Chart of the Day EURUSD
EURUSD Playing The Triangle - Probable Price Path
Despite US president Trump’s comment that “we have prevailed” on Covid-19 testing, related deaths exceeded 80,000 and the White House has now ordered all entrants to the West Wing to wear a face mask. The WHO also warned that the transmission risk will rise again as countries ease lockdowns. Meanwhile, Fed officials like Bostic opined he was “not a big fan of going into the negative rate territory” and Evans added that “at best, we’d have to study it more, but I don’t anticipate that being a tool we would be using in the US”. Bostic also poured cold water on the idea of the Fed buying stocks, saying “that kind of support is typically best done through the fiscal side”. Wall Street closed mixed overnight with S&P500 flat at 0.02%, on Friday, while VIX edged down to 27.57. UST bonds bear-steepened again as the 10-year yield climbed to at 0.71% (+3bps) amid strong IG credit issuance including an $11b offering by Disney.
The recent market obsession towards negative policy rates in the US eased somewhat after the Fed’s Evans and Bostic spoke out against it. The rhetoric used was leaning on the strong side. A whole swathe of Fed speakers are scheduled today starting 1300 GMT, but it may be up to Powell (Wed) to put the matter to rise. Elsewhere in the data calendar, watch for US CPI (1230 GMT). With concerns over negative policy rates eased, the broad USD may stay supported at least until Powell (Wed).
US: President Trump said he is not interested in reopening negotiations with China for a trade deal, but “let’s see if they lived up to the deal they signed”. Meanwhile, House Democrats will not vote on the stimulus proposal before Friday as they are still drafting the bill which could top $2 trillion and include another round of cash payout to individuals on top of the $1,200 received from March.
EU: German Chancellor Merkel is said to be proposing a workaround the German court ruling on the ECB’s QE program by asking the ECB to offer an explanation via the Bundesbank who would serve as an intermediary to the German parliament.
From a technical and trading perspective, the EURUSD continues to test triangle ascending trendline support, additional support maybe provide by hugh option hedging flows related to over 12 Billion EUR’s that are due to expire this week between 1.0750 and 1.09, as the 1.08 area continues to attract bids bullish exposure should be rewarded enroute to a test of 1.09 initial range resistance, through here and bull can target descending triangle resistance at 1.0970 ahead of the initial equality objective sighted at 1.1040. A closing breach of 1.0750 would negate the bullish thesis and open a move to test year to date lows towards 1.0630
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!