Last week ended with a bang for USD after disappointing low wage growth exposed how sensitive the single currency had become. The USD weakened across the board creating volatility before normality was regained. Sentiment overall still remains bullish on the USD as long as the possibility of an interest rate hike in September holds.
This will be a big week for the USD as there will be an array of releases which will not only heavily impact the currency but act as the attributes that may reaffirm what most market participants will be waiting for in September.
Today the ISM Manufacturing PMI was released with results below expectations. The forecast was 53.6 and actual 52.7. The USD weakened slightly but acted almost indifferently as the main focus for most held as the NFP. On Wednesday ADP Non-Farm will be out for the States, this has a slight correlation to the NFP on Friday and a positive figure will not only be good for the USD but give a clearer image on the possibility of Fridays report. Unemployment claims for the States have been improving gradually and a positive result will be expected on Thursday which follows the trend. All eyes will be on NFP this Friday, a release that has the potential to shake markets and ripple to other currencies and commodities.
Speaking of commodities, Gold has remained under pressure globally with the stance of the Dollar acting as an attribute. For almost 2 trading weeks, the price of Gold has hovered within a wide range with support around 1071 and resistance below 1110.0. Regardless of the range this is still a bearish market and Friday’s release, if positive should take this precious metal back to the 1071.0 levels. Other commodity currencies such as the AUD and CAD will be expected to decline if Gold trades lower due to a positive NFP release on Friday.
The EURUSD is starting to look indecisive and choppy on the daily timeframe. USD sensitivity can be seen with the amount of erratic wicks created in the months of June and July. Fundamentally the EURUSD is bearish because the EUR remains passive whilst the USD strength brings the pair lower. Fridays move failed to touch the previous lower high of 1.1120 further creating a bearish daily looking candle. A breakdown below 1.0900 may offer an excellent opportunity with first targets of 1.0800, the lows of May. NFP this Friday should give this pair a jolt likely to the downside in which the shorting can be resumed.
Intraday – This pair remains intraday flat, even with the negative ISM manufacturing release an hour ago. There is intraday resistance at 1.1000 and support around 1.0940. The technical indicators do suggest that prices can trade lower, there is just a lack of volatility. Tuesday’s session may offer a fresh opportunity to go short as long as prices keep below the 1.1000 level.
The battle between GBP and USD strength continues and such can be seen with the range formed. There is support around 1.5500 and resistance around the 1.5650 level. There is a very strong possibility that the range will be broken this week. Not only is there NFP on Friday but BoE Carney will be speaking once more on Thursday. These 2 major releases have caused me to be on the fence temporarily for the GBPUSD until a clear direction can be seen. Technical leading and lagging indicators also suggest this is a flat ranging market on the daily timeframe.
Intraday – GBPUSD looks somewhat intraday bearish. There was a hefty decline in the earlier sessions of this morning with some resistance found around the daily pivot. The MACD has crossed to the downside and prices reside below the hourly 20 SMA. An hourly close back below 1.5600 should open a path to a further decline to 1.5500. If prices trade back above 1.5650, this intraday bearish view becomes invalidated.
AUDUSD currently trades below the 0.7300 and I feel it should be lower. The increasing value of dollar mixed with the depreciating value of Gold should have pushed prices lower. It seems this pair currently waits for the RBA statement on Tuesday, followed by the RBA Monetary statement and NFP on Friday. These releases are heavily significant and do have the power to change the technicals overnight. Levels to watch for still remain 0.7370 and 0.7500.
Intraday – This market is slightly bearish intraday, but volatility is absent. Prices do reside below the daily pivot and hourly 20 SMA, but there has only been a 20 pip decline all day. More action may be experienced in the Asian session. Intraday bears just need to keep below 0.7320 for targets of 0.7230 to remain valid.
USDJPY remains another passive pair which has established resistance below 124.50. A strong NFP on Friday may be the key needed for prices to break the 124.50 resistance which has held since early June. As of now, the MACD is flat but prices have found some support above the new monthly pivot of 123.80. The best strategy for a daily trader may be to observe until a break materializes.
Intraday - There was a bearish trend break of the upward trendline intraday, the weak PMI release in the States was the cause. The pair still trades above today’s daily pivot with very little movement. Asian session may offer some more volatility, but a break below the monthly pivot may open a path back to 123.50.
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