Daily forecast: EUR/USD, GBP/USD, EUR/GBP, GOLD, US OIL
On previous week increasing of US % rates didn’t bring anything new to the market, because he is already expected that and included this rising to the price. On this week we do not have any important news, so market will be trading sideways. Eur/usd is trading on main resistance level as 1.0780 (previous 2 high and neck line), from that will fall with correction to support 1.0560 (low + trend line). Same with gold, market will be on correction. And oil market will be trading sideways before wednesday “Crude oil inventories”, but with risk of downtrend continuation to the main support 48.00.
Fact of % rates increasing is negative event and dollar will fall on over 550 pips during few month to 1.1000 and 1.1250 Today Fed will increase % rates, but this fact will not bring anything positive for dollar for long term perspective, only a few days we can have positive effect. Why? When Fed increased % rate on 16.12.15 eur/usd was rising during 3 days and made +200 pips, but after that felt on -660 pips during 2 month. When Fed increased % rates in second time on 14.12.16, dollar was rising during 2 days, made +250 pips, but then felt on -480 pips during next 1.5 month. Same was with prices on gold: 1 rising +240 (4 days) and then -2100 (2 month); second +330 (2 days) and then -1400 (3 month). This saying, that before rates increasing, market already included this possibility in price and by the fact price start to go in opposite side. After % rates market will switch his attention on negative factors We have negative factors for % rates future, as: - unknown Trump tax policy, that Fed need to include in further rates and as long Trump do not saying about it, as more we have a risk that his promises will not be fulfilled; - collapsed oil price, that will reduce rising of CPI and will extend terms of increasing for next % rates; - problem with further federal debt prolongation, that can not to be approved by government for some time, that will create instability and we already had such situation with Obama; - problem with % rates increasing above 2% at all, because of huge debt that US will not be able to service with big rates. Same time on previous week Draghi increased ECB expectation relatively to much stronger CPI and increased GDP growth, that is positive for euro. All this Trump promises without execution and top trading of US stock indexes, with big US dept and without rising of % rates above 2% and to 2%, is looks like a very big HYIP (financial pyramid), that Trump’s brigade trying to sell for us from the market top.
Uptrend scenario: Uptrend scenario is complicated for today with accumulation of resistances between levels 53.30 - 53.70. Downtrend scenario: The downtrend may be expected to continue, while market is trading below resistance level 53.30, which will be followed by reaching support level 52.15.
Yellen destroy future of % rates expectation Dollar started to fall at past week Friday, after Yellen words, that before to continue to increase % rate Fed need to see positive rising of CPI and NFP to Fed target. Her words was against hawkish mood of other Fed members, who tells that % rate will be increased in the march. And Trump happy because of this Before Yellen words, market already included % rates rising in march in the price, when EU was traded on 1.0500. And then, Yellen words created a fear, that next % rates can not to be increasing so far, as market is expecting… Also this situation is well correlated with Trump desire for dollar falling. Dollar falling and will continue to 1.0800 or till March Fed % rate Trump didn’t said anything about his new tax policy, that create warnings about its realization at all or in way that Trump planned before. Because of this, market optimism is became low and as you remember after Trump election market is already included in price some part of that optimism… So now, any disappointing with future of tax policy will hurt dollar very much.
Main driving force of market on this week will be speech of Donald Trump in parliament on February 28, on that he will say about future of his new tax policy. On the other hand, the second factor of market force is election race in France, that made pressure on euro. But Mari le Pan is staying behind two other candidates, with big gap, that create optimism for euro.
Yesterday "FOMC Meeting Minutes" news not brought anything new, so market will be waitiing for Trump new tax policy news at the next week, february 28. At present time dollar is trading on resistance and we can expecting good correction with its weakness. This week we already do not have any important news, so technical conditions is saying only for range trading. Today we have "Crude oil inventories", that will bring good trend to this market.
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