Get started
EURUSD FuturesEURUSD FuturesEURUSD Futures

EURUSD Futures

No trades
See on Supercharts
Overview
Ideas
Discussions Technicals Forward curve Seasonals Contracts

EURUSD1! trade ideas

Euro to propel on relapsing EU inflation & US jobs dataFighting inflation is hard. Hence, central banks are data dependent while calibrating rates. Continuing geopolitical conflicts puts Europe at risk of inflation relapse. Headline numbers can be misleading. Central bankers will dig deep. Deeper analysis will compel investors and policy makers to rethink and recalibrate interest rate calculus. This paper unpacks US jobs & Euro area inflation report, and market expectations of rates ahead. UNPACKING US NON-FARM PAYROLL DATA The US labour market added 216k jobs in December 2023 surpassing expectations. It was up 25% month-on-month. Headline numbers look healthy. Details spell trouble. Payroll data was revised lower by 71k for October and November. Average work week contracted, and participation rate declined. Jobs growth is concentrated in three sectors, namely, Government, Education/healthcare, and Leisure/Hospitality. Eighty percent of the jobs added are from sectors that are not considered growth engines. Three key takeaways from jobs report: 1. Employment growth remains robust: Month-on-Month employment trends point to jobs growth in government, leisure and hospitality, health care, social assistance, and construction, while transportation and warehousing lost jobs. On a 12-month seasonally adjusted basis, apart from (a) Transportation & Warehousing and (b) Information, rest of the sectors added jobs. Source: BLS 2. Hourly Wage Earnings growth is strong: In December, average hourly earnings on private payrolls jumped by fifteen cents, or 0.4%, to USD 34.27/hour. Average hourly earnings have increased by 4.1% over the last year. Source: BLS 3. Unemployment Remains Unchanged: Unemployment rate was unchanged at 3.7% (3.5% last year this time) with number of unemployed persons unchanged at 6.3 million (5.7 million last year this time). COMPREHENDING EUROZONE INFLATION NUMBERS Euro area inflation rose 2.9% YoY in December 2023, reversing a two-year low (2.4%) observed in November. Eurostat inflation estimates was marginally below the market consensus of 3%. Inflation uptick since April 2023 was primarily due to energy-related base effects. Energy prices declined 6.7% while services inflation was flat. Core inflation, excluding food and energy prices, softened to 3.4%. Core inflation is at its lowest point since March 2022. MARKET EXPECTATIONS OF RATE CUTS Investors are betting that the US Fed and the ECB will cut rates six times this year. First rate cut is expected in March or April. Market expectations are in sharp contrast to policymakers. The US Fed expects to make three quarter-point cuts this year. The ECB has stood its ground arguing that the inflation fight is not over yet. Amid strong economic data, probability of Fed rate cuts in March has fallen from 100% to 70%. Source: CME Fedwatch Tool EUR-USD WITNESSED WILD MOVES ON INFLATION, JOBS, AND SERVICES DATA BUT SETTLED WHERE IT OPENED Last Friday news flow impacting FX rates were strong. Front month EUR-USD futures traded wildly opening at 1.0977 reaching a high of 1.1030 and then plunging to a low of 1.0908 before closing at 1.0977. December US ISM Services PMI unexpectedly fell to 50.6, the lowest reading in seven months, compared to 52.7 in November. Services industry is critical accounting for more than two-thirds of the US economy. Euro fell 0.5% last week, marking its largest weekly drop since early December breaking three consecutive weeks of strengthening. The EUR-USD is hovering at its support levels with the 50d DMA likely to print a golden cross with the 200d DMA. Near term technical signals point to strengthening of the Euro versus the US dollar. Momentum favours Euro while price reversion risk remains neutral. Diverging macroeconomic conditions leaves Eurozone exposed to higher risk of inflation relapse. The ECB is expected to be slower with rate cuts relative to the Fed. In anticipation, leveraged funds are starting to sharply reduce their net short positions in the CME EUR/USD futures. Source: CME QuikStrike HYPOTHETICAL TRADE SETUP Europe is at greater risk of inflation relapse on continuing geopolitical risks in Russia-Ukraine and the middle east. Energy and goods inflation relapse will force the ECB to defer its rate cuts. Size of the rate cuts, if any, is also likely to be smaller at the ECB relative to the Fed. This will strengthen the Euro against the USD in the near term. To harvest gains from a strengthening Euro, this paper posits a hypothetical long position in CME Micro EUR/USD Futures expiring in March 2024 (M6EH2024) with an entry at 1.0979 combined with a target at 1.1123 and hedged by a stop at 1.0871, delivering an expected reward-to-risk ratio of 1.33x. Each lot of CME Micro Euro Futures contract provides exposure to 12,500 Euros. It is quoted in USD per Euro increment. Each pip i.e., 0.0001 per Euro delivers a P&L of USD 1.25. • Entry: 1.0979 • Target: 1.1123 • Stop: 1.0871 • Profit at Target (hypothetical): USD 180 (= 0.0144; 144 pips; 144 x 1.25 = 180) • Loss at Stop (hypothetical): USD 135 (= -0.0108; -108 pips; -108 x 1.25 = -135) • Reward-to-Risk (hypothetical): 1.33x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME_MINI:M6E1!Long
