We saw a lot of action in the forex market last week. For the most part, we have the G20 meeting to thank as the major economies of the world discussed the possibility of an all-out currency war. This resulted in a strong euro and a weak yen early in the week.
Economic data releases also contributed to market volatility. For instance, disappointing CPI figures from the U.K. caused the pound to tank, while negative GDP figures from the eurozone sparked rumors that the ECB could soon change its mind about keeping its hands off further stimulus.
Moving forward, I think upcoming tier-1 data like the German Zew, BOE MPC meeting minutes, and FOMC meeting minutes will dictate the fate of most major currencies.
I think I made a good call on shorting EUR/USD last week. You’d think that I would’ve changed my mind by now, but I’m actually still bearish on the pair. In this silly, barista girl’s own opinion, concerns about growth will continue to weigh heavily on the euro this week.
I’m not going to sell right away though. I’m going to be patient and wait for a test of the trend line resistance somewhere between the 38.2%-61.8% Fibonacci retracement levels.
My analysis of GBP/USD is similar to EUR/USD. I believe it has more room to fall since the price is below both the 100 and 200 SMAs. Just like in EUR/USD, I’m going to wait for price to retrace before jumping in on a short trade.
Do you agree with my analysis? Let me know your thoughts on them, as well as any other trade setups you spot on the majors.
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