EUR/USD: Profit taken, long again for 1.0870

Macroeconomic overview: Dallas Federal Reserve Bank President Robert Kaplan said Thursday that trimming the balance sheet is an appropriate step for the future, and the Fed should communicate its plan for doing so clearly and in advance.

Minneapolis Federal Reserve Bank President Neel Kashkari on Thursday said he would like to see a detailed plan for how and when the Fed will reduce its USD 4.5 trillion balance sheet as soon as possible. Kashkari was the lone dissenter against the U.S. central bank's decision last week to raise interest rates, citing the need for further progress on employment and inflation. The Minneapolis Fed chief has also said the Fed should hold off on further rate increases until it publishes its plan on the balance sheet. That's at odds with the majority of his colleagues at the Fed who favor lifting rates well away from zero before altering its current balance sheet policy.

San Francisco Federal Reserve President John Williams said that the economy is in a good place and that the U.S. central bank should continue to raise interest rates this year as fast as or faster than it has signaled it would. He said: "Three or even four increases as your total makes sense".

U.S. investors are focused on a showdown between U.S. President Donald Trump and members of his own party over a new healthcare bill. The healthcare vote, which had been expected to be an early legislative win for Trump, is seen by investors as a litmus test for his ability to work with Congress and push through key policies such as tax reform and infrastructure spending.

Trump warned House Republican lawmakers that he will leave Obamacare in place and move on to tax reform if they do not get behind new healthcare legislation and support it in a vote on Friday. Postponement of the vote from Thursday initially knocked the dollar and stock markets, but the dollar was given breathing space as Treasury yields turned higher after Wall Street shares trimmed losses to close little changed.

Technical analysis: Underlying bias stay with the bulls. A close above the head and shoulders neckline at 1.0786 will be an important bullish signal.

Short-term signal: Profit taken at 1.0765 on long (+150 pips). We got long again at 1.0796 for short-term target at 1.0870, stop-loss 1.0760

Long-term outlook: Bullish. Long-term target is at 1.1125 with a wide stop at 1.0600.

 

GBP/USD supported by retail sales bounce

Macroeconomic overview: Sterling hit a one-month high against the dollar on Thursday, outperforming other major currencies after stronger than expected UK retail sales data soothed worries about weakening consumer sentiment.

Sales rose by 1.4% in February from January, the official numbers showed, beating market forecast for 0.4% increase and ending a streak of three consecutive monthly declines. For the three months to February, this was still the biggest slide for retail sales in nearly seven years as higher fuel prices eroded shoppers' disposable income and the Office for National Statistics said the monthly improvement was too little to offset the drag from previously weak demand.

Bank of England deputy governor Ben Broadbent said it was possible that interest rates could rise, although he also highlighted the strong sense of caution among investors about the outlook for Britain after Brexit.

Technical analysis: Underlying bull trend remains intact. The GBP/USD closed above 61.8% fibo at 1.2478 yesterday. The new short-term target for the bulls is 1.2566 (76.4% fibo).

Short-term signal: Long at 1.2486, target 1.2566, stop-loss 1.2445.

Long-term outlook: Neutral

 

TRADING STRATEGIES SUMMARY:

FOREX - MAJOR PAIRS:

FOREX - MAJOR CROSSES:

PRECIOUS METALS:

It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long term thanks to the long-term trend in price changes. Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky. In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short-term.

How to read these tables?

1. Support/Resistance - three closest important support/resistance levels

2. Position/Trading Idea:

BUY/SELL - It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level. LONG/SHORT - It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.

3. Stop-Loss/Profit Locked In - Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.

4. Risk Factor - green "*" means high level of confidence (low level of uncertainty), grey "**" means medium level of confidence, red "***" means low level of confidence (high level of uncertainty)

5. Position Size (forex)- position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD/USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!

Position size (precious metals) - position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD/USD 10,000) * (our position size).

6. Profit/Loss on recently closed position (forex) - is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.

Profit/Loss on recently closed position (precious metals) - is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.