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2 New Big Trade Orders for 02.01.2016
2 New Big Trade Orders
1. EUR/USD Orders
Place Order to SELL EUR/USD at 1.0918
Place Order to SELL EUR/USD at 1.1000
We are starting the week with our FIRST new Big Trade Order to SELL EUR/USD. Mario Draghi is speaking later today and on Thursday. We believe that he will continue to jawbone the currency and reiterate the central bank’s willingness to increase stimulus. Investors are eager to see who will ease next and the ECB is on the top of our list. The currency war is in full swing with BoJ easing and while risk appetite improved, the ECB’s dovish bias will underpin the euro.
2. USD/JPY Orders
Place Order to BUY USD/JPY at 120.65
Place Order to BUY USD/JPY at 119.85
Last week’s surprise decision to cut interest rates was a major announcement for the Bank of Japan -- one that we believe will have another 200 to 300 pips of continuation. Friday’s move stopped right at the 200-day SMA so a deeper retracement is possible and we want to use that opportunity to buy USD/JPY at a lower level. The BoJ not only lowered interest rates, but also pushed out their timeline for reaching their inflation target and warned that more actions could be taken including changing the quantity and quality of asset purchases as well as cutting rates further. Since the BoJ did not increase the size of its QE program this could be the next option if the economy weakens further but adopting this radical form of monetary policy is a sign of the country’s desperation. They are finally recognizing the negative impact that volatility in the financial markets, the sharp decline in inflation and the slowdown in China will have on Japan’s economy. Looking ahead, the yen should be sold on rallies.