Note that this is my current view, but if market conditions change my view can change too. Generally I will trade in alignment with what I have noted here, though I will wait for a set-up before I enter. I base my view on technical and fundamental information. This is my beliefs and you are welcome to have opposite ones. Having a plan is more important than the actual direction for me.
- Wait DXY. – MT is sideways normal. President Trump backtracked a little on his hard stance toward China this week, delaying the application of the new tariffs on Chinese imports until mid-December to avoid hurting the Christmas shopping season. US data also broadly beat expectations with better CPI and Retails Sales readings and as a result the Dollar Index had a steady climb back toward the 0.980-0.985 resistance area. This coming week the minutes of the July FOMC meeting are released, although recent events on the trade war front and the inversion of the US Yield Curve, might make the minutes somewhat outdated. On the weekend we will hear from Fed Chair Powell speaking at the Jackson Hole Symposium, and this year’s topic is rather appropriate: Challenges for Monetary Policy. The market still expects 2 more rate cuts to come soon, so Powell’s words will be attentively scrutinised.
- Wait GBP/USD. – MT is bear normal. With the UK and European Parliament both in summer recess Brexit has been on the backburner but data this week has shown that the UK economy perhaps hasn’t been hurt as bad as the market assumed it had, with several readings beating expectations. The Pound gained some ground, but until a positive Brexit related catalyst surfaces, it is unlikely to reverse its downward trajectory. For the time being we should still be looking to sell on any retracement.
- Wait USD/JPY. – MT is bear normal. Trump’s backtracking on the tariffs propelled the pair back to 107 where it found resistance. Currently the chart has printed an inside bar formation, watch for a break of the pin bar low as a cue to re-join on the short side. Falling below the 105 support area and the January 3 flash crash low would open the door to a test of much lower prices towards 100. However a deeper retracement towards 108-109 is also a possibility in the short term.
- Wait AUD/USD. – MT is bear normal. The Aussie has been in a consolidation range this week, better than expected Consumer Sentiment, Wage Price Index and Employment readings have helped the pair remain above 0.675 but weren’t enough to push it above 0.68. A continuation of the downtrend is still the most likely scenario, whilst the fundamentals remain mostly negative for Australia with considerable risk looming offshore, improvement of the domestic housing market provide cause for cautious optimism. In the short term, I wouldn’t be surprised to see the pair break to the upside from the current consolidation and move back toward 0.70.
- Wait EUR/USD. – MT is sideways normal. In the Euro area the soft pace of growth was confirmed with mostly disappointing data and the German investor sentiment falling to the lowest level since 2011. The Euro could not push above 1.200 resistance and fell back just below 1.110 approaching the most recent support area. While we wait for the September ECB meeting when new policy measures are expected to be announced, the possibility of the German government intervening with a fiscal stimulus package could help keep the currency from falling further at least for the time being. In the coming week PMI prints for the Euro area and German manufacturing in particular are already expected to have deteriorated further and the ECB minutes from the last meeting are unlikely to shed much light on what’s to come next month.
- Sell NZD/USD. – MT is bear normal. Perhaps the realisation that the trade war might impact Chinese demand for New Zealand products more significantly than previously thought, as well as a deteriorating global outlook, led the RBNZ to take decisive pre-emptive action with a 0.5% rate cut earlier this month. Governor Orr also said that unconventional measures (unconventional so far for New Zealand that is) such as quantitative easing and a negative overnight cash rate are being investigated. The sharp fall following the release found support at 0.64 around last year’s low, but the price action this past week hasn’t really shown signs that the Kiwi might bounce from here and a retest of the post announcement low seems more likely. If the pair then closes below that level we could see further downside toward the 2015 lows.
- Wait USD/CHF. – MT is bear normal. The 0.97 support level held well with the chart printing a confirmed Bullish Engulfing reversal pattern indicating that the Swissie might have some further room to move back up in the short term. If that does in fact occur we can look for signs of the retracement stalling or reversing to consider short positions again.
- Wait USD/CAD. – MT is bull normal. The Loonie retested the previous week high just shy of 1.335. The short-term trend is still up but it is encountering resistance and there could be a period of sideways consolidation before the pair either continues moving higher or starts falling back down. This coming week we have data releases on Inflation and Retail Sales, they are both expected to have improved from previous readings, but the picture remains unclear. We might have to wait until the BOC meets in early September for a directional catalyst.
- Sell EUR/GBP. – MT is sideways normal. The Euro this week gave back all the gains it had accumulated in the previous week versus the Pound. The absence of negative Brexit related news, better UK data and deteriorating Eurozone outlook all contributed to the slide. The weekly chart has printed a Bearish Engulfing pattern at the 0.93 resistance level. This in my opinion can warrant taking a contrarian longer term position with a decent risk reward.
- Sell EUR/CHF. – MT is bear normal.
- Wait AUD/JPY. – MT is bear normal.
- Sell NZD/JPY. – MT is bear normal.
- Wait GBP/JPY. – MT is bear normal.
- Sell EUR/JPY. – MT is bear normal.
- Wait CAD/JPY. – MT is bear normal.
- Wait CHF/JPY. – MT is sideways normal.
- Buy GBP/NZD. – MT is bull normal.
- Wait EUR/NZD. – MT is bull normal.
- Buy AUD/NZD. – MT is bull normal.
- Wait EUR/AUD. – MT is bull normal.
- Wait GBP/AUD. – MT is sideways normal.
- Sell AUD/CAD. – MT is bear normal.
- Wait GBP/CAD. – MT is bear normal.
- Sell EUR/CAD. – MT is sideways normal.
- Sell NZD/CAD. – MT is bear normal.
- Wait GBP/CHF. – MT is bear normal.
- Wait CAD/CHF. – MT is bear normal.
- Wait NZD/CHF. – MT is bear normal.
- Wait AUD/CHF. – MT is bear normal.
- Buy Gold. – MT is bull normal.
- Wait Oil. – MT is sideways normal.
- Wait S&P 500. – MT is bear normal.
- Wait DAX. – MT is bear normal.
- Wait Nikkei. – MT is bear normal.
- Buy T-Notes. – MT is bull normal.
(MT = Market Type: Click for more information on market types.)
About the Author
Massimiliano Andrighetto is a currency trader and member of the team at FxRenew. If you like his writing you can follow it here. You can also get Free access to the Advanced Forex Course for Smart Traders.