Of to a slow start of the week, the Euro is likely to rise further
Our strategy session for this week is aimed to deal with the ongoing US dollar weakness at least until Wednesday. The main risk to this trade is some sort of hawkish minutes from the January Federal Reserve meeting that will be released on Wednesday.
Euro strength likely to continue on the basis on decent recovery and less downside risks to price stability in the EU. The first data points that could support this view are released on Tuesday, this is our first call - buy daily calls around 1.3690 for Tuesday expires.
If we take a look at the chart we see a relentless rise of the single European currency against its US counterpart. There are some risks to this outlook, but for now they seem unlikely to materialize at least until Wednesday as we already stated above.
The first support comes from previous resistance around 1.3690 that has been broken on Friday, however the EUR/USD binary options forex pair has not been able to break much further during the day.
This morning we saw the pair mark daily highs around 1.3724, however that has not been sustained for now and current price levels are hovering around 1.37. In order to gain further momentum the move will have to garner some speed and break above 1.3730.
If we see that happening on a sustained hourly basis we could even purchase some hourly call options. For now we don't expect much moves today as the US market is closed and liquidity in Europe seems subdued. The main theme for tomorrow is to manage a close above 1.37.
So for now we are waiting for a revisit of the 1.3680-90 levels to provide us with an opportunity to buy daily calls expiring after tomorrow's close. We are not fans of thin traded markets, so today's expiry is not attractive to place trades.
Stay tuned for updates in the comments section below!