It has been increasingly difficult for traders of the Euro, as headlines regarding Greek negotiations sent the common currency in opposite directions without any chance of a break.
As there is so much uncertainty, the ranges were pretty big. I am still optimistic that the market will prefer a US dollar move over a Euro one. It may seem that the Euro is traveling faster than other currencies against the US dollar, but this is because it was the one that was felt the most.
That being said, the previous day showed a Euro that exploded higher across the board as we heard that Greece and its creditors are, yet again, rumored to be close to a deal – even though the rumor was officially denied. It was too late for bears, however, as the EURUSD, for example, jumped more than two hundred pips – and as a consequence levels were broken.
In the same time, the USDCAD fell like a rock from levels of more than 1.2530 all the way below 1.2400 – on apparently no news.
This confirms the above statement that the move to expect is a US dollar related, and not a Euro/Greek related one.
Friday’s NFP (Non-Farm Payroll) is going to be crucial.
Factory orders in the United States missed expectations the other day, but the indicator is not that important to trigger such a move in the dollar. It must be something else, and all clues lead to the NFP. More importantly, to the FOMC statement and associated press conference which is due to take place in the middle of the month.
From a technical perspective, the EURUSD pair still has some more potential to the upside as we’re looking at a possible flat pattern with the c wave, an impulsive move, in progress. This kind of pattern retraces the highs in the previous wave most of the time. This implies that the 1.1470 area will come sooner rather than later.
I am still saying it is not a done deal as it is only the beginning of June, and traders do not normally take any chances ahead of Fed meetings.
The good news out of this volatility is that traders are provided with “healthy moves” as the market is traveling rapidly.
It is recommended that under such a trading environment, stops should be bigger, position sizing should be smaller, and moving the stop-loss to break-even as quickly as possible in order to secure a position.
This should be a sound management plan in a week in which the ECB (European Central Bank) press conference looms, where Draghi will be questioned about the Greek situation. Huge swings are still possible, so it is better to be safe than sorry.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
