Trading plan for November 11
By Kira Iukhtenko
US Dollar extends the upside after a short-term pause on Monday. USD index returned to the Friday’s post-NFP high of 99.40 on Tuesday. We remain bullish for the USD this week. Watch the FOMC members’ comments on Thursday and the US October retail sales on Friday.
EUR/USD broke below the 1.0700 support and is actively declining. We target 1.0650 in the nearest future (trend support), small pullback from here could take place before a test of the 1.0500 target. Use all the rallies to go short. Divergence in expectations between the ECB and the Fed remains a strong bearish factor.
GBP/USD is a bit more stable on Tuesday due to the EUR/GBP decline. Cable has recovered above 1.5100 (early October lows) and stays calm ahead of the UK labor market data on Wednesday. Officials forecasts are upbeat, but the market reaction to any deviation could be very rude – remember the last week’s volatility. Resistance at 1.5200 is expected to limit the upside. We stay bearish though and target 1.5000 this week.
AUD/USD bounced back from 0.7200 and is testing the 0.7020 support as we write. Watch the Chinese figures tonight. Any disappointment will pull the Aussie down to our bearish target at 0.6900.