Forex Trading Signals: EURUSD, USD-X July-August 2017

After, the hawkish speech from President Draghi in late June, Forex investors have turned bullish on the Euro. Draghi said that no further Euro rate cuts would be required, signaling a potential change in ECB’s monetary policy. As a result, the euro has seen strong gains against all the majors (USD, CHF, JPY, and GBP). Nevertheless, at this moment, EURUSD has entered an accumulation phase that is expected to last until early August 2017.

■ Market: Foreign Exchange

■ Assets: EURUSD | USD-X

Macroeconomic Outlook

In June, FED has raised the target range of the federal funds' rate to a range of 1.00% to 1.25%, the third consecutive quarterly increase. This is the higher level of US funds rates since the financial crisis of 2008. This move corresponds to a record US jobs growth and to the lowest level of unemployment rate in 16 years. The Fed also made a statement about reducing its enormous bond portfolio. After three rounds of quantitative easing, the Fed holds $4.5 trillion of bonds (including $1.8 trillion of mortgage securities). Meanwhile, EURUSD moved higher as President Draghi gave a signal for a monetary policy change and the potential for a stronger Euro.

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US Dollar Index (USD-X) Chart and Technical Analysis

This is the weekly chart of the US Dollar Index (Futures Contract). As you can see in the chart, the USDX trend is clearly bearish. The key support area for USDX is NOT close. Currently, USD-X trades at 95.48, and the support zone commences at 90.80 (S1) and expands to 86.90 (S2). Note that the point S2 is based on the A2 trend line, which provides general support. As concerns resistance, strong supply is expected at 100.5 (R1), and especially at 104.80-105.00 (R2). The point R2 is based on the A1 trend line, which provides general resistance.

Chart: US Dollar Index (Futures Contract -Weekly)

US Dollar Index (USD-X) Support and Resistance Levels

USDX currently trades at 95.48, and these are some key support and resistance levels.

□ Demand (Support) Level: 90.90-90.80 (S1) | 89.50 | 88.30 | 87.30-86.90 (S2)

□ Supply (Resistance) Level: 98.50-98.70 | 99.70 | 100.5 (R1) | 104.80-105.00 (R2)

EURUSD Chart and Technical Analysis

The trend is bullish for EURUSD. Currently, EURUSD trades at 1.1385.

Chart: EURUSD (H4)

These are some key support and resistance levels for EURUSD:

□ Demand (Support) Level: 1.1280-1.1290 | 1.1240 | 1.1115-1.1125 | 1.0955-1.0975 | 1.082-1.0840 | 1.0730-1.0735

□ Supply (Resistance) Level: 1.1550 | 1.1600-1.1610 | 1.17050 | 1.1825-1.1830 | 1.2005-1.2010

TradingCenter Indicator (TCI) on EURUSD

After a strong move during the past weeks, TCI indicates that EURUSD has entered an accumulation phase. According to TCI, this phase will probably complete in eleven (11) trading days (TCI=+0.75%). That means in late July or in early August. Here are the full TCI readings regarding EURUSD.

Click on the following slider to reveal the full TCI readings regarding EURUSD.

EURUSD Statistics

These are the Statistics for EURUSD based on 13.5 years of research by TradingCenter.

■ Forex Trading Signals: USDX July-August 2017

George Protonotarios, Financial Analyst » George at Linkedin

TradingCenter, July, 13th 2017

Free Forex Trading Signals: GBPUSD and EURUSD March-April 2016

■ Market: Forex

■ Asset: GBPUSD and EURUSD

■ TCI Forecast: GBPUSD Reversal on March and Uptrend (↑)

Nothing is discussed more these days than the Brexit. Britain's prime minister, set June 23rd, 2016 as the date for a referendum regarding the membership of Britain in the European Union. The Forex market dances on the ‘vibes’ of the Brexit and its implications.

