The FOMC Minutes, Brexit, And ECB Cancel Each Other Out

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The FOMC Minutes, Brexit, And ECB Cancel Each Other Out

Major Forex Pairs – Technical Overview And Weekly Predictions

A marathon deliberation between EU leaders determined that Britain will remain a member of the European Union until October 31 st. . The option to leave earlier is still on the table provided Theresa May can secure enough votes for a Brexit agreement.

The European Central Bank is set to hold interest rates steady at low values throughout the current year and the Fed announced a similar path through their Meeting Minutes released earlier this week. Volatility has remained relatively subdued and the major FX pairs had a slow week, with action picking up towards the end of the period.

EUR/USD – Technical Outlook

The Euro is pushing to the upside and currently struggling to break the key resistance at 1.1300, trading barely above it at 1.1310. The week has been bullish albeit just Monday and Friday showed significant movement.

The current resistance (1.1300) is very important for future price action but it must be noted that even if a break occurs, the bulls will still be facing strong resistance. Strong resistance is represented by the 100 days Exponential Moving Average and the long term bearish trend line seen on the chart. A failed break of 1.1300 would increase the chances of another test of 1.1216 support and possibly 1.1176.

The MACD is crossed bullish but doesn’t show strong momentum despite price printing a higher low after several lower highs and lower lows. All these are mixed signs which show that the pair doesn’t have a clear bias but a break of the resistances mentioned would tilt the balance in favour of the bulls.

GBP/USD – Technical Outlook

The Pound has remained surprisingly quiet during the latest round of Brexit drama. The pair has been trying the entire week to move away from a bullish trend line but not quite able to do it.

Although price has been in an uptrend since December 2020 the US Dollar has been gaining momentum and the bears are threatening a break of the trend line. If they manage to break said trend line and the support at 1.3000, the pair will likely slide into 1.2800 area but this will probably take more than a week, depending of course on Brexit news, if any.

USD/CHF – Technical Outlook

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The green-back has been posting solid gains against the Swiss Franc. The pair is currently trading very close to 1.000 and in a continued climb since bouncing at 0.990.

Although it climbed consistently, the pair doesn’t show strong momentum so it’s very likely to see a drop into the 100 days Exponential Moving Average. If price finds support there and bounces higher, we will probably see another attempt to break 1.010 but this may take more than a week to happen. A drop through the moving average will make 0.990 the next target.

USD/JPY – Technical Outlook

Currently trading at 111.95, the pair is approaching a strong resistance zone represented by the previous top at 112.15. It is showing upside momentum which sets the stage for a bullish break.

Price bounced nicely at the 100 days EMA just 2 days ago and now threatens the resistance at 112.15. A break would mark the end of choppy price action seen over the past two months. It would also signal a resumption of the uptrend started in early January 2020, leading to a move into 113.00 area and possibly 113.50. A break of the 100 EMA would invalidate this scenario and would make 110.00 the next destination.

U.S. Federal Open Market Committee (FOMC) Meeting Minutes

Release Date Time Actual Forecast Previous
Apr 08, 2020 14:00
Feb 19, 2020 15:00
Jan 03, 2020 16:00
Nov 20, 2020 15:00
Oct 09, 2020 14:00
Aug 21, 2020 14:00

By Yasin Ebrahim Investing.com – Federal Reserve policymakers agreed that current stance on monetary policy was likely to remain appropriate “for a time” to sustain economic growth and support the.

By Peter Nurse Investing.com – U.S. stocks are set to open a touch higher Wednesday, as investors look for more help from central banks to combat the damage caused by the ongoing coronavirus.

By Geoffrey Smith Investing.com — Apple’s sales warning is a dim memory as risk assets march higher, along with gold, on expectations that central banks will pick up the pieces if the.

Analysis

The economic data releases are starting to show coronavirus crisis impact on the economy. Last week’s Thursday’s Unemployment Claims number has reached almost 7 million. And we will likely get more.

Early signs of COVID-19 curve flattening in Europe and the U.S. kicked off with a relief rally in currencies and equities this morning. USD/JPY jumped above 109 as AUD/USD and NZD/USD rose nearly 2%.

Weekly Technical Analysis For April 6th to 10th, 2020US Non-Farm Payrolls plunged 701k in March, a far greater collapse than the expected, -100k. The unemployment rate rose to 4.4% from 3.5%. The.

