Forex trading was extremely light on Monday as traders seem to already be waiting for the U.S. Non-Farm Payroll Report on July 2nd or have taken an early holiday ahead of the U.S. market holiday on July 3rd.
In addition to the U.S. economic report on July 2nd, the European Central Bank also has a meeting scheduled. Traders are not sure what the ECB will do on the 2nd. It has room to cut rates but many traders feel that it will leave rates unchanged. Traders also expect the ECB members to remain a little dovish on the economy because of low inflation. Do not expect any surprises by the ECB because like other central banks, it does not want to interfere with the global economic bottoming process.
If it does comment on anything, it may be about concerns that a rapid rise in the Euro will hurt export demand. This “verbal intervention” may be enough to keep downside pressure on the EUR USD.
At this time, the line in the sand seems to have been drawn at 1.41. Watch this area to see if traders try to trigger a short-covering rally while trading activity remains light.
Despite higher crude oil, the USD CAD was able to post a modest gain. The Main Trend is up. At this time the trend is not being threatened.
Clearing the minor retracement zone at 1.1298 to 1.1419 has this market in a position to rally to a major retracement zone at 1.1922 to 1.2191.
If this market does start to form a short-term top then look for a short-term correction to 1.2289 to 1.1207 before new buyers step up.
Like the Euro, traders are concerned that the rapid rise in the Canadian Dollar may hurt Canadian exports. Traders fear the Bank of Canada may take action to limit the upside of the Canadian Dollar if prices get too lofty.
British Pound traders did not have much to go on today. Trading was thin and volume extremely light. Traders have either taken an early holiday or are waiting for the U.S. Unemployment report on July 2nd.
With July 3rd a U.S. holiday, my feeling is that trading conditions will worsen as the week moves on. It is hard to believe that traders will take the early part of the week off and expect to pick it up on Non-Farm Payroll Day with a market holiday one day later.
Two main tops at 1.6621 to 1.6663 are holding the market back at this time. These two tops were made earlier in the month. Traders seem reluctant to buy strength as a major Fibonacci retracement price at 1.6944 can repel any attempt to break out.
The last key swing is 1.5801 to 1.6621. This range has formed a retracement zone at 1.6211 to 1.611. This area is providing the support at this time.
If this pair is topping, then this area will have to fail first in order to force the weaker longs out of the market.
Contact us:
Local: 312-896-3930
Toll Free: 800-971-2440
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
