Stick with the broader perspective on Eurozone - short euro
Fundamentals
EUR: There are indeed hawkish expectations as ECB officials reiterated the need for further hikes in June-July to tame sticky inflation. However, most if not all leading indicators' latest readings point to a decrease in economic activity. I believe yesterday's spike is the result of pricing in those hawkish expectations, which is overdone.
The idea is to follow the bigger picture of the economic conditions in the Eurozone. ECB may try to hike rates a few times to fight inflation, but the major downtrend in the euro should continue unless leading indicators show some improvements.
Additionally, the positioning of retail traders is mostly long - an old habit of fighting a fundamental trend. At some point the retailers should take their losses, feeding the downtrend.
USD: Yes, there's a pause in rate hikes expected in June, but Fed has been more successful in lowering inflation, while recent data showed some signs of improvement in economic conditions (consider Retail sales and NFP). Also, the medium-term Fed's outlook is still quite hawkish because inflation is still well above the regulator's target
Technical & other
Setup: S(RTF)
Setup timeframe: 4h
Trigger: 1h
Medium-term: Down
Long-term: Range
Min. Target: MA(10)
*The market is likely to range until FOMC, so the target is quite limited.
EUR: There are indeed hawkish expectations as ECB officials reiterated the need for further hikes in June-July to tame sticky inflation. However, most if not all leading indicators' latest readings point to a decrease in economic activity. I believe yesterday's spike is the result of pricing in those hawkish expectations, which is overdone.
The idea is to follow the bigger picture of the economic conditions in the Eurozone. ECB may try to hike rates a few times to fight inflation, but the major downtrend in the euro should continue unless leading indicators show some improvements.
Additionally, the positioning of retail traders is mostly long - an old habit of fighting a fundamental trend. At some point the retailers should take their losses, feeding the downtrend.
USD: Yes, there's a pause in rate hikes expected in June, but Fed has been more successful in lowering inflation, while recent data showed some signs of improvement in economic conditions (consider Retail sales and NFP). Also, the medium-term Fed's outlook is still quite hawkish because inflation is still well above the regulator's target
Technical & other
Setup: S(RTF)
Setup timeframe: 4h
Trigger: 1h
Medium-term: Down
Long-term: Range
Min. Target: MA(10)
*The market is likely to range until FOMC, so the target is quite limited.
Trade closed: stop reached:
What a pity, I should've watched London opening closely for a possible exit trigger (there was). At least it would be more prudent to move my stop to the breakeven.