Good morning traders.
We had a steady drift up yesterday into the FOMC press conference when Powell´s comments undid the general dovish feel the market was taking from the statement. It appears the cut in IOER (interest on excess reserves) of 5 bps (dovish) was out ranked by comments in the press conference about inflation being transitory (more hawkish). Hence we got the USDx decline swiftly followed by a climb. Such is the fickleness of the market when it comes to central bank utterances and why we always have to be fleet of foot at such times.
From our pov we were again bang on target with our upside resistance at R1 at 1.1260.
The level was tagged on the statement, stalled and then collapsed on the presser. If you traded it there was an easy +26 for the model strategy and +60 for a max strategy. Its always risky at these events so don´t sweat it if you didn’t trade the short and I said yesterday to be careful. I will not count it in our performance. However, it is good to note that we called it yet again!
For today we have some final PMIs out of Europe and the BoE at 13.00 CET. However, the NFP tomorrow is the headline act for the rest of the week.
The Daily Chart
The push back up in the USDx drove the eurusd back down to below the 1.12 level before rebounding to take back the handle. We are trading 1.1207 as I write this morning. It´s unclear where we may be headed next on the higher time frame although there is a fair bit of resistance further up at the 1.13 level in particular.
We have seen good data out of Europe this week in the form of beats on Germany CPIs and EZ GDP which were better than expectations so some might take this as a contraction in monetary policy divergence between the USD and the EU. I am not so sure but will keep an open mind and as ever simply trade what the chart tells me.
The Hour Chart
I am keeping main S & R levels the same for today although I suspect we will get some good scalp opportunities within this range.
Look for buyers to step in if we push down to the 1.1175 major low or retests of the yesterday low at 1.1185. Above look for sellers at the 1.1220s and the hour candle closes from yesterday at around the 1.1245 level.
Have a good day amigos.