Good evening Forex Kings,
Some crazy moves this afternoon across the AUD and NZD pairs. Clearly these two do not want to go down just yet.
There has been some more positive headlines over the past couple of hours. Trade negotiators from the US and China are set to meet to discuss how to proceed with executing the phase 1 of the trade war agreement after Trump threatened to pull the deal.
Currently the overall view on the USD is very bullish, keep in mind May is generally a positive month for the USD. The worse the global economy gets, the more money the FED will print. Therefore we have two contradicting views. Firstly, we have the safety play, USD generally does well during recessions and times of uncertainty. However we also have the FED printing money on a scale that has never been seen before, not even during the GFC which will result in the opposite, devaluation.
FED total assets.
The FED has printed roughly 3 trillion USD so far during this crisis. This much money flooding the markets should result in a weaker currency. The stock market needs this liquidity and this is the only reason for the rally over the past couple of weeks.
DXY Index 4 Hour Charts
We have now potentially seen waves 1 and 2 of the larger wave 3. Looking at the charts you can also see a gap in the market on the 4th of May. This gap will be filled at some stage. Obviously this structure is very ambitious, this is just an idea I am keeping track of.
EURUSD Technical Analysis
Going into tonights session the US will provide the next initial jobless claims and tomorrow the non farm payroll and unemployment data, we could potentially see a weaker USD as the worse the economy gets the more money the FED will print.
Trade setup: BUY – Market Execution (current price 1.0797), stop loss 1.0740 and take profit 1.0920.
Stop loss: 57 pips
Take profit: 123 pips