Trading plan for 01/08/2017:
The news of the day is the Reserve bank of Australia (RBA) interest rate decision. The RBA kept expectations unchanged at 1.5%. As a result, the AUD since the morning is the strongest currency against the dollar. Asian indexes started August on gains supported by a better read of the Chinese Caixin PMI for the industrial sector. Dow Jones has set a new historic high of 21,929.8 pts, but the S&P500 and the Nasdaq 100 closed below the open line. EUR/USD is above 1.1800 for the first time since January 2015.
On Tuesday, 1st of August, the event calendar is busy with important economic releases. During the London session, the set of PMI Manufacturing indicators will be released from Germany, France, Spain, UK and the Eurozone. A little bit later the Preliminary Eurozone GDP for the second quarter will be released as well. During the US session, Canada will provide RBC Manufacturing PMI and US economy will post ISM Manufacturing PMI data together with Personal Spending and Personal Income data.
EUR/USD analysis for 01/08/2017:
The Eurozone Prelim GDP data are scheduled for release at 09:00 am GMT and the market participants expect 0.6% increase in the second quarter and overall advance from 1.9% to 2.1% on yearly basis. The biggest source of the optimism regarding this increase in GDP was the last week GDP report from Spain that beat the market expectations, so more of the global investors are expecting a good data today (the Spanish output increased 0.9% while the expected number was 0.8%). Moreover, the three biggest Eurozone economies, Germany, France, and Italy are growing up as well, so the economic optimism might have a solid grounds as incoming data is bright. If today's data will be in line with expectations or better, then the prediction anticipates that economic activity will expand at or above the 0.5% mark for three straight quarters for the first time in nearly a decade.
Let's now take a look at the EUR/USD technical picture at the H4 timeframe. The market is in a strong uptrend, but it starts to lack the momentum and some deeper correction would be welcome. The growing bearish divergence between the price and the momentum indicator might suggest, that even if the data will beat the expectations, the market participants might start to begin the take profit process at the current levels above 1.1800. The immediate support is seen at the level of 1.1775, but in a case of a further breakout, the next one is seen at the level of 1.1711.
Market Snapshot: USD/JPY bounces from 78% Fibo level
The price of USD/JPY had bounced from the Fibonacci 78% retracement of the last swing up at the level of 100.02 and not the price is trying to move higher to test the technical resistance at the level of 110.61. The oversold market conditions support this view, but due to the weakness of the bull camp, another failure at the resistance level is anticipated.
Market Snapshot: DAX fills the gap
The German stock index DAX30 has filled the gap between the levels of 12093 - 12302 and not is trying to bounce from the oversold market conditions. In a case of a failure, the next technical support is seen at the level of 11957 points.
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