What I'm thinking on EURUSD trade right now?
EU CPI data is expected to come
in at 3.00% yoy and Core CPI numbers at 3.50% yoy. No further deterioration was
evidenced in Mfg PMI figures and better showing in Services PMI saw EURUSD take
support at 1.0890 levels. The German – US 10Y spread has been trading in a
-1.80% to -1.95% range since mid December in an ascending triangle formation.
The markets are pricing in a 150 bps of rate cuts by the ECB which translates
to 2.50% rate.
In terms of levels, 1.0870 is an
important support failing which the uptrend in place since Oct 23 would appear
to have broken down. I am biased to go long EURUSD at 1.0880 with stops below
1.0840 for a move higher towards 1.0960/80.
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