- Fundamental Analysis
EURUSD seems to be provided new life post ECB Meeting. : From 1.0500 to 1.1100 is 500 pips in two weeks; that's a great move I rarely see.
The momentum behind this move according my view come from the fact that market is positioning for disappointed FED meeting on next Wednesday.
I and all traders believe that FED will hike rate coz FED need to finish 2015 financial year by doing something. They need to reassure market's expectation before it's too late.
However, that is not our expectation, what we care is a future path of next rate hikes. That's it.
This is indeed too hard to FED. FED must protect USDollar from a new wave of rally; the current level of USDollar indeed is too high and FED doesn't like it.
A strong Dollar hurts to export directly and manufacturing sector indirectly.
A low energy price damages to inflation and US grow.
Higher borrowing cost would impact to US spending in context of mixed data.
All reasons restrict FED to introduce a clear time frame for next rate hike. They will wait until :
- Recovery of energy cost.
- Improvement of data.
- Rise of export and manufacturing sector.
That why I choose bearish bias for USDollar.
- Technical Analysis
Look at on the chart, the E/U price action creates a tough case to buy E/U
E/U now stop at strong resistance levels:
- Kumo cloud.
- SMA100 + SMA200
- 1.1100 key resistance level.
- 50% Fib retracement level.
IT'S DIFFICULT TO BREAK THOSE STRONG LEVELS UNLESS MARKET GIVES A STRONG CATALYST.
THE CATALYST I WAIT IS FED MEETING LIKE I SAID.
i choose bullish bias for EURUSD, so how to trade ?
I think EURUSD will retrace at current level, if it retraces, let it does then we will buy at lower level ahead FED meeting.
If it moves higher, simply, we place a BUY stop position at 1.1100, if EURUSD breaks 1.1100 level, it must move higher, then the buy stop position is activated. 50% Fib retracement is borken : Trend reverses, the BUY STOP position is positive.
That is my final view of EURUSD next week.
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