EUR/USD Trade Ideas

  • EUR/USD: long at 1.1260, take profit at 1.1370, stop-loss 1.1205
  • USD/JPY: long at 111.05, take profit at 112.50, stop-loss 110.30
  • AUD/USD: long at 0.7150, take profit at 0.7300, stop-loss 0.7075
  • EUR/JPY: long at 125.20, take profit at 128.00, stop-loss 124.00
  • AUD/JPY: long at 79.50, take profit at 81.50, stop-loss 78.50
  • XAU/USD: long at 1300.00, take profit at 1360.00, stop-loss 1270.00

Market Overview
Signs of economic stabilization in China and a strong start to U.S. corporate earnings season boosted demand for riskier assets, leaving the dollar to turn in its worst weekly performance against the euro in four weeks.
China's exports rebounded in March but imports shrank for a fourth straight month and at a sharper pace, painting a mixed picture of the economy as trade talks with the United States reach their endgame.
Investors are hoping for signs of economic recovery in China to temper worries about slowing global growth, after the IMF this week downgraded its 2019 world outlook for the third time.
China factory surveys for March had provided some glimmers of hope that demand was improving at home and abroad, suggesting government stimulus measures may be starting to take hold.
While export orders remained sluggish, there were signs that a long spell of contraction was easing even as trade talks with the United States appeared to be making progress.
Washington and Beijing have largely agreed on a mechanism to police any trade agreement they reach, including establishing new "enforcement offices," U.S. Treasury Secretary Steven Mnuchin said on Wednesday. However, a top White House official said on Monday the U.S. side is "not satisfied yet" about all the issues standing in the way of a deal to end the U.S.-China trade war.

Trade ideas

EUR/USD bull signals are increasing. The 55-day moving average and daily cloud base have been pierced while RSIs are rising. While bull signs grow the pair trades near the midpoint of the March-April decline. We stay long for 1.1370 target.
Our USD/JPY long opened at 111.05 looks good. The USD/JPY pierced 112, but need to close above 2019's 112.13 high to extend the uptrend toward the downtrend line off of 2018 highs, now at 112.90. USD/JPY outlook remains bullish. Let’s remind that recent outcome from our portfolio structure optimizer showed USD/JPY long position could be a good pick for current phase of the economic cycle.

The European Central Bank kept its ultra-easy monetary policy unchanged on Wednesday. ECB President Mario Draghi confirmed that policymakers were considering measures to mitigate the impact on banks of its negative deposit rates as well as the pricing of new cheap two-year loans to banks, but said it was too early to decide. "We need further information that will come to us between now and June," Draghi said. The ECB has already backtracked on plans to tighten policy but may be reluctant to do more as the root causes of the downturn, weak demand from abroad and political turmoil, are largely beyond its policy reach.

At his regular news conference after the meeting, Draghi gave little away on any further planned stimulus measures but highlighted further downside risks linked to global trade tensions and other uncertainties. "Incoming data continue to be weak, especially for the manufacturing sector. The slower growth momentum is expected to extend into the current year," he said. Draghi added that a weakening of inflation would nonetheless "probably bottom" in September and that ECB Governing Council members recognised the underlying strength of the economy. "The estimated probabilities of a recession remain low," he concluded of the risk to the euro zone's economy.

U.S. consumer prices increased by the most in more than a year in March, but underlying inflation remained benign against the backdrop of slowing domestic and global economic growth.

CPI rose 0.4%, boosted by increases in the costs of food, gasoline and rents. That was the biggest advance since January 2018 and followed a 0.2% gain in February.

In the 12 months through March, the CPI increased 1.9%. The CPI gained 1.5% in February, which was the smallest rise since September 2016. The market had forecast the CPI climbing 0.3% in March and accelerating 1.8% year-on-year.

Excluding the volatile food and energy components, the CPI nudged up 0.1%, matching February's gain. In the 12 months through March, the core CPI increased 2.0%, the smallest increase since February 2018. The core CPI rose 2.1% year-on-year in February.

The Fed, which has a 2% inflation target, tracks a different measure, the core personal consumption expenditures price index, for monetary policy. The core PCE price index increased 1.8% on a year-on-year basis in January after a rising 2.0% in December. It hit the Fed's 2% inflation target in March last year for the first time since April 2012.

Inflation has remained muted, with wage growth increasing moderately despite tightening labor market conditions. The tame inflation environment, together with slowing economic activity, support the Federal Reserve's decision last month to suspend its three-year campaign to raise interest rates.

The U.S. central bank dropped projections for any rate hikes this year after increasing borrowing costs four times in 2018.

Monday-Tuesday EUR rebound lost its way in the morning, after testing the 21-day moving average. But long lower wick on today's candlestick suggests the recent rebound in EUR/USD may last longer. In our opinion short-term EUR/USD outlook is bullish and we opened a long position at 1.1260. A break above a 38.2% Fibo at 1.1284, 1.1448-1.1183, will support our view.

The USD continues its rise against the EUR, in line with our expectations, , as investors evaluated international growth prospects with the U.S. and European central banks unlikely to raise interest rates soon.

Factories in the euro zone had their worst month for almost six years in March and forward looking indicators pointed to gloomy times ahead, a survey found, grim reading for European Central Bank policymakers.

Manufacturing PMI declined for an eighth month, coming in at 47.5 from February's 49.3, just below a flash estimate and its lowest reading since April 2013.

An index measuring output change, which feeds into a composite PMI due on Wednesday - seen as a good gauge of economic health - sank to 47.2 from 49.4, its lowest since April 2013 and the second straight month it has come in below the 50 level dividing growth from contraction.

The disappointing results come after the ECB changed its outlook last month. It pushed back the timing of an interest rate rise until 2020 at the earliest and said it would offer banks a new round of cheap loans to help revive the economy.

Data on Tuesday, however, showed that new orders for key U.S.-made capital goods unexpectedly fell in February and shipments were unchanged, while data for January was revised slightly higher.

Our economic cycle clock suggest the U.S. economy entered the recession phase in recent months.

EUR/USD has registered multiple daily closes below the 1.1241 Fibonacci level, a 76.4% retrace of the 1.1177 to 1.1448 rise. That has made the chance of a breakdown below the recent 1.1177 2019 low more likely. We remain short. is an independent macroeconomic consultancy with thousands of subscribers all over the world. We provide fundamental research to help our clients make better investing decisions. Our subscribers should expect to get access to:

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