Mark wogan: Turnaround Tuesday anyone?

Good morning traders.

Nothing much to say about yesterday. We had a 15 pip range for most of the day followed by a bit of excitement to the downside later in the London afternoon. No levels were triggered during our session times so nothing to add to our model strategy performance.

For today my view of the fundamental macro environment remains the same as yesterday see here albeit with an update regarding Brexit noted below.

On the Brexit front The Times reports this morning that Martin Selmayr the EU´s most senior civil servant was sounding out Tory Brexiteers whether they would back Mays withdrawal deal if the letter on the Irish backstop already in place were to be made part of the agreement itself thereby giving a legal position to the temporary nature of the backstop.  It appears that some in the meeting weren´t able to confirm that they would support the deal even with this added.

It appears its all about chicken and egg positioning. MP´s wont say whether they would support it unless it is actually made legally binding and the EU wont make it legally binding unless they know it will be accepted. This is the state of negotiations with regard to the most historically important event in UK politics for 50 or so years.

However, I suspect this has room to run and that the letter will be made legally binding in the end. In which case (if the backstop issue is the real issue) this would give the May withdrawal deal the best chance of being accepted by UK Parliament thereby preventing a disorderly no deal exit.

This, if it does come to pass, should be positive for both sterling and the euro. I should add I´m not certain simply adding the letter to the agreement would be enough there is also some discussion whether the letter adds anything new in its own right but in asking Selmayr seems to be moving towards some sort of rapprochement.

For today see the charts below.

The Daily Chart

There is nothing to add to what I said yesterday about the daily chart. We had another down close but nothing that changes the position.

The Hourly Chart

Similarly there´s not much to add to the Hourly chart from yesterday. Levels as per.

We did come down to the ´point of origin´of the FOMC move up last week which could be significant (see dotted orange line) especially as it occurred at the same time as the USDx took out the highs of its same leg lower (remember the two are inversely correlated). If we are to get any upside in the eurusd this would be an opportune place for it to start off from (or a little lower at our S1).

Have a good day and if we do get a bite – keep a tight line:).