I’m seeing this neat short-term trend setup on EUR/USD and thinking that the upcoming U.S. data could spur a bounce.
Take a look!
Before moving on, ICYMI, today’s Asia-London session watchlist checked out a potential pickup in volatility for GBP/AUD ahead of the Australian GDP release. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Australian economy expanded by 0.7% in Q2 vs. 0.5% estimate
- Australia’s Q1 GDP upgraded from 1.8% to 1.9%
- Chinese Caixin manufacturing PMI slipped from 50.3 to 49.2
- Asian shares retreat on fears of slower global growth
- BOJ official Wakatabe: Central bank ready to ease further if needed
- ECB VP de Guindos: Inflation to pick up this year but fall back in 2022, central bank to raise growth forecast next week
- Germany’s retail sales slipped 5.1% vs. projected 0.9% drop in July
- Australia’s commodity prices up 50.3% y/y in August
- Swiss manufacturing PMI down from 71.1 to 67.7
- OPEC raised 2022 global demand forecast
Upcoming Potential Catalysts on the Economic Calendar:
- OPEC-JMMC meetings ongoing
- U.S. ADP non-farm employment change at 12:15 pm GMT
- U.S. ISM manufacturing PMI at 2:00 pm GMT
- U.S. crude oil inventories at 2:30 pm GMT
- FOMC member Bostic’s speech at 4:00 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: EUR/USD
I’ve got this textbook trend setup on my radar for today!
EUR/USD formed higher lows connected by a rising trend line that’s been holding for a week already, and it looks like another test of support is due.The Fib tool shows that this is in line with the 50% level and near the 1.1800 major psychological mark. It also happens to be close to the 100 SMA dynamic inflection point!
This faster-moving SMA is above the 200 SMA to confirm that support levels are more likely to hold than to break.
At the same time, Stochastic is reflecting exhaustion among sellers, so turning higher would mean that buyers are back in the game.
In that case, EUR/USD could make its way back up to the swing high near the 1.1850 minor psychological mark and beyond.
Of course this depends on the outcome of the U.S. leading jobs indicators, as traders are likely eager to place bets ahead of the NFP release.
Weak results from both the ADP non-farm employment change report and the ISM manufacturing PMI jobs component could spur losses for the Greenback.
After all, this would remind dollar traders that the Fed has a long way to go before tightening monetary policy.