Trading plan for 29/08/2017:
The risk aversion remains in the Asian session, pushing down the Nikkei index (-0.5%) after the news that North Korea fired a missile towards Japan. Franc and Gold gains, the strongest losses are noted on AUD and NZD currency. Crude oil bounces slightly from Monday's low.. USD/JPY fell from 109.30 to 108.30, EUR/USD is eight pips away from 1.2000 level.
On Tuesday 29th of August, the event calendar is light in important news releases. The market participants will keep an eye on French GDP data, German Gfk Consumer Climate data during the London session. Later on, the data from Canada will be published ( Raw Materials Price Index data ) and the US (CB Consumer Confidence data).
EUR/USD analysis for 29/08/2017:
The German Gfk Consumer Climate data were slightly better than expected (10.9 vs. 10.8 points), but the French GDP for the second quarter was released unchanged at the level of 0.5% as expected. Gfk's Consumer Climate Indicator (CCI) has increased to the highest levels in more than a decade. In the report, the global investors can read, that: "Based on the estimations of German consumers, the German economy will develop positively over the further course of the remaining year", which means the current customer sentiment remains on the elevated levels. Nevertheless, after the recent Retail PMI data from Germany (fall to the lowest level since January), the sentiment among the customers might decrease a little. It does not mean it will reverse, but the rate of growth looks set to decelerate. On the other hand, the accelerating higher exchange rate of EUR.USD is starting to become uncomfortable for German exporters.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market broke out through 1.2000 round number level with a high at the level of 1.2025 at the time of writing. The bias remains bullish as there is no sign of bearish divergence despite the overbought market conditions. The nearest technical support is seen at the level of 1.2000 and in a case of a deeper correction, the level of 1.1908. The next stop for the bulls will be the Fibonacci extension of 161.8 percent at the level of 1.2060.
Market Snapshot: USD/JPY made another lower low
The price of USD/JPY has broken below the local technical support at the level of 108.79 and made another lower low at the level of 108.30. The geopolitical situation is causing a risk aversion among the global investors, so the currencies like JPY and CHF are appreciating across the board. The bias is still to the downside and the nearest technical support is seen at the level of 108.12.
Market Snapshot: Gold breaks above the resistance
The price of Gold has broken through the technical resistance zone between the levels of $1300 - $1308 and hit the 127% of Fibonacci Extension at the level of $1322. Gold is being now treated as "safe heaven" as the geopolitical uncertainty is increasing. The bias remains bullish and the next technical resistance is seen at the level of $1337.
