EUR/GBP Could Drop to .8800

EUR/GBP Could Drop to .8800

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EUR/GBP Could Drop to .8800

One of the biggest stories this past week was European Central Bank President Mario Draghi’s post monetary policy meeting comments. They sent the euro tumbling against the U.S. dollar because Draghi was not nearly as optimistic as the changes in the policy statement suggests. The central bank head emphasized the need for policy accommodation, the downside risks related to global factors, the strong euro and protectionist threats. The ECB lowered their 2019 inflation forecast as Draghi warned that underlying inflation remains subdued, “victory hasn’t been declared” and therefore “ECB policy will continue to be reactive.” Taking all of this into consideration, the ECB is telling us that while they are more confident in the economy, they don’t plan to taper quickly. For this reason, we believe that euro will underperform other major currencies in the coming week and we expect further losses against sterling. There’s absolutely nothing on the UK calendar and data hasn’t been that terrible – service sector activity accelerated and while the trade deficit expanded slightly, industrial production rebounded at the start of the year. If ris appetite improves we should see sterling outperform the euro.

Technically, we’ve seen 3 days of lower highs and lower lows in EUR/GBP. This move took the currency pair below the first standard deviation Bollinger Band. There’s a lot of support near .8845, but we believe that the sell-off could extend to .8800.

Today’s Trades 03.05.2018 – EURUSD, EURGBP, AUDCAD, AUDUSD

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading higher against all of the major currencies this morning except the Japanese Yen, though USD/JPY has found support above 105.50. What’s interesting about this morning’s move is that its not necessarily driven by risk aversion as European stocks trade higher and Dow futures point to a only a modestly lower open. The markets are slightly nervous about the elections in Europe, encouraged by the stronger PMI data in the UK and eager to take USD/CAD to fresh 8 month highs. The Australian and New Zealand dollars are also under pressure but unlikely to see any big movements until U.S. stocks move significantly in one direction or another. This is a big week in the FX market with 4 central bank rate decisions on the calendar (RBA, BoJ, ECB, BoC) and the U.S. non-farm payrolls report. Today, the ISM non-manufacturing index will be released and its important because its a leading indicator for NFP. Trade wars are still on everyone’s minds but with no new antagonism from China and other foreign nations over the weekend , it has taken a backseat to Europe’s political developments.

*The MAIN THEMES I see today are*

+USD
-EUR
-CAD
-AUD

*Trading Biases*

+USD,
-EUR, -CAD, -AUD, -NZD, -CHF
mildly +GBP
neutral JPY

*Today’s Initial Trades*

Here’s the summary –

1. Sell EURGBP at .8904, Stop at .8932, Target .8876
2. Sell EURUSD at 1.2299, Stop at 1.2327, Target 1.2271
3. Sell AUDUSD at .7746, Stop at .7774, Target .7718
4. Buy AUDCAD at 1.0010, Stop at .9982, Target 1.0038

Close ALL open day trades by 10:20AM NY / 15:20 GMT

EUR/GBP Rolling Over?

EUR/GBP Rolling Over?

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On a fundamental and technical basis, we believe that EUR/GBP could be headed for near term losses. This is an important week for the euro and the upcoming political / economic events will highlight the region’s vulnerability. Politically, German and Italian politics are in focus. The Social Democrats begin voting on Merkel’s coalition government on Tuesday. They have until March 2nd to file their votes and the outcome will be announced on March 3rd and if they reject the coalition, new elections are likely. In Italy, the Five Star Movement is gaining traction making investors nervous ahead of the Italian elections in 2 weeks. The outcome could have significant ramifications for the Eurozone. Economically, we are looking for softer EZ data starting with Tuesday’s German ZEW survey. It will be difficult for investors to remain optimistic after the nearly 9% drop in the DAX from its high on January 23rd. Sterling has key data on Wednesday but between now and then, we should see GBP outperform EUR after BoE Governor Carney avoided talking about policy.

Technically, EUR/GBP has fallen below the first standard deviation Bollinger Band, signaling potential for a deeper reversal. Although it bounced on Monday, the 100 and 200-day SMAs should cap gains. If we’re right, EUR/GBP could slip down to 88 cents and possibly even lower. Only a break of February high near .8820 negates the downtrend.