by mintdotfinance
FX Price Action Ahead on Growing Rate DivergenceLast week was busy for major central banks. During a 60-hour window, rates were set for 60% of the global economy, from the US Fed, the ECB, to the BoE. Central banks’ announcements caused a frenzy in markets. The pivot to a dovish stance by the US Fed contrasted sharply with hawkishness from the ECB. This paper summarizes rate announcements and their market impact. It also dives into Yen dynamics as the Bank of Japan (BoJ) meets tomorrow. CAUTION FX TRADERS: GROWING RATE DIVERGENCE AHEAD Renewed divergence in monetary policies was evident from rate announcements by the major central banks. After more than a year of moving in tandem, central banks’ stances are shifting. The Fed is signaling rate cuts sooner. Meanwhile, ECB and BoE insist that rates need to stay higher for longer to fight sticky inflation. As interest rates in the US remain elevated relative to other major economies, the Fed has ample room to slash sooner. Inflation in the EU has contracted at a rapid clip relative to the US. However, economists expect EU inflation to rebound in the near term with fading base-level effects. Inflation in the US is expected to average 2.4% in 2024 compared to 2.7% in the EU and 3.75% in the UK, as per respective central banks. The US economy is strong with robust economic growth, resilient consumer spending, and solid PMI numbers. FED HAS PIVOTED TO DOVISHNESS The FOMC opted to keep rates steady with their statement pointing to the end of the rate hiking cycle. Most notable was the Fed’s updated economic projections & dot plot. It showed faster-declining inflation, slower GDP growth, and faster rate cuts. The Fed’s dot plot of rate expectations guided towards three 25 basis point (bps) cuts next year. Markets were expecting five rate cuts before the Fed announcement. Following the Fed meeting, markets now anticipate six rate cuts. BOE REMAINS HAWKISH The Bank of England opted to keep rates steady with a hawkish pause. The BoE statement indicates further rate hikes if inflationary pressures remain persistent. “The full effect of higher interest rates has yet to come through, posing ongoing challenges to households, businesses and governments," ~ BoE Market Policy Committee ECB JOINED THE BOE WITH A HAWKISH PAUSE ECB decided to keep rates steady with a hawkish pause. ECB President Christine Lagarde asserted that rate cuts were not being discussed yet and rates may even need to go higher to bring inflation under control. ECB noted that tighter financing conditions were leading to demand contraction, which weighed on pushing down inflation. Economic growth is expected to remain subdued. ECB estimates gradual ramp up in growth from 0.6% for 2023 to 0.8% for 2024, and to 1.5% for both 2025 and 2026. BOJ DECISION IS MOST UNCERTAIN WITH A THORNY JOB ON HAND The Bank of Japan (BoJ) is set to announce their rate decision on December 19th. It has maintained ultra-low interest rates all year while others hiked aggressively. Recent statements by BoJ Governor Ueda signal a pivot away from the ultra-low policy. "Managing monetary policy will become even more challenging from the end of the year and heading into next year." ~ Kazuo Ueda, Governor, Bank of Japan on 6/Dec Governor Ueda’s statements have led to market expectation of upcoming monetary tightening in Japan. JPY has strengthened 6% relative to the USD over the last month. Despite Ueda’s statements, BoJ pivot remains uncertain. Inflation in Japan is running hot and above US inflation. Moreover, wage growth and economic growth in Japan have been moderate despite high inflation creating stagflation risks. Consumer spending and wage growth remain muted despite record profits. Feeble Yen is boosting Japanese exporter profits. Nevertheless, the BoJ has been setting up a change in monetary policy. Earlier this year, it raised the cap on JGB yields and eventually changed the cap from a rigid limit to a loose reference. Some economists consider this a prelude to eventual scrapping of the YCC altogether. CENTRAL BANK DECISIONS HAVE CREATED DEEP RIPPLES ACROSS MARKETS Commodity markets reacted positively to the rate announcements. The Fed’s signal of upcoming easing opened the door for commodity demand to rise. Precious metals are likely to benefit from asset rotation out of US treasuries while Crude will benefit from higher economic activity from lower interest rates. Equities surged on Fed pivot. Small-caps and Mid-caps outperformed the Nasdaq-100 and S&P 500. Both SPX and NDX also extended