Good morning traders.
Well we did get a close below 1.13 yesterday albeit only just. 1.1297 on my broker chart so not what you´d call a decisive move!
So we continue with the cat and mouse game for another day. It could be waiting for the FOMC minutes tomorrow evening (CET) before we get anything conclusive. Or it could smash down (or up?) today. I don´t know.
We have monetary policy divergence between the US and the EU, the former on a hike path, the latter not but its not always that simple. For my money it’s as much to do with the USD via risk on risk off sentiment. US equities backed off lows yesterday which should in theory reduce the upward pressure on the dollar as sentiment eases and we move to more of a neutral position rather than solid risk off.
I also suspect the G20 in the next few days will provide more of a clue. It depends on whether Trump and Xi strike up any conciliatory dialogue on trade tensions. If they do, risk will feel less pressured and the safe haven flows to the dollar should abate. But I won´t be holding my breath.
So what’s in store for today?
The Daily Chart
Not much to say in addition to what I´ve said for the past week or so. 1.13 is the line in the sand. Whether we cross firmly and push down or whether we respond upwards (from the head and shoulders pattern), I don´t know is the answer. But we do know where we are likely headed in either direction. That´s as good as it gets right now.
The Hourly Chart
Given that I don´t know what will happen I can only give you my reaction levels as noted. If we move up look for opportunities to fade at the levels noted. Same for any downward move. Also, if we get a strong move in either direction, our resistance levels could well become support (and vice versa) as is norma. So if you faded them once you might have to take the opposite trade the next time. Careful attention is always required. Especially so now.
Hard hats on guys as we play cat and mouse around 1.13.