A Blank Cheque Euro – April 26th Morning Brief - Forex News by FX Leaders

A Blank Cheque Euro – April 26th Morning Brief

Posted Wednesday, April 26, 2017 by
Arslan Butt • 3 min read

In yesterday's New York trading session, the market encountered another wave of volatility as investors increased their positions in the single currency Euro. This came specifically after the release of mixed economic figures from the United States.

Our trading signals on the Gold and Nikkei were a hole in one. Investors are now desperately looking to find out more about President Donald Trump’s tax reform plan to predict how it will impact the market. On Friday, U.S President Donald Trump stated that he is likely to reveal a tax plan on either "Wednesday or shortly thereafter" which may include a “massive tax cut” not only for individuals but also for businesses.

The good thing about Trump is that he never fails to provide the market with breaking news. He managed to weaken the Canadian dollar and strengthen the greenback with a mere twitter post. He tweeted that "Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this." Watch!

Economic Events To Watch Today

AUD

  • CPI q/q (2:30)
  • Trimmed Mean CPI q/q (2:30)

CAD

  • Core Retail Sales m/m (13:30)
  • Retail Sales m/m (13:30)

USD

  • Crude Oil Inventories (15:30)

EURUSD – The Buyers Favourite

The demand for a single currency Euro is consistently rising. Frankly speaking, I wasn't expecting a pullback in the EUR/USD but it seems investors are in love with the Euro. Perhaps one of the reasons behind the bullish Euro is the uncertainty in Trump's policies which are keeping potential investors away from the U.S dollar. I think that's exactly what Trump wants, a weaker dollar

Consequently, investors are left with very few investment options. The results of the first round of French elections are making the Euro the most reasonable currency for investment purposes. We aren't expecting any major fundamentals from the Eurozone today. This forces us to trade based solely on technical trading levels.

EURUSD - Daily ChartEURUSD – Daily Chart

Technical Outlook – Intraday

Although the single currency Euro is trading in the overbought territory against the U.S dollar, investors are not willing to take profit. Yesterday, the EUR/USD violated the major resistance level of $1.0908 to hit another resistance at $1.0946.

The pair has formed an ascending triangle pattern in the 4-hour chart which is extending a strong support at $1.0920 and a resistance at $1.0945. As we know, the ascending triangles patterns are likely to break upward. If this happens, we may see EUR/USD testing a new target level of $1.1000.

Forex Trading Signal

I'm looking to buy above $1.0955, with a stop loss below $1.0915 and a take profit around $1.1000.

USDCAD – The Victim Of Trump's Tweet

The Loonie gained bullish momentum in the New York session on Tuesday after Donald Trump commented "We’re going to be putting a 20 percent tax on softwood lumber coming in — tariff on softwood coming into the United States from Canada”

As we know, the Canadian economy sends nearly 70% of its exports to the U.S and the increased duties are likely to hurt Canadian business. Therefore, the investors withdrew from Canadian currency and the sudden sell-off caused a drop in the prices of the Loonie.

USDCAD - Daily ChartUSDCAD – Daily Chart

Technical Outlook – Intraday

The USD/CAD has already completed a 23.6% Fibonacci retracement at $1.3580 and is now heading towards the next target level of 38.2% with a retracement at $1.3540.

On the flip side, the RSI is still bullish above 50 along with the 50 periods EMA. I can see a strong support level at $1.3515 and this could be a potential buying level for today.

Forex Trading Signal

In my opinion, It's better to wait for prices to come closer to $1.3540 before taking up a buying entry in the pair. The most secure entry level will be $1.3530 with a stop loss below $1.3490.

Ending Remarks

We don't have many economic events from the United States today, but Canada will be releasing Core Retail Sales and Retail Sales. Let's keep a close eye on Canadian currency pairs to spot more trading opportunities.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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