EUR/USD – sell at market
Friday’s data provided some support for the dollar, but the market reaction was rather mixed. EURUSD has fallen just after the data release, but then reversed sharply and climbed to the 1,0970 area. However, given recent comments from the FED’s officials and last week’s U.S. data we see the pair as somewhat overvalued. What’s more, also interest rates markets support further falls of the pair, with the dollar rates near 2015 heights. In addition, the dollar should gain some support from D. Lockhart, who is due to speak later today. To conclude, we see current levels as a good opportunity to enter short positions, with a tight stop and with a target well below recent lows.
EUR/GBP – sell limit at 0,7140
After a “Super Thursday” that became a “Super Disappointment” the British Pound remained under pressure, with EURGBP as the one of the biggest winners of the GBP weakness. However, we don’t think that the rally of the pair will continue. First of all, it is the BoE that will raise rates in upcoming months, probably just after the Federal Reserve. Secondly, the economic prints from the UK are improving, while the recovery in the Eurozone remains fragile. On Wednesday we have an employment report from the United Kingdom and we see it as a chance for the GBP to rebound. Nevertheless, we prefer a limit order in case of further market adjustment to the dovish BoE.