gains. Bond yields fell sharply following the FOMC decision. Yields fell to their lowest level in four months. One-year bond yields performed the best while thirty-year performed the worst. LEVERAGED FUNDS ARE BULLISH EURO, STERLING, AND BEARISH YEN Asset managers and leveraged funds are net long on Euro FX futures. Asset managers and leveraged funds are net short on Yen and Pound futures but have reduced net short positioning over the past few weeks. HYPOTHETICAL TRADE SETUP The Fed’s dovish stance plus the hawkishness of European central banks will result in dollar weakness relative to Euro and Sterling. Upside risks to the dollar persist with stronger economic data and inflation resurgence forcing the Fed to reassess its stance. To gain from the weakening of the dollar against the euro and sterling, investors can buy into CME Micro FX Euro and GBP futures. A long sterling provides higher upside than long euro given higher inflation in the UK. Policy uncertainty in Japan is unlikely to usher in a pivot in the short-term. The JPY is likely to weaken against the dollar despite DXY weakness. To harness gains from weakening Yen, investors can establish a long position in CME Micro JPY Futures. Hypothetical Trade 1 & 2: Long EUR and GBP Entry: 1.0960 Target: 1.1150 Stop Loss: 1.0860 Profit at Target: USD 238 (= 1.1500 - 1.0960 = 190 pips = 190 x 1.25) Loss at Stop: USD 125 (= 1.0860 – 1.0960 = -100 pips = -100 x 1.25) Reward-Risk: 1.9x Entry: 1.2720 Target: 1.3120 Stop Loss: 1.2490 Profit at Target: USD 250 (= 1.3120 - 1.2720 = 400 pips = 400 x 0.625) Loss at Stop: USD 144 (= 1.2490 – 1.2720 = -230 pips = 230 x 0.625) Reward-Risk: 1.75x Hypothetical Trade 2: Short JPY Entry: 139.57 Target: 146.28 Stop Loss: 137.97 Profit at Target: JPY 67,100 (= 146.28 - 139.57 = 671 pips = 671 x 100) Loss at Stop: JPY 16,000 (=137.97 – 139.57 = 160 pips = 160 x 100) Reward-Risk: 4.2x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME_MINI:M6E1!
by mintdotfinance
Will EUR-USD Parity Repeat?Two men adventuring in the wild. They see a tiger racing towards them. They turn and start dashing away. Then, one of them stops to put on shoes. “What are you doing? The beast will outsprint you despite those” says the other. “I don’t have to run faster than the tiger” he retorts. “I just have to outrun you.” FX stories are not dissimilar. Relative strengths and weaknesses facilitate price discovery between currency pairs. On 1 January 2002, twelve EU countries move to euro in a historic event. Since December 2002, the euro has always traded above parity to the US dollar. The only exception is the last quarter of 2022. EUR/USD has been above parity since late 2002 except for Q4 2022 Despite the collapse of regional banks, US corporations and consumers are in the pink of health. Cracks are starting to show in certain pockets but none too alarming (just yet). In contrast, economic conditions in Europe are in sharp deterioration. Arguments abound on the direction of the euro ahead. Following the rate decisions by the ECB and the US Fed last week, volatility in the Euro/USD pair has been trending to near 12-month lows. Low volatility equates to lower premiums on options. Periods of low volatility are opportune time for buying options. This paper posits that euro will carry greater risk to the downside. That said, geopolitics and economics could turn favourably to the euro resulting in a rally. To seize opportunities presented by the price action, this paper posits a long straddle to benefit from low volatility & a euro that is set to move. EURO SKEPTICS OBSERVE MANY PROBLEMS Talk of the euro falling back to parity is once again creeping into the market murmurs. Google search on euro parity is at levels last seen in Nov 2022. As reported by Bloomberg, last month, Nomura, Rabobank & ING analysts forecast the euro to get to levels marginally shy of parity to the USD. The likelihood of the euro hitting parity by early next year have more than doubled, as per Bloomberg options model. Strong US economic fundamentals, rising US yields are bolstering the dollar. Rate differentials between the two tilts in dollar’s favour. US Q3 Real GDP was up by an annual rate of 4.9%, more than double the growth rate for Q2. Additional tailwinds for greenback include sluggish Eurozone economic growth, concerns linked to Italy’s government debt, and slowdown in destination markets for Eurozone's exports. OTHER ANALYSTS BELIEVE THAT EUROZONE PESSIMISM IS ALREADY PRICED IN Disagreeing with euro sceptics are analysts with a view that Eurozone pessimism has been baked in. Eurozone GDP fell by 0.1% in Q3. Despite feeble GDP data, market reaction was stoic. That points to an "invisible" floor for the euro. Lack of growth is priced in. FOUR CHARTS CONTRASTING US EXCEPTIONALISM WITH GROWING EUROPEAN WEAKNESS US GDP continues to expand at a remarkable clip given the size of the economy. In sharp contrast, Eurozone GDP growth is fragile and steadily losing steam. US GDP racing