Get started

Euro-dollar

EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Inflation >9% saw a 75bsp ECB hike in September. Post-meeting sources noted the bank is planning to discuss QT at their October meeting. The President showed more communication tact by not giving any clues on estimates for the terminal rate. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/ Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose a lot of ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent leading indicators pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. But recent price action suggests the energy reforms, progress in Ukraine and the push lower in EZ gas futures has stopped some of the bleeding. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8%, the Fed is under pressure to continue hiking rates and ramping up QT. The bank made its third 75bsp at the Sep meeting and pushed up their 2023 terminal rate projection to 4.6%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y . The Aug CPI saw markets price out the likelihood of a soft landing and subsequent price action saw typical bear market behaviour with heightened volatility across major asset classes giving the USD a big bout of safe haven inflows. This past week, the BoE’s attempt to calm down the bond market & threat of Yuan intervention saw some mild pressure in the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming data that exacerbates fears of a deep recession and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced in for the Fed and the USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a higher than 5% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. With some lingering expectations of a possible ‘soft landing’ for the US economy, any goldilocks data (higher growth & labour but lower inflation data) could trigger safe haven outflows from the USD and into US equities. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. The upcoming week is full of important data with the two ISM prints and of course NFP. Even though the USD is expected to trade cyclically with incoming data, we do need to keep an open mind about goldilocks data (higher growth and lower inflation ) as that could see a nuanced reaction in the USD.
by thunderpips
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Inflation >9% saw a 75bsp ECB hike in September. Post-meeting sources noted the bank is planning to discuss QT at their October meeting. The President showed more communication tact by not giving any clues on estimates for the terminal rate. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose a lot of ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s DXY weighting, better overall risk sentiment that pressures the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s DXY weighting, continued sour risk sentiment that supports the USD should be negative for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent leading indicators pointing to a higher likelihood of a EZ recession. Current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply) outweigh the positives. But recent price action suggests the energy reforms, progress in Ukraine and the push lower in EZ gas futures has stopped some of the bleeding. Recession risks remain high and means incoming data like growth & inflation will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics, which means we don’t want to be hasty with looking for new EUR trades and want a very clear reason to trade the currency in the short-term. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8%, the Fed is under pressure to continue hiking rates and ramping up QT. The bank made its third 75bsp at the Sep meeting and pushed up their 2023 terminal rate projection to 4.6%. The Fed is on a data-dependent (meeting-by-meeting) policy stance, meaning incoming growth, inflation and jobs data remains a key driver for short-term USD volatility where we expect a cyclical reaction with incoming data for both the USD and US10Y. The Aug CPI saw markets price out the likelihood of a soft landing and subsequent price action saw typical bear market behaviour with heightened volatility across major asset classes giving the USD a big bout of safe haven inflows. This past week, the BoE’s attempt to calm down the bond market & threat of Yuan intervention saw some mild pressure in the USD. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming data that exacerbates fears of a deep recession and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. With a lot priced in for the Fed and the USD, the bar is high for hawkish Fed surprises, but any aggressive Fed speak talking up a higher than 5% terminal rate can trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. With some lingering expectations of a possible ‘soft landing’ for the US economy, any goldilocks data (higher growth & labour but lower inflation data) could trigger safe haven outflows from the USD and into US equities. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any big concerns about growth from Fed speakers could trigger outflows. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk sentiment. The data dependent stance from the Fed means that short-term data surprises can pull the USD either way and would be our preferred way of trading the Dollar right now. The upcoming week is full of important data with the two ISM prints and of course NFP. Even though the USD is expected to trade cyclically with incoming data, we do need to keep an open mind about goldilocks data (higher growth and lower inflation) as that could see a nuanced reaction in the USD.
by thunderpips
2
EURUSD CORRECTION? Looking for LONGS!Hello traders, Today we will be monitoring EURUSD as we have been extremely interested in catching our expected buys which have already begun! EURUSD has been in a bearish impulsive wave since summer 2021 and I believe we have come to the end of our bearish wave which is where we should be seeing a correction form. I am anticipating a ABC correction to form before seeing any more weakness from EURUSD. Why we are looking to buy? - Elliot bearish wave has come to an end and we are now in a correction. - We have rejected our fibonacci level perfectly as anticipated. - We can see the 1HR EMA is being respected on the downtrend, we can use this as a confirmation of bullishness as this will confirm a change in direction. We what are we looking for? - We are looking for a break of the 1HR EMA/WFB trendline or BOTH! Using both will give you the strongest confirmation. Be sure to BOOST🚀 my idea if you like it Thanks MoneymanFX
Long
by Pips-Collector
1
Huge drop on EURUSD.Hi! Even though the geopolitical situation in my opinion looks like this: Europe: The elections in Italy are approaching, the risk of a Eurosceptic right-wing prime minister An unexpected solution to the war in Ukraine seems very unlikely, but it could escalate very quickly, especially taking into account mobilization and referenda. According to my detailed analysis, we can expect bigger drops to around 0.93437. This price is also a determinant of taking a long position to 1.00380 levels.