Eurozone in Trouble and EURUSD

Against the general market consensus, I believe that a potential. Brexit will harm the EU much more than Britain itself. It will harm the EU in economic terms, but majorly in political and geopolitical terms. It will also create a climate of uncertainty regarding who is the next to leave the table. The Eurozone inevitably will be affected by the implications of a Brexit during the following months. In addition, the problem of uncontrolled immigration in the EU gets worst, but it can still be resolved. In this uncertain environment, EURUSD trades lower.

Major Investment Banks Forecast EURUSD in 2016

In the following table, major investment banks forecast the rate of EURUSD in 2016. The average forecast for Q1 is 1.073, and for Q4 is 1.053.

Table: EURUSD rate in 2016

Read more: GBPUSD, EURUSD Trading Signal March 2016

Free Forex Trading Signals: The US Dollar Index (USDX) December 2016

■ Market: Foreign Exchange

■ Asset: US Dollar Index (USDX)

Forex Market Outlook

The global markets are still feeling the vibrations of Trump’s victory. The Fx market volatility of the past couple of weeks has been enormous. The US Dollar grew stronger and the USDX (US Dollar index) reached a 13.5 year high. A great USD movement took place against the Japanese Yen (USDJPY). Probably, the Bank of Japan is preparing a long-term devalued Yen in order to fight back the new Trump’s foreign trade policies. The Euro is also in trouble, towards the rise of the ‘right-wing extremism’ in all around the world. In this dynamic environment, FED is expected to raise the US rates while ECB is not clear about how much it will extend its massive asset purchases program (QE), which ends in March 2017.

TradingCenter's TCI on USDX

During the past couple of weeks, the US Dollar Index (USDX) has grown considerably, as you can see in the following chart. In the lower chart, you can see the TCI for the same period. TCI indicates that the USDX can grow furthermore, after a short-term price consolidation. Below you can check the TCI reading for the past 15 trading days and its forecast regarding the upcoming 15 trading days.

Chart: USDX 2012-2016 (upper chart) TCI (lower chart)

Read more: USDX Trading Signal December 2016

Free Forex Trading Signals: EURUSD, AUDUSD May 2016

■ Market: Foreign Exchange

■ Forecast: EURUSD to Range / Commodity Currencies to Correct in May

It seems that the Foreign Exchange market has entered a new phase. Recent economic data from both sides of the Atlantic makes ECB and FED less willing to accept further currency appreciation. Both monetary authorities fear that a harder monetary policy will have a direct negative effect on the real economy. Hence, we shouldn’t be surprised seeing EURUSD trading in a broader range between 1.05 and 1.17, for quite some time. On the other hand, commodity currencies such as the Canadian Dollar, the Australian Dollar, and the New Zeeland Dollar are rapidly appreciating against EUR and USD. In the first months of 2016, the Australian Dollar against the US Dollar lifted from 0.68 to 0.78 and the USD against the Canadian Dollar slumped to 1.26 from 1.46. These extreme movements can be explained as most commodity prices have bottomed in early 2016 and now they are rising rapidly. Note that AUD is highly correlated to Gold and CAD is highly correlated to Crude Oil.

Our Previous TCI Trading Signal

In our previous Trading Signal in early March 2016, we have forecasted a bullish British Pound against the US Dollar. GBPUSD was trading at 1.3913 back then. As it was mentioned: “focus on Long GBPUSD positions by targeting a strong momentum that may lead GBPUSD to 1.41 and then to 1.43”. In the middle of March, GBPUSD hit both targets and now it is trading above 1.45. The TCI trading signal was fully confirmed.

Macroeconomic Outlook

Commodity Prices and China

The commodity prices have bottomed in early 2016 and now they are rising fast. According to many analysts, this is due to the increase of Chinese demand, signs of tighter supply, and the prospect of a weaker US Dollar. Citigroup Inc. in a recent report stated that “There is growing evidence that virtually all commodities have stared at a price bottom and are groping for a return to normal”. In the same report, Citigroup supported that oil and natural gas markets are recovering, while industrial metals are advancing as China’s property market picks up.

