Generally, the USD has been weak most of this week. After periods of uncertainty especially in matters tax reforms and recent Democratic wins in Virginia, the GOP sponsored tax bills looks like it will face headwinds in the coming days. First off, it’s the intention of the Republicans to marshal their senators and get the much needed majority in the Senate but any signs of unwillingness to cooperate or dissent by some senators could weigh down on this objective. As mentioned before, Democrats don’t really find the bill beneficial for the people they represent. They want assurance on how this bill will lead to tax reduction for middle class populace.
In New Zealand the Kiwi recovered after a more optimistic RBNZ chair Spencer provided a positive inflation forecast through to 2019. Even though inflation is expected to slow down in Q2, NZD correction shall help boost headline and core inflation. With this in focus, the RBNZ place the first round of interest rate hike in 2019 right after RBNZ inflation target has been hit.
I will look to buy the CHF in the short term because of technical development in the weekly chart. As noted, there is price action bear divergence relative to stochastics which begun after July 2017. EURCHF closed above the upper BB and since afterwards a correction lower followed. The weekly chart lower lows relative to the upper BB is favorable for bears now that stochastics are overbought and a sell signal has been printed.
In the daily chart, I will set buy and sell stops above and below the wedge at €1.63 and €1.54 respectively. Since there is a sell signal just like in the weekly chart and price action is trending lower along the resistance trend line, CHF bulls are likely to drive prices lower. If price action close below the 20 period MA support line, then our sell stops at €1.54 will likely be triggered.
My trade plan will be as follows:
Sell Stop: 1.54
Stop Loss: 1.64
Take Profit: 1.1
Have a good trading day.