The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.
I looked at buying the pair on a break of the downtrend (on the hourly chart), which at the time was at 1.4810, however the trend gave way on April 15 at 1.4754 and this was my trigger for long positions. It was also positive to see that the pair found good support on a re-test of the former downtrend (as you can see on the hourly chart enclosed).
Part of the reason we saw the strength in the pair was that we saw solid Eurozone ‘flash’ composite PMIs, which at 54.0 was a 35-month high. This clearly suggests the recovery in the Eurozone is on track and in theory holds upside risks to the consensus Q1 GDP on June 4 of 1%. Employment showed signs of improvement, which is certainly positive.
Today at 18:00 we get the German IFO report and the market is expecting a modest decline in this survey, with expectations for the sub-index to fall from 106.4 to 105.8. A good number in this data point should lower expectations of ECB action in its coming central bank meeting.
I continue to feel there are upside risks to this pair and would potentially have a stop at 1.4775.