Last week was a pretty eventful one for the foreign exchange market. Price action was driven by a lot of factors, including interest rate statements, high-impact economic reports, and the ever-shifting market sentiment.
In the U.S., for instance, the ADP non-farm employment change greatly disappointed. It showed that only 119,000 jobs were added versus the 154,000 forecast. Many traders, as a result, expected a weak NFP too. This didn’t happen and the NFP actually exceeded forecasts by a huge margin. It reported that 165,000 net jobs were created, which was larger than the 146,000 increase consensus.
In the euro zone, the European Central Bank (ECB) shocked the forex market and cut the minimum bid rate by 25 basis points. The rate now stands at 0.50%, down from 0.75%. On top of that, Draghi hinted that the central bank is open to further easing! Forex Gump did an excellent article on the ECB’s latest monetary policy decision. Check it out!
I’m not sure what the upcoming week will bring. Rest assured, I’ll be extra careful with my trades, especially since I’m on a losing streak. It’s really depressing, but I guess I’ll have to soldier on.
GBP/USD: Slightly Bullish
For now, I’m slightly bullish on GBP/USD. However, I’m still not sure how to play this pair as price still hasn’t retraced. It seems overextended and ripe for a pullback though, so I’m going to watch it for a potential long trade.
I have a bearish bias for the euro given its fundamental landscape and so, I will be looking for a way to short the pair. On the hourly chart, I’ve noticed that price is still above the 200 SMA and is making higher highs. If I am to jump in on a short, I will have to wait for a convincing break below both potential support levels. But of course, should support at the SMA or trend line hold and there’s a fundamental reason to buy the euro, I wouldn’t hesitate going long.
There ya have it!Those are my trade ideas for this week. What pairs are you looking at?