Last week, I anticipated the market to reach for 1.54800 before selling off. Though the market did stop at that area, I have changed this outlook due to some fundamental reasons - mainly that the Fed is more likely to not increase Interest Rates this year. This should weaken the USD at least for the rest of the year. So I am looking for Buy setups moving forward, the same as my outlook in EURUSD .
My bias is on Long but my profit targets will be very conservative because things in EU and UK may not fair better than the US.
The lack of liquidity hours prior to the Retail Sales report will allow some market makers to manipulate the market. Since the expectations for this report is positive, the overall move should be bullish. But price could dive down first as far as 1.53500 - this is to get a better price and to trigger Sell Stops which the market makers will buy into. Once the Sell Stops are consumed, market will turn around. Once I see that it's really turning and it reached back 50% of the down move right before the report, that's when I'll buy. If the report turns out to be within expectations, I will set the TP to 1.5550. But if it's well above expectations, I'd set it to 1.56300. I'd still take partial profit at 1.55000.
I'll close the trade right away if report is below expectations.
As for the GBP, this weakness could be temporary. If the FOMC moves to weaken the USD with a dovish statement, and if the GDP turns out to be not so good, the USD could become weaker and GBP could come up on top this week. So I will still be looking for a long.