NEWSLETTERPRO – Dollar retraces lower against the other majors as investors are repositioning ahead of the ECB decision tomorrow, what to expect for today

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MORNING BRIEF

We’re right in the middle of the week and ahead of us lie two important events: the ECB Rate Decision tomorrow and the NFP release on Friday. Investors are adjusting their positions ahead of these events with Dollar losing ground for a second day against most majors. The Greenback held its own against the Euro and the pair is still hovering around the 1.3500 mark as traders are positioning themselves for tomorrow’s ECB Rate Decision. We’re pretty certain that nothing will change regarding the rate policy but we’re very keen to hear from ECB President Draghi. Analysts and policymakers as well have voiced their doubts over the region’s growth and we’d like to see whether the ECB President shares their views or feels more optimistic. Unlike the Euro, the British Pound soared higher against the Dollar yesterday as the PMI Services Index beat expectations coming at 62.5 against the 60.0 previously eyed. The Pound has been on the move for a second day in a row rising from 1.5920 to nearly 1.6100. For the day ahead, we wouldn’t expect much movement as the day holds only second-tier news events but more importantly investors have already repositioned their portfolios ahead of the two significant events tomorrow and the next day so we wouldn’t expect any major adjustments at this time.

Several second-tier events today to warm up traders ahead of ECB,NFP

As we mentioned above, today the Economic Calendar holds a few second-tier data releases that will attract our attention ahead of the two most significant events of the week tomorrow and the day after. So today we’re expecting the Euro-zone and German PMI Services reports, the British Industrial and Manufacturing Production reports, Euro-zone’s Retail Sales and the German Factory Orders. Finally, at noon the UK GDP Estimate is set to be released and at the same time the US Leading Indicators release is also scheduled. A host of data as you can see and even though none of them could be considered a market-mover we would be on the lookout as the combined effect of several surprises could spur a rally in the majors.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

08.55

EUR

German PMI Services

Medium

52.3

52.3

09.00

EUR

Euro-zone PMI Services

Medium

50.9

50.9

09.30

GBP

Industrial Production

Medium

1.8%

-1.5%

09.30

GBP

Manufacturing Production

Medium

0.8%

-0.2%

10.00

EUR

Euro-zone Retail Sales

Medium

0.6%

-0.3%

11.00

EUR

German Factory Orders

Medium

5.6%

3.1%

15.00

GBP

NIESR GDP Estimate

Medium

0.5%

0.8%

15.00

USD

US Leading Indicators

Medium

0.6%

0.7%

 

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TECHNICAL ANALYSIS & LEVELS

EUR/USD

The Euro yesterday remained generally unchanged but this didn’t prevent us from capturing a few quick pips when the pair broke below 1.3480. We entered short there, closed 50% of our trade at the 1.3455 level which was our first target and then the pair pulled back higher again to hit our stops that were moved at the breakeven price when the first target was reached. Now for the day ahead, we favor a long entry just above the 1.3525 area as the pair seems to have formed a reversal pattern and we would like to enter long should this pattern be broken upwards. So again, our entry will be just above the 1.3525 area with targets at the 1.3570 and 1.3640 levels and our stops needs to be placed below the 1.3440 mark.

GBP/USD

The Pound continued to move higher yesterday lifted by better than expected Services’ data release. Our long entry placed just above the 1.5980 mark was triggered and both our targets were hit within the first hour for a nice 70 pips profit. Now the Pound seems to test the 1.6100 mark and we would like to stand aside for the day and let the currency test this important level. The outcome will be significant for us as an upwards breach will confirm that momentum for the uptrend is still present but a failure to climb above it will illustrate that traders might want to wait for the ECB,NFP events to pass prior to committing to any trades.

FTSE 100

The FTSE 100 retraced lower yesterday and the remaining 50% of trade was closed out at the breakeven price or actually a few points below that for an overall medium profit. Now for the day ahead, we would prefer to enter short as the index appears to have formed a peak formation and our entry point would be just below the 6,700 points, our targets will be set at the 6,650 and 6,560 points levels and our stops needs to be placed just above the 6,790 points. The UK index seems to have reached a medium-term peak and the sideways formation could be broken downwards.

Gold

Gold remained range-bound for yet another day hovering around the $1,315 price tag. We have only half of our trade open at this time since we’ve already closed the other half at the first target’s level of $1,310. Our stop has been moved at the $1,325 price tag and we need to remain patient as we target lower at the $1,278 level for our second target. However, if for any reason the yellow metal’s price pulls back higher to hit our stops and clears above the $1,325 level then we would like to enter into a long trade with entry point just above the $1,325 price tag and targets coming at the $1,336 and $1,355 price levels, a stop needs to be placed just below the $1,305 area.

All charts have been created using FXCM’s Trading Station platform.

This is the free, time-delayed version of NewsletterPro, a subscription-based product.

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