Forex Strategies

We think there was no surprise in the Fed chairman's message. Powell did not offer his individual views on the appropriate pace of tightening or whether he thinks, as some of his colleagues have argued, that the Fed should pause its rate hike cycle sometime next year if inflation remains under control.

This is how we trade now:

EUR/USD

Trading strategy: Await signal

Open: -

Target: -

Stop-loss: -

Recommended size: -

Short analysis: Latest rally fails to hold above the 55-DMA and daily cloud base. The ensuing slide sees the pair slip back below the 10 and 21-DMAs and RSIs turn lower. Our long was closed at the entry point. Bear sentiment is rising but we will stand aside until we get stronger signals.

U.S. Federal Reserve Chairman Jerome Powell's semi-annual testimony on the economy and monetary policy before the Senate Banking Committee on Tuesday will be keenly watched by investors.

If, as we expect, Fed Chair Jerome Powell sticks to his script during the upcoming Congressional testimony, we see no reason for further USD appreciation on the back of his remarks. Given that there is a one-sided risk that rate-hike expectations might move higher following the event, some temporary USD support cannot be ruled out. That said, with a lot of positivity already priced in for the USD, and with Powell likely to warn that an escalation in trade tension poses a risk to the Fed’s baseline outlook, we find it difficult to see any lasting support to the greenback from current levels.

This is how we trade now:

EUR/USD

Trading strategy: Long

Open: 1.1660

Target: 1.1790

Stop-loss: 1.1660 (raised from 1.1595)

Recommended size: 2.31 mini lots per $10,000 in your account

Short analysis: EUR/USD left a bullish hammer on Friday's candlestick. Traders shrugged off today's solid U.S. retail sales data, which suggests the USD rally may be coming to an end. We raised stop-loss of our long to the entry point.

U.S. Fed Chairman Jerome Powell said the U.S. economy remains in a "good place," with recent government tax and spending programs likely to boost growth for perhaps three years. His upbeat comments stoked demand for the dollar today.

U.S. Treasury Secretary Steven Mnuchin said that the United States and China might reopen trade talks, briefly easing concerns about the trade dispute.

This is how we trade now:

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