Euro Bulls Need to Show a Little Patience

Nobody expects the European Central Bank to raise interest rates when policy makers meet Thursday. Even so, conditions are ripe for the euro to resume its upward trend after stalling for much of the past three months.

The naysayers like to point to purchasing manager index, or PMI, surveys showing a deceleration in manufacturing and the potential for growth to slow as the reason why the euro hasn’t been able to follow through on its big gains from last year. But the truth is, there is less downside risk to the euro zone economy than there is in the U.S. economy.  The euro zone has enjoyed low inflation of only 1.3 percent, despite showing relatively strong year-over-year GDP growth of 2.7 percent. And although PMI surveys have weakened in recent months, they are still at high levels following a massive 57-month-long expansion through March. Read More @ https://www.bloombergquint.com/view/2018/04/25/euro-bulls-need-to-show-a-little-patience

Here’s why the euro looks cheap ahead of Thursday’s ECB meeting

The euro has sold-off lately and is trading around its lowest level since mid-January against the U.S. dollar on Wednesday. But this is rendering it undervalued ahead of the European Central Bank’s policy update on Thursday, according to Scotiabank strategists Shaun Osborne and Eric Theoret.

What has dragged the euro EURUSD, +0.1316%  down?

Rising government bond yields TMUBMUSD10Y, -0.31%  in the U.S. lent support to the dollar DXY, -0.09% and market expectations for interest-rate hikes by the Federal Reserve still hover around three to four raises this year, compared with only three guided to by the U.S. central bank. Read More @ https://www.marketwatch.com/story/heres-why-the-euro-looks-cheap-ahead-of-thursdays-ecb-meeting-2018-04-25?siteid=rss&rss=1

The US dollar is breaking out this week, boosted by trade talks and higher rates

  • The dollar has been moving higher, trading more on rising U.S. interest rates and the economy than on President Donald Trump’s trade threats.
  • The dollar is poised to continue its move higher, as Trump administration officials look set to negotiate trade disputes rather than just slap tariffs on goods.
  • The dollar also gained as the U.S. 10-year Treasury jumped to 3 percent for the first time in four years, and expectations for Fed rate hikes are on the rise. Read More @ https://www.cnbc.com/2018/04/25/dollar-got-mojo-back-when-trump-dialed-back-on-threats.html

WHAT IS THE USD INDEX SAYING?

THE USD AWAITS A BREAKOUT OR BACK TO SWING INTO A RANGE. We still stay pessimistic over the USD.

TODAY’S NEWS THAT MIGHT AFFECT YOUR TECHNICAL TRADES.

  1. 2.00pm – German Consumer Climate – expected to be no change.
  2. 3.00pm – Spanish Unemployment expected to be good or no change.
  3. 7.45pm – ECB goes to action; we believe Mario Draghi ECB Chairman will be hawkish in his statement today or even raise rate today. We stay optimistic for the EUR pairs.
  4. 8.30pm – Is where the EURO will give us a good massive volatility when ECB addresses questions during the press conference.
  5. 8.30pm – Con-Currently US will release Durable Goods order and Trade both is expected to be good. We are cautious on the USD as the market prepares for a Bull Run.

Overall the market is indeed cautious – have good money management and don’t over trade.

High Risk Investment Warning:

Please note that Forex and other leveraged trading involves significant risk of loss, It is not suitable for all traders and you should make sure you understand the risks involved, it is recommended that you seek an independent advice, if necessary.

 

2 Comments
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