The latest Australian employment update is right around the corner, making this simple resistance retest on EUR/AUD a candidate for both bulls and bears to check out for short-term opportunities.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at USD/CAD ahead of the Canadian CPI & FOMC minutes, so be sure to check that out to see if there is still a potential play!
Intermarket Update:
| Equity Markets | Bond Yields | Commodities & Crypto |
|
DAX: 15965.97 +0.28% FTSE: 7169.32 -0.16% S&P 500: 4421.84 -0.59% NASDAQ: 14603.10 -0.36% |
US 10-YR: 1.278% +0.02 Bund 10-YR: -0.48% 0.00 UK 10-YR: 0.574% +0.008 JPN 10-YR: 0.011% 0.00 |
Oil: 64.87 -2.58% Gold: 1,787.90 +0.006% Bitcoin: $44,874.50 -1.42% Ethereum: $3,032.30 -2.87% |
Fresh Market Headlines & Economic Data:
Federal Reserve preparing for taper this year, July minutes show
U.S. housing starts fall sharply in July
U.S. mortgage applications drop as mortgage rates edge above 3% -MBA
Bullard: Misreading inflation could require “very disruptive” rate hikes
Annual inflation up to 2.2% in the euro area; Up to 2.5% in the EU
Production in construction down by 1.7% in euro area
and by 1.2% in EU; Up by 2.8% and 3.5% compared with June 2020
UK inflation slows down to 2% in temporary blip
The Fed is worried the rise of stablecoins could impact financial stability
Upcoming Potential Catalysts on the Economic Calendar
Japan Tankan Index at 11:00 pm GMT
Australia Employment Change, Unemployment Rate at 1:30 am GMT (Aug. 19)
Swiss Trade Balance at 6:00 am GMT (Aug. 19)
Euro area Current Account at 8:00 am GMT (Aug. 19)
Spain Trade Balance at 8:00 am GMT (Aug. 19)
Italy Current Account at 9:00 am GMT (Aug. 19)
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: EUR/AUD
On the one hour chart of EUR/AUD above, we’ve got a short-term rally in the works, favoring the euro over the Aussie as risk sentiment turned sour over the past week on pandemic and fading global growth fears. EUR/AUD is now retesting the previous swing high around 1.6180, where the bears took back control and sent the pair lower. Will we see a return of sellers and the rally reversed?
Well, we’ve got a big catalyst coming up for the pair in the form of the latest employment update from Australia. With expectations of a net job loss and rise in the unemployment rate, this could be the first sign of the recovery topping out in Australia, a likely scenario with strict covid-19 lockdowns currently in place.
If we do see weaker-than-expected/previous Aussie jobs numbers, that retest of the previous swing high could turn into an upside break, at which point we’d look for the market to simply maintain the price action above the 1.6180 area before considering a bullish position.
And vice versa, if we see a positive surprise, this would likely spark a bullish reaction in the Aussie, albeit a likely short-term move given the lockdown situation and worsening global pandemic situation. There’s also an argument that the resistance retest and bearish divergence pattern between price action and stochastic could draw in short-term sellers, or at the very least, profit takers from the past week’s rally.
With a daily ATR of around 90 – 95 pips, EUR/AUD could dip as low as the 1.6100 major psychological handle before seeing potential buyers step back in, both technical traders who’d like to play the current uptrend and longer-term fundamental players.
