Trading plan for 14/07/2017:
It was a quiet overnight Asian session with no major price movements. The strongest currencies are AUD (0.16%) and GBP (0.15%). On the other side of the table is the yen, which is down -0.13% against USD. Crude oil has slowed yesterday's gains, now WTI gains 0.1% and is at $46.15. The Nikkei 225 is up 0.2%, Hang Seng 0.1%, and Shanghai Composite 0.05%.
On Friday 14th of July, the event calendar will get busy during the US session, because the US will present a series of statistics of crucial importance: Retail Sales, Consumer Price Index, Capacity Utilization Rate, Industrial Production, and Preliminary UoM Consumer Sentiment. Moreover, there is one speech from FOMC member Robert Kaplan scheduled later in the global trading day.
EUR/USD analysis for 14/07/2017:
From the bunch of US economic data, the most important are inflation data in form of Consumer Price Index. The global investors expect an increase in inflationary pressures from -0.1% to 0.1% on a monthly basis. However, on the yearly basis, the CPI is expected to decrease from 1.9% to 1.7%, but Core CPI (which excludes food and energy prices) should remain stable at the level of 1.7%. The inflation peaked in February 2017 and has been falling since. In that situation, the Federal Reserve will need to find a good justification whether they should continue with rate hikes as planned and even move toward normalizing the balance sheets or should they wait for more data to come later this year.The danger here is the FED might start to tighten the monetary policy too early while the pace of economic growth is too slow and the inflation is not picking up as projected. This is why today's inflation data are so important.
The latest testimony of FED Chairperson Jannet Yellen on monetary policy to the US Congress was rather dovish. Nevertheless, Yellen still thinks all the recent US economic troubles are transitory (especially low inflation) and the economic growth will pick up later this year.
Other economic data are also expected to improve, like Retail Sales from -0.3% to 0.1%, Industrial Production from 0.0% to 0.3%, and Business Inventories from -0.2% to 0.3%. The Retail Sales data are not expected to improve too much as long as wage growth remains subdued. The strong US job market helps to some extent, but so far it is still not enough to improve the sales over 1.0% on monthly basis.
Let's now take a look at the EUR/USD technical picture on the H4 time frame. The market is trading under the golden trend line and still can not break out above the 61%Fibo at the level of 1.1422. This will be the key level for both bulls and bears as any violation of this level will open the road towards the last high at the level of 1.1489 or towards the recent lows at the level of 1.1370. Better than expected US data will favor the downside move in this pair.
Market Snapshot: USD/JPY trades in oversold zone
The price of USD/JPY is trying to bounce from the technical support at the level of 112.92, but so far the bulls are too weak to violate the intraday resistance at the level of 113.68. The market conditions remain oversold and the momentum indicator is moving sideways around the fifty level. Breakout below the level of 112.74 will accelerate the sell-off towards the next technical support at the level of 111.77.
Market Snapshot: EUR/NZD bounces from support
The price of EUR/NZD had bounced from the technical support zone at the level of 1.5450 - 1.5503 and left a long candle wick in this zone. Despite the oversold market conditions, the bulls are so far unable to push the prices towards the next technical resistance at the level of 1.5633 and it looks like the downside move might continue after the period of consolidation. Any violation of the level of 1.5450 will open the road towards the technical support at the level of 1.5232.