Today’s Trades 02.07.2018 – EURGBP, EURUSD, USDCAD

Swing

*Good morning/afternoon everyone!*

Risk sentiment is starting to deteriorate again after yesterday’s attempted consolidation. Asian and European equities came off their highs with some indices ending the day in negative territory. Dow futures are pointing to another ugly open. U.S. stocks may have experienced their strongest one day rise since 2016 but investors are nervous as the recent volatility makes them realize that equities are not in a one way uptrend. With U.S. yields rising the danger the economy faces is still very real. The Japanese Yen is the best performer today followed by the U.S. dollar – the sell-off in USD/JPY is pulling other Yen crosses lower. All of the major currency pairs including EUR/USD and GBP/USD are vulnerable to additional losses at the start of the NY session. Yesterday’s recovery may have been a fakeout but prices could turn around just as quickly as they did yesterday so the prospect of volatile trading and wild swings means everyone should be weary of reversals.

*The MAIN THEMES I see today are*

-EUR
-GBP
+JPY
+USD (except USDJPY)
-CAD

*Trading Biases*

-EUR, -GBP, -AUD, -CHF, -CAD
+JPY, +USD (but -USDJPY)
mildly -NZD

*Today’s Initial Trades*

1. Buy USDCAD at 1.2519, Stop at 1.2491, Target 1.2547
2. Buy EURGBP at .8892, Stop at .8864, Target .8920
3. Short EURUSD at 1.2345, Stop at 1.2373, Target 1.2317

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 01.31.2018 – USDCHF, EURJPY, EURGBP

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading lower against all of the major currencies this morning but thanks to President Trump who did not cause any major disruptions to the market, the sell-off is modest. High beta currencies continue to perform well with the New Zealand dollar leading the gains. There’s no specific explanation for the 1% jump outside of AUD/NZD selling after softer Australian CPI. Euro is trading above 1.2450 thanks to stronger German employment numbers and while GBP is also trading higher, it lags behind following a report that the EU rejected the city of London’s post Brexit deal for financial services. The Canadian dollar is trading firmly ahead of GDP but all eyes are on the FOMC today. It will be Yellen’s last and while the greenback is on its back foot, the currency’s slide should be limited by the prospect of a more hawkish outlook. Beware of month-end flows and the upcoming ADP and Chicago PMI reports.

*The MAIN THEMES I see today are*

+EUR
-JPY
-GBP

*Trading Biases*

+EUR
-JPY, -CHF
mildly +USD, +AUD, +NZD
mildly -GBP
neutral CAD

*Today’s Initial Trades*

1. Buy USDCHF at .9330, Stop at .9302, Target .9358
2. Buy EURJPY 135.47 at 135.19, Target 135.75
3. Buy EURGBP at .8795, Stop at .8767, Target .8823

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 01.30.2018 – USDJPY, EURCAD, EURGBP, AUDJPY

Swing

*Good morning/afternoon everyone!*

If the price action in the FX market on Monday can be characterized by consolidation, the last 12 hours is best described by the word volatility. The dollar rallied hard during the Asian trading session into Europe but collapsed sharply after the London open. It is trading heavily as the NY session begins but trying to recover its losses as pairs like EUR/USD appear to be topping while USDJPY and USDCAD appear to be bottoming. There’s been zero fundamental catalyst but for the past few weeks its lived up to its title of Turnaround Tuesday. We’re also nearing the end of the month and after some very strong moves in currencies, portfolio rebalancing could be affecting FX trade. Eurozone data was mostly in line with expectations with the EZ economy expanding by 0.6% in Q4. UK mortgage data was slightly weaker. Consumer confidence and house prices are scheduled for release this morning but the main focus will be this evening’s State of the Union Address by President Trump – traders may look to unwind positions ahead of this big event.