Long
by xxpqxx999
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Inflation >9% saw the ECB hike rates 75bsp at their Sep meeting, with post ECB sources saying the bank is planning to discuss Quantitative Tightening at the Oct meeting. It seems like President Lagarde learnt from here July mistakes by being very careful not to give any clues away on where the ECB thinks the terminal or neutral rate is. On spread fragmentation, the bank didn’t provide any new info or clarity on how the eligibility might impact countries like Italy and Spain. Until the BTP/Bund spread breaches 2.55%, markets will have to wait and see whether TPI can make a difference. The main driver for the EUR is the economic outlook, but there are a few different conflicting drivers. Gas supply from Russia remain closed, but energy reform plans have seen EU gas prices lose a lot of ground. The war in Ukraine remains a risk, but recent victories by Ukraine has been a positive development. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief (incoming S&P Global Flash PMIs will be very important) Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. Resumption of Nord Stream gas flows or if gas storage can see Europe through winter, would ease some of the pressure. Given the EUR’s high weighting in the DXY, a dovish FOMC reaction in the USD should be supportive for the EUR. POSSIBLE BEARISH SURPRISES Escalation in Ukraine war that risks NATO involvement. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure (incoming S&P Global Flash PMIs will be very important) If ECB fails to act on the TPI when we see big jolts higher in the BTP/Bund spread could trigger bearish reactions in the EUR. Announcements that Europe gas storage won’t make it through the winter without resumption of gas flows. Given the EUR’s high weighting in the DXY, a hawkish FOMC reaction in the USD should pressure the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent leading indicators pointing to a much faster economic slowdown than markets previously expected. The current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply concerns) outweigh the positives. But recent price action suggests that the energy reforms, progress in Ukraine and the push lower in European gas futures has been enough to stop the bleeding for now. Recession risks remain and means incoming data like this week’s S&P Global Flash PMIs will be watched closely. For now, the focus for the EUR is on multiple fronts from energy to policy to geopolitics. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8%, the Fed is under pressure to continue hiking rates and ramping up QT to try and equalize supply and demand . They hiked rates 75bsp in July, and after the strong Aug CPI , another 75bsp hike is fully priced and question for the FOMC meeting this week is whether they hike 100bsp. Recent Fed communication pushed back against rate cuts in 2023 and stressed that rates could reach close to 4% in early 2023 and stay there throughout 2023. In July, the Fed announced a data-dependent (meeting-by-meeting) policy stance, explaining that the pace of hikes is likely to slow as rates get more restrictive and more data becomes available. This means incoming growth, inflation and jobs data remains key drivers for short-term USD price action where we expect a cyclical reaction to incoming data (good data being good for the USD and US10Y and bad data being bad for the USD and US10Y ). The Aug CPI print saw markets pricing out the likelihood of a soft landing. This saw further downside in bonds and equities and upside in the USD. However, this narrative is still in focus for many market participants. So, if incoming data continues to suggest that a soft landing is possible, we expect that to pressure the USD. But we’ll let the data guide us. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming data that exacerbates fears of a deep recession and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. The Aug CPI saw markets price in a higher terminal rate for the current Fed cycle, which means a lot is already priced going into the FOMC decision. However, should the Fed bring out the big guns and the Dot Plot median for 2023 is closer to 5% or they hike 100bsp, that could trigger further USD upside. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. With some growing expectations of a possible ‘soft landing’ for the US economy surfacing, further goldilocks data (higher growth & labour but lower inflation ) could trigger safe haven outflows from the USD and into US equities. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side this week with their FOMC decision. If the dot plot does not exceed what is already priced for the curve or the Fed sticks to a 75bsp hike, it could trigger some sell-the-fact reactions to the downside for the USD. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk assets. But the data dependent stance from the Fed means that short-term data surprises can pull the USD either way. The recent string of data has triggered some ‘soft landing’ expectations for the US economy, which is expected to weigh on the USD given all of the safe haven inflows based on recession fears. This makes incoming data even more important. Going into the FOMC, there is already a lot priced for the on the rate side and markets are preparing for a very hawkish message. That does increase the risk of a sell-the-fact reaction.
