Trade Example: Trading EUR/USD On Bad Economic Data

"Given the rapid escalation of the Coronavirus in Europe we knew we might see downside if we printed below the market’s minimum expectations."
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We’re going to demonstrate how Forex Source subscribers made money trading a sentiment shift involving bad economic data for the EUR this week…

The move we’re going to be looking at is on EURUSD. So, let’s break this down and see how you could have predicted and caught this move, using our market commentary.

So, firstly we need to understand the context or the baseline surrounding this pair before the move took place…

Inside the Forex Source Terminal on 17 March in our video commentary section, we release daily videos update for all of the major currency pairs and give our current bias as well as the reasoning behind it. In the video we did for the EURUSD we explained that the bias for the EURUSD for the day was to the downside.

This was due to the EUR being pressured by a further exponential rise in the spread of the Coronavirus as well as the containment measures put in place around Europe which would severely impact the EZ economy.

On the other hand, the video explained that the Dollar was well supported due to a massive demand for US Dollars as investors were rotating into cash and as bank, governments and companies all scrambled to get cash rich due to the overwhelming economic uncertainty.

Once the baseline was in place the next step is to identify the type of breaking news that would generate the biggest market moving shift…

For this we can head back to the terminal to our Daily Risk Event Outlook report for the 17thof March. In the report we highlighted that we were waiting for the latest German Zew data, and even though markets were not really focused on Economic data, that given the rapid escalation of the Coronavirus in Europe that we might see downside if we printed below the market’s minimum expectations.

So now all we needed next was the trigger, in other words, the sentiment shift that we identified ahead of time, to actually take place.

So, also in the terminal, later on the 17thof March we had the release of the German Zew data and saw that both metrics came much lower than the markets were anticipating. After this we made another follow-up video in our video commentary section highlighting the bad data and likelihood of further momentum to the downside for the pair.

In the chart, after the event the EURUSD was testing the 1.1050 support area to the downside, you could either have jumped in with the Zew data or you could have waiting for the pair to break out of the support zone, either way, you could have traded the pair to the downside and looked to take some profit at the 1.0950 which coincided with the support we saw going back to the end of February and could have banked about a 100 pips in the process.

The focus of trade examples like these are not to showcase a particular strategy, but rather to show how our commentary and analysis can help you interpret news and fundamental analysis and turn it into profitable trades.

So, if you’re interested in learning more about Forex Source and how our market commentary and analysis can help you, click the link below and check out Forex Source.

Thank you and please remember to post your questions or comments below this video, we read and appreciate them and actually base our future posts on what you ask for.

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