Hello Traders,
Earlier today the Australian Construction Works and Wage Price Index data were released. Even though it was mixed, the AUD continued to gain against the USD. Data showed that Construction Work for December quarter contracted by 0.2% when investors expected a rise of 0.3% and at the same time, Wage Price Index expanded by 0.3%. Trend direction for NZD and AUD should be defined later in the day when the FED’s minutes for the January meeting will be released. With hindsight, many investors are bullish on the Greenback and with recent comments by Yellen and Cleveland FED President-saying that with inflation picking it would be most “appropriate” to raise rates in the coming meeting. Analysis are supportive of this assertion because currently 10 year yields are trending in negative territory and inflation rising, hiking interest rates at least 3 times this year would make sense. These combinations of expectations and hard data jolted the USD in the NY session and some gains especially against the Euro were observed. Personally, I’m bearish on the Euro and other than its inflation problems, further misery could be piled on the common currency as Italian Banks go to the dregs. Data compiled by Reuters points a bleak picture on Italian Banks as more and more debts goes to the unrecoverable “Sofferenze” and this means, sooner or later the combination of NPL and Unlikely to Pay Loans will compound and weigh down on the Euro.
Technically, almost all the major currencies are gaining against the Euro. The Aussie is leading the on-slaughter and checking on the EURGBP, the weekly support trendline was broken yesterday. Bear momentum is also increasing as the number of shorts pick up as indicated by the weekly OBV. Further, the synchronicity of bear moves in the monthly, weekly and daily charts means that at any intraday time frames, it will be wise to short and therefore my trading in the 1Hr chart will be as follows:
Sell Limit: 0.8440-Resistance line
Stop Loss: 0.8400
Take Profit: 0.8320
Fundamentals to watch out today include the UK GDP data in about 1HR time, Euro CPI information and later the US Existing Home Sales data at 1600 London time. MoM CPI in the Euro zone is expected to dip and if it does, then it’s a ride home.
That is my game plan and entry and exit plans should be on or around the suggested zones. It is not fixed; tailor it to fit to your entry plans with the correct entry confirmation signals.

EURGBP 1HR Chart-22.02.2017

Source: Dalmas Ngetich

EURGBP Daily Chart-22.02.2017

Source: Dalmas Ngetich

EURGBP Weekly Chart-22.02.2017

Source: Dalmas Ngetich

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