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Dollar technical pointing to weakness ahead of NFP
07 August 2015, 14:51
Dollar is showing signs of weakness ahead of NFP, suggesting that data might
either disappoint or Dollar might fail to break above its range and might
succumb to testing the floor once more.
FXCM US Dollar index is currently trading at 12034.
Euro is currently trading at 1.0934 and pound is trading at 1.5522 against Dollar.
FXCM US Dollar index is currently trading at 12034.
- Current range of FXCM Dollar index stands as 12060 on the up side and 11980 area to the down side.
- Dollar index tried to pose breakout of the range yesterday over BOE minutes as pound slumped and Yen has broken above its resistance of 124.5 area this week.
- The tryout however failed yesterday with a bearish engulfing candle. This is a clear sign of weakness at key resistance, which is suggesting that possibility runs high that dollar might test the support area.
- To add to the bearishness, Dollar index has broken below recent interim trend line, as shown in the figure suggesting a break further is possible.
Euro is currently trading at 1.0934 and pound is trading at 1.5522 against Dollar.
FxWirePro: Speculate EUR/USD via ATM binary calls ahead of NFP, target 20 pips
07 August 2015, 14:50
On verge of Non form payroll EUR/USD's vols are bolstering up close to 11%.
As we could foresee some up swings on this pair is most likely, hence we reckon
one touch at the money binary calls to fetch yields up to 15-20 pips with
ease.
Forecasts for July month NFP is 222K
Private segment - 218K
Government sector - 4K
Preliminary ADP changes revised - 185K
Since Euro has collapsed from the peaks of May 2014 (almost more than 23%) but still there is no trace of recovery despite all attempts by euro area leaders.
RSI (14) on weekly chart converging with falling prices (Currently, RSI trending at 42.1192). This momentum indicator has started evaluating when the prices touched 1.1180 by taking the computation of last 14 weeks periods the magnitude of recent gains to recent losses in an attempt to signifying the overbought pressures.
While %D crossover has been maintained on slow stochastic curve with every price dips (Currently, %D line at 28.3835, while %K line at 19.4655). Stochastic on monthly curve also remains in the oversold territory but %D crossover signifies weakness in the euro.
With this technical reasoning, we recommend arresting further downside risks of this pair by hedging through Put Ratio back Spread on hedging grounds. So purchase 15D 2 lots of At-The-Money -0.49 delta puts and sell 1M one lot of (1%) In-The-Money put option in the ratio of 2:1. The short ITM puts funds to the purchase of the greater number of long puts and the position is entered for no cost or a net credit. The delta of combined positions should be around -0.33 with slightly negative theta value.
Forecasts for July month NFP is 222K
Private segment - 218K
Government sector - 4K
Preliminary ADP changes revised - 185K
Since Euro has collapsed from the peaks of May 2014 (almost more than 23%) but still there is no trace of recovery despite all attempts by euro area leaders.
RSI (14) on weekly chart converging with falling prices (Currently, RSI trending at 42.1192). This momentum indicator has started evaluating when the prices touched 1.1180 by taking the computation of last 14 weeks periods the magnitude of recent gains to recent losses in an attempt to signifying the overbought pressures.
While %D crossover has been maintained on slow stochastic curve with every price dips (Currently, %D line at 28.3835, while %K line at 19.4655). Stochastic on monthly curve also remains in the oversold territory but %D crossover signifies weakness in the euro.
With this technical reasoning, we recommend arresting further downside risks of this pair by hedging through Put Ratio back Spread on hedging grounds. So purchase 15D 2 lots of At-The-Money -0.49 delta puts and sell 1M one lot of (1%) In-The-Money put option in the ratio of 2:1. The short ITM puts funds to the purchase of the greater number of long puts and the position is entered for no cost or a net credit. The delta of combined positions should be around -0.33 with slightly negative theta value.