The EUR/USD has eased off from it’s high.
Looking at the EUR/USD 60 minutes chart above, we note that the currency pair is now consolidating near the middle bollinger band with a slight upside pressure.
Equities are mixed at the moment as the initial sting of the US China trade war appears to be subsiding. The general talk is that of a mutually destructive situation. Both sides would probably like to exert power but must remain measured due to the huge implications.
The yellow lines are possible regions of support and resistance. Do be mindful that price action in shorter time frames are often sentimental in nature.
US Fed Official Surprise
Fed Official James Bullard mentioned that the current low inflation rate and the ongoing trade wars started by the US are putting pressure on the US economy. With the growth momentum of the previous years fading, there may be a risk of significant slowdown. In view of this, the US Federal Reserve may need to cut the interest rate to support the economy.
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy. With this dovish statement, it is likely that negative sentiment towards the US dollar has increased.
US Non Farm Payroll Ahead
The ADP Non-Farm Employment Change came in much weaker than expected. Instead of the forecast of 185k, it reported only 27k. A number of analysts believe that this gives insights to the US Non Farm Payroll report. If indeed, a much weaker than expected report may bring in more volatility and risk aversion.
Still to Come
Many important economic events are still to come and it will be even more critical now for us to assess each with the understanding of whether risk appetite has increased or decreased.
EUR Monetary Policy Statement
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.
EUR Main Refinancing Rate
A high interest usually generates demand while a low interest may result in dumping of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.
EUR ECB Press Conference
Press conferences often go into unscripted territory during the Question and Answer segment and hence may spur unexpected developments and volatility.
USA FOMC Member Williams Speech
Speeches may contain a question and answer segment that at times go into unscripted territory and result in unexpected developments and volatility.
USA Average Hourly Earnings
USA Non-Farm Employment Change
USA Unemployment Rate
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. Volatility may increase during the Non-Farm Payroll event, especially when it is not as per expected.
There are many more events and hence it is important to follow an economic calendar. By doing so, you can reduce the possibility of an unexpected development affecting your trading plan. Members can log in to their dashboards for an economic calendar. Traders should always practice proper money management and seek to understand the underlying tones for the market.
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