The Last Week in August


REMINDER - I'm not sure what will be this week but please keep in mind we are in the final days of August and trading conditions will be thin. Many FX market participants will be off the desks enjoying holidays with the family as their summer closes out and this could either result in tight ranges or larger swings that will need to be taken with a grain of salt. Of course, things are definitely interesting out there right now, with so much uncertainty around monetary policy direction, White House stability, US policies, geopolitical risk and so on. The US debt ceiling is another one of those stories working back into the headlines and could easily disrupt the market if the government goes to a shutdown. And on Friday, we get that always anticipated monthly employment report out of the US. So yes. A lot going on but at the same time, a lot of participants off the desks. 

STRATEGY - As far as the Euro goes, I highlighted my view on Monday and will be looking to sell. Technically however, there is risk we see one more jump into the 1.2150 area before the market finally rolls back over for a meaningful downside correction, which I believe should be 500 points off of whatever high that ends up taking form in the days ahead. Of all the markets out there right now, EURGBP is actually the most compelling when talking extension, with this rate also at yearly highs but far more overbought on the daily time frame than EURUSD. I have said I love the idea of selling EURGBP as a longer term play, but I have to wait for the right entry setup. At the moment, it looks like that might not be until somewhere in the 0.9300 area. But if it keeps grinding like this, without taking off, it may take even longer and the short could be something that then becomes more viable in the 0.9500 area, which coincides with the 2016 high. 

Trading conditions will be thinner in the final week of August. Via @joelkruger



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