by thunderpips
12
EURUSD Recovering!!! Euro have a GDP above the forecast. And today the PPI of US was released and the price is following the inflation that was realeased yesterday. Today PPI (mom) show us a -0,4%. The prices are increasing in US and Euro seems to start recovering the usual currency price. We can see the MACD almost crossing 0, and we can see before the price was oversolding, and when the volume started to be higher the price start to have the "correction" We also have a strong support, that was crossed in September 08, but was just a retest and after that went long The yellow line is a 1H resistance, that has been constatly tested The white arrows is our three prediction that could occur, but if the price cross the blue box, the trade must close and it has to be analysed again
Long
by AFCapital21
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Inflation >9% saw the ECB hike rates 75bsp at their September meeting, with post ECB sources saying the bank is planning to discuss Quantitative Tightening at the October meeting. It seems like President Lagarde learnt from here July mistakes by being very careful not to give any clues away on where the ECB thinks the terminal rate is. On spread fragmentation, the bank didn’t provide any new info, and didn’t add any new clarity on how the eligibility might impact how countries like Italy and Spain will be able to take advantage of the tool in the first place. Until the BTP/ Bund spread reaches above 2.55% markets we’ll have to wait and see whether this program can make a difference. Even though policy is important, the main driver for the EUR is the economic outlook. Recent Nord Stream comments opened up a lot of potential downside risks, but for now markets need more details on how it’ll impact energy levels in the winter. Apart from that, focus will also turn to the ongoing Ukraine/Russia war where weekend developments have been more positive. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine would open up a lot of EUR upside. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. If Russia re-opens Nord Stream gas flows, it should be a positive catalyst for the EUR. If gas storage levels, see Europe through winter that could ease some of the pressure so storage levels will be watched. POSSIBLE BEARISH SURPRISES Any escalation in the Ukraine war that risks including NATO would be big negative risks. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. If Russia keeps Nord Stream one shut, it should add downside risks to the EUR. If gas storage levels are not enough to see Europe through the winter that should increase energy supply concerns for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent leading indicators pointing to a much faster economic slowdown than markets previously expected. The current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply concerns) far outweigh the positives from a hawkish ECB. Recession risks have opened up a narrative change for the EUR which have seen markets adjust forecasts to reflect higher recession probabilities which has continued to weigh on the EUR. However, with lots of bad news priced in there is risks in chasing the EUR lower from the current levels, which means waiting for more attractive levels to short or waiting for a strong enough catalyst to short would be the preferred strategy for the EUR right now. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8%, the Fed is under pressure to continue hiking rates and ramping up QT this month to try and bring demand and supply back in balance. They hiked rates 75bsp in July, and whether they go 50bsp or 75bsp in September will come down to this week’s CPI . At the Jackson Hole the Fed took a hawkish turn by pushing back against rate cuts in 2023 and stressing they not only envision hiking rates to close to 4% by early 2023 but also expect to keep rates high throughout 2023. However, the Fed did announce a data-dependent (meeting-by-meeting) policy stance in July, explaining that the pace of hikes is likely to slow as rates get more restrictive and as more data becomes available. This means incoming growth, inflation and jobs data will be key drivers for short-term USD price action where we expect a cyclical reaction to incoming data (good data being good for the USD and US10Y and bad data being bad for the USD and US10Y ). Even though a resolute Fed can put further cyclically driven pressure on bonds and equities and support the USD, the most recent economic data has painted a bit of a goldilocks environment where most growth & labour data has surprised higher while inflation data has surprised lower. This has seen some ‘soft landing’ expectations surfacing which we would expect to support equities and bonds and to pressure the USD should the goldilocks pattern with incoming data continue. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming data that exacerbates fears of a deep recession and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. Various data is pointing to downward pressure on CPI , enough for 1-year inflation expectations to trade below the Fed’s 2% target. With the ‘peak inflation’ narrative back in full force, a huge upside surprise in CPI this week could disappoint risk buyers and see further upside pressure on the USD. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. With some growing expectations of a possible ‘soft landing’ for the US economy surfacing, further goldilocks data (higher growth & labour but lower inflation ) could trigger safe haven outflows from the USD and into US equities. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. With the Fed in their blackout period, all eyes will be on the incoming data. If inflation confirms new calls for peak inflation with another miss across the board that could trigger downside for the USD. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk assets. But the data dependence stance from the Fed means that short-term data surprises can pull the USD either way. The recent string of data has triggered some ‘soft landing’ expectations for the US economy, which is expected to weigh on the USD given all of the safe haven inflows based on recession fears. In the short-term, with positioning in mind, and speculation of both ‘peak inflation’ and a ‘soft landing’, we would expect a softer USD in the week ahead running into the CPI print. A beat or a big miss can create equally big reactions in the short-term, but we would prefer shorting opportunities on a surprise CPI miss.
