that represents costs in terms of percentage. And the magnitude of these percentages determines the range of costs on each trade.

ECN Model Account

Spread = 0.9 | Slippage = 2 | Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.9 + 1 = 3.9

STP Model Account

Spread = 1.6 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.6 + 0 = 3.6

Comprehending ‘Cost as a percentage of trading range’

Note that the mentioned percentages are a unitless quantity, and we consider only the magnitude of it. If the percentage value is high, then the costs are high. If they’re low, the costs are low too. Relating it to volatility, if the volatility is high, the costs are low and vice versa.

The Ideal way to trade the EUR/CHF

Now that we’ve comprehended what the cost percentages mean, let us determine the best times to trade the EURCHF currency pair. The minimum column of the table has the highest percentages, while the max column has the lowest percentages for each timeframe. It is neither ideal to trade when the volatility is high & costs are low nor when the volatility is low, and the costs are high. The only option left is the average column. The average column consists of the median values for both volatility and costs. Hence, this becomes the most suitable time to enter into this currency pair for trading.

Limit orders and their benefits

Traders usually enter and exit trades using market orders. This is the sole reason for slippage to take place. This has a significant weight on the cost of the trade. However, placing a limit order instead will nullify the slippage on the trade.

The difference in the ‘costs as a percentage of trading range’ when the slippage is made nil is illustrated below.

Categories
Forex Assets

What Should You Know About EUR/GBP Forex Pair Before Trading

Introduction

Introduction

Introduction

EURGBP is the abbreviation for the currency pair Euro area’s euro against the Great Britain pound. This pair, unlike the EURUSD, USDCAD, GBPUSD, USDCHF, etc. is not a major currency pair. This pair is classified under the minor currency pairs and the cross-currency pairs. In EURGBP, EUR is the base currency, and GBP is the quote currency.

Understanding EUR/GBP

The current market price of EURGBP depicts the required number of pounds to purchase one euro. For example, if the value of EURGBP is 0.8527, then one needs to pay 0.8527 pounds to buy one euro.

EUR/GBP Specification

Spread

Spread in trading is the difference between the bid price and the ask price. The spread is not the same on all brokers but depends on the type of account. It also varies depending on the volatility of the market. An average spread on an ECN account and an STP account is shown below.

Spread on ECN: 0.8 | Spread on STP: 1.5

Fees

On trade a trader takes, there is some fee associated with it. Fees, again, depends on the type of account. There is no fee on STP accounts, but few pips on ECN accounts.

Slippage

When a trader executes a using the market order, they don’t really get the price they had intended. There is a small pip difference between the two prices. And this difference between the prices is referred to as slippage. The slippage is usually within 0.5 to 5 pips.

Trading Range in EUR/GBP

Understanding the volatility of the market is essential before opening or closing a position. It shows how much profit or loss a trader will be on a particular timeframe. For example, if the volatility is on the 4H is 10 pips, the trader can expect to gain or lose $1269 (10 pips x 12.69 value per pip) in a matter of about 4 hours.

The table below illustrates the minimum, average, and maximum pip movement on the 1H, 2H, 4H, 1D, 1W, and 1M timeframe.

EUR/GBP PIP RANGES

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

EUR/GBP Cost as a Percent of the Trading Range

An application of the volatility would be the determining of cost on each trade. As in, the ratio between the volatility and the total cost on each trade is calculated and is expressed in terms of percentage. The percentage depicts the cost for a particular timeframe and volatility. The comprehension of it shall be discussed in the subsequent section.

ECN Model Account

Spread = 0.8 | Slippage = 2 | Trading fee = 1

Total cost = Slippage + Spread + Trading Fee = 2 + 0.8 + 1 = 3.8

STP Model Account

Spread = 1.5 | Slippage = 2 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 2 + 1.5 + 0 = 3.5

The ideal way to trade the EUR/GBP

With the above two tables, let us figure out the ideal way to trade this currency pair. Note that the higher the percentage, the higher is the cost on a trade and vice versa. It is evident from the chart that the percentages are highest for the minimum column and lowest for the max column. In other words, the cost is high when the volatility of the market is low, and the cost is low when the volatility is high. So does this mean it is ideal to trade when the volatility is high? Well, that’s not the right approach to it, as trading in high volatility is risky. So, it is ideal to take trades during those times when the volatility is around the average range. Doing that will ensure marginal cost as well as decent cost. For example, a 4H trader must take trades during those occasions when the volatility is around 20 pips.

Note: One can apply the ATR indicator to determine the current volatility of the market.

Another feasible way to reduce costs is by canceling out the slippage cost. Cancel slippage costs can simply be done by placing limit orders. With limit orders, the slippage automatically becomes 0.

The difference in the cost percentage when the slippage goes to zero is illustrated as follows.

We hope you find this Asset Analytics informative. Let us know if you have any questions in the comments below. Cheers!

Categories
Forex Market Analysis

The Germany ZEW Economic Sentiment could mark optimism for the Euro and other stories

Hot Topics:

  • GBP – The Unemployment rate in historic lows.
  • AUD – Waiting for the minutes of the last meeting of the Reserve Bank Board.
  • EUR – The Germany ZEW Economic Sentiment could mark optimism for the Euro. 

GBP – The Unemployment rate in historic lows.

On Wednesday 21th, the unemployment rate will be released. The analyst survey consensus does not foresee changes in respect to the last month’s data of 4.3 percent, the lowest in four decades. On the same day, the Bank of England (BoE) will release its Annual Inflation Report to the Treasury Select Committee. The BoE’s Governor, Mark Carney will speak in the British Parliament on the Annual Inflation Report to the Select Committee of the Treasury.

The pound reached a new low below 1.3978 and as long as it does not exceed 1.434, there is a high probability that it will fall back to new lows with a maximum target of 1.3448, which would coincide with the long-term bullish guidance.

GBP-USD 4-hour chart (click on the image to enlarge)

 

AUD – Waiting for the minutes of the last meeting of the Reserve Bank Board.

On Tuesday 20th, in the overnight session, the Reserve Bank of Australia (RBA) will publish the minutes of the last monetary policy meeting, where the members of the Reserve Bank Board decided to keep the interest rate unchanged at 1.50%. Although members observe the growth of employment, and the unemployment rate has remained at a minimum, they conclude that inflation is still below the target goal of the RBA.

The AUDUSD pair could be developing a corrective structure in the form of A-B-C, which could lead to 0.765, once it reaches this area, it could again be a new connector of a higher degree leading to new highs.

AUD-USD 4-hour chart ( click on the image to enlarge)

 

EUR – The German ZEW Economic Sentiment could mark optimism for the Euro.

In January, the German Economic Sentiment Index ZEW reached its highest point in 8 months, marking 20.4 points, increasing the expectation in the economic environment for the first half of the year. For this month, the analysts’ consensus expects it to fall to 16 points. However, considering the last GDP (YoY) in Germany reached 2.3%, and in the Eurozone which reached 2.70% (YoY), we expect the ZEW index to continue at the same level as that registered in January.

The single currency could mark a new maximum that could reach 1.2646, thus completing a sequence of five movements. After this, we could expect a corrective move for the Euro. However, we should expect all pairs against the Euro to be “aligned” before starting a more profound corrective process for the euro.

EUR-USD 4-hour chart ( click on the image to enlarge)