Market Update – March 1, 2018

Market Update – March 1, 2018

With one trading day in the week left, March started the way it ended: with a higher USD. On top of it, Trump’s administration just announced it will impose tariffs on steel and aluminum this March.

In other words, protectionism at its best. How will it impact the currency market?

Brexit Draft Ready

The other day we saw the first official draft of the Brexit divorce. Of course, nothing good for the United Kingdom, in the sense that the access to the single market comes with compromises.

As a consequence, the GBP dropped like a rock, with GBPUSD dipping to almost 1.37 and EURGBP surging well above 0.88. It seems like an extended move beyond 0.90 is in cards, providing EURUSD finds some bids.

Mixed Euro

The Euro pairs acted strange lately. While the EURUSD and EURJPY fell, the EURGBP consolidated only to break higher.

Right towards the end of the month, the EURJPY made the dip below 130. It was quite an outstanding journey considering that only a few weeks ago it flirted with 137.

However, the move lower in the EURUSD pair looks impulsive. But, the impulsive move doesn’t seem to be the start of a bigger degree cycle. Instead, it looks like it is part of a c-wave of a flat.

If that’s correct, the flat looks like a running correction, making the EURUSD suitable for another rally. However, a little more time is needed.

ECB Next Week

The European Central Bank will hold its regular meeting in a week from now, and that’s when the Euro traders will decide on the direction. Until then, it is unlikely for the common currency to make sharp moves, but with the current markets, you never know.

The Eurozone GDP grows at a constant rate and the so-called Euroboom is evident in all countries. To give you an example, the Manufacturing PMI in Greece rose to a 212 months high!

However, risks still exist. This weekend the Italian elections will make Euro traders closing their positions on Friday. The risk is that we’ll have a gap over the weekend.


March should prove an interesting month. Interesting developments take place both in Eurozone and the United States, making trading the dollar and the Euro a roller coaster.

If I were to pick a favorite pair to break higher, it’ll be the EURGBP cross due to GBP weakness. Time will tell if 0.90 will be a tough nut to crack, or only a checkpoint.

Also published on Medium.

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