Short term
/
Buy
Trade view / 04 January 2018 at 3:01 GMT

Signs that the uptrend in the euro has probably resumed

Managing Director / Technical Research Limited
New Zealand
Instrument: EURUSD
Price target: 1.2148
Market price: 1.2010
Background

EURUSD continues to perplex analysts who see rate differentials as the main driver of forex rates. At more than 250 basis points, the spread between US and German two-year bond yields is at its highest level since the euro made its debut in 1999. Perhaps the markets are anticipating the spread will narrow significantly when the European Central Bank takes its foot off the quantitative easing accelerator later this year. 
 
But for that to come to pass, we will need to see positive developments in the inflation space. So Friday’s flash estimate for December could be key for EURUSD. Expectations are low, for the core rate accross the Eurozone to come in at 0.9% year-on-year, with no improvement over the previous update. So anything better than this should give the euro a boost.
 
Later on Friday, we will see the US employment report for December. Forecasts are for a jobs added number around 190,000; unemployment to drop marginally to 4% and average hourly earnings to rise 2.5% on an annual basis. 
 
Heading into this key data point, Fed funds futures are pricing in a 68% chance of a March rate hike.

Management and risk description

From an Elliott Wave perspective, the euro is undergoing a probable 5-Wave sequence from last November’s low of 1.1555 (which is valid while it holds above the 1.1900 level), for an advance toward potential targets of 1.2345 and 1.2630 (refer Daily chart below).

In the short term, support is today found at 1.2000/1.1970, for the next rally onto the mid 1.2100s.

Parameters

Entry: Today Only: EURUSD is seen as a buy at 1.2010/1.1985.

Stop: 50% below 1.1965 and 50% below 1.1920 (all initially, only).

Target: 50% at 1.2148 and 50% at 1.2344.

Time horizon: allow a few days for first target to be met .

Daily EURUSD chart (click to expand)
EURUSD daily chart
 Source: ThomsonReuters 

Weekly EURUSD chart (click to expand)
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more.

– Edited by Robert Ryan

For more on forex, click here.

If you would like an email notice each time Max posts a trade, then click here to follow him.

Non-independent investment research disclaimer applies. Read more
A compiled overview of Trade Views provided on TradingFloor.com is found here
2y
Treve Treve
Max, its Great to have you back!
2y
Max McKegg Max McKegg
Glad to be back !
2y
Morris Morris
Max! The chart pattern is it economics following or leading?
2y
wang fei wang fei
how about gold?
2y
Max McKegg Max McKegg
At the start of this trading week I sent all my Subscribers a Special Trading Update on Gold.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail