Will the Fed Nudge the Rate? And Will This Nudge the Dollar?

Fundamentals

There was no news about fundamentals yesterday. Canada was taking a break to celebrate Victoria Day. In the United States, the Chicago Fed’s national activity index for August came out. The number hit 0.49 versus a forecast 0.25. Noteworthy among current news is traders’ uncertainty over what the Fed will do about raising the interest rate at its coming meeting in June. If the Fed decides not to change the rate, this obviously will put pressure on the dollar.
Germany’s GDP is expected to come out today. It is expected to have risen by 0.6% over the first quarter of this year. The number comes out at 6:00 am GMT.
At 9:00 am GMT we recommend watching for the Bank of England's inflation report. You’ll recall that the current inflation situation in the UK is not very good, especially given the target of 2%.



In view of the coming exit from the Eurozone, which will make it hard to raise rates, the question is how the BoE sees the situation and what next steps it will take to control the situation.
Unemployment in Russia and retail sales for the year also come out tomorrow.

Stocks

Among the reports coming out on Tuesday, traders will certainly be drawn to data from Autozone, which is traded on the NASDAQ. The company has continued to build its assets over the last few years; in 2016, they totaled USD 8.59979 billion.
The Dow Jones Industrial Average is lying low in a short-term lateral trend with a corridor of 20500 – 21000 points. The indicator has now come up against the resistance at 20900, points, where the middle Bollinger band is located. If it breaks through upward, it is quite possible that we’ll see movement toward 21100. We can’t help but mention the growing political risks for the US stock market posed by the Trump scandal and possible impeachment. We’d therefore advise bulls to be extremely careful when opening positions and to remember to not hesitate to take their profit.

Currency Market

On the daily charts the CAD/CHF pair is forming a pattern that quite closely resembles a double bottom. A breakthrough at 0.7400 may be confirmation. If this happens, then in the short term we might talk about a trend reversal and possible movement toward 0.7600, which is 400 points above the current value. But at the moment this is just one of the possible scenarios. The older, weekly time frame indicates that the pair is testing the intermediate support around 0.7210. If there is a successful breakthrough downward, the bears will be able to send the loonie to 0.7075. Otherwise, the bulls will drive the pair to 0.7400, where the double bottom formation might be completed.
According to Elliott's wave theory, the EUP/JPY pair may be in a complex correction model (expanding triangle). If this is the case, the internal structure of this correction pattern is 3-3-3-3-3. If this scenario continues, we might see another 3 formations with this structure. In this case movement should be limited to 123.5 – 125 yen per euro.

Nikolay Dudchenko, Olymp Trade analyst

Olymp Trade Review