Last week we I suggested looking at the 200-SMA on the 4-hr chart. We traded to that level almost to the pip before selling off nicely. The downside trades have been really strong for us over the past fortnight. This week we will look to do something similar.
Enter short on a push to 1.1815 as that’s the 50 SMA. We are still looking for a break lower and a move back towards 1.1700.
EUR/USD 240 min Chart - EUR/USD is looking weak
Tax Reform Boosting the USD
The USD has been on the charge in recent weeks and on Friday it got another big boost. US President Trump has been talking up the possibility of tax reform since he started running for President, but until now it had appeared that it was just a dream. On Friday a big hurdle got cleared which opens up the possibility for reforms to take place. That led the USD on a big charge and all the majors sold off against it.
It’s clear that the USD is driving the momentum, however this week there will be some attention returning to the EUR as we are faced with the next installment of the ECB and Mario Draghi and their thoughts on interest rates and monetary policy. I suspect there won’t be any changes to underlying rates or the rate of asset purchases however we might be in for a surprise as when traders don't expect changes is often the best time to make new announcements.
Key for the Week - ECB and US GDP
While the big focus is clearly on Mario Draghi and the ECB interest rate announcement, there is another big one on the data front. US GDP. I can’t see big changes happening in the Eurozone just yet, however a strong GDP might give the US Federal Reserve some more ammunition in their quest to raise interest rates.
Technical Analysis - The Key Levels
The EUR/USD continues its decline and we are targeting the downside 1.1700 level. If we can take that out then we are very much in a downtrend. I believe that it’s only a matter of time, given the underlying strength in the USD, however with the ECB this week things can change fast.
EUR/USD - Key Levels
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