Alpesh Patel's NEWSLETTERPRO - Euro explodes higher after the Flash PMIs surprise to the upside, Dollar falls across the board

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Euro explodes higher after the Flash PMIs surprise to the upside, Dollar falls across the board

© Alpesh Patel

MORNING BRIEF

The Euro performed admirably against the Dollar and the Pound yesterday as the Single currency was the focus of the day after the extremely bullish PMIs released yesterday. The European currency climbed from 1.3550 to 1.3700 within the day after the figures expected regarding the German and European outlook printed far stronger than expectations. Later in the day the Euro-zone Consumer Confidence also came in better that previously eyed fueling another swing higher while the data from the US regarding Home Sales and Initial Jobless Claims were short of spectacular. We believe that this strong rally in the Euro is due to a combination of two things: first, the figures printed yesterday were impressive and in line with the recent optimistic tone that was noted on the ZEW survey as well and second, investors still have some doubts on whether the Fed will continue on schedule with their tapering agenda next week in light of disheartening US data. The Pound was also in demand yesterday but nothing as impressive as the Euro, the British coin was lifted mainly due to the not-so-impressive US data released after mid-day. The recent volatility in currency markets the past two weeks is a clear signal that investors remain undecided on whether this is going to be a strong year for the Dollar or whether the US is slowing down in recovery. If you add to this uncertainty the fact that the Euro-zone seems to start the year with a stronger outlook than expected you can understand why these wild swings appear only to be reversed a couple of days later.

No news expected for the day ahead

The Economic Calendar today is empty of anything important regarding the currencies we are monitoring and this should probably mean that we will see a calmer trading environment today and possibly a slight retracement in the currencies that rallied yesterday. Next week starts strong with the IFO survey and the New Home Sales reports expected on Monday and we feel that investors will probably want to see these data coming out along with the FOMC decision on Wednesday before moving into any large reshuffling of their portfolios.

Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

No important releases scheduled

 

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TECHNICAL ANALYSIS & LEVELS

 

EUR/USD

The Euro gained some 150 pips yesterday against the Dollar after the extremely positive PMI releases early in the morning and the not so impressive US related results. Our long entry was of course spot on as we managed to hit both of targets within the day for a massive 90 pips gain. For today we expect the Euro to arrest its incline as yesterday’s rally was kind of too much and also the 1.3700 resistance seems hard to overcome without anything new coming out. We will remain on the sidelines today and see if the Euro will retrace lower while we count our profits.

GBP/USD

The Pound remained in demand yesterday climbing above the 1.6600 resistance as the figures coming out of the US yesterday were not so impressive. The Pound has been on an uptrend this whole week and we’d like whether this rally will slow down and possibly reverse at some point. We believe that at least a retracement lower is required as the currency pair appears to be heavily overbought at this time.

FTSE 100

The FTSE 100 confirmed our assessment yesterday and did break lower triggering our short entry at the 6,815 level and hitting our target #1 at the 6,790 mark where we liquidated half of our trade. Our stops have been moved to the breakeven price and the UK index is finding it difficult to overcome the 6,770 support area. For today, we wish to move our stops even further down to lock in some additional pips so please move your stops at the level of our first target which was the 6,790 points level as we’re looking towards hitting our second target which lies at the 6,750 points price tag.

Gold

Gold reversed completely yesterday and climbed back above the $1,260 level on the back of the apparent Dollar weakness across the board. Gold has been quite volatile recently as it usually is on the eve of important events like the FOMC meeting on Wednesday and this is indicative of the uncertainty that exists in the markets at this time. We remain patient and continue to monitor the commodity until a tradable pattern allows us to move in again.

 

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

STOCK MARKET FOCUS

 

[Restricted Content] PLC.

The Alpesh Patel Bullish Momentum filter has indicated [Restricted Content] PLC. as our stock of the day.
Company Information: [Restricted Content]


Created using Sharescope Pro

[Restricted Content] PLC. has been rated an 7 out 10 in our Value/Growth rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is relatively high suggesting that the stock might be overpriced, the ratio of the price earnings growth is low but Earnings are down year on year challenging the growth potential. From a technical standpoint however, the MACD indicator is pointing upwards in the weekly chart above suggesting further incline and the break above recent highs will confirm that. We’re looking for a short term investment on this stock in order to capitalize on a move higher. The suggested holding period for a stock of this type is 1-3 months.

Important Information

The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.

 

This is the free, time-delayed version of NewsletterPro, a subscription-based product.
If you would like to receive it before 7:30am, please subscribe by clicking here.

 

 

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