Here is my LIVE trading journal where I execute all trades according to my thoughts I write here. Feel free to check
So last week was mixed in earnings. Actually it was all ECB Draghi +Trump week. The focus was whether the head of European Bank will drop some clues on halting stimulus, which currently stays at 80B Euro/month bond-buying program plus 0% interest rate. And it did have its results, I would say. Consumer Inflation in the Eurozone gained traction in November-December period of last month (1.1% average across EU, 1.7% YoY in Germany – EU economic leader). Particularly because the extensive help to corporate sector in the EU, offering them cheap money at 0% interest rate, there are a signs of economic revival which many economists saw as a handle for Draghi to start gradually reducing support. But unfortunately Draghi found another reason for inflation pickup – rise in oil prices which gave boost to EU economy while underlying trend remained weak.
Here is the Euro reaction:
My bet was on Euro rally but it seems I was too optimistic on how the things are going on in Europe. Policymakers opted for staying cautious for more as Draghi said after a cut of asset-purchase program to 60B in April, no changes are expected till December. Its sad but my lingering dream to buy Euro on its multi-lows should be shelved for a while 🙂
Euro trade was closed by SL but another opportunity came way. Guess what was it? Of course Trump inauguration! My general projection was selling Dollar as nobody knows what’s in the Trump’s head and how many surprises he prepared for us. The same is for large investors who hates any uncertainty. Moreover his ambitious projects on breaking trading ties is a BIG trading risk which can not work as a general stimulus for markets, only for special stock sectors which can benefit from his protectionist measures. After getting Monday confirmation I hopped in with BUY bet on GBPUSD near 1.2450 with target around 1.2490 and it worked as a charm.
Now about further projections:
Dollar decline should be extended. I will wait for the pullback of USD index from 100 area to 100.20-100.50 but general direction remains SELL. Expecting some sweeping moves from FED is also unreasonable as Yellen said during her two recent speeches that hikes will be GRADUAL. It basically means there may be one rate hike as it was in previous year. Or even no one. Trump “America first” motto is not necessarily beneficial for US economy as cutting trade ties also means cutting the total pie of global economy and consequences are really unpredictable.
What is likely to worth trying:
BUY EURUSD from 1.0730-40, Target 1.0850 – 1.09
BUY GBPUSD from 1.2410, Target 1.26 level.
SELL USDJPY from 113.50 Target 111.70
That’s it for now. Looking forward to you comments or suggestions.