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Forex Trading Signals

Free Forex Trading Signals: EURUSD & AUDUSD May 2016

■ Market: Foreign Exchange

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

It seems the Foreign Exchange market has entered a new phase. Recent economic data from both sides of the Atlantic make the ECB and Fed less willing to accept further currency gains. Both central banks worry that tighter monetary policy could directly hurt the real economy. So, it’s not surprising to see EURUSD trading in a wider range between 1.05 and 1.17 for some time. Meanwhile, commodity currencies like the Canadian Dollar, Australian Dollar, and New Zealand Dollar are quickly gaining against EUR and USD. In early 2016, the Australian Dollar rose against the US Dollar from 0.68 to 0.78, and the USD dropped against the Canadian Dollar from 1.46 to 1.26. These sharp moves reflect that most commodity prices hit their lowest point in early 2016 and are now rising fast. Keep in mind, AUD is closely tied to gold prices, and CAD is closely tied to crude oil.

Our Previous TCI Trading Signal

In our early March 2016 Trading Signal, we forecasted a bullish British Pound against the US Dollar. Back then, GBPUSD was trading at 1.3913. We advised to “focus on long GBPUSD positions, targeting momentum that could push GBPUSD to 1.41 and then 1.43.” By mid-March, GBPUSD hit both targets and is now trading above 1.45. The TCI trading signal was fully confirmed.

Macroeconomic Outlook

Commodity Prices and China

Commodity prices hit their low in early 2016 and are now rising quickly. Many analysts attribute this to growing Chinese demand, tighter supply, and the chance of a weaker US Dollar. In a recent report, Citigroup stated, “There is growing evidence that nearly all commodities have hit a price bottom and are looking to return to normal.” The report also noted that oil and natural gas markets are recovering, while industrial metals are rising as China’s property market improves.

Forex Trading Signals

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

Our Previous Forex Trading Signal

In our previous trading signal (November 2015), we said December would be a good month for the EUR against the USD. In fact, EURUSD reached 1.05 in early December 2015 before making a strong move up to 1.1059. After the Fed raised rates in mid-December, EURUSD stayed between 1.07 and 1.098.

Fed Rates Hike – What Happens Next

In December, the Fed raised US interest rates by a quarter, ending a long period of near-zero borrowing costs. This decision affects many areas of finance, including Forex markets, USD exchange rates, bond markets, stock markets, and commodities. Remember, the price of every financial instrument competes with the risk-free returns from interest rates.

Forecasting Upcoming Rate Hikes Based on CME Futures

USD rates are expected to rise by 1.50-0.75% over the next two years. According to CME Group 30-Day Fed Fund futures prices, there is a 50.3% chance of a 0.25% rate increase in March 2016. The pace of Fed tightening might speed up in the second half of 2016. Overall, the median forecast suggests the Fed will raise rates by 0.50-0.75% in 2016 and another 1.00% in 2017.

The Impact on the US Dollar and EURUSD

In many TradingCenter Forex reports over the past 15 months, we said 2015 would be the year of the US Dollar. Indeed, 2015 was an exceptional year for the USD. But will 2016 be as good for the USD?

In four of the last five Fed rate hike cycles, the USD peaked around the first hike. This suggests that the USD tends to move opposite to Fed rate cycles. The reason is that markets often anticipate expected events before they happen.

However, keep in mind that statistics don’t tell the whole story. We cannot rule out EURUSD hitting parity (1:1) or even dropping below 0.9 in 2016-2017. In other words, a major EURUSD downtrend before a long-term turnaround is possible. Historically, USD bear markets lasting 9-10 years are followed by USD bull markets of 6-7 years. From this view, we may see two more years of a USD rise.

Forex Trading Signals

Free Forex Trading Signals: US Dollar Index (USDX) and EURUSD October 2015

□ Market: Foreign Exchange

□ Asset: US Dollar Index (USDX) and EURUSD

□ Forecast: USDX Local-High on October 9th ,2015, after Long on EURUSD

For the first time, the TCI indicator is applied to the US Dollar Index (USDX). All TCI readings can be viewed by clicking the USDX TCI tab below.

