Trading should be light until the US session, with the eurozone economic forecast a potential market mover if they decide to put in a surprise or two. The FOMC meeting minutes have been greatly discussed but there may be a few pointers to how Hawkish the conviction is, so a move after that the release is more likely to be today’s directional trade
Market Brief
Today’s economic calendar is fairly light in the London session though the Halifax Price Index (HPI) is forecasted to be better than last month and if it comes in higher will make the homeowners of the UK feel slightly richer than before. More importantly, we have the Eurozone Economic Forecasts, US JOLTS Job openings, and the FOMC meeting minutes release.
In the Asia-Pac session, the Japanese Leading Indicators came in ever so slightly under expectations and less than the previous readings. The USDJPY has risen into the London open and found the daily 20-period exponential moving average as support yesterday.
The EURUSD should move later today when we have the European Economic Forecasts and trend traders will be looking for another down day. The weekly EURUSD chart is showing a clear downtrend that has lasted 6 weeks so far and a decent target to aim for is the swing low from the end of March around 1.1700-1.1750 area. A sweep of these lows could encourage retail traders to dump their remaining longs and sentiment on the ActivTrader platform is slightly more bullish coming in at 56% long to 44% short. Today’s German Industrial output data dropped for a second consecutive month, though year on year output grew by 17.3% in May.
At the London open the New Zealand dollar was the strongest of the currencies with the euro and yen battling it out for the current weakest. The EURNZD chart could be signaling for more downside as the price action appears to be testing the lower bounds of a rising channel. Yesterday’s price action showed there were some buyers but the close indicates the sellers are still in control. On a smaller time frame the breakdown, retest, and continuation trade would have the stops above 1.6920 with a take profit target towards the 1.6300 swings low, so a decent risk to reward.
Later today we get the JOLTS jobs openings and the FOMC meeting minutes, with forecasters predicting a slight uptick in the JOLTS figure. Traders will look to see how the committee sits in terms of Hawkish bias and try and decide if the chat the FOMC had last month is looking to bring a rate hike decision any time soon.
Gold has started the day strong having already been in a 6-day uptrend. The overhead resistance comes in the form of the daily 200 ema, with the 20 and 50 already crossed in a bearish manner and above current prices. This could be the pullback before a continuation to the downside, which largely depends on whether the US dollar can break higher on the US dollar index. The monthly TLT long bond chart is showing that there is an appetite for risk-off assets but that could be down to a tight US Treasury market. If Gold can get above the daily 200 ema, the next market structure resistance is up around $1,850
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