There were a handful of tier 1 events last week. If you ask me though, the price action that we saw on the charts was pretty limited.
The euro, for instance, initially fell following ECB President Draghi’s remarks that the central bank would keep rates low for an extended period of time. However, the shared currency didn’t plunge. This was probably because positive data came out of the euro zone, particularly from the periphery nations.
The dollar also got mixed signals from the roster that were released last week. According to the GDP report, economic growth was stronger in Q2 2013 and the ISM manufacturing index printed its biggest monthly improvement since 1996! On the other hand, the NFP report came in below expectations. To top it off, the initial reading for June was revised lower. Aaack!
With that said, and given that we don’t have a lot of market-moving data on tap in the next few days, we’ll probably see the dollar pairs trade sideways. I personally think that monetary policy is the most dominant factor affecting price action. Until we see more hints on where the Fed is headed, the dollar’s moves will be limited.
USD/JPY: Slightly Bullish
On the hourly timeframe, we see that the pair is testing support around the 50% Fibonacci retracement level and the 200 SMA. I’ll wait for more confirmation in the form of a bullish candlestick before I pull my trigger. I don’t want to get ahead of myself and jump in on a long this early.
As I mentioned in my fundamental analysis, I think most dollar pairs will move sideways this week. Technically, this seems to be the case too, as both the 200 and 100 SMAs are moving horizontally. For now, I’m going to watch where price goes first before committing to a position.