Trading plan for 22/08/2017:
Dollar appreciation is visible from the morning, but the rise lacks momentum. The weakest currencies are JPY (-0.21%) and CHF (-0.23%). The Asian indices record quite a positive session - the impact is on the rise of industrial metal prices. The Hang Seng is up 1%, the Shanghai Composite added 0.2%, but the Nikkei 225 can not move away from yesterday's closing price.
On Tuesday 22nd of August, the event calendar is light, but market participants will keep an eye on the ZEW Economic Sentiment data from Germany, Retail Sales from Canada and House Prices Index from the US.
Analysis of EUR/USD for 22/08/2017:
The ZEW Economic Sentiment data are scheduled for release at 09:00 am GMT and market participants expect a decrease in all three components of the ZEW data. The German ZEW Current Situation is expected to slide from 86.4 to 85.2 points. At the same time, the ZEW Economic Sentiment index is expected to fall from 17.5 to 14.8 points. In the EU the Economic Sentiment is expected slide from 35.6 to 34.6 points. So, the August update of Germany's ZEW Economic Survey is expected to dip mildly, but there is always something to worry about when looking ahead in the German economy. The most recent concern is "diesel gate", that had begun two years ago with Volkswagen emissions scandal. This is still a very serious risk for the reputation of German high-quality auto and industrial sector of the economy. The ZEW Expectations benchmark is on track to fall to 13.3, a five-month low, suggesting more overall trouble in the second-half of the year. On the other hand, the hard data still indicate that German economy is currently a high-performer and economic growth remains robust.
Let's now take a look at the EUR/USD technical picture on the H4 timeframe. The market is still consolidating the gains in the narrow trading zone between the technical support at the level of 1.1614 and technical resistance at the level of 1.1908. This sideway move might last even until Friday when the fundamental event in a form of Mario Draghi's speech in Jackson Hole might trigger a breakout in either direction.
Market Snapshot: USD/JPY close to breaking out lower
The price of USD/JPY had tested the technical support at the level of 108.79 four times already, but no follow through has occurred so far. A slight bullish divergence between the price and the momentum oscillator indicates a bullish corrective move towards the next technical resistance at the level of 109.84 before any breakout happens.
Market Snapshot: DAX still under the trend line
The German index DAX is still trading below the golden trend line dynamic resistance around the level of 12,100. The key level for bulls is technical resistance at the level of 12,338, so this level must be violated before any new low below the technical support at the level of 11886 will happen. Otherwise, bears will confirm their strength and might try to push the prices lower towards the next important technical support at the level of 11,425.
