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Dollar gains against other majors over the deal on Iran, is this the start of a major trend shift?
MORNING BRIEF
Major currency pairs started the week by giving back some of the gains they got during the previous one. Euro and Cable fell against the US Dollar as investors increased their holdings in the US currency excited over the developments on the Iran’s nuclear arsenal front. Analysts worldwide call this deal a “major victory” for the Obama administration and this step takes out an important risk factor of a global scale. Moreover, the latest CFTC report shows that the amount of long positions on the EUR/USD pair has hit the lowest level since August and this could mean that the Euro could extends its losses over coming sessions. However, the recent influx of US data doesn’t help too much in that direction as the housing market showed signs of weakness with yesterday’s Pending Home Sales but Dollar gained influenced by the general euphoria caused by the Iran deal. With little to expect this week from economic data coming from the US today’s Consumer Confidence report appears to be the most significant event to look into. From a technical point of view, Euro needs to clear below the 1.3500 level and should this happen then we could see the pair falling as low as 1.3400. The Pound showed similar weakness yesterday as it failed to move higher above 1.6250 for a third time and now the levels that come into play are the 1.6100 and a downwards break of that could send the pair as low as 1.6000.
US Consumer Confidence could send Dollar higher today
The only important event scheduled for today is the Consumer Confidence report coming from the US at 15.00 UK time. We’re also expecting a couple of second-tier reports from the US housing market prior to the Consumer data but we believe that they will just confirm what we learned yesterday: that the housing market in the States is still struggling. Focusing now on the Consumer Confidence report, analysts expect an uptick here and should this materialize then it could boost the Dollar even more extending Euro and Cable’s losses.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
13.30 |
USD |
Building Permits (OCT) |
Medium |
||
|
15.00 |
USD |
Consumer Confidence (NOV) |
High |
72.4 |
71.2 |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Euro fell yesterday as the deal with Iran boosted investors’ confidence in the US Dollar. The pair seems to reject the 1.3560 levels which leads us to believe that a move lower could be in play and a strong printing in today’s Consumer Confidence report could be the fuel needed to spur this rally. So, we prefer a short entry just below the 1.3485 mark with targets placed at the 1.3460 and 1.3410 marks and a stop placed just above the 1.3545 area. However, since markets can sometimes catch us by surprise we’d like to offer our bullish scenario as well which needs to see Euro printing a new high above 1.3560 to trigger. So, should the European currency move above 1.3560 a long entry is advised with targets at the 1.3600 and 1.3670 marks and a stop placed below the 1.3480 area. We believe the long scenario to be rather hard to come into play but we’d rather have you prepared for that too.
GBP/USD
The Pound yesterday retreated lower to conclude our long trade hitting our stops at the 1.6170 area to offer us 20 pips on the remaining 50% of our last trade. Still a profit is a profit. Now, the pair seems to find it hard to overcome the 1.6250 barrier and has retreated near the 1.6150 area and settling there. The Pound seems uncertain on what’s next thus we’ll offer two quick scenarios for the day ahead: we favor a long entry just above the 1.6175 mark targeting the 1.6200 and 1.6240 marks with a stop placed below the 1.6130 support or a short entry just below the 1.6130 area with targets placed at the 1.6110 and 1.6070 marks and a stop just above the 1.6175 peak. The Pound will be at risk tomorrow with the Q3 GDP release thus we don’t want to be committed into any long term trades until that time.
FTSE 100
The FTSE 100 seems unwilling to break out of this sideways move it holds during recent sessions and we remain firm on our short scenario. We need to the UK index to fall below the 6,640 points support and we repeat yesterday’s trading idea: we will enter short there with targets coming up at the 6,600 and 6,530 marks and a stop placed above the 6,710 area. For this scenario to work we need the FTSE to remain below the 6,725 resistance, any breach above it will signal a potential shift in the trend.
Gold
Gold pulled back higher yesterday on a long overdue retracement. The instrument climbed as high as the $1,258 level and is now hovering near the $1,252 mark. We’d like to try and rejoin the move lower if the $1,248 support gets broken thus we favor a short entry at the $1,248 area with targets at the $1,243 and $1,234 marks and a stop placed just above the $1,258 peak. Gold seems to be moving on a inverse trend compared to the rest of the market thus caution and a reduced leverage is advised. Please don’t over-leverage your account with big positions on Gold as it is known to be a very volatile instrument.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Plc.
The Alpesh Patel Value/Growth filter has indicated [Restricted Content] Plc as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Plc has been rated a 9 out 10 in our Value/Growth rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is relatively low suggesting that the stock might be undervalued. Turnover is up year on year suggesting good growth and the MACD indicator is still rising on the weekly chart above. The recommended holding period for a stock of this type is 6-12 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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