KEY RISK/TRADE IDEAS

From the FXWW Chatroom: MARKET UPDATE: FX markets are springing to live once again with high energy returning to G10. Euro crosses have been trading extremely well thanks to a combination of momentum in the European reinvestment story and softening US yields. Trump has gone from hero (stronger US$, rising equities and rates) to zero over the course of the year. Momentum in the US$ reversal trade has been gaining this week and looks set to continue in the short-term. UK employment data the only major data release today.

EUR:

EURUSD –            Support: 1.1024 (Post-FE2 high/break), 1.0923 (low this week)    Resistance: 1.1143 (Nov-16 high pre-US election), 1.1300 (high on US election)

The European asset reallocation story has been gathering momentum this week and yesterday saw a period of extremely high demand for EURUSD and Euro crosses more generally. Net-aggressed figures on a major FX trading platform showed 4.6bn of demand and is already showing 1.5bn since 10pm. The market feels under positioned in the trade with pullbacks thus far extremely shallow. Note, however, we have started to see supply of Euros from both the corporate and real money communities. Although we still ultimately look for EURUSD to grind higher, we have reduced our exposure in the short-term.

GBP:

GBPUSD –           Support: 1.2844 (last week low), 1.2831  (4th May Low)                   Resistance: 1.2990 (recent double top) 1.30 (physiological), 1.3445 (Sept high)
EURGBP –           Support: 0.8557 (100dma), 0.8530 (break up)                                      Resistance:  .8597 (200dma), 0.8640 (trend line)

EURGBP
EURGBP takes out resistance at .8515/30 yesterday and this am takes out the 200 day through .8597.  Some resistance .8640 but we believe the break through .8530 yesterday is significant and opens up the move to towards .8730.  Wage data important today – are we going to get high inflation with weak wages… ?  Not a great scenario.  We like EUR and EURxxxs higher sti

DB
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