Michael Bridgman

Germany’s economy is contracting and a bearish sentiment prevails for the E.U.’s largest economy.

Despite all the volatility in U.S. stock markets on Wednesday, the USD index managed to move upward and continued higher today.

After a slew of economic news releases for the U.S. today, the EURUSD moved sideways for an hour then broke to the downside. A short was taken risking risking 14 pips for a potential 28 pips to our daily target at 1.1100.

Price continued down to our target and the trade was closed. The Euro weakness was also apparent in the higher octane EURJPY which also moved lower to test its Asian session low and yesterday’s low.

Building permits and housing starts will be closely watched on Friday for the U.S. It would not be unusual to see the USD pull back to close the week after four up days, but strong economic numbers may give it further resilience.

Good luck with your trading!

The AUDUSD continues to move lower and after retesting its Asian session low and failing to stay above it, a short was taken, risking 13 pips for a potential 30 pips to our daily target at .6738. I prefer a 3:1 reward to risk early in the U.K. session but 30 pips is not bad in the current market for an intraday trade.

Price continued lower and we locked in some profit and used a structured stop in advance of the U.S. session. when price continued lower to our target the trade was closed.

The market remains very jittery and reactive to not only scheduled economic news releases but also to “tweets” and Fed comments.

A strategy that continues to work well intraday is to lock in profits allowing some wiggle room, but not letting a profit turn into a loss due to a headline surfacing on Bloomberg.

Be selective in your trade setups and don’t be greedy when it comes to taking profits.

Good luck with your trading!

My preference will continue to be to short the GBPUSD on days of USD strength coupled with nothing favourable coming out of the U.K. – Brexit-wise.

It wasn’t that long ago that this pair could find some contrarians (buyers) on dips below 1.2500. Now 1.2000 is in sight, where it will likely have some difficulty getting through and moving lower…although a 34 year trendline low is at 1.1960.

Today as the pair rallied and failed early in the U.S. session overlap…making a lower high, a short was taken risking 20 pips for a potential 74 pips to our daily target at 1.2113. Price moved lower and we closed the trade at the U.K. close.

We may as well get used to it, President Trump has an interesting style of negotiating. After positive comments of progress being made with the U.S. – China trade talks last week, harsh criticism of China followed and optimism for resolution diminished once again. As the global economies slow even further, the likelihood of further interest rate cuts in the U.S. increases.

Good luck with your trading!

Britain now has Prime Minister Boris Johnson leading the Brexit challenge and hoping to accomplish what Teresa May was unable to complete.

The uncertainty as to how the divorce from the E.U. will be accomplished by October 31st will likely continue to weigh on the GBP regardless of the political rhetoric.

With persistent USD strength this past week and uncertainty in Britain, the GBPUSD set up nicely for a short on Friday risking 14 pips for a potential 34 pips to our daily target at 1.2382.

This trade was a little tricky in that on a Friday how likely is it that the GBPUSD would break and stay below the 1.2400 figure…but it did and it made its way down to our daily target for a satisfying trade.

On July 31st the market remains uncertain as to whether the U.S. Fed will cut rates by 25 or 50 basis points. President Trump will certainly be hoping for 50 bp – but it is not up to him. Usually lower interest rates will cause a currency to weaken but this may not be the case if the Fed only cuts by 25 bp. Expect some volatility on Wednesday and keep in mind that the first move the market makes after the announcement will be reactionary and it is easier to fade a reactionary move that to chase it.

Good luck with your trading!

The major event risk for the week was the ECB interest rate decision, policy statement and press conference.

ECB’s Mario Draghi left interest rates unchanged, but concern about the economy of Germany and the E.U. will continue to offer opportunities to fade any rallies.

The USD was able to continue upward today and a long entry was found in the USDJPY after the ECB press conference…risking 15 pips for a potential 37 pips to our daily target at 108.58.

Price moved higher, paused, pulled back just a few pips, then moved to our daily target in advance of the U.K. close.

Tomorrow the GDP and Michigan consumer sentiment releases will be closely watched. Traders are still deciding whether the Fed will cut the interest rate by 25 or 50 bp on July 31st.

Good luck with your trading!

The AUDUSD has been moving down for three days in a row. Today with USD strength, a short setup was found risking 8 pips for a potential 28 pips to our daily target at .6994.

Price began to move lower early in the U.S. session, then moved through its Asian session low and continued toward the technically significant .7000 figure. At the U.K. session close, we exited the trade for modest gains just above our daily target.

Boris Johnson will be the new prime minister of Britain.

All eyes will be on the ECB this Thursday.

Good luck with your trading!