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FBS: trading plan for September 10

Trade ideas

US dollar made another push higher on Tuesday, driven by hopes the weak NFP will not change the Fed’s tightening plans and by higher Treasury yields. There are no important releases on the US agenda on Wednesday. The only data that could pause USD buying is the Retail Sales release on Friday. We remain bullish on USD in the long term, but don’t exclude a short-lived bearish correction: USD long positions are clearly overstretched.

EUR/USD extended the downside, hitting a 14-month low of $1.2850 on Tuesday. The currency is clearly oversold, but it seems that nothing’s going to stop the ECB-triggered hysteria now. French Industrial Production data release on Wednesday could accelerate the euro selloff. We hold a short position with an initial target of $1.2750.

GBP/USD hit a 9-month low as the fears of Scotland Independence referendum drive the sterling down. However, the pound found some support at $1.6060 thanks to Marc Carney’s speech in Liverpool. The BOE Governor announced plans to hike rates in spring 2015 as the economic growth remains very strong although the labor market needs more time to recover. We’ll be watching the BOE Inflation Report Hearings on Wednesday for more details. Our GBP/USD target lies at $1.6000. This mark could offer some support for the price (50% Fibonacci). $1.6150 or $1.6300 marks will cap the rallies anyway, so get ready to sell on highs.

USD/JPY hit a 5-year high, meeting support at the 200-month MA (106.50). We expect the pair to retrace down to 105.70 before resuming the rally. These days 110 yen per dollar doesn’t sound so shocking as it was a couple of weeks ago.

Good luck!

Events to watch on Wednesday:

AUD: Westpac Consumer Sentiment

EUR: French Industrial Production

CNY: New Loans

GBP: Inflation Report Hearings

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