Good morning traders.
We saw some improved two way price action yesterday in the eurusd once the USDx broke the top of its upward cycle at 96.65. Whether we can expect further down moves in the US $ index and inverse moves up in the euro pairs remains to be seen.
Global growth risks appear to be gathering and we saw a number of comments from various sources yesterday about the parlous state of the euro zone economy in particular. Of note was the Feds Kaplan who said that “Europe is technically ‘Teetering’ …on risk of recession…”.
Additionally there are increasing concerns about the US – China trade negotiations. In which case from a fundamental point of view the US dollar would remain a better bet than the single currency due to its position as more of a safe haven currency.
We had one trade yesterday a long from S1 which went +10 into profit then turned around and technically become a loser. I commented in yesterdays blog that all trades especially longs should be managed carefully and to take profit early or at least move stops to break even so I will record a scratch trade on our model account.
On the data slate for today we have no stand out announcements. However, we have French and Italian industrial production this morning and if they follow Germany´s lead and print below expectations it would provide further evidence of a weakening euro zone economy.
The Daily Chart
From the daily chart we are still in a downtrend so our basic plan will be to continue to sell rallies. The 1.13 level is still acting as a magnet for prices and we have little structure to work with in the interim. But as its Friday we may get some profit taking on the week as traders close out shorts not wanting to run any ´political´ or economic risks over the weekend.
The Hourly Chart
Levels as per.
Should R1 trigger my advice would be to take a short for a quick reaction from yesterdays highs and if it gets into profit by around 10 to 15 pips then don´t let it become a loser. Move your stops to break even or take profit (or partials and leave some running). As its Friday discretion is the better part of valor. Better to go into the weekend with money banked than money lost.
Have a good day and enjoy your weekend :).