Forex Tips

The ECB raised interest rates by 75 b.p. yesterday with hawkish talk of more rate increases to come. Canada too had raised interest rates earlier in the week by 75 b.p. This helped the EURUSD move above par during the Asian session today.

As the U.K. traders started their trading day, the pair surged higher but looked heavy above the 1.0100 figure. As price began to move lower, approaching its Asian session high, a short was taken with a stop loss above the high of the day… with the thinking that price might move back down to retest par and potentially get to our daily target at .9992. Price made its way toward yesterday’s high as we awaited the U.S. session to get underway. Locking in profit before a new session begins is a useful practice, from my experience. On the first candle, our trade was closed for modest gains.

My condolences to the British on the passing of their monarch Queen Elizabeth II. She was always a very welcomed guest when she visited our country and by all accounts a lovely lady.

Good luck with your trading and enjoy your weekend!

Countertrend trades are tricky and tend to yield less in profit. If you haven’t mastered trading with the trend, then taking lower probability trades against the trend, should in my opinion be avoided. The market may be trending strongly as the USD has this year – making waves to the upside, but it won’t go up every day.

Today when the U.S. session got underway, the pair traded essentially sideways for the first hour bouncing above its Asian low area… up and down 15 pips or so. This range broke with a bullish candle higher just before the U.S. equity markets opened. A long was taken risking 23 pips for a potential 80 pips to our target at .9983. The pair moved higher, but couldn’t close above its Asian session high. It eventually pushed higher and we locked in some profit but allowed for another retest of the Asian session high. Price continued higher going into the European close enabling us to lock in more profit. After the first bearish candle we closed the trade ahead of the U.K. close.

On a day of USD weakness, we were hoping for a retest of par, but getting to our target level before the U.K. close would have been a great trade. If the pair moves above par, I am anticipating shorts entering around the 1.0050 area on renewed USD strength.

Good luck with your trading!

Britain has elected Liz Truss to be the new Prime Minister replacing Boris Johnson.

The U.S. economy remains very strong, as does inflation, which suggests another large rate increase from the Fed later this month.

The current trend for the GBPUSD is lower.

As the North American traders returned today after some August holidays and a long weekend, an entry short was taken after the first bearish candle close. We were willing to risk 20 pips for a potential 60 pips to our daily target at 1.1503.

Price pushed lower and we locked in profit in advance of the ISM Non-Manufacturing PMI release which took price to our target and beyond the 1.1500 figure.

Volumes will be picking up substantially this month.

Always be aware of the larger trends and don’t be blindsided by major economic news releases.

Good luck with your trading!

I have been reflecting back on conversations I’ve had over the years with institutional traders about when the EURUSD would reach par or move even lower. Many times a case has been made for the EURUSD to reach par in a given year… but it didn’t. We have a hawkish Fed and a dovish ECB by comparison. Could this be the year?

It was pretty amazing to see the USDJPY definitively break 130.00, then 131.00 and quickly ascend almost 600 pips. The EURUSD moved up to 1.0600 on its recent retracement and has quickly fallen to the 1.0150 area. All eyes are on par once again and there will be some buyers near that level. In the meantime the downtrend continues.

Today, taking advantage of the Euro downtrend came via shorting the EURCAD. The USD was slightly soft but the CAD was showing some strength.

As the North American session got underway the pair was consolidating as it had in the Asian session. When a period of consolidation breaks, price tends to move (but not always) back in its trending direction. A short was taken risking 20 pips for a potential 46 pips to our daily target at 1.3185.

Price moved lower and tested our target level but the spread was 2 pips and the trade didn’t close. On the second test the trade was manually closed.

Tomorrow the event risk will be the NFP release in the U.S. session and ECB President Lagarde will be speaking early in the EUR/UK session.

Good luck with your trading!