EU Session Bullet Report – Dollar Safe Haven As Stocks Slide

Global markets continue to be dominated by last weeks Fed announcement. Its decision to leave rates unchanged is again raising concerns over the economy as investors remain twitchy as markets continue to experience a mild selloff. European and U.S stocks suffered the most yesterday, with the German DAX, S&P 500 and the DOW Jones suffering their biggest one day loss in almost one month.

In Asia this morning, poor manufacturing PMI data from China, 47.0 versus 47.6 expected, further compounded the misery as markets in the region experience losses.

One mans loss is another mans gain, and this certainly applies to the greenback. The USD, with the exception of the JPY, continues to strengthen against other currencies as its safe haven appeal returns. Interestingly, the Dollar index today touched its highest level in more than one month.

Today, we can expect volatility and opportunities in the market as flash manufacturing data from the Eurozone and Germany (08:30 GMT), and the U.S (13:45 GMT) is due for release.
In between this news at 13:00 GMT, ECB President Mario Draghi is scheduled to testify to the European Monetary Committee on the state of the Eurozone economy. As recent figures show, the Eurozone’s recovery continues to struggle as inflation remains a major concern, so investors will be looking for the ECB to perhaps increase its QE bond purchasing programme and provide a much needed boost.

Trading quote of the day:

“What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower.”

-William O’Neil

EURUSD
Pivot: 1.118
Likely scenario: Short positions below 1.118 with targets @ 1.108 & 1.102 in extension.
Alternative scenario: Above 1.118 look for further upside with 1.1255 & 1.132 as targets.
Comment: As long as the resistance at 1.118 is not surpassed, the risk of the break below 1.108 remains high.

GBPUSD
Pivot: 1.54
Likely scenario: Short positions below 1.54 with targets @ 1.529 & 1.524 in extension.
Alternative scenario: Above 1.54 look for further upside with 1.546 & 1.553 as targets.
Comment: The RSI is badly directed.