The euro zone PMIs are up for release next, and strong results could support the idea that the region is due for a rebound.
Currency Snapshot:
Forex Majors Performance from MarketMilk
Fresh Market Headlines & Economic Data:
- Japanese national core CPI y/y up 0.4% as expected, 0.3% previous
- Japanese flash manufacturing PMI up from 48.4 to 48.6 vs. 48.7 consensus
- Australia’s Markit flash manufacturing PMI dipped from 50.0 to 49.9
- Australia’s Markit flash services PMI down from 50.1 to 49.5
- PBoC adviser: China still has room to adjust monetary policy
- South Korea to end intelligence pact with Japan
- China urges US to end provocative acts in South China Sea, doubts on “phase one” of trade deal rise
- US President Trump to sign bills backing protesters in Hong Kong
- China revises 2018 nominal GDP by 2.1%
Upcoming Potential Catalysts on the Forex Calendar:
- French flash manufacturing and services PMIs due 8:15 am GMT
- German flash manufacturing and services PMIs due 8:30 am GMT
- Euro zone flash manufacturing and services PMIs due 9:00 am GMT
- U.K. flash manufacturing and services PMIs due 9:30 am GMT
- ECB head Lagarde’s testimony coming up
- Canadian retail sales figures due 1:30 pm GMT
What to Watch: EUR/CAD
EUR/CAD 1-hour Forex Chart
With small improvements eyed for eurozone leading indicators, I’m hoping to catch a quick bounce for the shared currency in this session. On the flip side, expectations for another dip in Canadian retail sales figures could be enough to keep the Loonie on a weak footing.
To top it all off, resurfacing uncertainty surrounding U.S.-China trade talks could keep a lid on gains for commodity currencies and the dollar, giving the euro its “safe-haven proxy” appeal back.
EUR/CAD has formed higher lows connected by a longer-term rising trend line and is also seeing lower lows from stochastic. This bullish divergence suggests that a bounce could happen at the 50% Fib level, but a larger correction could still take the pair to the 61.8% Fib around 1.4675.
EUR/CAD Moving Averages from MarketMilk
Both the simple and exponential moving averages reflect a bullish trend for the pair. However, the upcoming data releases could still spur additional volatility, so preempting a move might be risky.
Scaling in might prove to be a better option, with an entry around current market levels and another on a larger correction to the 61.8% Fib. Waiting for the actual figures to be printed could also work out.
