The situation in the euro looks confusing. On the one hand, we can expect a decrease in quotations to the psychological level of 1.1000 against the background of capital inflows into risky assets. The euro is the currency of financing and is actively used in carry trade transactions. Investors around the world are increasing long positions in risky assets through the currencies of financing (the renanu and the euro). The day before, Chinese Ministry of Commerce spokesman Gao Feng said that China and the United States agreed to reduce tariffs on each other’s goods in a proportionateway. This factor has inflated the prices of many corporate stocks and brought a number of stock markets to fresh historical highs. On the other hand, the uptrend in the oil market may support the single European currency, as there is a strong correlation between the euro and oil.
Trading recommendation: flat 1.1015 – 1.1100
The meeting of the Bank of England presented a small surprise: two members of the bank’s board of directors supported a reduction of the interest rate by 0.25%. Of course, this is not much, but it still made traders nervous. A small split in the ranks of the British monetary regulator will negatively affect the dynamics of the credit market, where the yield of 10-year UK government bonds fell in relation to its counterparts from the U.S. and Germany. At the same time, the Bank of England raised its FORECAST for GDP and announced expectations of inflation growth in the second half of next year. In general, confused everyone. Everything seems to be bad, but it seems to be good. What do we have in the dry residue? Since the British pound correlates with risky assets, which are now sold out as “cakes at the bazaar on the weekend”, we can expect an increase in quotations in the area of psychological level 1.3000. Since it is more than 1% up to this level, it may take several days to move to this mark.
Trading recommendation: Buy 1.2800/1.2780 and TakeProfit 1.2855.
The bullish rally in the stock markets will have a positive impact on this currency pair, as it has a strong correlation with the U.S. stock index . In my last review, I noted the fact that journalists once again launch a “duck” on the failure of trade negotiations between the United States and China. Such misinformation was last observed two weeks ago, and this week the situation has been repeated. On Thursday, Chinese Trade Ministry spokesman Gao Feng dispelled all rumors and confirmed the Chinese side’s intentions to conclude an agreement with Washington.
Trading recommendation: Buy 109.12/108.89 and TakeProfit 109.44.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.