by thunderpips
2
Today’s Notable Sentiment ShiftsEUR – The single currency jumped on Monday, supported by a combination of hawkish ECB rhetoric and source reports. EURUSD fell just two pips shy of the 1.02 handle, while EURGBP rose to fresh monthly highs after reclaiming the 0.87 handle. Explaining EUR strength, Reuters noted: “European Central Bank policymakers see a rising risk that they will have to raise their key interest rate to 2% or more to curb record-high inflation in the euro zone despite a likely recession… Five sources close to the matter said many policymakers saw a growing probability that they will need to take the rate into “restrictive territory”, jargon for a level of rates that causes the economy to slow, at 2% or above.”
by thunderpips
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Inflation >9% saw the ECB hike rates 75bsp at their September meeting, with post ECB sources saying the bank is planning to discuss Quantitative Tightening at the October meeting. It seems like President Lagarde learnt from here July mistakes by being very careful not to give any clues away on where the ECB thinks the terminal rate is. On spread fragmentation, the bank didn’t provide any new info, and didn’t add any new clarity on how the eligibility might impact how countries like Italy and Spain will be able to take advantage of the tool in the first place. Until the BTP/Bund spread reaches above 2.55% markets we’ll have to wait and see whether this program can make a difference. Even though policy is important, the main driver for the EUR is the economic outlook. Recent Nord Stream comments opened up a lot of potential downside risks, but for now markets need more details on how it’ll impact energy levels in the winter. Apart from that, focus will also turn to the ongoing Ukraine/Russia war where weekend developments have been more positive. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine would open up a lot of EUR upside. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Any TPI comments that convinces markets it can solve spread fragmentation issues should be supportive for the EUR. If Russia re-opens Nord Stream gas flows, it should be a positive catalyst for the EUR. If gas storage levels, see Europe through winter that could ease some of the pressure so storage levels will be watched. POSSIBLE BEARISH SURPRISES Any escalation in the Ukraine war that risks including NATO would be big negative risks. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. If ECB fails to act on the TPI when we see big jolts higher in the BTP/Bund spread could trigger bearish reactions in the EUR. If Russia keeps Nord Stream one shut, it should add downside risks to the EUR. If gas storage levels are not enough to see Europe through the winter that should increase energy supply concerns for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent leading indicators pointing to a much faster economic slowdown than markets previously expected. The current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply concerns) far outweigh the positives from a hawkish ECB. Recession risks have opened up a narrative change for the EUR which have seen markets adjust forecasts to reflect higher recession probabilities which has continued to weigh on the EUR. However, with lots of bad news priced in there is risks in chasing the EUR lower from the current levels, which means waiting for more attractive levels to short or waiting for a strong enough catalyst to short would be the preferred strategy for the EUR right now. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI above 8%, the Fed is under pressure to continue hiking rates and ramping up QT this month to try and bring demand and supply back in balance. They hiked rates 75bsp in July, and whether they go 50bsp or 75bsp in September will come down to this week’s CPI . At the Jackson Hole the Fed took a hawkish turn by pushing back against rate cuts in 2023 and stressing they not only envision hiking rates to close to 4% by early 2023 but also expect to keep rates high throughout 2023. However, the Fed did announce a data-dependent (meeting-by-meeting) policy stance in July, explaining that the pace of hikes is likely to slow as rates get more restrictive and as more data becomes available. This means incoming growth, inflation and jobs data will be key drivers for short-term USD price action where we expect a cyclical reaction to incoming data (good data being good for the USD and US10Y and bad data being bad for the USD and US10Y ). Even though a resolute Fed can put further cyclically driven pressure on bonds and equities and support the USD, the most recent economic data has painted a bit of a goldilocks environment where most growth & labour data has surprised higher while inflation data has surprised lower. This has seen some ‘soft landing’ expectations surfacing which we would expect to support equities and bonds and to pressure the USD should the goldilocks pattern with incoming data continue. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. If the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming data that exacerbates fears of a deep recession and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. Various data is pointing to downward pressure on CPI , enough for 1-year inflation expectations to trade below the Fed’s 2% target. With the ‘peak inflation’ narrative back in full force, a huge upside surprise in CPI this week could disappoint risk buyers and see further upside pressure on the USD. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. With some growing expectations of a possible ‘soft landing’ for the US economy surfacing, further goldilocks data (higher growth & labour but lower inflation ) could trigger safe haven outflows from the USD and into US equities. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. With the Fed in their blackout period, all eyes will be on the incoming data. If inflation confirms new calls for peak inflation with another miss across the board that could trigger downside for the USD. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk assets. But the data dependence stance from the Fed means that short-term data surprises can pull the USD either way. The recent string of data has triggered some ‘soft landing’ expectations for the US economy, which is expected to weigh on the USD given all of the safe haven inflows based on recession fears. In the short-term, with positioning in mind, and speculation of both ‘peak inflation’ and a ‘soft landing’, we would expect a softer USD in the week ahead running into the CPI print. A beat or a big miss can create equally big reactions in the short-term, but we would prefer shorting opportunities on a surprise CPI miss.
