Ichimoku Kinko Hyo CNH/JPY: The CNH/JPY pair is trading above the Kumo…
EUR/GBP: breaking bottoms
Information is not investment advice
Let’s have a detailed technical look at EUR/GBP from a strategic point of view.
Since the beginning of the year, EUR has been gaining value against the GBP. When the virus came, in March, it was pushed out of balance but in the next month it was already back to the same upward trajectory. That, by the way, confirms once again that individual events only have a temporary impact on the market: it is the long-term processes and systematic events that drive currencies. In September, things changed. The currency pair reached the tactical highs above 0.92 and started falling. Since then, it has never stopped.
Currently, it trades below 0.90. The fact that the pair crossed this support downwards confirms the understanding of the market as predominantly bearish now. Although it already managed to make an upward retrace after dropping to 0.89, there is little doubt that it will continue falling. For this scenario, o.8870 is the regional bottom – it saw the price bounce upwards twice before. Will it happen again? Possibly, but a lot of things depend on the outcomes of Brexit – they are due in weeks, if not days. If the trend stays, 0.87 will be the next target for bears. So let’s watch how Brexit evolves and mark the checkpoints.
This week, there are a few high-probability trade ideas I'd like to recommend to you. Trading these setups, be sure to implement a proper risk management approach.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.