Last week the dollar was mostly weak with DXY currently sitting at the 101 area and is about to test the key 100 level most likely after last week's much worse-than-expected Chicago PMI which came at 46.9 versus the expected 51 which was already far lower than the previous 55.8 and now sliding in the below 50 contraction zone.
Another negative for the dollar could be the U.S. Navy killing Houthi Rebels in Red Sea.
Last week was quiet for the Euro with no economic release so we are left with the overall expectation that the ECB is trying to look hawkish pushing back on cutting rates soon.
- This week Tuesday 16:15 we have Euro Manufacturing’s PMIs in Spain, Italy, France, Germany, and the Eurozone which are mostly expected to stay around the previous levels which are still well below the key 50 level for the indicator.
- Also Tuesday we have a 1st tier US Manufacturing PMI which is expected to drop from 49.4 to 48.2 but after the sharp decline in last week’s Chicago one, a surprise to the downside can be expected which will weigh on the dollar further.
We have an extremely Bearish DXM paired with Institutional traders favouring the euro combined with the 5 year seasonality being slightly bearish sitting at -0.69% but the 10-year one being at positive 0.14% so seasonality can be considered neutral for our potential trade.
Potential entry at 0.50 Fib retracement level on the 4H which is also a Big psychological level being at 1.10 area with 0.5R and another 0.5R after a bullish engulfing candle.
SL on the first potential entry will be at 1.09240 which is around 88pips which is more than the ATR average at this zone for the whole of 2023 Daily chart.
Another negative for the dollar could be the U.S. Navy killing Houthi Rebels in Red Sea.
Last week was quiet for the Euro with no economic release so we are left with the overall expectation that the ECB is trying to look hawkish pushing back on cutting rates soon.
- This week Tuesday 16:15 we have Euro Manufacturing’s PMIs in Spain, Italy, France, Germany, and the Eurozone which are mostly expected to stay around the previous levels which are still well below the key 50 level for the indicator.
- Also Tuesday we have a 1st tier US Manufacturing PMI which is expected to drop from 49.4 to 48.2 but after the sharp decline in last week’s Chicago one, a surprise to the downside can be expected which will weigh on the dollar further.
We have an extremely Bearish DXM paired with Institutional traders favouring the euro combined with the 5 year seasonality being slightly bearish sitting at -0.69% but the 10-year one being at positive 0.14% so seasonality can be considered neutral for our potential trade.
Potential entry at 0.50 Fib retracement level on the 4H which is also a Big psychological level being at 1.10 area with 0.5R and another 0.5R after a bullish engulfing candle.
SL on the first potential entry will be at 1.09240 which is around 88pips which is more than the ATR average at this zone for the whole of 2023 Daily chart.
Trade closed: stop reached:
Losing trade with overall good entries and strict risk management as we initially entered with only 0.5 Risk