28/02/2014: Trading outlook for today

The announcement of the flash Eurozone CPI number for February has completely changed the outlook for the Euro, smashing through all resistances in a huge 100 pip rally today. This has changed the outlook for the Euro on not only the intraday but also the daily chart. Staying flat at 0.8% on the month means that the immediate pressure has been taken off Mario Draghi and the ECB to act. The clamour for easier monetary policy will reduce and the Euro has gained strength. Risk is back in play and once the froth has been taken away from the initial move, this could prove to be a significant change in sentiment for the Euro.

The huge jump in EUR/USD has completely changed the outlook. A push above $1.3800 has taken the Euro to a new high for 2014. We must now wait to see how this move unwinds as the overbought momentum on the intraday chart unwinds. Stretched near term, but it is difficult to day at this stage whether the Euro effectively now has been re-rated on the back of what will now have to be scaled back expectation on a rate cut. This is not one for the faint hearted for the time being.

GBP/USD was dragged higher on the coat-tails of the Euro, but now the move has entirely been retraced. Huge spiking throughout today with first the move higher to $1.6768 and now the rate back below $1.6700 again. Once the rate settles down, I will reassess the situation.

As with Euro/Dollar, the outlook on the intraday chart of EUR/GBP has completely changed with the CPI figure.  This move has also stopped me out of my short position. A test of £0.8269 could be seen but RSI is overbought and the move could easily see some retracement soon. I would prefer waiting for this to settle down before deciding what to do next.

As I said in my USD/JPY morning report video, I was afraid of sitting in a short for too long as I felt that the move would again retrace back towards the 102.00 pivot level, a move which is currently being seen. This could be a chance to sell, but with the amount of volatility in the fx markets today, I would prefer to wait for the move to settle. Trading below the old intraday uptrend gives Dollar/Yen a continued corrective look to it still.

Gold continues its ranging period, but has again pushed higher and is back to the resistance of the break below $1331.10. The consolidation continues to make the very near term outlook difficult to trade.

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