Source: Growth Aces Forex Trading Strategies
EUR/USD
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[li] There are a lot of U.S. data releases scheduled for this week, but markets will focus mainly on the ISM index and non-farm payrolls data.
[/li][li] Investors will turn their attention also on the ECB meeting and Mario Draghi delivering a new set of macroeconomic forecasts. We may expect some upward revisions for GDP growth forecasts by the ECB, which will support the EUR. Furthermore, markets will be looking to see whether final PMI data from Euro zone countries.
[/li][li] We maintain our bullish EUR/USD outlook and expect the rate to return to at least 1.1400 soon. We do not see strong reasons for further depreciation of the EUR against the USD and in our opinion long position is relatively safe now.
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GBP
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[li] The Bank of England meeting scheduled for Thursday will be considered a non-event, because it is widely expected than no action will be taken by the monetary authorities.
[/li][li] All eyes should be focused on the three important PMIs releases (manufacturing, services and construction). If PMIs stay at current elevated levels, the GBP will probably appreciate and return above the level of 1.5500.
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CAD
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[li] We can expect stronger volatility on the USD/CAD this week due to BoC rate decision scheduled for March 4. Investors are pricing in a less than 30% probability that the Bank Of Canada will lower rates again when it meets next week. This probability has lowered significantly recently and we see that the market is converging to our forecast that the Bank Of Canada will keep interest rates unchanged.
[/li][li] Why the BoC will not cut rates on Wednesday? The Canadian January CPI surprised slightly on the upside and BoC governor Stephen Poloz stated that the cut in January was aimed at buying some time and to work as a cushion.
[/li][li] In our opinion a good trading idea for the USD/CAD is to get short in anticipation for no change in the BoC rates.
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AUD
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[li] The Reserve Bank of Australia will also decide on rates this week. The market expects a rate cut, but our forecast is against the market consensus. In our opinion the RBA is likely to wait with a cut for more data (especially CPI for the first quarter that will be released on April 22) at least to its May meeting. However, we assume in our baseline scenario that no more rate cuts will be necessary.
[/li][li] The AUD/USD may benefit from an on-hold decision. We maintain our long AUD/USD position taken at 0.7805. In our opinion breaking above the 0.8000 level cannot be excluded in the short term.
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Source: Growth Aces Forex Trading Strategies