Daily FX Brief, May 10 – Market Wrap & Key Trade Setups Today

FX Market Recap

Equity markets are on track for one of their worst weeks since last October as trade concerns continue to weigh on investor sentiment.

The equity market is all red this morning, and things could get worse after the traiff hike.

Trump administration is hiking duties on $200 billion worth of Chinese products to 25% from 10%.

It had been hoped that a resolution could be reached by the two sides before a midnight deadline for the tariff hike, but no deal materialized.

EUR/USD - 61.8% Fibonacci Level Breakout

The eurozone needs to pull closer together, starting with a common backstop for its banks, if it is to win over its doubters, the European Central Bank’s chief economist Peter Praet said on Friday.

With eurosceptic parties poised to gain seats at upcoming European Union elections, Praet acknowledged that the single currency’s reputation had been tarnished by years of crisis.

On the technical side, the EUR/USD intraday spike hasn’t been enough to change the neutral stance of the pair, as it stalled below this month high of 1.1264.

Furthermore, the pair quickly violated the 61.8% retracement of its latest daily slide at 1.1245, but settled below it, now struggling with the 50% retracement of the same bullish slide.

In the 4 hours chart, technical signs have improved, showing upward momentum.

Support and Resistance

R3: 1.1295
R2: 1.1244
R1: 1.1218
Key Trading Level: 1.1193
S1: 1.1167
S2: 1.1141
S3: 1.109

EUR/USD - Trade Idea
Consider staying bullish above 1.1190 to target 1.1260 today. Whereas, selling should be considered below 1.1190 today.

GBP/USD - Double Bottom Still In Play

The U.K. Gross Domestic Product (GDP) report may trigger a near-term bounce off in the GBP/USD as the growth rate is anticipated to rise 1.8% after expanding 1.4% per annum during the last quarter of 2018.

GBP/USD is down for the third consecutive days as the United Kingdom’s government and the opposition have been unable to reach an agreement.

The Cable seems to gain support above the double bottom level of 1.2990. On the 4 hour timeframe, we can see a series of Doji and test bars which are suggesting a potential reversal in the GBP/USD today. As long as 1.3025 is resistance, look for choppy price action.

Support and Resistance
R3: 1.3209
R2: 1.3117
R1: 1.3063
Key Trading Level: 1.3025
S1: 1.2972
S2: 1.2933
S3: 1.2842

GBP/USD - Trade Idea

Short positions below 1.3025 with targets at 1.2970 & 1.2945 in extension. Above 1.3025 looks for further upside with 1.3060 & 1.3080 as targets. All the best for today!