EurUsd has had a wild ride on Wednesday, falling to 1.2275 after the stronger US CPI, before reversing sharply to reach a high of 1.2445, roughly where it is finishing the session. Why the violent reversal? No idea. Perhaps the Retail Sales miss was to blame? There will be plenty more US data again today, which will be the main driver, and if weak then we can probably expect the dollar to come under further downside pressure. In the longer term, if the Fed is going to raise rates 3 or 4 times this year while the ECB stay on hold, I fail to see why the dollar is going to lose too much more ground against the Euro – or the other majors come to that. Perhaps I am missing something?!
1 hour/4 hour indicators: Up
Daily Indicators: Turning Neutral
Weekly Indicators: Turning higher?
Preferred Strategy: The short term momentum indicators are pointing sharply higher today, and if we take out 1.2450 we can possibly expect a return to 1.2500/20, above which the next major resistance is at 1.2590 (61.8% of 1.3993/1.0340). A failure at the current levels would see us back at 1.2390/2400, below which sees minor support at 1.2370 and then the 200 HMA at 1.2335. A pretty nimble stance is currently required and it looks set to remain volatile. While buying dips currently seems to be the idea, a more cautious outlook is required in the medium term, and trading a range of something like 1.2300/1.2520 over the next couple of days could be the plan.
Buy EurUsd @ 1.2400. SL @ 1.2350, TP @ 1.2520
|1.2521||1 Feb high||1.2425||Minor|
|1.2475||5 Feb high||1.2385||Minor|
|1.2464||Session high||1.2335||200 HMA|
|1.2458||(76.4% of 1.2537/1.2204)||1.2275||Session low|
Economic data highlights will include:
EU Trade Balance, New York State Empire Mfg Index, US PPI, Philadelphia Fed Mfg Survey, Jobless Claims, Capacity Utilisation.
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