One of the biggest stories out there in FX is the strength in the U.S. dollar, making the strong move in EUR/USD one to watch to potentially grab short-term pips.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 8833.78 +1.05% FTSE: 5144.82 -0.12% S&P 500: 2452.32 +2.77% DJIA: 20426.58 +1.18% |
US 10-yr 0.78% +0.059 Bund 10-YR -0.444% +0.013 UK 10-YR: 0.489% +0.053 JPN 10-YR: -0.001% -0.006 |
Oil: 28.70 +0.00% Gold: 1528.90 +2.85% Bitcoin: 5228.79 +4.47% Etherium: 115.40 +4.96% |
Fresh Market Headlines & Economic Data:
- Fed announces another $500 billion operation for overnight repo funding markets
- U.S. Home Builder Confidence Declines But Remains Solid Amid Rising Risks
- U.S. industrial output shows strength in February, just prior to coronavirus disruption
- U.S. Retail sales drop 0.5% in February
- U.S. job openings rebound; labor market strong before coronavirus outbreak
- U.S. Regulators considering more changes to free up bank liquidity, sources say
- International transactions in securities generated a net inflow of funds of $26.1 billion in the Canadian economy in January
- Canadian manufacturing sales were down 0.2% to $56.1B in January, the fifth consecutive monthly decline.
- The ZEW research institute’s monthly survey showed economic sentiment among investors collapsed to -49.5 from 8.7 in February
- UK jobs boom gathers pace but unemployment rises too: ONS
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- New Zealand Current account at 9:45 pm GMT
- Japan Trade Balance at 11:50 pm GMT
- Australia Leading index at 12:30 am GMT (Mar. 18)
What to Watch: EUR/USD
With no major catalysts ahead for the rest of the U.S. session, we’re looking at EUR/USD today, in which the bears took over strongly after weak European sentiment data earlier. It’s more likely we’re seeing the downtrend on broad U.S. dollar strength, rallying on the huge financial issue of disruptions in the funding markets where banks go for operating capital.
With those themes in play, a short EUR/USD position makes sense, but after dropping a full ATR (around 120 pips) since today’s open, the market may find a bottom around current levels just under the 1.1000 major psychological level. If you’re down with this thesis, a conservative entry strategy would be to wait for a bounce to the previous minor support area (between 1.1060 – 1.1100) and reversal patterns to form. For the more aggressive, consider scaling into short position from current levels up to the broken support as the odds of further drop from here for the session is low given the stochastic signaling oversold conditions.
For the bulls, from technical perspective the odds are probably pretty good that the down move is done given the length of the move (1 daily ATR) and stochastic signal. For the brave, consider a long position at current levels, but it risk very small given that you will be going against a very strong market current.