Market Sentiment – Forex Trading Tips

We will be looking for dollar longs on pullbacks throughout the week, especially against weaker currencies such as the euro, but this is highly dependent upon the results of forthcoming tier one US data.

Market Sentiment:

Yesterday’s bank holiday in Europe and the US resulted in very light trade; the major pairs were relatively unchanged on the day.

Bullish sentiment remains in the USD after Friday’s US Core CPI displayed better than expected readings. Most market participants are currently expecting a rate hike from the Fed in H2 this year. Further helping the dollar on Friday was Yellen’s speech where she confirmed a rate hike is likely appropriate this year and that the US economy is expected to strengthen.

The euro remains pressured by news over the weekend that Greece is increasingly closer to defaulting on its imminent payments to the IMF. Greek Interior Minister Voutsis said that Greece simply does not have the money to make the €1.6bn due next month. We expect the bearish bias on euro to prevail. Pullbacks against stronger currencies should be viewed as potential opportunities.

This morning’s Asian session saw Trade Balance figures from New Zealand. The reading showed a larger than expected surplus, however both imports and exports decreased from the prior month. Milk powder, butter, and cheese exports were down 27% percent from April. Kiwi is relatively unchanged on the day, remaining within a 25-pip range.

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