Buy EUR/USD – MT is Bull Normal.
Technical overview: Market has formed a series of higher highs and higher lows suggesting a continuation of the overall bullish trend. After the price reached a high last seen in May 2018, the pair rejected the level, indicating we may be in for a period of consolidation. I will look for the price to break above 1.19 to buy the pair with a good risk reward ratio.
Fundamental analysis: The recent bearish price action was due to the weak data coming out of Europe as the consumer price index and the retail sales data printed lower than expected. The European Central Bank’s speech last week also weighed on the EUR, with the ECB unhappy with EURUSD at these levels. The weak Non Farm Payroll data out of the US, however, could weigh more on the dollar in the long run. Coming into the weak ahead, my attention will be on European GDP data, the ECB Interest rate decision, and the consumer price index coming out from the US. There is a higher chance of the rates remaining unchanged or a rate cut compared to a hike. A rate cut by the ECB may cause the pair to trade sideways rather than fall, as I expect the pair to continue to be supported by the weak picture for the USD.
Wait USD/JPY – MT is Sideways Quiet.
Technical Overview: Price is seen consolidating within the key support and resistance levels suggesting a continuation of the sideways market. Typically an impulsive move follows a sideways market type. As the overall trend remains bearish, I will wait for the price to break below the key support level at 105.0 to enter a short.
Fundamental Overview: There has been no major escalation in the US-SINO trade wars. The pair is often driven by geographical tension and trade tensions and there is not much development on these fronts at the time of writing, but the risks remain in the background. Coming into the week ahead, I will look into the GDP data coming out from Japan and any escalation of trade tensions between the US and China.
Buy GBP/USD – MT is Bull Normal.
Technical Overview: The pairs overall trend remains bullish after a strong breakout of the descending trendline. The market has made a retracement after reaching the key resistance level. We can now expect buyers to enter in an attempt to break resistance at 1.34027. However, a Doji candle was formed upon market close. This may suggest that price may remain in consolidation within the range of 1.34027 and 1.32 before the continuation of the overall bullish trend.
Fundamental Overview: In a speech made by the Bank Of England Saunders, he outlined the expectation for a sharp rise in unemployment which will be bearish for the pair. As much as Saunders is not opposed to having negative interest rates, he also mentioned that “The UK banking system has a high share of deposits so negative rates might produce more of a squeeze on margins for banks.” This statement signifies that as of the moment, the BOE does not see a need to cut rates. Moving forward into the week ahead, attention will be on any Brexit talks developments.
Buy AUD/USD. MT is Bull Normal.
Technical Overview: Price has made a retracement after fulfilling our target price of 0.74 which is now our key resistance level. The pair continues to trade above the ascending trendline suggesting a continuation of a bullish trend. Any break below the ascending trendline may suggest a reversal of the current bull trend. I will be patient for a break above 0.74 to continue to buy the pair.
Fundamental Overview: The current downtrend was supported by the technical level and also the weak data coming out from Australia with GDP underperforming at -7%. The weak data from the Non Farm Payroll, however, triggered some profit taking supporting the AUD. According to Australian Prime Minister Morrison, they are developing a new plan to re-open the economy by December which will increase the demand for AUD in the long run. As the AUD is strongly affected by the data coming out from China, attention will be on the trade data coming out from China in the week ahead. Any strong data coming out from China will be bullish for the AUD/USD.
Steve Lucas is our head market analyst. He has been trading since the 80’s and sending out market analysis since 2007. He is trusted by major hedge funds and investment banks around the world to get the direction right. When you live and breath the markets like Steve does, you develop a “sixth sense” about the market. In Steve’s Corner, we get his view on what the highest probability trades will be.
This week, Steve’s favorite call is Oil. He also likes EURJPY. Please see our signal report for more details.