Read more: EURUSD AUDUSD Trading Signals May 2016

Trading the Global Financial Markets in the Last Quarter of 2016

• ■ Forex Markets: EURUSD to continue ranging, GBP to face further selling pressure, AUD uptrend possible continuation
• ■ Equity Markets: We should expect the outcome of the American Elections, the odds are in favor of the sellers
• ■ Energy Markets: Production cut (1 million BPD) is expected in late November, if there is confirmation by Iran and Saudi Arabia, crude is heading for $60 / barrel

Increased Volatility Towards the American Elections of November

During the past couple of weeks, the global financial markets have been pretty volatile. The UK Prime Minister Theresa May set a date in March 2017 to begin exiting the EU and that pushed the British Sterling even lower against the Euro and the US Dollar. The EURUSD, as we have stated many months ago, is expected to continue ranging, at least until the American Elections. ECB and FED see the EURUSD exchange rate as the stabilizing factor in our current unstable financial world.

Equities are still trading close to all-time record highs. We should wait and see what happens after the American Elections in Tuesday, November 8, 2016. The oil markets are moving up after a historic agreement between OPEC and non-OPEC countries for cutting oil production by nearly 1 million BPD, in late November.

Foreign Exchange Markets

The British pound slumped furthermore after the UK Prime Minister Theresa May set a date in March to begin exiting the EU. That will happen “no later than the end of March” setting the UK up to leave the EU by 2019. The British Sterling reached a post-Brexit low against the euro. UK chancellor Philip Hammond said that we should expect Brexit-induced turbulence in the UK economy. He said also that the Foreign Exchange market is inclining towards believing the pound has further to fall.

During September, Jean-Claude Juncker announced that the EU will double the duration and the financial capacity of the European Fund for Strategic Investments. He said: “we will ensure that the European Investment Fund will provide at least EUR 500 billion by 2020. We will do even more to reach 630 billion by 2022”.

Read more: Forex Trading Signals in late 2016

TradingCenter Forex Report January 2016 –The US Dollar Index (USDX)

Our Previous Forex Trading Signal

In our previous trading signal (November 2015) we have stated that December shall be a good month for EUR against the USD. Actually, EURUSD reached even 1.05 in the early days of December 2015 before making a strong move lifting the pair up to 1.1059. After the Fed rates hike in the middle of December, EURUSD moves within the channel 1.07 and 1.098.

Fed Rates Hike –What Happens Next

In December Fed raised US interest rates by a quarter ending a long era of near-zero borrowing cost. That decision affects every aspect of our financial universe, including the Forex Markets and the USD exchange rates, the bond markets, the equity markets, and the commodity markets. Don’t forget that the price of every financial instrument has to compete with the risk-free returns of the interest rates.

Forecasting Upcoming Rate Hikes based on CME Futures

The USD rates are expected to rise 1.50-75% in the next 2 years. Based on the CME Group 30-Day Fed Fund futures prices, there is 50.3% probability for a further 0.25% lift in March 2016. The pace of Fed monetary tightening in the 2nd half of 2016 might prove higher. In total, the median forecast suggests that the Fed is going to raise rates by 0.50-75% in 2016 and a further 1.00% in 2017.

The Impact on the US Dollar and EURUSD

In numerous TradingCenter Forex reports during the past 15 months, we have stated that 2015 will be the year of US Dollar. Indeed, 2015 proved an exceptional year for the US Dollar. But can 2016 prove as good as 2015 for USD?

In four of the past five Fed interest rate hike cycles, the USD has peaked around the first interest hike. That suggests that statistically speaking the direction of USD is almost inversely correlated to the Fed interest rate cycles. The explanation of this phenomenon is simple and it is based on the fact that markets tend to anticipate any fundamental fact that is highly probable to occur before it actually occurs.

But keep in mind that statistics don’t tell the whole truth, and thus, we can’t be sure that we are not going to see EURUSD hitting parity (1:1) or even to trade below 0.9 during 2016-2017. In other words, a final major EURUSD downtrend before the long-term turnaround commences is not out of the question. As concerns timing, historically the USD bear markets of 9-10 years are followed by USD bull markets of 6-7 years. According to that perspective, we may witness 2 additional years of a USD upswing.

Read more: USDX Trading Signal January 2016