Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY. – MT is sideways normal. There has been some weakness in the USD after a dovish FOMC meeting. It seems “patience” is now the new buzz word. NFP data was mixed on Friday with a strong headline number but lower wage growth and downward revisions to prior months. It is not likely to impact the Fed’s more dovish stance. Other data was also constructive and there was a small bounce in the USD on Friday. US/China trade talks have progressed well with both sides issuing positive statements. There is hope that when the two leaders meet in Beijing in February, it will result in a deal before the end of March. This will be positive for risk assets in particular, and a boost to the global economy which has been slowing. The shutdown of the US Govt is set to resume on the 15th of Feb unless President Trump gets funding for a wall. While this is a headline, FX market sentiment has not focused on it yet. US 10-year yields have continued to fall. This is a bearish factor for the USD and suggest the pressure will remain to the downside. Wait for now.
- Buy GBP/USD. – MT is bull normal. While we remain in the uptrend, we are near resistance and the price looks to be struggling. Given the on-going Brexit headline risks, the buy call is low conviction. Prime Minister May is set to renegotiate again with the EU which has received a luke-warm response from Brussels. She seems to be stuck between a rock and a hard place, a large part due the Irish Border issue. As yet no extension to the Brexit deadline at the end of March has been given. Market participants remain positive there will be an extension. The BOE meet next week and are likely to leave rates on hold. With growing domestic inflationary pressures, a fiscal boost from the Governments last budget and an expected extension to the Brexit date, we can expect them to remain relatively upbeat (i.e. not more dovish).
- Wait USD/JPY. – MT is sideways normal. Stocks continue to rise which is supportive of the pair. But with bond yields under pressure the picture is incomplete for bulls. Best to look for opportunities to short JPY on the crosses.
- Buy AUD/USD. – MT is bull normal. Last week the RBA reiterated that the next move in interest rates will be up not down as some pundits had suggested. This sentiment is likely to be echoed in this weeks RBA meeting. Iron Ore prices have bounced sharply. Data has been mixed. Positive sentiment around trade talks and rising stocks should both help to boost the Aussie. Overall, considering a weaker USD, I like to buy the pair.
- Wait EUR/USD. – MT is sideways normal. While we have seen the EUR bounce against the USD, data remains very poor and is likely to cap any gains. If we do get towards the high at 1.1570 then I expect to sell a sell-off. Otherwise wait for now.
- Buy NZD/USD. – MT is bull normal. Kiwi continues to rise on the back of a weaker USD. Last week S&P reaffirmed New Zealand’s debt rating at AA while raising its outlook to positive. This coming week we have a dairy auction. The last auction saw a rise of 4.2%. Positive trade talks news is good for the Kiwi. Continue to buy.
- Wait USD/CHF. – MT sideways volatile. The price is consolidating below the key 1.00 figure. With EURCHF breaking out into a bull MT we may see a push though 1.00 towards the high at 101. With rising stocks, CHF is one of the weakest currency’s right now.
- Sell USD/CAD. – MT is bear normal. With the more dovish leaning Fed and oil prices rising above $55 completing the head and shoulders bottom, selling USDCAD looks like a good option.
- Sell EUR/GBP. – MT is bear normal. We got the expected bounce last week, and we can look for selling opportunities again. Lower conviction just now though.
Crosses
- Buy EUR/CHF. – MT is bull normal. Look to buy.
- Buy AUD/JPY. – MT is bull normal. Look to buy.
- Buy NZD/JPY. – MT is bull normal. Continue to buy.
- Buy GBP/JPY. – MT is bull normal. Continue to buy.
- Buy EUR/JPY. – MT is bull normal. Look to buy.
- Buy CAD/JPY. – MT is bull normal. Look to buy.
- Wait CHF/JPY. – MT is sideways quiet. Wait.
- Wait GBP/NZD. – MT is sideways normal. Wait.
- Sell EUR/NZD. – MT is bear normal. Continue to sell.
- Wait AUD/NZD. – MT is sideways normal. Wait.
- Sell EUR/AUD. – MT is bear normal. Look to sell.
- Wait GBP/AUD. – MT is sideways normal. Wait.
- Wait AUD/CAD. – MT is sideways quiet. Wait.
- Wait GBP/CAD. – MT is sideways volatile. Wait.
- Sell EUR/CAD. – MT is bear normal. Look to sell.
- Wait NZD/CAD. – MT is sideways quiet. Wait.
- Buy GBP/CHF. – MT is bull normal. Continue to buy.
- Buy CAD/CHF. – MT is bull normal. Continue to buy.
- Buy NZD/CHF. – MT is bull normal. Continue to buy.
- Buy AUD/CHF. – MT is bull normal. Continue to buy.
Other Markets
- Sell USDSGD. – MT is bear normal. Continue to sell.
- Sell USDCNH. – MT is bear normal. Continue to sell.
- Buy Gold. – MT is bull normal. Continue to buy.
- Buy Oil. – MT is bull normal. Look to buy.
- Buy S&P 500. – MT is bull normal. Continue to buy.
- Buy DAX. – MT is bull normal. Continue to buy.
- Buy Nikkei. – MT is bull normal. Continue to buy.
- Wait T-Notes. – MT is sideways normal. Wait.
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(MT = Market Type: Click for more information on market types.)
About the Author
Sam Eder is a currency trader and author of the Definitive Guide to Developing a Winning Forex Trading System and the Advanced Forex Course for Smart Traders (get free access). He is the owner of www.fxrenew.com a provider of Forex signals from ex-bank and hedge fund traders (get a free trial). If you like Sam’s writing you can subscribe to his newsletter.