Daily Forex Signals 13.07.2017
EUR/USD: Market attention turns to U.S. CPI, stay short for 1.1290
Macroeconomic overview: The Fed "continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time," Fed Chair Janet Yellen said in her prepared testimony before Congress. Reductions in the Fed's portfolio of more than USD 4 trillion in securities are likely to begin "this year," she said.
But she also noted that given current estimates, the federal funds rate "would not have to rise all that much further" to reach a neutral level that neither encourages nor discourages economic activity. The Fed still feels the economy needs loose, or accommodative, monetary policy, so a lower neutral rate means the Fed may feel compelled to slow the pace of rate hikes down the road.
But for now, Yellen told members of the House Committee on Financial Services, the economy remains strong enough for the Fed to continue to gradually tighten policy. In response to questions from lawmakers, she said she expects the gradual run down of the balance sheet will "play out smoothly" in markets.
The reduction in the balance sheet, which will begin slowly as the Fed reinvests only a portion of the holdings that mature each month, will mark the final exit from crisis-related policies.
A recent dip in inflation has been of concern among Fed officials who want to see surer progress toward the central bank's 2% inflation goal. Yellen, however, ascribed it to "a few unusual reductions in certain categories of prices" that would eventually drop out of the calculation.
U.S. stocks rose, while yields on Treasury bonds fell and the dollar was little changed against a basket of currencies.
In a separate release, the Fed's latest beige book of reports from regional Fed banks showed "slight to moderate" economic growth across the country.
Market attention turns to U.S. inflation data now and its potential impact on Fed policy. U.S. CPI numbers are due on Friday and the market expects the June core CPI figure to have risen 0.2% mom, from a gain of 0.1% mom the previous month. We think that a reading in line with expectations would support the USD.
Technical analysis: We stay short at 1.1450. Wednesday’s price action was encouraging – after setting a new trend high the pair closed down. We are looking now to close below 7-day exponential moving average (currently at 1.1405). 23.6% fibo of June rise at 1.1402 is also an important support level.
TRADING STRATEGIES SUMMARY:
FOREX - MAJOR PAIRS:
FOREX - MAJOR CROSSES:
How to read these tables?
1. Support/Resistance - three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)
5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.