We have a lot of EUR news due out tomorrow together with a speech from Mario Draghi, the President of the European Central Bank.
His comments alone will move the market and we are hoping for an alignment with the PMI data due out later on in the morning. This will give us a great trading opportunity on the EUR throughout the rest of the week.
We are planning a long trade on the EURGBP should we see and hear hawkish sentiment from Draghi. The Euro has been the stronger of the two currencies over the past week, and over the past month, and is currently sitting at resistance. We would prefer to see this pair fall into a level of support before the news, giving us a better entry. We would also look to take a long on a breakout condition with a small position, adding to it as the bullish move is confirmed.
The chances of him being hawkish is slim in my opinion. The recent economy survey came out negative today due to the EU's high appreciation in recent months.
Mase_00_7
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@Jamal92, Absolutely right, we are not expecting anything hawkish but it pays to be prepared. The technicals often set up for the fundamentals, so the fact that EURGBP finds itself at resistance is not a surprise. Our preferred trade will be the EURJPY short here:
Jamal92
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@Mase_00_7, I totally agree with you on EJ. I am confident of a dovish response from Draghi because the momentum in EG is subsiding now and the fact that EG increased 9% in 4 months is defiantly a cause of concern for small EU countries as it will affect exports and inflation.
@Mase_00_7, It was a great day but draghi was not hawkish yet the pair shot over 60 pips up. I am so patiently waiting for a much needed reversal.
Mase_00_7
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@Jamal92, a combination of higher than expected Manufacturing PMI together with Draghi not mentioning anything specific about QE means business as usual! Looking forward to Jackson Hole now :)
Jamal92
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@Mase_00_7, I agree & I am glad that I banked at least 40 pips from this. What do you predict the outcome from Jackson Hole. I really want EUR/GBP to finally drop and at least drop for a while.
Mase_00_7
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@Jamal92, good stuff, we ended with just shy of 30 pips from the second push up so not bad for a "free" trade!
Draghi steered clear of making a statement about monetary policy today yet the EUR rallied, and he may do so again on Friday as his comments generally seem to be misinterpreted by the market. The ECB is concerned with the current appreciation in the exchange rate as it is detrimental to their efforts to increase inflation, so I'm not sure how tapering is going to help here.
I think we are probably likely to see business as usual and continued Euro strength, but I am hoping for something to quell the market and push Euro lower.