I’m seeing a short-term reversal pattern on this pair, and it might play out in the next few hours.
Will the upcoming catalysts spur a break or a bounce?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at a neat range setup on GBP/JPY. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Fed official Kaplan: First Fed hike to happen in 2022, projects GDP at 6.4% this year
- Japan preliminary GDP price index down 0.2% vs. projected 0.1% dip
- Japanese economy contracted 1.3% in Q1 2021 vs. consensus of -1.1%
- Japan’s tertiary industry activity up 1.1% vs. 0.8% forecast
- RBA minutes: Australia transitioned from recovery to expansion earlier and with more momentum than previously anticipated
- RBA: Price pressures remain subdued, despite improvements in job market
- RBA: Monetary policy to remain easy for quite some time
- Asian markets shrug off coronavirus surge concerns
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. claimant count change, jobless rate, average earnings index at 7:00 am GMT
- Eurozone flash GDP at 10:00 am GMT
- U.S. building permits and housing starts at 1:30 pm GMT
- BOE Governor Bailey’s speech at 3:00 pm GMT
- Australia’s CB leading index at 3:30 pm GMT
- SNB head Jordan’s speech at 4:00 pm GMT
What to Watch: EUR/AUD
Check out this double top formation yo!
EUR/AUD is already testing the neckline of its short-term reversal pattern, and a break lower could set off a slide that’s at least the same height as the formation.
Technical indicators are suggesting that support might hold, though. The 100 SMA is above the 200 SMA while Stochastic is dipping into the oversold region to reflect exhaustion among sellers.If support holds, EUR/AUD could bounce back to the tops around the 1.5700 major psychological mark.
The freshly-released minutes of the RBA meeting seemed somewhat optimistic, as policymakers acknowledged that “the Australian economy was transitioning from recovery to expansion earlier and with more momentum than previously anticipated.”
This could mean more upside for the higher-yielding commodity currency, provided risk appetite stays in play for the upcoming sessions.Meanwhile, the euro could take cues from the flash GDP release, which is slated to show another 0.6% drop in growth. An even larger contraction could mean more downside for the shared currency.
