We have moved our short-only bias in EurUsd to an each-way strategy, thus allowing both buy and sell orders to be executed via the Tomi EA, as we take a more flexible attitude to the price action over the coming month.
There are several reasons for this:
- We now feel that the Euro may be in a choppy range over the next few weeks, with rough parameters being 1.1400/1.1750 and on that basis, we wish to allow ourselves the opportunity to participate in any potential Euro strength.
- The DXY is beginning to look a little heavy for the next few sessions. (see chart below).
- US yields do look a little bit “toppish” on the charts right now, and a repeat of last month’s US CPI figure (which missed expectations), due later today, would see yields ease back further.
- The selloff in the stock markets, seen on 10/10/18, looks as though it may have more in it, and some of the rhetoric coming from Donald Trump about the “Fed having gone crazy for raising rates too fast”, could unsettle the dollar as we head towards the mid-term elections.
Further downside for the Euro can also not be ruled out, with Italy, as usual being the main culprit, as the row between Brussels/Rome intensifies over the level of Italian debt, as a ratio to GDP, intensifies.
We also have the important EU/UK Brexit summit coming up next week, so a more flexible attitude seems prudent given the likelihood of escalated 2-way volatility, driven through the EurGbp cross, based on whatever the latest headline happens to be.