ahead with Eurozone GDP losing steam US inflation, while softening, is showing signs of spiralling up, thanks to its resilient and tight labour market. This puts the Fed on a hawkish stance supporting USD. Inflation still above central bank targets but US inflation raging higher than in Eurozone Meanwhile, the ECB might have headroom to ease rates thanks to slowing inflation and might be forced to loosen up to support growth and to stem economic contraction as shown below. Composite PMI in US in expansion territory compared to sharp contraction in Eurozone Monetary policy divergence between the Fed and the ECB has prevailed since early last year when the Fed was quicker relative to ECB to crank up rates. Interest Rate Policy Divergence in US has continued to remain in favour of the dollar In summary, the USD is poised to strengthen against the Euro, given strong GDP, higher US inflationary environment, sharp contraction in Eurozone, and continued monetary policy divergence. TECHNICALS ALIGN WITH FUNDAMENTALS POINTING TO WEAKENING EURO Momentum based indicators signal further weakness in the euro while oscillators point to strengthening based on near term mean reversion. Overall, across twenty-five indicators curated by TradingView, eleven signal weakening, ten neutral, and four point to strengthening. TradingView’s Technical Signals Dashboard point to euro weakness CFTCs Commitment of Traders (CoT) report show that leveraged funds are net short. Asset managers who are still net long are gradually reducing their long positions. In contrast to fundamentals, technical, and CoT reports, options market data points show that traders are bullish for euro to strengthen. Put-call ratio at 0.76 shows larger open interest on calls compared to puts. That said, over the last one trading week, options traders are increasing puts compared to calls suggesting shifting market sentiments leaning towards a weakening euro. Implied volatility based on options market is near 12-month lows with the conclusion of central bank meetings across both sides of the Atlantic. Low implied volatility makes premiums affordable. CVol Index is at near 12-month low (Source: CME QuikStrike) HYPOTHETICAL TRADE SET UP Affordable premiums offer the best opportunity for buying options. When ambivalence prevails on the path ahead for the euro, traders could consider a long straddle to leverage volatility expansion and price action. This paper posits a long straddle at a strike of 1.0845 on CME EUR/USD options expiring on 5th April 2024. A long straddle comprises of two legs: (a) long position in a call, and(b) long position in a put, at the same strike and expiry. Each CME EUR/USD Monthly options contract delivers an exposure to 125,000 euros. Take the settlement prices as of November 3rd as an example, premiums for the (a) long call at 0.0182, and (b) long put at 0.0187, aggregate to 0.0369 for the long straddle. This translates into USD 4,613 in straddle premiums. The straddle has two break-even points (BEP) at expiry. BEP on the downside is at 1.0476. BEP on the upside is at 1.1214. The pay-off from the straddle is illustrated in the chart and table below. Pay-off at Expiry from Long Straddle (Source: Mint Finance Analysis) MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CME:6E1!
by mintdotfinance
Which asset reacted the most to geopolitical risk? It’s not oil In this video tutorial, we discussed which of these 6 major asset classes reacted the most initially during a major geopolitical conflict and what its implications are. Micro Gold Futures and Options: 0.10 per troy ounce = $1.00 Code: MGC Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME:6E1!Long
by konhow
EURUSD 6EF Short Trade Idea 6EZ2023 - EURUSD - SHORT 6E / EURUSD just had a strong bearish reaction on the H4 timeframe to the area of sensitivity (weekly fair value gap FVG). On a pullback into a H4 premium, I will be hunting short triggers on M15 timeframe to then target the PWL (previous weekly low). This correlates nicely with DXY, which just had the same reaction to a weekly FVG. There is a nice weekly fractal high within the weekly fair value gap on DXY which should act as the next DOL. 6EZ2023 doesn't have a fractal high to act as a draw, so I will be watching DXY to determine when to exit the short.
CME:6EZ2023Short
by Tradius_Trades
EUR/USD 10/10/2023 Levels My daily Bias for EUR/USD for the day will be Bullish Im expecting another green candle close. Optimal trade set ups for shorts will be found from premium to discount levels and for longs from discount to Premium levels. Where you will be able to harvest a few pips. Look for a fill of the GAP and Liquidity voids on break of market structure. Optimal trades can be found at 2am and 7:45 - 11:45 AM EST for higher probability as during this time the algo makes a move with heavy volume. Strong buy zones for long can be found at EQ for reversals to the upside. Safe Trading Transcend Reality FX:EURUSD
CME:6E1!
by Louisprez