By GrowthAces.com

Macroeconomic overview: Dallas Federal Reserve Bank President Robert Kaplan said on Monday that he would support further interest rate hikes if the U.S. economy takes more steps toward reaching the Fed’s goals of full employment and 2% inflation. Kaplan, who votes this year on Fed policy, repeated his view that the economy will likely grow about 2.25% this year, but could grow faster, or more slowly, depending in part on the policies the new administration implements. With government debt rising, reform of entitlement programs such as Medicare and Social Security must be on the table, he said.

Chicago Fed President Charles Evans said that the case for four interest rate hikes in the United States this year is not yet solid and would require a stronger lift in inflation. Evans said he saw three rate hikes in 2017 as “plausible”, but added that two or four increases were also a possibility. In his opinion long-term inflation expectations may still be running below the U.S. Federal Reserve’s target of 2%, though in the shorter term prices are rising towards that figure. Evans said he did not expect core inflation, which strips out volatile elements like energy prices, would reach the 2% target until 2019.

The dollar steadied on Tuesday after its worst week since U.S. President Donald Trump’s election in November, promises of more rises in Federal Reserve interest rates this year helping it recover from multi-month lows in still shaky global markets.

Technical analysis: The EUR/USD managed to close above 1.0825 (38.2% retrace of May-January fall), which means that 1.0976 (50%) is unmasked. Tenkan line is pointing north, indicative of positive momentum. The 7-day exponential moving average is positively aligned.

Short-term signal: We are looking to buy EUR at 1.0780. Our next short-term target will be 1.0960, just below 50% fibo of May-January drop.

Long-term outlook: Long-term target is 1.1125.

USD/CAD: Near-term outlook is unclear, all eyes on Poloz today

Macroeconomic overview: The Canadian dollar was little changed on Monday against its U.S. counterpart as lower oil prices offset broadbased losses for the greenback. Investors are focused on a today’s speech by Bank of Canada Governor Stephen Poloz. He is likely to be asked about the recent better-than-expected economic performance in Canada.

Canada’s annual inflation hit the central bank’s 2.0% target in February for the second month in a row, but closely watched core measures remained tame, indicating little pressure for a rate hike. The market had expected inflation to remain at 2.1%.

Earlier this month, the Bank of Canada said it was looking past what it called the temporary impact of higher energy prices, noting that muted underlying inflation continued to point to material excess capacity. Of the three new core inflation measures, CPI common, which the central bank says is the best gauge of the economy’s underperformance, was furthest away from target, remaining at 1.3%. CPI median, which shows the median inflation rate across CPI components, remained at 1.9%, while CPI trim, which excludes upside and downside outliers, slipped to 1.6% from 1.7%.

We expect the next move of the Bank of Canada will be a hike in the second quarter of 2018

Technical analysis: The USD/CAD did not manage to break below support at 38.2% fibo of January-March rise and is testing the resistance at 23.6% fibo of that move now. The technical analysis does not provide a clear signal for now, but a close above 1.3399 will support USD/CAD bulls.

Short-term signal: Small profit taken on USD/CAD short after the rate hit the lowered stop-loss level at 1.3410. We stay sideways now.

Long-term outlook: In our opinion long-term outlook is slightly bearish, given improving fundamentals of Canadian economy. But there is still a risk of upward move in the near term.

TRADING STRATEGIES SUMMARY:

FOREX – MAJOR PAIRS:

FOREX – MAJOR CROSSES:

PRECIOUS METALS:

It is usually reasonable to divide your portfolio into two parts: the core investment part and the satellite speculative part. The core part is the one you would want to make profit with in the long term thanks to the long-term trend in price changes. Such an approach is a clear investment as you are bound to keep your position opened for a considerable amount of time in order to realize the profit. The speculative part is quite the contrary. You would open a speculative position with short-term gains in your mind and with the awareness that even though potentially more profitable than investments, speculation is also way more risky. In typical circumstances investments should account for 60-90% of your portfolio, the rest being speculative positions. This way, you may enjoy a possibly higher rate of return than in the case of putting all of your money into investment positions and at the same time you may not have to be afraid of severe losses in the short-term.

How to read these tables?

1. Support/Resistance – three closest important support/resistance levels
2. Position/Trading Idea:
BUY/SELL – It means we are looking to open LONG/SHORT position at the Entry Price. If the order is filled we will set the suggested Target and Stop-loss level.
LONG/SHORT – It means we have already taken this position at the Entry Price and expect the rate to go up/down to the Target level.
3. Stop-Loss/Profit Locked In – Sometimes we move the stop-loss level above (in case of LONG) or below (in case of SHORT) the Entry price. This means that we have locked in profit on this position.
4. Risk Factor – green “*” means high level of confidence (low level of uncertainty), grey “**” means medium level of confidence, red “***” means low level of confidence (high level of uncertainty)
5. Position Size (forex)– position size suggested for a USD 10,000 trading account in mini lots. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size). You should always round the result down. For example, if the result was 2.671, your position size should be 2 mini lots. This would be a great tool for your risk management!
Position size (precious metals) – position size suggested for a USD 10,000 trading account in units. You can calculate your position size as follows: (your account size in USD / USD 10,000) * (our position size).
6. Profit/Loss on recently closed position (forex) – is the amount of pips we have earned/lost on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
Profit/Loss on recently closed position (precious metals) – is profit/loss we have earned/lost per unit on recently closed position. The amount in USD is calculated on the assumption of suggested position size for USD 10,000 trading account.
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By GrowthAces.com – Daily Forex Trading Strategies