CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

Will EUR/USD break through 2016 highs?

Great trading opportunities next week

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
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There are great trading opportunities presenting itself to traders in the most traded currency pair throughout the next week. To understand how to trade them, let me paint the picture of the last 6 weeks.

After breaking through strong resistance at 1.0960 at the beginning of January, the Euro was flying all the way to 1.1375 or 415 points in 4 trading days. This was followed by 4 weeks of Euro weakness which saw the pair pull back all the way to 1.0855 – a reversal of 520 points. This level was last tested on March 3rd before we saw the pair recover to 1.1337 in the following two weeks. You get the picture. It has been an extremely volatile trading period with lots of opportunities.

Today, we find ourselves at one of these crossroads again. The US Dollar is weakening quickly and the pair has the yearly highs of 1.1337 and 1.1375 in clear sight. The more dovish tone by Janet Yellen and the cohort of Fed officials, puts the Euro in a much more favourable positions than just a few weeks ago. The question is how much longer will the Euro be able to ride this wave?

This week is NFP week! This means that we will very soon get an indication where the pair is heading next. How can you trade this scenario?

Until NFP are released on Friday, there is great possibility that we will see continued US Dollar weakness. Therefore, bullish traders looking to take a position could aim for 1.1337 and 1.1375 with a long position and a tight stop.

Traders thinking that NFP figures will be a big hit will try to get into the market as close as possible to yearly highs at 1.1375 with a short position just before the release with a target of 1.1200 or 175 points profit. Make sure to attach a stop to your position just in case NFP figures disappoint which may send the pair rallying to new highs.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.  Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. 

CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.