Good morning traders.
I´ve mentioned in the past that levels often change there purpose depending on evolving price action and yesterday while R1 didn´t act as much resistance (although you could have scalped for a few pips) it did provide support to get long once it had been taken out and retested from the upside. Other than that it was pretty choppy above this level and price didn´t take out the Friday highs around 1.1364.
Two other key takeaways from yesterday. First is that US stock indices were down and tested the February lows signalling risk off sentiment is gaining ground. They did come off worst levels overnight but it was a very nervous market. How the USD will react will be critical for eurusd.
Second was the way the Trump administration is heaping pressure on the Federal Reserve not to hike on Wednesday. To kick off we had President Trump tweeting that:
“It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”
This was followed by Peter Navarro, director of the White House National Trade Council saying that the Fed is the predominant factor in the stock market downturn.
This is heady stuff! It is certainly outside of the realm of normal etiquette by some stretch and Fed Chair Powell must be feeling the heat. Wednesday has just got a whole lot more important in my view as it will signal not just rate policy but political independence.
Ok – whats up for today.
The Daily Chart
Again there is nothing to add to what I´ve been saying over the past month. We are firmly planted mid way between 1.13 and 1,14. I assume that tomorrows FOMC rate decision will provide some direction. I hope so :).
The Hourly Chart
Levels noted as per. I don´t have any conviction which way we might go today so as ever watch carefully how price evolves, check the lower time frame charts when we are approaching our levels and trade accordingly.
I suggest you take extra care with the Fed out on the wires tomorrow and the nervousness we saw yesterday in equities. There appears to be a lot riding on Powell!
Vigilance is the order of the day – hard hats on.