Good morning traders.
Not much to add to the macro scene. We are in the midst of worsening US China trade war tensions, new tariffs have been imposed on Mexico (not great for a ratification of the USCMA deal), Brexit goes on (and on…) and Italy up the stakes with the EU over tax / debt issues. On top of this Merkel is under pressure politically in Germany as her coalition partner in the SPD resigned after disastrous European election results.
Whichever way you look at it the global economic picture does not look particularly rosy and US and EU indices gapped down last night. I´m not in the business of calling for crashes or ever higher markets, whatever happens there are always opportunities for us to trade. However, risk looks to be on a precipitous knife edge right now.
If you want a more in depth look at the macro economic implications of this I suggest you read Marc Chandlers blog. Marc writes and post a few times every week and he is always worth a read.
From our perspective the USD has not yet become the go to safe haven trade with the yen taking most of the weight in this regard. Consequently when Salvini of Italy announced that they were to press ahead with no increase in taxes to cover the budget deficit in direct defiance of the EU, the eurusd slumped initially but came right back to close out Friday near its highs.
This week will be important as we see how the risk picture unfolds and we have the ECB on Thursday and NFP on Friday.
For today we have final manufacturing pmis out of Europe and US ISM manufacturing pmi at 16.00 CET.
The 240m chart
As I write this morning the 61.8 Fib just about held the topside on Friday at around 1.1180 – a level we have had on the charts for some time and one we know is usually sensitive to a reaction to scalps. This level needs to be taken and hold on a close of the daily for the eurusd to move to higher level although I suspect we will stay within this range (1.1250 and 1.1150 ish) until Thursday and the ECB. Unless the situation turns much worse for risk which could herald a run to the USD and a sharp pullback in the eurusd.
The Hour chart
Levels as per.
As we have the ECB on Thursday we could be in for a quiet day/week until then. Watch the levels for scalp trades as we did on Friday to good effect. Friday was a good day for scalping the levels and if you followed the plan you should have made decent returns.
Have a good day amigos