by thunderpips
3
Today’s Notable Sentiment ShiftsAUD - The Australian dollar fell while bonds rallied on Thursday, as markets scaled back bets on more aggressive rate hikes from the Reserve Bank of Australia, after a speech by governor Lowe opened the door to a slower policy at tightening going forward. EUR/ECB – The euro held above a twenty-year low on Thursday after the ECB raised interest rates by a record 75 basis points, taking the deposit rate above 0% for the first time since 2012, in an attempt to tame surging inflation. The central bank said it expected to continue raising rates in the foreseeable future to dampen demand as it prioritized the fight against inflation even as the Eurozone heads towards a likely winter recession.
by thunderpips
1
Joe Gun2Head Trade - Selling EURUSD into 50% Fib levelTrade Idea: Selling EURUSD Reasoning: Selling EURUSD into 50% Fib level Entry Level: 0.99920 Take Profit Level: 0.99124 Stop Loss: 1.00242 Risk/Reward: 2.47:1 Disclaimer – Signal Centre. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
Short
by Signal_Centre
3
EUR USD - FUNDAMENTAL DRIVERSEUR FUNDAMENTAL OUTLOOK: WEAK BEARISH BASELINE Persistently high inflation has seen the ECB tilt more hawkish by hiking rates 50bsp in July. Additional pressure on inflation from gas supply shortages and drought-linked supply constraints has seen ECB members get more uneasy about price pressures, with comments last week suggesting that there is growing support for a 75bsp hike in September. This saw some initial upside in the EUR, but it’s important to remember that the bank quelled hawkish excitement at the July meeting by saying that frontloading hikes are not a signal of a higher terminal rate. Until that changes, higher rate expectations are likely only going to have short-lived upside potential for the Euro . Spread fragmentation, even though largely moving into the background, is still a concern, with the ECB failing to ease the market’s spread concerns with their new Transmission Protection Instrument (TPI) as the eligibility criteria means countries like Italy and Spain that will need the support the most might have a tough time qualifying. Even though policy is important, the main driver for the EUR is the economic outlook. Recent growth data has continued to flag recession risks and as energy concerns increase so too does the likelihood of stagflation. Even though the bias remains lower, a lot of negatives have been priced in from a tactical point of view so worth keeping that in mind. POSSIBLE BULLISH SURPRISES De-escalation or cease fire in Ukraine would open up a lot of EUR upside. Stagflation risks remains, but with lots of bad news priced any materially better-than-expected data could spark some relief. Spread fragmentation remains a concern, thus, any TPI comments that convinces markets it can solve fragmentation issues should be supportive for the EUR. Energy supply is a problem. If Russia does re-opens gas flows after the planned shutdown it should ease some pressure. Any good news on Rhine water levels and resumption of normal transport could be a bullish catalyst for the EUR. POSSIBLE BEARISH SURPRISES Any escalation in the Ukraine war that risks including NATO would be big negative risks. Stagflation risks remains, even with lots of bad news priced any materially worse-than-expected data could see more pressure. Spread fragmentation remains in focus, and if the ECB fails to act when we see big jolts higher in the BTP/ Bund spread could trigger bearish reactions in the EUR. Energy supply is a problem. If Russia does not re-open gas flows after the planned shutdown it should add downside risks. Any bad news on Rhine water levels and continued breakdown in transportation could be a bearish catalyst for the EUR. BIGGER PICTURE The fundamental outlook remains bearish with recent leading indicators pointing to a much faster economic slowdown than markets previously expected. The current bearish drivers (geopolitics, stagflation, spread fragmentation, energy supply concerns) far outweigh the positives from a hawkish ECB. Recession risks have opened up a narrative change for the EUR which have seen markets adjust forecasts to reflect higher recession probabilities which has continued to weigh on the EUR. With lots of bad news priced in there is risks in chasing the EUR lower, but the fundamental outlook remains bleak. USD FUNDAMENTAL OUTLOOK: BULLISH BASELINE With