Yesterday, was an interesting day, as the fed announced $10B taper to reduce asset purchases one more time. I think the US dollar may gain some bids after the outcome in the short term. So, we should look for buy opportunities in the US dollar. Currently, I think the EURUSD pair may present us an interesting sell opportunity. The pair is currently under pressure, and can continue to move lower.
Looking at the hourly chart of EURUSD, there is a critical support zone at around the 1.3630 level. If the pair manages to break the support zone and trade lower, then we can jump into a sell trade. Remember, this is a critical area for the pair, so wait for the pair to close below the support before entering into a trade. This is not a medium term entry. We can gain good 30-40 pips from this trade.
Initial target should be around the up-move trend line as shown above, and final target could be a bit lower if the pair fails to hold the trend line. Stop should be placed above the down-move trend line, as plotted in the chart below.
Reviewing yesterday’s events and trades
Yesterday, the Fed announced another reduction in the bond purchases by $10B. The market was expecting this outcome, and as a result, there was no major reaction from the US dollar. However, earlier in the Asian session, the pairs like AUDUSD, EURUSD and GBPUSD lost some ground. Another risk-event which was scheduled in the Asian session was the RBNZ rate decision. The central kept the interest rates unchanged, and mentioned that they are committed to rising rates in the near future. The NZDUSD is trading lower after the release towards the 0.8120 support level.
Fundamental Outlook for the day
Today, the US GDP figures will be released in the NY session. The expectations are of 3.2% growth rate. If the data does not disappoint, then we may witness some dollar strength later during the day. Furthermore, the US pending home sales data will also be released. Other than this, we have New Zealand’s trade balance data, Japan’s inflation data and Australia’s PPI data to be released around the next Asian session. We need to be very careful trading in the coming sessions, as there can be some swing moves. So, be watchful while trading friends.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURGBP, AUDCAD, EURAUD, SILVER, GOLD and USDCAD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
