Trade ideas thread - European session 6 May 2021

Author: Justin Low | Category: News

Daily thread to exchange ideas and to share your thoughts

Major currencies are mostly little changed on the day going into Europe currently. The aussie got a bit of a knock earlier, with AUD/USD falling to 0.7701 as China suspends a key economic dialogue between the two countries amid the ongoing geopolitical rift.

But the pair has recovered a little trade at 0.7730-40 as it nears a test of its key hourly moving averages @ 0.7734-55 once again. The 200-hour moving average @ 0.7755 also played a part in keeping gains in-check so that will be one to watch before 0.7800.

The pound is going to be a key focus in the session ahead as it faces a twin risk of events. GBP/USD is seen keeping steadier around 1.3900 for now, holding just above its key hourly moving averages @ 1.3884-97.

US futures are keeping little changed after the mixed session yesterday, with tech stocks having slumped towards the latter stages. The Dow closed at a record high, benefiting from rotation flows as the market continues to fixate on the inflation narrative.

A good opportunity that may present itself would be a buy-the-dip play in the pound in case there is a combo of dovish events i.e. BOE holding back on taper talk and being less hawkish in general, and SNP winning a majority.

We may not see a pullback come immediately upon those risk events playing out but it will be good to identify key risk levels and the potential for a rebound in the quid as long as the fundamental undertones stay as they are in the bigger picture.

Besides that, I'm still a fan of the loonie and getting in on dips as well although after the move in the past two weeks, there might be some propensity for a pullback.

What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.

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