LONG EUR: Long term reversal brewing
Updated
(Im coming back to the trading desk this week after 3 weeks of vacations!)
Im opening a long EUR position to hold over the weekend and with a multi-day horizon. The rationale is both technical and fundamental.
Technicals: For the first time in a long time, EURUSD printed a Golden Cross (50-day MA is at 1.1174 vs 200-day MA at 1.1168), and the currency is trading above these two and Ma(9); from this point, we could be watching at the start of an uptrend here. The uptrend in RSI from the pivotal lows of 2015 also confirms the view. Finally, the trend since end of Q1 2015 has been of steady EUR appreciation and DXY depreciation, and currently EUR is at daily support and DXY at daily resistance, so my bet would be for a continuation of this trend.
Fundamentals: The Eurozone economy isn't as strong as it could be (Composite PMI at 53,9 in Sept '15 and core inflation just at 0,9% YoY last month), but the divergence argument in terms of economic performance is starting to lose steam. More telling though, is the disappointing Non-Farm Payroll print of September 2015 in the US (just 148k new jobs, vs 201k expected and 173k last month), which means that the effects of USD appreciation and worldwide financial stress are starting to take a toll in the US economic performance and showing that this country is definitely not an island and that the Fed has red lights in terms of hiking the Fed Funds rate this year.
Opened today at avg price 1.1267 (poor entry timing), keeping my risk open until the moving averages below, and aiming for a gradual retest of recent highs. May the force be with us!
Im opening a long EUR position to hold over the weekend and with a multi-day horizon. The rationale is both technical and fundamental.
Technicals: For the first time in a long time, EURUSD printed a Golden Cross (50-day MA is at 1.1174 vs 200-day MA at 1.1168), and the currency is trading above these two and Ma(9); from this point, we could be watching at the start of an uptrend here. The uptrend in RSI from the pivotal lows of 2015 also confirms the view. Finally, the trend since end of Q1 2015 has been of steady EUR appreciation and DXY depreciation, and currently EUR is at daily support and DXY at daily resistance, so my bet would be for a continuation of this trend.
Fundamentals: The Eurozone economy isn't as strong as it could be (Composite PMI at 53,9 in Sept '15 and core inflation just at 0,9% YoY last month), but the divergence argument in terms of economic performance is starting to lose steam. More telling though, is the disappointing Non-Farm Payroll print of September 2015 in the US (just 148k new jobs, vs 201k expected and 173k last month), which means that the effects of USD appreciation and worldwide financial stress are starting to take a toll in the US economic performance and showing that this country is definitely not an island and that the Fed has red lights in terms of hiking the Fed Funds rate this year.
Opened today at avg price 1.1267 (poor entry timing), keeping my risk open until the moving averages below, and aiming for a gradual retest of recent highs. May the force be with us!
Note
Changed my position a bit taking advantage of client flow. Current play is:
Long from 1,1246
stop 1,1165
target 1,1499
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