Good morning traders.
Quick update this morning as there is little to add to what I’ve already said about the driving forces behind the eurusd right now. Its all about the Fed and the ECB and their easing timetable.
The key to its level near term rests with Fed expectations of a rate cut and the level of a cut in July. The market appears confident that a cut is coming of at least 25 bps with some bets that a 50 bps cut is on the cards. Yesterday we had the Feds Bullard (Dove) saying he did not prefer a 50 bps cut in July which triggered a dip yesterday evening (CET) pushing the eurusd straight into the 1.1345 level we had on the charts as S1.
If anyone had a resting order there from my last post you would be nicely in the money this morning. Again it proves the point that decent support and resistance are the core drivers of good moves in our preferred weapon of choice to trade the markets.
There is also good deal of focus re risk on or off with the upcoming G20 meeting and whether Trump and Xi can agree anything that lifts trade tensions between the two. The worsening geo political position between the US and Iran is also not helping as the threat of military action is still present. While President Trump pulled back from a strike at the end of last week, whether he will do so a second time is less certain.
In a nutshell we are waiting for easing action from either or both the Fed and the ECB. Who moves first will be the initial trigger for higher or lower eurusd rates. The G20 outcome and Iran are driving risk.
Watch out for today’s US Core Durable good data at 14.30 CET and for any comments re rates from either or the Fed or the ECB.
The Daily Chart
The pair is having some difficulty pushing up through the 1.14 level which is not surprising as we only need to look at the past few swings to see that a push up of around 200 pips seems to be the max before a pull back. If nothing else the market is a creature of habit! Its also a key psychological level and any further move needs to see a break up and use the level as a springboard for higher. With easing bias as the main macro driver from both the Fed and the ECB traders will be cautious as any utterances from either will impact its short term trajectory.
The Hour Chart
Levels as per.
I have left S1 at the 1.1345 level in case we get another retest which should give us some bounce pips. However, take care to manage this carefulñly as a bigger push down to the 1.1320s is equally likely.
Have a good day amigos :).