*The MAIN THEMES I see today are*

+GBP
+USD
-AUD
-CAD

*Trading Biases*

+USD, +GBP
-AUD, -CAD, -NZD
mildly +EUR, +JPY (+USDJPY)
neutral CHF

*Today’s Initial Trades*

1. Sell AUDJPY at 87.98, Stop at 88.26, Target 87.70
2. Sell EURGBP at .8803, Stop at .8831, Target .8875
3. Buy USDJPY at 108.64, Stop at 108.37, Target 108.92
4. Sell AUDJPY at 87.98, Stop at 88.26, Target 87.70

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 01.23.2018 – EURGbP, AUDJPY, NZDCHF, NZDUSD

Swing

*Good morning/afternoon everyone!*

All of the major currencies are trading lower this morning with AUD/USD leading the slide. We’re finally seeing weakness in a pair with very little retracements over the past month. Although USD/JPY is also down, the greenback is better bid against most of the major currencies including the euro, which should have benefitted from a stronger ZEW. The BoJ altered its inflation assessment slightly from saying prices are skewed to the downside from weakening. The U.S. government is open again but in 3 weeks time, we’ll be revisiting shutdown risks. NAFTA talks begin today. Its the 5th round and no real progress is expected but we’ll have to see if the U.S. threatens to pull out again or the Canadians express their concerns about U.S. departure. Sterling is also under pressure and could see 1.39 while NZD holds up well amidst U.S. dollar strength.

*The MAIN THEMES I see today are*

-GBP
-NZD
-AUD
+JPY

*Trading Biases*

+JPY, +CHF
-GBP, -NZD, -AUD
-USD/JPY (But +USD vs everything else)
mildly -CAD, -EUR

*Today’s Initial Trades*

1. Sell NZDCHF at market now .7031, Stop at .7059, Target .7003
2. Sell NZDUSD at market now .7315, stop at .7343, Target .7287
3. Bought EURGBP at .8784, Stop at .8756, Target .8812
4. Sell AUDJPY at 88.06, Stop at 88.34, Target 87.78

Close ALL open day trades by 10:20AM NY / 15:20 GMT

USDCAD +11
USDJPY -3
EURUSD -9

Today’s Trades 12.29.2017 – EURGBP, AUDCHF, USDCAD

Swing

*Good morning/afternoon everyone!*

As it is the end of the month, end of the year and the Friday before a long weekend, there’s a good chance we’ll see unexplained price action in currencies. With that in mind, the dollar remains under pressure, falling to fresh multi-month lows against the commodity prices and extending its weakness versus sterling, euro and the Japanese Yen. There are no U.S. economic reports on the calendar today but 10 year Treasury yields are starting the day lower. While higher yields have not helped the greenback, lower yields are increasing the pressure. This has been a terrible year for the greenback and the downtrend remained intact this week. Momentum dictates that we should see further dollar weakness today but as mentioned earlier, the end of the week/month/quarter/year could exacerbate market volatility so for that reason we are keeping our day trades tight and will be looking to exit trades early.

*The MAIN THEMES I see today are*

+EUR
+CAD
+AUD
+NZD

*Trading Biases*

+EUR, +CAD, +AUD, +CHF, +NZD
-USD
mildly -GBP
neutral JPY

*Today’s Initial Trades*

1. Buy AUDCHF at market now .7626, Stop at .7598 Target .7654
2. Sell USDCAD at 1.2534, Stop at 1.2562, Target 1.2506
3. Buy EURGBP at .8872, Stop at .8844, Target .8900

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 12.28.2017 – EURGBP, EURAUD, AUDNZD

Swing

*Good morning/afternoon everyone!*

Unlike the past few days, we’re actually seeing some volatility in the FX market this morning. The U.S. dollar is trading sharply lower across the board with decent losses (for a holiday) against the Yen and euro. There is absolutely no particular reason for this move outside of the greenback extending lower in a week marked by losses and high beta currencies powering higher on the back of equity market gains. However with U.S. yields up sharply this morning, we could see the greenback recover in the hours to follow. EUR/USD is now firmly above 1.19 but there’s major resistance near 1.1960. USD/JPY has support at 112.50 and GBP/USD has resistance right above 1.3350. USD/CAD should find support at the 100-day SMA near 1.2600 while AUD and NZD are poised for a pullback.

