After nursing wounds on Wednesday, the USD recovered some of their losses on Thursday despite the absence of any market moving catalyst to pin point to. As a matter of fact the only important US economic indicator like Jobless claims were negative and many attribute this to profit taking. Well, we cannot really conclude this because from a technical point of view, the USD is deep in the oversold territory. If some positivity is considered then the only hope could be the Durable Goods Orders which ticked higher and surpassed expectations and printed a 6.5% expansion in June. Well, GOP wanted a weaker USD to facilitate trade and with setbacks especially the Fiscal stimulus through infrastructure spending, Tax borders and then the repeal and replace rhetoric peddled during the election hitting the wall, the only thing that Trump and his confidants rely from congress is a little bit of tax reforms. Corporate tax cuts will perhaps be the only thing that brings back some confidence and a follow through of election promises in my view. Anyhow, today’s only hope today is 2nd quarter GDP reading and should it be negative, just sell the USD going forward. The reverse will mean we fade the market and that is exactly what I’m doing.
From my previous post on Wednesday, my stop loss was hit when price rallied past the highs of Monday. However, right now, I will enter short again and put my stop loss above yesterday’s highs. Also note that price is overextended and closed well above the upper BB in the daily chart with a sell signal printed by the stochastics. Momentum in the weekly chart is also waning as it is deep in the overbought territory.
Trade as follows:
Stop Loss: 0.7560
Take Profit: 0.7360-resistance turned resistance in the daily chart.
Wait for Q2 GDP reading in NY open