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DJIA: 28620.43 +1.02%
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Gold: 1925.00 -1.40%
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Japan Tokyo CPI at 11:30 pm GMT
Fed Barkin speech at 4:30 am GMT (Aug. 28)
German Gfk Consumer climate, Import prices at 6:00 am GMT (Aug. 28)
French Prelim GDP & CPI at 6:45 am GMT (Aug. 28)
Swiss KOF Economic Barometer at 7:00 am GMT (Aug. 28)
Japan PM Shinzo Abe speech at 8:00 am GMT (Aug. 28)
Euro Area Economic & business sentiment, Consumer Confidence at 9:00 am GMT (Aug. 28)
Canada GDP at 12:30 pm GMT (Aug. 28)
U.S. Personal Income & Spending, PCE Price index, Goods trade balance at 12:30 pm GMT (Aug. 28)
What to Watch: EUR/AUD
On the one-hour chart above of EUR/AUD, we can see strong downside momentum favoring the Aussie for the session. Risk sentiment seems to be leaning positive on the session, especially after Fed Chair Powell’s speech on inflation and jobs earlier in the U.S. session.
That momentum had enough juice for EUR/AUD bears to break below the bottom of the recent range (around 1.6360) that could draw in technical sellers for a continued short-term move lower.
Looking forward, we do have potential catalysts that could keep volatility going for the pair, most notably the upcoming Euro area economic/business/consumer sentiment data, but we also may see reactions off of central bank speeches during the Jackson Hole Economic Symposium going on this week.
For the bears, the ball is currently in your court right now with the downside momentum, and if you have expectations of disappointing Euro area sentiment and/or continued positive global risk sentiment, shorting at current levels up to the broken support level makes sense.
For swing traders, shoot for a move to the next major support area around 1.6120 for strong potential return-on-risk if using the ATR as your stop guide.
For the bulls on the pair, it’ll likely take both positive European sentiment data and a broad move in risk sentiment towards negative to turn this pair around.
Bearish commentary from the Reserve Bank of Australia would likely have the same effect as well.
If we do see these scenarios, buying if we see a test of the 1.6200 – 1.6250 area makes sense, but a more prudent approach would be to wait for a break back above the 1.6360 handle as it may draw in technical buyers at that point.