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05/03/2014: Trading outlook for today

Despite strong sessions in the US and Asia, investors have become cautious. With the impact of Monday’s flight to safety now having been unwound, the focus has turned back on economic data as we move towards Friday’s key Non-farm Payrolls. However there are contrasting fortunes of the currency pairs in early trading today. The Euro has broken lower, with Cable remaining supported, while the Yen is testing resistance. Equities are lower and the gold price is also testing support again.

EUR/USD has just broken under $1.3719 (yesterday’s low) which has opened $1.3692. I still have the impression that $1.3700 is the pivot level we need to watch out for. However the breakdown in the past few minutes has taken the Euro below the 200 day moving average support and the outlook is now deteriorating. The bears are beginning to gain control and I may now look for a short position.

GBP/USD tried to break higher but has been pegged back in the past hour. The outlook therefore remains very neutral. I am still putting weight on the $1.6700 pivot level for my outlook. Holding a move above could begin to turn more positive, while below $1.6638 will see a retreat back to the $1.6603 38.2% Fib retracement once more. I am sitting on the sidelines while this one thinks about the next move.

USD/JPY continues to put pressure on the underside of the old uptrend and a move above 102.44 would certainly improve the outlook now. I am undecided how this one will play out although I am encouraged by the rate holding above 102 yen today. I still think this is very difficult to call on a very near term basis as the daily technical indicators are increasingly neutral once more. It is probably best to continue to play the range, so I may look to sell into any move towards the range highs that gives me an adequate stop that is above the key resistance at 102.83.

Gold traders are now engaged in a battle for control as the price continues to consolidate over the past 24 hours. I would turn my near term outlook towards bearish on a break below $1331 as I am concerned that the deteriorating momentum on the daily chart will eventually pull the price lower back towards $1300. For now though I am waiting for the initial break down.

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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.