Start your trading week right by prepping for these top-tier catalysts and checking out my potential trade setup.
Don’t forget to review which factors drove forex market price action last week, too!
Major Economic Events:
RBA rate statement (Apr. 6, 5:30 am GMT) – The Australian central bank will be making its monetary policy decision this week, but analysts predict that they are likely to sit on their hands.Still, policymakers might have a thing or two to say about the surge in bond yields, likely reiterating their commitment to their yield curve control policy. Recall that the RBA already stepped in to double the amount of daily bond purchases in order to keep the three-year yield close to their 0.10% target.
Canadian Ivey PMI (Apr. 7, 3:00 pm GMT) – An improvement from 60.0 to 62.5 is expected for March, reflecting a stronger pace of industry expansion.
Traders are likely to pay extra close attention to the jobs component of the survey, as a huge jump could mean a potential upside surprise for the employment report due later in the week.
FOMC meeting minutes (Apr. 7, 7:00 pm GMT) – Fed head Powell and his fellow FOMC members refrained from making any policy changes in their latest rate statement, and the minutes of their meeting should contain more insights on their decision.Note that most Fed officials are still feeling uneasy about the surge in Treasury yields, so dollar traders are keen to find out what exactly policymakers meant about reacting to “disorderly movements” in the bond market.
ECB monetary policy meeting accounts (Apr. 8, 12:30 pm GMT) – The minutes of the ECB meeting don’t usually cause quite a ruckus in the markets, but this particular one could be of interest.
Keep in mind that ECB head Lagarde and her fellow Governing Council members are more inclined to curb bond yields, leading them to announce a faster pace of asset purchases in their March meeting.
With that, euro traders would likely keep their eyes and ears peeled for any clues on how soon the ECB might be willing to adjust purchases again.
Canadian employment report (Apr. 9, 1:30 pm GMT) – An increase of 90K in hiring is expected for the month of March, slower than the earlier gain of 259.2K.
This should be enough to bring the jobless rate down from 8.2% to 8.0% for the month, although underlying components such as the underemployment rate and labor force participation rate are still likely to draw attention.
Forex Setup of the Week: EUR/CAD
I’m seeing this simple trend setup on the 4-hour chart of EUR/CAD that might play out during the release of Canada’s jobs report.
Stronger than expected employment conditions for March might be enough to boost the Canadian currency, and the Ivey PMI report to be released earlier this week might have some clues.The pair is cruising below a newly-formed descending trend line that might be tested later in the week. This happens to be right smack in line with the 61.8% Fibonacci retracement level and is near the 1.4900 major psychological mark.
A shallow pullback could already find sellers at the 50% Fib that coincides with a former support zone and the 100 SMA dynamic inflection point.
This moving average is below the 200 SMA to confirm that resistance levels are more likely to hold than to break. Stochastic is also nearing the overbought zone to suggest that sellers could take over soon. Once that happens, EUR/CAD could slide back to the swing low or lower.