Alpesh Patel's NEWSLETTERPRO – Euro advances further while Pound stumbles on weaker data, Dollar still under shutdown pressure

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MORNING BRIEF 

The US Dollar continued to move lower yesterday almost across the board as investors are trying to hedge themselves from the chance that the US government might default on its obligations. Analysts predict that this is an extremely slim possibility since the US has never defaulted in the past but this doesn’t prevent investors from cutting their dollar positions. In the European region retail sales surprised the markets coming better than expected and this fact followed by the uncertainty in the US has led EUR/USD above 1.3600. However, the British Pound was hit from some aggressive profit taking as the currency weakened after 5 consecutive bullish days on mixed economic data. We’re not surprised as it was about time the Sterling traders took some profits of the table and we remain confident that the trend higher will continue.
No news on the Economic Calendar as US shutdown affects reporting
It’s an empty day today for the economic calendar as there are no major news events expected during the European session. The thing however that is most annoying is that the US shutdown is affecting the news flow into the market. Government agencies yesterday declared a suspension in their reporting capabilities as long as the shutdown continues. This leaves us hanging as today we expected to see how the US labor market is going with Non-Farm Payrolls on the focus on the first Friday of each month. This is an unprecedented situation for analysts worldwide and we hope that in the interest of global markets continuing to operate without issues this situation will be swiftly resolved.
Economic Calendar

Time

Currency

Event

Importance

Forecast

Previous

13.30

USD

US Economic Data delayed due to Government Shutdown

High

 

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TECHNICAL ANALYSIS & LEVELS

EUR/USD

Euro continued to move higher yesterday on better than expected data from the Euro-zone and it reached as high as 1.3650. For those of you that have followed our medium-term suggestion and still are on the trade then you should feel happy and let your profits run. For today, we don’t expect any major movements in the currency as it is Friday and no news events are bound to come in, with NFPs announcement suspended due to the US shutdown. There could be some profit taking today as investors might want to be risk-free over the coming weekend thus we will move our stops at 1.3580 level for our medium-term trade locking in some additional pips in profit.

GBP/USD

The Pound seems to have paused its uptrend and has formed a range movement between 1.6160 and 1.6250 as traders took some profits off the table yesterday. For today we are inclined to think that the Pound will continue to move sideways and we would like to enter long just above 1.6185, place a stops just below 1.6150 and target for the upper limit of this range at 1.6250 while grabbing some profits on the way around 1.6210. However, we would like to be prepared for the chance that the Pound breaks below this range and looks for lower levels. In that case our entry will be around 1.6135 with a stop above 1.6185 and targets at 1.6105 and 1.6020. You will notice that we are more cautious on our suggestions with tighter stops today, this is because it is Friday and we don’t want to risk so much on a probably dull trading day ahead.

FTSE 100

The FTSE 100 rebounded higher yesterday and nearly reached our point of entry at 6,470 points before retracing a bit lower. We still feel that the British index could move higher but we are not so sure whether investors will move aggressively today as it is the last day of the week. Nonetheless, we are prepared for this reversal higher, our point of entry is above the 6,470 points with targets at 6,500 and 6,550 points and a stop placed below the 6,415 area. We need to be patient as financial markets globally are trying to cope with this US shutdown and investors remain undecided on whether to trade or not.

Gold

Gold seems to have settled a bit and found some balance between the $1,300 and $1,320 levels. We would like to jump in a long trade higher with caution should the commodity reach higher and we will place a long entry just above the $1,325 area, with targets at $1,337 and $1,359 levels and a stop below the $1,300 mark. Gold still seems volatile to us so a reduced size trade is suggested.

Have a great weekend.

 

All charts have been created using FXCM’s Trading Station platform.

This is the free, time-delayed version of NewsletterPro, a subscription-based product.

If you would like to receive it before 7:30am, please visit InvestingBetter.com to subscribe.

 

 

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