The major event risk for the week was the outcome of the U.S. mid-term elections. The market was not caught off guard, as it had anticipated a divided Congress with a Republican Senate majority and a Democratic House of Representatives majority. The U.S. economy will continue to be very strong and the Fed will continue to raise rates going forward with a 78% probability for the next hike being in December currently priced in.
The USD is stronger today and a long was taken in the USDJPY risking 8 pips for a potential 32 pips to our daily target at 113.99
By the end of the of the U.K. session, we had not reached our target and closed the trade for a modest return.
An alternative trade today was the EURGBP as the EURUSD moved down and the GBPUSD moved up. This is a relatively easy trade to get into when opposing direction is seen between the Euro and Sterling crossed against the USD.
There were other good trade setups today and hopefully this will continue with the mid-term election results now history.
Rumours continue regarding a Brexit deal being almost completed, but there is no deal until an accepted solution is agreed upon and we are not there yet. Be cautious in thinking that the GBPUSD will be headed back to 1.5000 just yet.
Good luck with your trading!
