EUR/USD trading mixed following Obama’s plan (1.4122)

EUR/USD trades mixed as investors are cautious following U.S. President Barack Obama’s speech yesterday. Obama plans to alter the U.S. banking system by cutting the size of big banks, trading activities and the use of hedge funds.

Although the system does need regulation, there are some concerns in the timing of the announcement and the possible impact it may have.

First, the country is still tackling one of the worst recessions since the 1930′s. Adding new regulation at these stage is risky business. Banks will be more reluctant to provide loans to consumers, thus slowing down the recovery.

Second, the U.S. may loose its competitiveness across the globe, unless other countries follow suit. However, it is unlikely to see other nations do the same as they are also in the midst of an economic recovery.

For now, investors will analyze the announcement and contemplate its implications in the economic recovery and whether or not other governments will implement similar measures.

“Regulation can be good at times and its needed. Nevertheless, all these different government decisions put a cloud of worry over investors. What could they do next?”

The Yen was the biggest beneficiary after Obama’s speech as risk aversion was at the forefront.  USD/JPY shorts may continue to be the best option, as you can play risk aversion and possible weakness in the US Dollar.

Although markets will likely trade mixed, traders will monitor Wall Street’s performance for further guidance.

USD’s near term trend remains bullish but the impact of Obama’s plan is still unclear for us. We will remain on the sidelines for now.

Thank you and have a great weekend.

Trend:

Weekly : Sideways
Daily: sideways
Hourly: Bearish

Support & Resistance:

From current levels, 1.4122, the pair finds initial resistance at 1.4160, followed by 1.4218 and 1.4260.

Key support to watch is the 1.4030 where a break of such would open targets to the 1.3975 level, followed by 1.3900 and 1.3836.

Strategy:

Limit Buy @ 1.3820 Targets: T1 1.3950 – T2 1.4500 Risk: 1.3730
* After 15 pips profit move stop to entry, take profit at will. Trade is canceled if it rebounds near entry and moves higher by 20 pips. Comments will follow if outlook changes.

DISCLAMER: The above post is for information only. Before making your investment decisions please acknowledge that the information provided herein should not be taken without your own individual assessment and extensive investigation, it should not be preempted as your own trading strategies, investment advice and/or trading portfolio.
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