USD Trading Outlook (03-01-2014)

Currencies

• The euro (EUR) continues to slid against the US dollar (USD) and looks that it found a strong support at 1.3635. The pair looks that lost its bullish momentum and may be seen lower in the short term.

• The US dollar (USD) declined after recording new five year high at 105.43 down to 104.06 against the Japanese yen (JPY). The Fed chairman, Ben Bernanke, speaks today at 19:30 GMT and his speech may move the markets.

Equities

• The US 500 (SPI) slid down to 1820 after reaching its new record high at 1843.The index is now trading around 1823 and we may see a rebound throughout the day.

Commodities

• WTI crude (OIL) moved even lower touching a monthly low at 95.12 US dollars per barrel. The Crude oil inventories will be released today with forecasts at -2.3 million barrels of stockpiles.

Mover & Shaker with FX Options

• The British Pound (GBP) recorded a two year high at 1.6603 before dropping almost 200 pips against the US dollar (USD). The cable dropped after the UK Manufacturing PMI came out worse than expected. On the calendar, the UK construction PMI due at 09:30 GMT and another worse than expected figure may drive the pair lower.

• Options traders may consider constructing a Long Straddle on GBPUSD in order to benefit from unexpected moves in either direction.

• The Long Straddle can be constructed by buying an at-the-money Call and Put option.