This week is light on hard economic data releases in the US and the Eurozone. That will leave the stage to Federal Reserve Open Market Committee members to give their views on monetary policy at various forums over the next few days. Market pricing suggests an 13% chance the FOMC will raise the Fed funds rate again in September, although some members may start to get cold feet and express reservations as they reflect on the disappointing inflation data released last week.
For the Eurozone, the main data releases are of the “soft” variety (that is, survey results) but the European Central Bank's quarterly Bulletin, to be published on Thursday, will give some background to in-house thinking on the economic outlook.
Management and risk description
The euro may have completed a complex (“irregular”) Elliott Wave corrective structure on last week’s low at 1.1135 (see daily chart below) and whilst finding support today at 1.1175/1.1160, there is opportunity for the euro to rally back toward key 1.295 resistance.
Once this resistance level is cleared, the EURUSD uptrend will probably extend toward the mid/late 1.1400s over the coming days.
Entry: Today: EURUSD is seen as a Buy at 1.1175/1.1160.
Stop: just under 1.1140, initially.
Target: 50% at 1.1278 and 50% at 1.1463.
Time horizon: Allow a few weeks for both targets to be met.
Daily EURUSD chart (click to expand)
Weekly EURUSD chart (click to expand)
— Edited by Robert Ryan
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