Trading ideas for EUR/USD, GBP/USD and USD/CAD

April 15, 2022

EUR/USD: The euro fell to a two-year low against the U.S. dollar as comments by European Central Bank President Christine Lagarde were seen as a sign that the ECB was in no hurry to raise interest rates, in contrast to the U.S. Federal Reserve’s aggressive efforts to tighten monetary policy. Lagarde said there is no clear timeline for when rate hikes will begin, adding that it could be weeks or even months after the ECB’s stimulus program ends. Technically, the maintenance of a status quo by the ECB President Christine Lagarde was already in the expectation category, therefore dovish guidance sounded in the commentary forced the market participants to dump the euro. The ECB ended its latest meeting with cautious steps to wind down support and avoid a tight timetable. The European single currency fell to $1.0758, its lowest level since April 2020. Later EUR/USD pairs had witnessed a short-lived pullback.

SELL STOP 1.0787/TP 1.0762/SL 1.0799

 

GBP/USD: Sterling dipped as investors were worried that aggressive U.S. policy tightening could hurt the economy, while the European Central Bank signaled a steady reduction of stimulus. The benchmark 10-year U.S. Treasury yield jumped, following two days of declines, after a flurry of economic data such as retail sales and jobless claims and as the ECB signaled less aggressive tightening plans than expected. Meanwhile, sentiment around the Bank of England has taken a back seat of late, with no BoE speakers this week, but at the March meeting, the BoE changed its tone from being very hawkish to being more cautious. That said, we could see some more interest in the pound as we head closer to the May BoE meeting with speakers slated for next week.

BUY LIMIT 1.3034/TP 1.3105/SL 1.2995

 

USD/CAD: The Canadian dollar weakened against its U.S. counterpart as bond yields jumped and the U.S. currency broadly climbed, with the loonie pulling back from its strongest level in more than one week. The currency touched its strongest intraday level since April 6 with the move coming after the Bank of Canada on Wednesday raised interest rates by half a percentage point, its biggest single move in more than two decades. Domestic data for February showed that wholesale trade decreased 0.4% from the previous month, missing analyst estimates of a 0.9% gain, and that factory sales grew by 4.2%. Also supportive of the US dollar, New York Fed President John Williams said that the US Federal Reserve should reasonably consider raising interest rates by a half percentage point at its next meeting in May.

BUY STOP 1.2618/TP 1.2675/SL 1.2590