*The MAIN THEMES I see today are*

+EUR
-AUD

*Trading Biases*

+EUR, +CHF,
-AUD, -CAD
mildly +USD
mildly -NZD, -GBP
neutral JPY

*Today’s Initial Trades*

1. Buy EURGBP at market now .8882, Stop at .8854, Target .8910
2. Sell AUDNZD at market now 1.0988, Stop at 1.1016, Target 1.1960
3. Buy EURAUD at market now 1.5337, Stop at 1.5309, Target 1.5365

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 12.19.2017 – EURUSD, EURGBP, AUDCHF, USDCAD

Swing

*Good morning/afternoon everyone!*

It is a quiet morning in the foreign exchange market with the U.S. dollar trading flat against the Yen, sterling and Canadian dollar. The best performing currencies are the EUR, which shrugged off a mixed ZEW and AUD and NZD which continued to power high on year end short covering. U.S. housing starts, building permits and a New Zealand dairy auction are on the calendar this morning. Although GBP is flat, it is off its highs which is a sign of weakness for the currency. There was no specific news other than ongoing Brexit concerns and a rejection of the 1.34 level. Investors are still waiting for the tax bill vote which is expected to be passed easily. The House vote is likely to take place this afternoon followed by the Senate vote later today or tomorrow. So the dollar could still cheer the victory with a late day boost.

*The MAIN THEMES I see today are*

+EUR
+CHF
-GBP
-JPY
-AUD

*Trading Biases*

+EUR, +CHF, +NZD
-GBP, -AUD, -JPY
mildly -USD
mildly -CAD

*Today’s Initial Trades*

1. Sell USDCAD at 1.2857, Stop at 1.2885, Target 1.2829
2.Buy EURGBP at .8828, Stop at .8800, Target .8856
3. Buy EURUSD at 1.1809, Stop at 1.1781, Target 1.1837
4. Sell AUDCHF at .7557, Stop at .7585, Target .7529

Close ALL open day trades by 10:20AM NY / 15:20 GMT

oday’s Trades 12.13.2017 – EURGBP, EURUSD, AUDJPY, NZDCAD has been sent

Swing

*Good morning/afternoon everyone!*

While today is FOMC day the usual consolidation before the event risk could be thwarted by the CPI report due at 8:30 NY time. The Fed is expected to raise interest rates for the third time this year but their forward guidance could be limited. The greenback is trading lower against most of the major currencies despite a modest increase in U.S. yields. Euro remains under pressure, GBP is up on the back of stronger wage gains while the commodity currencies consolidate. We think USD/CAD is prime for a pullback given its latest price action while AUD and NZD near key resistance.

We have our Wed webinar today and a LIVE FOMC trading session beginning at 1:45PM NY time (15 min before FOMC)

*The MAIN THEMES I see today are*

-EUR
+CAD
-USD
+GBP
-AUD

*Trading Biases*

-USD, -EUR, -CHF
+CAD, +GBP, +JPY,
mildly -AUD, -NZD

*Today’s Initial Trades*

1. Sell EURGBP at market now .8783, Stop at .8811, Target .8755
2. Short NZDCAD at .8928, Stop at .8956, Target .8900
3. Sell EURUSD at 1.1737, Stop at 1.1765, Target 1.1709
4. Sell AUDJPY at 85.72, Stop at 86.00, Target 85.44

Close ALL open day trades by 10:20AM NY / 15:20 GMT

Today’s Trades 12.11.2017 – USDCHF, CADJPY, EURGBP

Swing

*Good morning/afternoon everyone!*

The U.S. dollar is trading slightly lower against most of the major currencies this morning and the losses could accelerate if U.S. yields fall further from current levels. There are no major economic reports on the calendar but this is an exceptionally busy week with 4 central bank rate decisions and a host of other market moving releases, so we would not be surprised to see pre-positioning. The best performing currency is the New Zealand dollar which jumped over 1% on the selection of a new central bank governor. However the move is overdone and NZD fundamentals remain weak so we have chosen not to join this trade. 10 year UK yields are down more than 5bp this morning and GBP is flat. This misalignment leads us to believe that GBP will fall, catching up to the move in yields as the FX market realizes what the bond market already knows which is that the second round of Brexit negotiations could be tougher than the first.

*The MAIN THEMES I see today are*

-GBP
-USD
-CAD
+CHF
+NZD

*Trading Biases*

-USD, -GBP, -CAD,
+EUR, +CHF, +NZD, +JPY, +AUD

*Today’s Initial Trades*

1. Sell USDCHF at market now .9905, Stop at .9933, Target .9877
2. Sell CADJPY at market now 88.20, Stop at 88.48, Target 87.92
3. Buy EURGBP at .8813, Stop at .8785, Target .8841

Close ALL open day trades by 10:20AM NY / 15:20 GMT