EUR Trading Strategy: Can the Euro Trade Higher?

The Trump Effect

Euro Dollar posted moderate gains in today’s session as risk aversion coated global markets. President Donald Trump once again the ‘star of the show.’ The US Dollar (USD) was initially scarred by President Trump firing the FBI Director, James B, Comey. Speculations suggested Comey was fired to halt an investigation into Russia intervening in the US elections 2016.

The secondary wave occurred in the past 24 hours where it has been suggested that President Trump asked Comey to halt the FBI investigation against Michael Flynn. It was also leaked that President Trump leaked classified information to Russia, which was sufficient to fuel the rally in EURUSD. EUR strength spilled over to other currency pairs and were not limited to Euro Dollar.

The chairman of a House of Representatives asked the FBI to provide all evidence they have on the discussion that took place between Comey and President Trump. It is therefore likely the news will continue to plague the market for some time.

The European Central Bank (ECB) has already affirmed it is unlikely to amend its monetary policy until the end of the year.  The Fed is expected to hike rates in June, however, with the recent turmoil there is minor possibility a hike may be delayed.

It is still too early to assume the hike may pushed down the road to September. The market volatility has created a potential entry in EURCAD. We have been monitoring the Canadian Dollar since a crude oil output cut has been extended into Match 2018.

EURCAD Daily Chart

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EUR Trading Strategy: Can the Euro Trade Higher?

EURCAD Daily Chart 17/05/17

EURCAD Trading Strategy

We will begin with EURCAD. We have noted negative divergence is being developed across the indicators. 1.5298 is a fairly strong monthly resistance that we are expecting to hold if tested. If we pay attention to CADCHF the positive divergence is not fully locked in, which suggest CAD may weaken for an additional day before strengthening against a basket of currencies

Although the Consumer Price Index (CPI) may be the trigger (due on Friday), we suspect the tension that is clouding the markets may lift, which may reflect in strong commodity currencies. We are aware the Bank of Canada (BOC) is due to hold its monetary policy on 24 May, 2017 (next week), however, our assumption is that the risk aversion may ease, which may force profit taking in a number of pairs and crosses.

We did consider also opting for the Swiss Franc (CHF), which has surged against several currencies due to safe haven flows. The technical entries though are insufficient to initiate a signal in CHF. Entries that are based on divergences often mean minor drawdown.

If the retracement does not take place in EURCAD within the next 24 hours of initiating the signal we may witness a re-test of 1.5298. To lower the odds of such a re-test to occur within the next 24 hours we require EURCAD to close above or at its current daily high. The lower the daily close the greater the possibility of incurring a drawdown over the short signal but we must stress that it is not guaranteed to materialize.

We pay great attention to the interest at the rollover in all our signals, should EURCAD trade near its daily high prior to the daily close we may initiate the short trade before the end of the daily session. As this is daily entry we are expecting to be in some profit by the weekly close. We highlight that we relying on a strong CAD rather than a weak Euro.

EURCAD Trade Alert

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EUR Trading Strategy: Can the Euro Trade Higher?

EURCAD Daily Chart II 17/05/17

EURCAD short at market price (1.5180)
Take profit:1.4760
Protective stop: 1.5358
Risk Ratio (RR): 1 : 2.5 (approx.)
Estimated duration: 8 days

Note: the price may re-test 1.5298 if bearish retracement does not materialize within the next 24 – 48 hours.

18/05/17 UPDATE: EURCAD is trading at 1.5105 at the time of this writing.

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EUR Trading Strategy: Can the Euro Trade Higher?

EURCAD Daily Chart 18/05/17

We are closing 30% of the short trade at market price,

EURNZD Trade Alert

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EUR Trading Strategy: Can the Euro Trade Higher?

EURNZD Daily Chart 18/05/17

The risk of shorting EURNZD is the spread widening on Sunday should the price fail to post some profit on Friday. As this is a short trade, the spread may widen to 50 – 80 pips on Sunday. We will have to factor it into the protective stop. The entry may suggest EUR weakness, however, as NZD is a commodity currency it is still inline with our views that the risk aversion mode may ease. This is daily entry.

EURNZD short at market price (1.6097)
Take profit: 1.5570
Protective stop: 1.6316
Risk Ratio (RR): 1 : 2.4 (approx.)
Estimated duration: 10 days

Note: 1.6150 is the key resistance.

21/05/17 UPDATE: EURCAD triggered the protective stop following Canada’s CPI figures. Due to the partial’s realization we have ended the trade at breakeven.

22/05/17 UPDATE: EURNZD is trading is trading at 1.6063 at the time of this writing.

EUR Trading Strategy: Can the Euro Trade Higher?

EURNZD Daily Chart 22/05/17

We are closing 20% of the short trade at market price. The partial is to control our exposure NZD (we are aware the spread may have widened for some but we are still liquidating 20%).

23/05/17 UPDATE: EURNZD is trading at 1.6005 at the time of this writing.

EUR Trading Strategy: Can the Euro Trade Higher?

EURNZD Daily Chart 23/05/17

We are closing 20% of the short trade at market price (stop was later shifted to the entry, after the daily close).

24/05/17 UPDATE: EURNZD is trading at 1.5894 at the time of this writing.

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EUR Trading Strategy: Can the Euro Trade Higher?

EURNZD Daily Chart 24/05/17

We are closing 20% of the short trade at market price.

24/05/17 UPDATE: We are shifting EURNZD protective stop to 1.6010. There is a fair possibility the stop may be triggered, as we have already liquidated most of the profit we are allowing the last partial to run. Should EURNZD post heavier selling we are likely to close the last partial.

USDJPY Trade Alert

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EUR Trading Strategy: Can the Euro Trade Higher?

USDJPY 4hr Chart 24/05/17

We may have a long 4hr entry in USDJPY. Unfortunately, we will not have the time to prepare a full strategy for the pair.

The concept is similar to AUDCHF, this is not a trade we are planning to roll over the weekend. We will liquid partials should the price fail to correct higher within the next 24 hours although we suspect the US GDP on Friday may be the trigger.

USDJPY long at market price (111.55)
Take profit: 112.98
Protective stop: 1110.85
Risk Ratio (RR): 1 : 2.1 (approx.)
Estimated duration: 48 hours

Note: We would have preferred a better risk ratio.

25/05/17 UPDATE: USDJPY is trading at 111.87 at the time of this writing.

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EUR Trading Strategy: Can the Euro Trade Higher?

USDJPY 4hr Chart 25/05/17

We are closing 20% of the long trade at market price and shift the protective stop to the entry.

25/05/17 UPDATE II: We are shifting USDJPY protective stop to 111.65. We will be relatively close to the market but the stop has to be shifted above the entry. As noted earlier, we require a break above 112.00, which may affirm stronger gains are due. USDJPY is trading at 111.86 at the time of this writing.

25/05/17 UPDATE III: USDJPY triggered the protective stop at 111.65, we are not re-entering the market. We have ended the intraday position with a minor profit.

25/07/17 UPDATE IV: EURNZD is trading at 1.5930 at the time of this writing, we are closing the last partial at market price.

As all trades are closed this page can now be accessed by all traders. Open trades and relevant intraday strategies are restricted to members only. We have been providing trade alerts in the Forex market since May 2014.
EUR Trading Strategy: Can the Euro Trade Higher?

Last Updated on May 26, 2017