GROWTHACES.COM Forex Trading Strategies
Taken Positions
EUR/USD: short at 1.0630, target 1.0400, stop-loss 1.0730, risk factor **
GBP/USD: short at 1.4845, target 1.4650, stop-loss 1.4740, risk factor **
USD/JPY: long at 121.10, target 123.55, stop-loss 119.60, risk factor *
USD/CHF: long at 1.0020, target 1.0230, stop-loss 0.9900, risk factor *
USD/CAD: long at 1.2680, target 1.2950, stop-loss 1.2700, risk factor **
AUD/USD: short at 0.7640, target 0.7340, stop-loss 0.7680, risk factor ***
NZD/USD: short at 0.7390, target 0.7130, stop-loss 0.7390, risk factor ***
Pending Orders
EUR/JPY: sell at 129.40, if filled target 127.00, stop-loss 131.10, risk factor ***
Source: Growth Aces Forex Trading Strategies
EUR/USD: Waiting For The Fed… Just A Little Patience…
(short opened at 1.0630)
[ul]
[li] A Fed statement is due at 18:00 GMT and this will be the main event today. The Fed is expected to drop the following sentence: Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. Fed Chair Janet Yellen has repeatedly suggested that this wording rules out a rate hike at the subsequent two meetings. If the word patient is still in the statement a rate hike in June is off the table.
[/li][li] The Fed is very likely to lose its patience today which will be good news for the USD bulls. However, the U.S. monetary authorities will also release an update of its quarterly update od macroeconomic forecasts. These forecasts will be rather dovish bad news for the USD bulls. The most important for investors will be interest rates projections. December 2014 projection shows that the FOMC median sees the Fed funds target rate at 1.125% at year-end 2015, at 2.5% at year-end 2016 and at 3.625% at year-end 2017. In our opinion the Fed is likely to lower the year-end 2015 interest rate forecast by 25 bps current projection assumes four rate hikes by 25 bps which is rather impossible given USD strength and low inflation.
[/li][li] The EUR/USD traded in a tight range today. The bearish momentum is intact and we have got short at 1.0630.
[/li][li] However, we should know that a strong appreciation of the USD against the rest of the world in the medium term poses a risk to the U.S. economy and may result in capital outflow from U.S. equity market. We should know that dropping patient today will not automatically mean a rate hike in June. There will be still a risk of the Fed delaying hikes in case of tighten monetary conditions caused by the USD strength. This risk may weigh on continuation of current strongly bearish EUR/USD trend.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.0651 (high Mar 17), 1.0684 (high Mar 12), 1.0687 (10-dma)
Support: 1.0551 (session low Mar 17), 1.0457 (low Mar 16), 1.0400 (psychological level)
GBP/USD: Stop-loss Lowered To Save Profits After Weak Britains Wages Data
(short for 1.4580, stop-loss lowered to 1.4740)
[ul]
[li] Total average weekly earnings, including bonuses, rose 1.1% yoy in January, slowing from 2.4% yoy growth in December. The Office for National Statistics said there were signs that companies paid fewer bonuses in January than in December. Excluding bonuses, pay rose by an annual 1.6% yoy in January, unchanged from December. The Bank of England is keeping a close eye on wages as it considers when to start raising interest rates.
[/li][li] The Office for National Statistics said Britain’s unemployment rate was stable at 5.7%, matching its lowest level in almost seven years but above a forecast for another fall to 5.6%. The number of people in employment rose by 143k to 30.939 million in the three months through January. It said the employment rate of 73.3% was an all-time high. The number of unemployed people fell by 102k to 1.856 million.
[/li][li] The minutes of the BoE Monetary Policy Committee’s March 4-5 meeting showed all nine members thought the very weak short-term outlook for inflation warranted keeping interest rates on hold at a record low 0.5%. Like last month, two members described their decision as finely balanced, but there was no repeat of another member’s view that a cut in interest rates in the immediate future could be on the cards. Policymakers saw little change to the economic outlook since the BoE published comprehensive forecasts in February. All MPC members agreed it was more likely than not BoE interest rates would rise over the next three years.
[/li][li] The GBP/USD hit a five-year low after data showed UK wage growth slowing and Bank of England policymakers pointed to risks that GBP could strengthen against the EUR and leave inflation below target for longer.
[/li][li] Weaker-than-expected wages data helped our GBP/USD short position. The GBP/USD fell to this-year fresh low at 1.4658, highlighting the bearish structure. We have lowered the target and stop-loss of our short position to 1.4580 and 1.4740 respectively.
[/li][li] We have withdrawn our EUR/GBP sell offer. Favouring GBP could prove costly over coming weeks as the GBP comes under pressure due to political risk.
[/li][/ul]
Significant technical analysis’ levels:
Resistance: 1.4779 (hourly high Mar 18), 1.4845 (high Mar 17), 1.4853 (high Mar 16)
Support: 1.4504 (low Jun 11, 2010), 1.4346 (low Jun 8, 2010), 1.4330 (low May 26, 2010)
EUR/CHF: The SNB Meeting Preview
[ul]
[li] The SNB meeting is scheduled for tomorrow. It is widely expected that the central bank will maintain its Libor target rate unchanged. However, there is a risk that recent Swiss CPI readings and developments on the EUR/CHF may make the SNB cut rates further into negative territory.
[/li][li] The SNB probably did not expect such a strong move in the EUR/CHF rate after the removal of the cap on January 15. Then the SNB probably expected that this move would not be long-lasting. But two months after the removal of the cap, the overvaluation of the CHF is still problematic. Despite worsening Swiss inflation and economic growth outlook the EUR/CHF has been quite stable since mid-February, largely driven by the weakness in the EUR/USD.
[/li][li] Swiss CPI fell in February to -0.8% yoy, import and producer prices fell by 3.6% yoy in February. Current SNB projection of CPI at -0.1% yoy in the first quarter of 2015 is unachievable. The SNB will certainly revise forecasts lower at tomorrows meeting. The question is: how many times can the SNB cut its forecast without cutting rates?
[/li][li] If the SNB stays on hold tomorrow, it may step up its CHF rhetoric by highlighting that the CHF is strongly overvalued and the SNB is ready to intervene. This would be probably not enough to convince investors and the EUR/CHF may fall in case of keeping Libor target unchanged. In this case the SNB may be forced to cut rates into negative territory later given CHF overvaluation and growing downside risks to Swiss GDP growth and inflation.
[/li][li] We got long on the USD/CHF at 1.0020 with the target at 1.0230.
[/li][/ul]
Source: Growth Aces Forex Trading Strategies