US Dollar Outlook

The Foreign Exchange Market has been volatile lately as expectations for an early US interest rate hike turned out to be wrong. The US Dollar was sold heavily in early October. On October 2nd, 2015, EURUSD jumped from 1.114 to 1.131 almost instantly. This happened because US Nonfarm Payrolls came in at 142,000 instead of the 200,000 expected by most analysts. After the heavy sell-off, the US Dollar quickly regained some ground, showing it is still strong. As the following analysis shows, the US Dollar is expected to remain strong for a few more days before entering a short-term downtrend. 

EURUSD Technical Analysis

Let’s see some important levels for EURUSD:

□ EURUSD ST Supply Levels: 1.1430-1.1465 | 1.1650 | 1.1710-1.1715 | 1.1750

□ EURUSD ST Demand Levels: 1.1135-1.1150 | 1.1010-1.1020 | 1.0800-1.0850

Forex Trading Signals

EURUSD & USDX November 2015

□ Market: Foreign Exchange

□ Assets: EURUSD and the US Dollar Index

□ TCI Forecast: EURUSD to form a new Short-Term Uptrend (↑), bringing it from 1.095 to 1.1350, up to 1.1500

EURUSD Outlook

EURUSD has been under selling pressure for the past few weeks. This pressure is not fully supported by new fundamental data and appears to be driven mainly by technical factors. Looking at the bigger picture (see EURUSD chart), EURUSD has been trading between 1.080 and 1.149 for some time. Currently, EURUSD is near the lower end of this range, with a recent low of 1.0896. Additionally, the TCI shows EURUSD is oversold and close to a reversal (TCI table below).

CBOE futures (non-commercial positions) show that professional traders have increased their long EURUSD positions and reduced their short positions. In October, these traders were mostly short on EURUSD, so the CBOE data now suggests a possible turnaround. Also, historically, November and December tend to be good months to be long on the Euro. Overall, if news remains neutral in November 2015, EURUSD is likely to start a short-term uptrend toward 1.1350 and possibly up to 1.1500.

EURUSD Technical Analysis

Here are some important EURUSD Support and Resistance Levels:

■ ST Supply Levels: 1.1050-1.1070 | 1.1100 | 1.1140 | 1.1340 | 1.1385 | 1.1430-1.1500

■ ST Demand Levels: 1.0890-1.0895 | 1.079-1.081

Lower EURUSD levels than 1.079 should be stopped (Stop-Loss entry). Wait until the new EURUSD uptrend is confirmed before you trade more aggressively.

Forex Trading Signals

EURUSD & GBPUSD July-August 2015

□ Market: Forex (EURUSD, GBPUSD)

□ Forecast: The US Dollar remains strong

Forex Market Outlook

Despite the difficult political situation in the Eurozone, foreign exchange investors remain fairly calm. The ECB currently appears willing to support the Euro to ease the impact of the Greek political turmoil. This support is temporary, and we should not expect long-term interventions from the ECB against the main market trend.

On the other hand, the US economy is strong based on June’s fundamental data. US retail sales are rising, building permits are increasing faster, and the monthly trade deficit is shrinking (to -$40.88 billion). The US unemployment rate is 5.5%, slightly higher than the forecast of 5.4%.

Regarding the United Kingdom, the BoE expects inflation to rise toward the end of 2015. In June, interest rates in the US, EU, and UK remained unchanged. Given the current economic conditions, US interest rates are expected to rise in the second half of 2015.

EURUSD Technical Analysis

Here is the EURUSD technical analysis chart, showing key supply and demand levels for the currency pair.

■ EURUSD Supply Levels: 1.1280 | 1.1390 | 1.1475 | 1.1645 | 1.1855 | 1.2025 | 1.2345 | 1.2520

■ EURUSD Demand Levels: 1.1020 | 1.0775 | 1.0540 | 1.0475 | 1.0225 | 1.0000 | 0.9855 | 0.9630

  1. EURUSD Trading Signal May-June 2015
  2. EURUSD March-April 2015
  3. Forex Trading Signals February 2015
  4. Forex Trading Signals January-February 2015

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