Once again the expectation of soft US economic data continued to trickle in. Remember last week we had the unusually soft GDP data showing the first quarter expansion of 0.7%. According to analysts, this was the lowest GDP performance since the last recorded figure of Q1 2014. Such kind of data has a way of influencing policy setters who consider such pointers when developing and deciding policies. To add to this, the Bureau of Economic Analysis Personal income and outlays printed a declining PCE data showing a decline of 0.53% mom and up 1.83% year over year. Core PCE on the other hand is still below the Fed’s target of 2% at 1.56% and though revisions are likely, still this data are pointers of a decelerating economy with stagnating inflation below the 2% benchmark level taken into consideration during FOMC meeting. In my opinion, the combination of last week’s growth rate and these preliminary inflation readings will go a long way in influencing the tightening cycle in the coming weeks or months.
So, for this currency pair, there is a sell signal printed by the stochastics and then look at that bear divergence forming. Price is trending higher while momentum is decreasing as shown by the stochastics. Then also, price action is moving away from the upper BB which means momentum up is as banding is minimized.
I will trade as follows:
Stop Loss: 1.29
Take Profit: 1.26-1.27
Intraday traders to trade as follows in the 1 hr chart:
Stop Loss: 1.2860
Take Profit: 1.2730-1.2750
Watch out for UK Manufacturing PMI expected to ease to 54.0 from 54.2. if it comes in lower, then the faster your TP will be hit.
Have a good trading day folks.