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Trading Video: EURUSD and GBPUSD Break Higher, USDollar at Critical Support

Trading Video: EURUSD and GBPUSD Break Higher, USDollar at Critical Support

2014-07-01 02:57:00
John Kicklighter, Chief Currency Strategist

Talking Points:

EURUSD and GBPUSD put opened with tremendous moves for a week that typically sees liquidity drain rapidly

• Despite the move from these majors, the USDollar is only not facing 16-month support

• The BIS - central bank of the central bank - releases a serious warning on stimulus and financial markets

Market conditions change, and our strategy should reflect those changes. We have coded the DailyFX-Plus strategies for Breakout, Range and Momentum to adapt to these market shifts.

The FX market is doing its best to fight the seasonal liquidity drain's crash into historically low volatility measures. Both EURUSD and GBPUSD marked notable bullish breaks Monday. While the immediate follow through on the moves was limited, the former breaks against a prominent divergence in fundamental forecasts (monetary policy and interest rates) and the latter is now trading at level last seen since 2008. If these pairs are to gain a foothold, we will likely see the USDollar slip below support that has stood for 16-months - difficult in these conditions. There is plenty of event risk to make this a risk. In other news, the Bank of International Settlements (BIS) has issued the most prominent warning of complacency and financial market risk of any regulatory institution to this point. What does all of this mean for traders? We discuss that in today's Trading Video.

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