E/U is very difficult to predict the move. The trend of E/U is not clear currently. You have the reason to LONG E/U base on past perform of E/U. In the worst scene, E/U still rallies despite of heavy sell-off pressure. Moreover, when the Eurozone debt crisis passed, investors begin to rebuy euro to invest into Eurozone and governments over the world favour euro as a good choice to diversify their currency reserves. We see Current Account of Eurozone and Germany is always surplus. On the other hand, we have some reasons to SHORT E/U too, most forecasters bet on falling down of E/U by end of year. They think that the divergence in economic performance between US and Euro would weight on Euro , and while the deflation of Eurozone still not be solved, FED tapering and tightening definitely drive the greenback to be higher against all major currencies around the world. Yes, I think it’s very reasonable, so make sense for those reasons.
ECB clearly doesn’t want E/U rally; if E/U reaches to 1.40, ECB must take action to devalue of Euro . Recent weeks, I saw ECB Mario Draghi tried to set the path for Euro , his speeches were very dovish. He hoped that by dovish comments, and maintaining low interest rate, using conventional tools, he will not use unconventional tools such as Quantitative Easing to intervene the market. Hence, no one wants to LONG Euro above 1.40 at least in the being time. BUY Euro in the long term is too risky.
I check the FX community outlook, traders are holding a massive of SHORT position; Short position is double the LONG position. The market sentiment obviously is .
Next week, main economic data of Euro are:
- Markit Manufacturing + Services PMI
- Germany IFO report
- ECB Mario Draghi Speech ( one more speech, he likes to speech)
Regarding to USD, we have Durable Goods Orders is released on Thursday. I check Retail Sales report + Manufacturing PMI + Industrial Production, all give positive number, I believe Durable Goods Orders would beat the forecast, but be careful, we need good data support USD strength, last two weeks market ignored all positive data of US, if market doesn’t respond to Durable Goods Orders , it’s nothing new. One more thing, we have FOMC Minutes on Wednesday 30, April , I surely FED will not change the taper plan, market most likely BUY USD to respond the Minutes. Why I hold LONG E/U while I know surely it will fall down after FOMC Minutes ?.
In short, I favour SHORT position, and the target I choose is 1.3730
I have no idea for TA now. All TA ideas seem are useless to trade E/U. Fundamentals always dominate and drive the move of E/U.
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Just one thing, the April 30 FOMC is not minutes but it is the interest rate decision and monetary policy statement.
Here is a very simple idea with the FOMC meeting as the goal for 1.3550 -
That is only about 250 pips in almost 2 weeks.