So,even though Madam Lagarde said they are not targeting EURUSD, a strong Euro is, after all, a problem for the ECB. Christine Lagarde has now admitted that EURUSD strengthening is a risk factor for the European recovery and that the bank will “carefully assess” incoming data, including strengthening Euro as it risks both growth and inflation. In the same speech to Arab central bankers she was reported to say that continued fiscal expansion is vital in order to avoid excessive job losses. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

This is a slightly different tone to last week’s speech in the ECB press conference where she said that the ECB does not target the EURUSD rate. Also Philip Lane, the Chief Economist for the bank, has recently said that strengthening EURUSD is a problem and that it will eventually feed into the economic models the bank uses to assess monetary policy. The pair continues in a sideways range and has not yet broken the key support levels at 1.1754 and 1.1711. We therefore, look for opportunities to participate in the existing uptrend.

There is a long-term trendline that has been resisting the attempts to take EURUSD higher. By connecting the highs of may 2011 and may 2014 we can create a trendline that coincides with the high from the week before the last. Currently there is evidence though that EURUSD bulls haven’t given up but are committed to defending the above mentioned key supports. Each time a market runs higher for a period of time there will be a point at which it needs to rest before moving again. This move could be higher or lower but which way the market is likely to go depends is often revealed by price action. We therefore monitor EURUSD on a daily basis in all relevant timeframes (weekly, daily and 4h) in order to gain more understanding on where the market is likely to move next. We do NOT provide investment advice but we help you and other readers to understand, learn and then decide how to trade. In other words, we provide you with invaluable learning opportunities so that you can become a self-sufficient trader, one that isn’t dependent on someone else’s signal service. To take advantage of our ultra-low trading fees, register for an account and deposit here.

Last week we talked about the VIX index creating a lower high, which suggests that the risk sentiment in stocks is improving. Friday was another down day for VIX and both S&P and DJIA created candles that indicate at least short-term momentum reversal could be in the cards.

Equity index futures are moving higher this morning on the back of the news that coronavirus vaccines could be around the corner. This is in line with S&P, Nasdaq and DJIA futures being near to important support levels. At the same time there are other elements, like the US Presidential election and the continuous back and forth between the two major political parties in the US, that can add to the market volatility. To learn more about handling stock index futures trades and manage risk like professional traders do in this environment, join our live workshops at tiomarkets.com/webinars. Our short-term targets for long trades in S&P and DJIA are: 3420 and 28140 respectively.

In the above Nasdaq futures e-mini daily chart we can see how the market has been moving sideways at support (and 50-day SMA) while violating the rising trendline. This combination of bullish and bearish indications makes us expect a short-term move higher is likely but that the target for any long trades should be close by. The next significant (short-term) resistance is at 11566.75 (CFD prices may differ from the futures prices) where the 10-period SMA and September 10th high coincide. Our target one (T1) for successful long entries is at 11500. If Nsdaq doesn’t fairly soon move above this level the risk of sell-off continuing in tech stocks increases significantly. The 11058.50 support that has been now tested a couple of times last week is a key support at the moment. 

Recent macroeconomic data releases

  • BOC Overnight Rate, 0.25% (0.25% expected)
  • ECB Main Refinancing Rate, 0.00% (0.00% expected)
  • US Core PPI, 0.4% (0.2% expected)
  • US PPI, 0.3% (0.2% expected)
  • US Unemployment Claims, 884K (838K expected)
  • US Crude Oil Inventories, 2.0M (-3.1 expected)
  • Eurogroup Meetings
  • US CPI, 0.4% (0.3% expected)
  • US Core CPI, 0.4% (0.2% expected)

Macroeconomic data releases today

  • RBA Monetary Policy Meeting Minutes
  • UK Claimant Count Change

You may access the times and dates in the economic calendar here.

For a more detailed analysis and for actionable trading strategies and ideas, please join our VIP program at www.TIOmarkets.com. We want you to be able to exploit trading opportunities in financial markets with 0 commission and tight spreads. Take advantage of the best trading account in the industry: Tiomarkets VIP Black. For more details on this truly exceptional offering see here.

Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

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Janne Muta
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