Trading action on Monday was rather smooth as it tends to be at the beginning of the week and the major currencies we monitor illustrated a calm price movement but we have to mention that there were inconsistencies in the performance of the majors. The focus of the week is undoubtedly the US jobs report coming up on Friday but until then we will have the opportunity to receive fresh news from all over the major markets.
The US Dollar is the currency that everybody have their eyes on as the US currency’s outlook hinges on the upcoming event however at the same time it is important not to lose focus of the rest of the majors that are also part of the FX universe. Yesterday the Euro was on the rise as several comments from ECB policymakers hinted towards a less likely chance of further easing down the road and the Single European currency has benefited on the back of that.
The Euro is trading higher this morning having moved above the 1.1200 resistance yesterday on the back of the ECB comments and at the time of typing this report the currency is moving around the 1.1260 area. The first area of focus is the 1.1300 resistance which is last week’s high and any moves above this area will expose the Euro to downwards pressure.
The bias remains bearish thus investors will look for opportunities to short the Euro against the Dollar ahead of the US jobs report later this week. The employment report is expected to show another strong performance from the US domestic economy that will increase the chances of the Fed moving forward and raising rates. As such traders will look to establish short positions hence we need to be on our toes and look for reversals on the current move higher.
Contrary to the Euro’s trading action, the Cable remained under pressure for yet another session. The UK currency didn’t print fresh lows but indeed remained on a bearish trend and it has now been 7 trading days without a correction on the Cable. We’ve seen times where this has happened in the past and the result was always a strong relief rally that allowed the currency to breathe easier.
The Mortgage Approvals and CBI Reported Sales reports today might not be enough to trigger this relief rally but we need to remain vigilant if we want to profit from any sudden reversals on the Cable. The pivot area lies around the 1.5250 level and any moves above that would signal a correction attempt on the Pound that might not last a lot though ahead of the NFP report on Friday.
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