Will the upcoming FOMC meeting minutes bring back the bulls? Or is this an opportunity for the bears to jump in at great prices?
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
FOMC meeting minutes at 6:00 pm GMT
Swiss Trade balance at 6:00 am GMT (Aug. 20)
German PPI at 6:00 am GMT (Aug. 20)
U.K. Industrial Order Expectations at 10:00 am GMT (Aug. 20)
Canadian ADP Non-Farm Employment Change at 12:30 am GMT (Aug. 20)
U.S. Philly Fed Manufacturing Index, Unemployment Claims at 12:30 am GMT (Aug. 20)
What to Watch: EUR/USD
On the one-hour chart above of EUR/USD, we can see the bulls have been in solid control for the past week, enough so to break above the previous swing resistance area at the 1.1900 major psychological level.
But today seems to have brought in some Dollar bulls, bringing the pair to retest the broken resistance area…is this an opportunity for the bulls or is this the start of a bear move lower?
Well, broad risk sentiment is on the upswing (which not great for the Greenback) and the upcoming FOMC meeting minutes aren’t likely to signal any kind of pullback on stimulus.
So the odds remain in favor of the bulls and this pullback may draw in EUR/USD buyers, especially technical traders as this area is not only a major psychological level but also a Fibonacci retracement area as well.
We can also see Stochastic nearing short-term oversold conditions, which could raise the technical argument for buyers to hop back in.
For the bears on this pair, look out in the FOMC meeting minutes for the rhetoric of pulling back on stimulus, especially any commentary related to inflation; inflation has picked up in the U.S. so we may see a reaction in that scenario. In that scenario (likely combined with some broad risk-off behavior), a break / retest / bearish patterns at 1.1900 is the technical behavior to watch out for before considering a short position.
The bearish argument rises if broad risk sentiment starts to move negative, a scenario that could play out if U.S. stimulus talks continue to disappoint.