FOMC Meeting Minutes Discussion

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Krona, Krone Eye ECB, FOMC, Outcome of Brexit

Krona, Krone Eye ECB, FOMC, Outcome of Brexit

NORDIC FX, NOK, SEK WEEKLY OUTLOOK

  • NOK and SEK to experience unusual volatility in the week ahead
  • ECB rate decision, FOMC meeting minutes, Brexit main event risks
  • The Swedish Krona and Norwegian Krone also eye domestic CPI data

The Swedish Krona and Norwegian Krone face major external-event risk this week from the release of the FOMC meeting minutes, the ECB rate decision and commentary from Mario Draghi as well as the showdown of Brexit. Local CPI data out of Norway and Sweden will be also be released throughout the week in addition to other peripheral economic indicators.

US-BASED EVENT RISK: FOMC MEETING MINUTES, ECONOMIC DATA

USDSEK and USDNOK will be eyeing the release of the FOMC meeting minutes on Wednesday along with several key economic indicators spread throughout the week. The publication from the Fed will give investors a better idea of the central bank’s outlook for domestic and global growth, both of which have been declining.

The Fed has reiterated that it is in wait-and-see mode and has emphasized a patient approach to raising rates while the outlook remains unclear. If the meeting minutes reveal dovish overtones, it could send the US Dollar lower, though the Greenback may quickly reverse and catch a haven bid as investors panic over why the Fed has become more downbeat.

The following key US economic indicators will also be worth watching this week because of the potential impact they may have on USD-Nordic crosses and overall monetary policy from the Fed:

Monday, April 08 – US Factory Orders (FEB), Durable Goods Orders (FEB F)

Wednesday, April 10 – FOMC Meeting Minutes, US CPI (YoY) (March), Ex Food and Energy

Friday: University of Michigan Sentiment (APR P)

Thursday, April 11 – US Initial Jobless Claims (APR 06)

EUROPEAN-BASED EVENT RISK: ECB, BREXIT

The ECB will announce its rate decision this week with markets pricing in a hold on rates. However, what investors may be more interested in is the commentary from central bank President Mario Draghi. At the last meeting on March 7, USDSEK jumped over one percent and reached a 17-year high with NOK following a similar pattern.

USD/SEK Reaction to March 7 ECB Rate Decision – Daily Chart

This is because Draghi’s outlook for Eurozone growth – Norway and Sweden’s largest trading partner – was substantially cut along with inflation forecasts due to the Continent’s unexpectedly rapid deceleration. As export-driven economies, Norway and Sweden’s performance is closely tied to growth trajectory of core Western Europe. As such, trends in SEK and NOK are also a reflection of European growth.

Another major event risk is Brexit. Unless Theresa May is able to secure an extension, the UK will be set to leave the EU on April 12. GBP traders are biting their nails as the probability of a no-deal Brexit continues to loom. On April 10, an emergency summit will be held with the 27 other member states to see if the process can be delayed further. UK Prime Minister Theresa May has asked to push the deadline to June 30.

NORDIC-BASED EVENT RISK: CPI, ECONOMIC DATA, CAPITAL SHIFTS IN NORWAY’S SOVEREIGN WEALTH FUND

Local CPI data out of Sweden and Norway will be released roughly in the midst of the other major event risk this week and could end up being overshadowed and distort the impact these indicators would otherwise have under normal circumstances. Sweden’s economy has been suffering as policymakers attempt to grapple with a frustratingly weak Krona and growing risk from rising household indebtedness .

In Norway, economic performance has been relatively stronger, and central bank officials recently raised rates and intend on another hike in June . However, the Krone’s performance may be undercut if global slowdown fears materialize and European affairs further deteriorate. As an export-driven economy with a heavy reliance on the petroleum sector, the Krone and overall economic activity is sensitive to changes in global sentiment.

Norway’s sovereign wealth fund – the largest in the world – recently announced that they are reducing their exposure to emerging markets in the fund and considering adding renewable energy investments. As an oil-linked economy, the fund’s divestment from the cycle-sensitive commodity is perhaps a canary in the coal mine that global risk appetite may wane and put pressure on risk-loving assets and overall economic activity.

SWEDISH KRONA, NORWEGIAN KRONE TRADING RESOURCES

— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri , use the comments section below or @ZabelinDimitri on Twitter

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