After Angela’s assertion that the Euro was weak merely because of the loose ECB monetary policy, the Euro rallied but it has since retraced lower. Well, taking this to Germany’s context, many will argue that the weaker Euro goes along in boosting exports as we have seen manufacturing and service activities in major European countries-France, Germany expand or remain steady as per May Flash PMI. The issue of growth therefore is not a concern for ECB and despite Merkel’s comments which caused the Euro to rally, the ECB is not raising rates anytime. Focus though will be on inflation concerns. Price pressures remains stagnant even though Draghi and ECB continue to retain rates at negative territory while easing. The aim of the ECB is to elevate price pressures at or around the 2% target for the current monetary policy to be considered successful. OPEC holds a meeting with a hope of convincing members to continue rationing crude oil production with a sole objective of stabilizing oil prices. Well, there is a synonymous agreement amongst many analysts that this is a ripe deal already and should this happen whilst EIA crude inventories remain low, CAD and oil prices should rise. I will also be watching the BoC rate decision today where rates are expected to remain unchanged.
To the charts and it looks like there is a bearish divergence in the daily chart just out of price action characteristics. While prices are trending higher, stochastics are trending lower with a sell signal printed by the stochastics right around the overbought territory. Trading this pair for a swing will be easy. Stop loss will be above the 1.5220-a zone where price action has failed on 5 separate occasions this month with take profit zones at the most recent support for a 1:2-3 risk reward ratio.
This will turn out as follows:
Stop Loss: 1.5220
Take Profit: 1.4550-1.48
Have a good trading day.