Trade Of The Week: GBPUSD - A Break Of 1.3205 And Look For 1.3079 Target Area

FX Week In Review


It was a strong week for the Dollar, but not for the reasons we expected. The market had priced in the Fed rise and good economic data, it was the ECB that pushed the Dollar higher with the EURUSD down 1.3% down to 1.1606, leading the push in the DXY to 94.79 up by 1.3%


We have talked about the EUR; it was a bad week. Down on the EXY to 116.2


Mixed again for the Pound, a bit of a stuck record (apart from Cable obviously). Nothing will seem to bring it to life. Brexit and Politics are keeping it in a muddle.  


We mostly traded sideways this week with no real data or major developments.

The Week Ahead

Central Banks dominated last week, with the expected 25bps rise out of the Fed, but the ECB caught the markets off guard. We like a surprise in the markets as they lead to some good technical set ups.

They announced the drawdown of QE by the end of 2018 and a cut in the growth forecasts, which could have been anticipated, but the real shock was the explicit commitment to not hike rates before the first half of 2109 was done, a very dovish stance and the EUR behaved accordingly.

Trump also announcing further tariffs on the Chinese, 20% on over $50bn worth of products, will escalate the trade war, with China’s response expected soon. Plus giving rise to Chinese media mocking President Trump with ‘wise men build bridges, fools build walls’ jibe. 

We expect some continued volatility, as the market still digests the Fed and ECB positions, the Dollar is also back at a great technical resistance level. Data wise we have more Central Bank goodness from the UK, Switzerland.

Major Data Releases

Currency Pairs to Watch

We will be interested in the USD, EUR this week. We will be looking at the ’trade of the week’ and the EURUSD, GBPUSD, and USDJPY.

Trade of the Week

So, last week we looked at the AUDNZD, ‘we will look for a break of 1.079, to retest the 100 day MA’ which was hit, with a low of 1.0704. On its way to the second target of 1.069:

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Disclaimer: SC Trading Trade of the Week - Sell a Break of 1289.55 to 1282.00

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