headline CPI at 8.5%, the Fed is under pressure to continue hiking rates and ramping up QT in September to try and tame price pressures. They hiked rates by 75bsp in July, and odds between a 50bsp and 75bsp in September are too close to call. At the Jackson Hole Symposium they took a further hawkish shift by pushing back against the idea of rate cuts in 2023 by stressing that they not only envision hiking rates to close to 4% by early 2023 but also expect to keep rates high throughout 2023. However, the Fed did announce a data-dependent (meeting-by-meeting) stance at the July meeting, explaining that the pace of hikes is likely to slow as rates get more restrictive and as more data becomes available. This means the incoming growth, inflation and jobs data will be a key driver for short-term USD price action where we expect a cyclical reaction to incoming data (good data being good for the USD and US10Y and bad data being bad for the USD and US10Y ). The USD’s safe haven status is important to keep in mind. Uncomfortably high inflation and a Fed that is resolute and pushing rate higher and keeping them high does put possible further downside pressure on long bonds and equities, and if we see further cyclical-inspired downside in bonds and equities the USD is expected to gain in that environment on safe haven demand. POSSIBLE BULLISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely good growth, inflation or jobs data is expected to trigger short-term bullish reactions in the USD. As the cyclical outlook continues to weaken, the USD’s safe haven status still matters. Any incoming data that exacerbates fears of recession and triggers strong moves lower in risk assets & bonds can trigger safe haven flows into the USD. Any further outflows in US bonds means more USD safe haven appeal. So, watching key triggers for further upside in bond yields (commodity prices, inflation and inflation expectations, more aggressive hike rhetoric from Fed, very good growth data) could also trigger further USD bullish reactions. POSSIBLE BEARISH SURPRISES With the Fed signalling a data dependent policy stance, we expect a cyclical reaction from the USD with incoming US data. Thus, extremely bad growth, inflation or jobs data is expected to trigger short-term bearish reactions in the USD. The USD is trading close to cycle highs while aggregate CFTC positioning is close to levels that previously acted as local tops. Positioning does make the USD vulnerable to short-term corrections, especially with bad US data points. With a lot priced in for the Fed and the USD, it won’t take much to disappoint on the dovish side. Any FOMC comments that suggests more concern about growth than inflation could trigger bearish reactions in the USD, but with inflation so high any major dovish pivots seem still far away. BIGGER PICTURE The fundamental outlook for the USD remains bullish as long as the Fed stays hawkish and cyclical concerns put pressure on risk assets. The data dependence stance from the Fed means we do want to be mindful that lots has been priced for the USD, and as growth deteriorates (as is currently our expectation), it’s expected to impact the USD negatively in the short-term, even though current inflation suggests any dovish pivot is still far away. As the safe haven of choice, any further recession focused downside in risk assets and bonds (due to sticky inflation and an aggressive Fed) could continue to prove supportive for the USD. In the short-term, with positioning in mind, and a dual-growth narrative (one being good for the USD and the other being bad for the USD) we prefer short-term catalysts that offer short-term sentiment-based trades as opposed to med-term positions.
by thunderpips
3
RLinda ! EURUSD-> Fighting for the strong zone 1.0000EURUSD. The price is at a very important point lately, which is the zone at 1.0000, which is a global and historically important price. On the chart we can see how the sellers and buyers are fighting very vigorously for positions relative to this level, while it is impossible to determine exactly who will win. We have a global downtrend, but there were attempts to break the trend, but when the price approaches the channel resistance - the attempts failed. I assume, if the price can consolidate above the level of 1.000, there is a huge potential for growth. The nearest short-term target is resistance 1.0194. Sincerely R. Linda!
Long
by RLinda
16