It seems that risk-related currencies are on a roll again, with the euro leading the pack. The euro posted huge gains as expectations of an ECB rate cute declined drastically following Mario Draghi’s post-meeting speech.
Trade data from China further boosted positive market sentiment as it came in significantly better than expected. It showed that the China’s trade surplus went up to 31.6 billion CNY from 19.6 billion CNY. The market had initially predicted to only go up to 20.1 billion CNY.
I don’t know exactly what’s going to happen this week in terms of market sentiment, but since the forex calendar is pretty light in terms of tier 1 reports, I think we’ll see a continuation of risk appetite. For the upcoming week, I think we’ll see a stronger euro and pound.
Technically, it appears that the pair is forming a quasi-bullish flag. Price is consolidating in a falling triangle. Given my bullish bias, I think the pair could breakout to the upside and post new highs, just like how EUR/USD has done last week. I’ll be keeping a close eye on this pair for a possible long trade.
Applying the same trading framework I introduced last week, it looks like the bullish trend on EUR/USD is still intact. The 200 and 100 SMA’s just crossed last Friday. But given the pair’s strong rally, I’m expecting a pullback soon. I’ll be keeping a close eye around the 1.3200 handle where the pair has previously found support and resistance. Not to mention, the area also coincides nicely with the Fibonacci retracement levels.
There ya go folks! What are your thoughts and trade ideas for this week? Share them with me!