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Steady open on currency markets after the German election

The Bundestag elections in Germany are over, with Angela Markel’s ruling party having won the most votes. Trading on currency markets this morning opened relatively peacefully.

Parliamentary elections were also held in New Zealand over the weekend. The ruling National Party received the most votes, although it wasn’t enough to win them a majority of seats in parliament and form a government. The NZDUSD pair has opened down this Monday, with a gap of around 1%.

Day’s news (GMT 3):

  • 11:00 Germany: IFO business climate (Sep).
  • 15:30 USA: Fed member Dudley’s speech.
  • 16:00 Eurozone: ECB President Draghi’s speech.
  • 19:40 USA: Fed member Evans’ speech.

Today, attention will be focused on the Bank of England’s Financial Policy Committee, which is scheduled to make a statement today at 12:30 (GMT 3). Any information concerning the BoE’s monetary policy has the potential to increase volatility on the pound.

EUR/USD

From chart analysis on the 4-hour timeframe, we can see that the EURUSD pair is testing the line of the upwards trend for the second time since the Fed’s meeting:

This calls into serious doubt whether this upwards trend will continue. So, in my view, there’s currently no buy signal.

On the hourly timeframe, the EURUSD keeps failing to renew the key top of the correctional movement and is consequently in the lower half of the price range:

Still, it’s relatively risky to buy EURUSD in the lower part of this range considering that the price has been unable to reach the upper half for two weeks now. As it stands, I can’t see any clear buy or sell signals on this pair.

At the time of writing, the EURUSD pair is trading at 1.1934.

GBP/USD

On the 4-hour timeframe, the GBPUSD pair is once again testing the resistance line of the upwards trend:

Considering that the GBPUSD pair is trading at the upper part of the upwards trend, I’m going to refrain from buying.

On the hourly timeframe, the GBPUSD pair is trading within this potential range:

There currently aren’t any clear signals that the price will exit this range.

At the time of writing, the GBPUSD pair is trading at 1.3542.

USD/CHF

The USDCHF currency pair is testing the upper line of the downwards trend on the daily timeframe:

I haven’t changed my opinion that if the US economy recovers in the second half of this year, the USDCHF pair will break through the trend line on D1 and rise to 0.9950 by the end of the year. I have a long position on this pair, which was opened at 0.9679, with a Stop loss at 0.9390. Here, I’m looking to gain around 300 pips (from 0.9679 to 0.9950), while at the same time risking a drop of similar magnitude (from 0.9679 to 0.9390). The position was opened on the daily timeframe. If some doubts start to arise about the US’s economic recovery, I’ll close the position myself.

At the time of writing, the USDCHF pair is trading at 0.9708.



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