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20/02/2014: Trading outlook for today

A series of factors overnight have added up to a correction in the major pairs. A slight hawkish leaning in the Fed meeting minutes, in addition to a higher than expected trade deficit for Japan, disappointing China HSBC flash manufacturing PMI, and weaker French flash PMIs have resulted in a shift away from the Euro and Sterling towards the Dollar. Subsequently, EUR/USD and GBP/USD are both under pressure today.

EUR/USD is now back towards the support around $1.3680 which is a key near term pivot level. A confirmed breach would open support around $1.3620 and $1.3560. The momentum looks negative and I will be looking for a chance to sell today as I am increasingly noticing bearish influences on this chart.

GBP/USD continues to drift back towards the 38.2% Fibonacci retracement level of the big bull run that comes in at $1.6603. Rallies are being sold into, so with any jump into the resistance band $1.6662/$1.6695 I am looking to use this as a chance to sell.

USD/JPY is a difficult shout near term. The rate continues to trade around the 102 pivot level. I may look to play the range at the extremes of the trading band 101.37/102.83, but calling the direction very near term is tough with momentum and moving averages so neutral.

Finally, I was stopped out of my EUR/GBP long at flat overnight on a dip below £0.8220. The outlook is becoming increasingly neutral, but I am looking at the price development at the pivot level around £0.8220 and if it continues to hold then I may begin to think about another position.

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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.