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Dollar’s retreat to benefit Euro and Pound, investors turn their focus to the ZEW survey for more information
MORNING BRIEF
It has been a quiet trading day yesterday with low volatility across major currency pairs. The Euro and the Pound benefited from the continued Dollar weakness with the European currency reaching as high as 1.3540 and the Pound hovering around the 1.6100 mark. Dollar traders are positioning themselves against a short-term weakness in the US currency as Yellen’s and other policymakers’ comments in favor of a continued stimulus are weighting on the Greenback. For the day ahead, the German ZEW survey is scheduled for release this morning and this is Euro’s chance to prove its strength, if analysts prove to be optimistic over the region’s outlook for the coming period then we expect the Euro to rally towards 1.3600. On the Dollar’s front, we have no news events scheduled for today other than a speech from Fed’s Evans speaking in Chicago and as always we’d like to hear to what he has to say. Yesterday, his colleague NY Fed President Dudley was quoted saying that weak economic growth could be followed by a stronger growth over the next few years, a comment that seems more dovish than hawkish as the Fed voter’s tone seems rather uncertain. Dollar will be at risk tomorrow as the Advance Retail Sales Report will be released and a possible downtick will definitely hurt the buck.
German ZEW survey could fuel a rally in the Euro
The only significant piece of data released today is the German ZEW survey and any surprises will be reflected on the Euro. The survey queries financial analysts throughout Europe over the German and European regions’ outlook for the medium-term and is considered an important indicator to gauge the economic climate in Europe. Analysts expect an uptick to the indicator and if they are proven right demand for Euros will lift the currency towards 1.3600. However, a surprise to the downside will definitely hurt the recent rally in the Euro and probably send it tumbling towards 1.3400. Lastly, Fed’s Evans will be speaking tonight to bankers in Chicago and as always we’d like to note down his remarks over the early or later tapering debate.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
10.00 |
EUR |
German ZEW Survey |
High |
54.0 |
52.8 |
|
10.00 |
EUR |
Euro-zone ZEW Survey |
Medium |
– |
59.1 |
|
19.15 |
USD |
Fed’s Evans to speak in Chicago |
Medium |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Euro continues to move higher versus the weakening Dollar and reached as high as 1.3540 yesterday before settling around the 1.3500 mark for the rest of the day. We remain focused towards our second target that lies at the 1.3550 area but we’d like to modify our stops since we have an event risk ahead of us with the ZEW survey coming early this morning. We will move our stop at the level of our first target at the 1.3590 area in order to lock in those pips in case the currency retreats lower. So to sum up, stops are moved at the 1.3490 level and we have 50% of our trade still open targeting the 1.3550 mark.
GBP/USD
The Pound barely fulfilled our scenario yesterday as the pair did retrace down to 1.6100 before hitting our first target at 1.6130. Our stops were moved to the breakeven price only to be hit a couple of hours later. Moving forward, we’d like to rejoin the upwards trend only if it prints a new high thus we will place a long entry just above the recent high of 1.6150 and should this trade be triggered we will target the 1.6190 and 1.6250 marks with a stop placed below the 1.6080 support. The Pound seems to be halting its recent rise for now but the obvious Dollar weakness across the board could fuel another swing higher.
FTSE 100
The FTSE 100 seems to have concluded its retracement higher and starts to point lower. At this point however we don’t feel comfortable as to suggest a trade yet. We’d like the index to clear below the 6,660-70 support to verify the new downwards trend prior to suggest a trade for you. We think that there’s no point in suggesting trades that we won’t take ourselves just to write something. Keep patient and wait for the right time to act.
Gold
Gold retreated lower yesterday even though Dollar appeared weak across all the other instruments. Our long trade was closed at the breakeven price of $1,279 and now we’d like to stand aside and see what’s next for the commodity. The important support level stands at the $1,260 price tag but it would be weird for Gold to fall as low as that. However, we’ve seen the yellow metal being on a trend of its own numerous times thus we remain cautious.
All charts have been created using FXCM’s Trading Station platform.
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