EUR/USD:1.3177/80: Yesterday, we sold the EUR for 50% of equity just under 1.3145 and the profit on the same was taken at 1.3105. Today we would like to stand aside to get a clearer view on the pair.

GBP/USD:1.9539/42: The shorts from 1.9520, was exited at 1.9440, as planned. Now we would sell again under 1.9575 and if done, keep a 45 pip stop for a 80-100 pip dip again.

USD/CHF:1.2331/32: The longs from 1.2350, could still continue for 50% of equity, with a 50 pip stop for a 90-100 pip upmove.

USD/JPY119.65/67: The longs from 119.30 could continue, with a 40 pip stop for a possible 90-100 pip upmove in the interim.

EUR/JPY:157.67/69: Yesterday no trades were recommended. Today also we would like to stand aside.

With the US markets closed for Presidents’ Day and many Asian markets closed for the Lunar New Year, trading has been extremely quiet in the foreign exchange market. News from Japan, the UK and the Eurozone have been driving the dollar’s fluctuations and we expect this to continue for the remainder of the week since consumer prices is the only piece of notable US economic data on the calendar.
Elsewhere, the Euro has started the new trading week on a firmer footing as technical traders continue to drive the currency pair higher after last week’s upside breakout. The Eurozone economy has been exhibiting impressive strength for the past month and the currency’s latest movements reflect that.
At the other end, even though the British pound ended the day virtually unchanged, the currency pair’s V shaped intraday recovery made it one of the most interesting pairs to trade. Sparking the commotion was a written testimony by the Bank of England to the Treasury Select Committee. According to the report, the trade weighted pound is overvalued and is expected to move lower to close the current account deficit. The Bank of England also noted that inflationary pressures has ebbed and have become unusually stable. Yet today’s recovery in the British pound suggests that traders do not want to be short going into the release of the minutes from the Bank of England monetary policy meeting earlier this month.
The Bank of Japan’s interest rate decision scheduled for Wednesday morning Tokyo time is this week’s most important economic release. The continual rise in Japanese stocks has helped to boost rate hike expectations.
On Friday, the odds were essentially 50-50 for a rate hike but now they are closer to 65-35. Former Deputy Governor Fujiwara said overnight that this is the right time for the BoJ to raise interest rates. However aside from strong fourth quarter GDP numbers and the potential for a behind the scenes agreement between the Europeans and the Japanese at this month’s G7 meeting, there is no strong reason for the BoJ to deliver an early rate hike.