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Currency Analyst since 2010

Forex trading plan for March 8

By Elizabeth Belugina

Monday was rather quite after the NFP-moves on Friday. Brent oil rose to 3-month high on Monday approaching $40 a barrel mark on the improved market’s risk sentiment. However, the market is still in the situation of oversupply, and the situation may change quickly. GDP growth target of 6.5-7% for 2016 was announced at China’s National People’s Congress. That’s below “about 7%” mark, which was set for 2015, but still rather high and somewhat dispels concerns of a hard lending. The nation’s foreign-exchange reserves fell to the more than 4-year minimum in February, but at a slower pace last month thanks to Beijing’s efforts to stabilize yuan and limit capital outflow. On Tuesday morning China will release trade balance figures – an important release for the market’s risk sentiment.   

EUR/USD stayed below resistance at 1.1050 because of the renewed expectations of the ECB’s policy easing. Although much of the easing is already priced in, the single currency will still likely remain under pressure. However, bears will likely stay cautious after the central bank disappointed in December. Support is at 1.0925/00 and 1.0830.

GBP/USD slid below 1.4200. The Bank of England’s Governor Carney will testify to the Parliament at 09:15 GMT on Tuesday. Carney will likely have to answer questions about potential Brexit – a topic, which he so far tried to avoid. The event makes sterling vulnerable for a decline to 1.4080/1.4040. Resistance is at 1.4250 and 1.4350.

AUD/USD closed above 0.7400 on Friday. The currency was supported by the market’s sentiment and the jump in iron ore price from below $40 per ton in the middle of January to more than $50 per ton now. Note though that this driver isn’t very sustainable. Resistance is at 0.7500/30. If Chinese data disappoint, AUD/USD will slide to 0.7365/0.7315. 

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