Hello Traders,
For the USD bears, it has been blue all over. It should be. From the recent semi-annual testimony by Yellen, there were much to be deduced and concluded despite the tightening cycle initiated since the last year. To begin with, there is a clear shift on the underlying drivers of inflation and this is a bit of a concern to the Feds who were sure that recent soft inflation readings were idiosyncratic risks which could not cause deflation in the long run. That is, they are sector specific and can be easily handled without causing any ripple in the overall market. But then now, these very factors are turning out to be “unusual” and coupled with weak consumption through Retail Sales, Yellen tone turned cautious causing the USD to weaken. On the other side of the Atlantic, the recent anti-tapering and balance sheet expansion exit talks were fuelling the Euro rally. While the ECB’s major objective is a regime of inflation over growth, it is more likely that the Feds and other central banks will embark on tightening before the undervalued Euro controllers lift the sub-zero deposit rate back from negative territory only when inflation is near 2% target. Growth is expected to boost employment which is turn at least theoretically should help lift inflation at an acceptable pace.
The EURUSD chart is pro-USD. Reason? Well, the 4HR stochastics through to the weekly charts are in the overbought territory. Thinking of what might happen tomorrow with ECB meeting especially if it they announce an extension of QE and consequently pouring cold water on rate hike talks. Should they say inflation is not self-sustaining and priming is required, then be on the fore front and buy the Yen and USD. That is exactly what I will do and trade as follows:
Sell Limit: 1.1560-80 or wait for a sell signal by the stochastics in the 1HR chart.
Stop Loss: 50 pips above sell level.
Take Profit: 1.1, 1.08 in that order.
Or,
Sell Stop: 1.15
Stop Loss: 1.16
Take Profit: 1.1, 1.08 in that order.
Plus there are some important news today from the US in the housing sector-Building Permits during the NY session. So watch out for that.
Have a good day.

eurusd 4hr chart-19.07.2017

Source: Dalmas Ngetich

eurusd Daily chart-19.07.2017

Source: Dalmas Ngetich

eurusd Weekly chart-19.07.2017

Source: Dalmas Ngetich

eurusd 1hr chart-19.07.2017

Source: Dalmas Ngetich

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