A weak US employment Cost Index (0.2% versus 0.6% expected) was the main reason for the heavy fall of the USD on Friday, especially against the EUR where the majority of long USD traders were positioned.
The news came as a shock to those expecting Fed to increase rates in September. Since costs are still low, wages are likely not to increase, which will not lead to increase spending from the workers, nor for the prices of goods and services to be increased which would lead to higher inflation, and ultimately another reason to increase Rates. So in summary, this reading does not call for a rate hike increase, however the FED will closely watch the news ahead of its meeting to decide the policy.
This week, we have a string of too many important data starting with core PCE, personal spending and ISM manufacturing today, as well as non-farm payrolls on Friday. Weaker data would likely lead to further depreciation of the USD.
Trading quote of the day:
“The basic concept that applies to both poker and trading is that the primary objective s not winning the most hands, but rather maximizing your gains.” – Jeff Yass
Green lines are resistance, Red lines are support
EURUSD
Pivot: 1.1025
Likely scenario: Short positions below 1.1025 with targets @ 1.0925 & 1.089 in extension.
Alternative scenario: Above 1.1025 look for further upside with 1.1085 & 1.1115 as targets.
Comment: As long as the resistance at 1.1025 is not surpassed, the risk of the break below 1.0925 remains high.
20150803-eurusd
GBPUSD
Pivot: 1.559
Likely scenario: Long positions above 1.559 with targets @ 1.568 & 1.574 in extension.
Alternative scenario: Below 1.559 look for further downside with 1.5555 & 1.5535 as targets.
Comment: The RSI has just landed on its neutrality area at 50% and is turning up.
20150803-gbpusd
AUDUSD
Pivot: 0.728
Likely scenario: Long positions above 0.728 with targets @ 0.7335 & 0.7365 in extension.
Alternative scenario: Below 0.728 look for further downside with 0.726 & 0.723 as targets.
Comment: The RSI is mixed to bullish.
20150803-audusd
USDJPY
Pivot: 124.15
Likely scenario: Short positions below 124.15 with targets @ 123.75 & 123.5 in extension.
Alternative scenario: Above 124.15 look for further upside with 124.35 & 124.6 as targets.
Comment: The upward potential is likely to be limited by the resistance at 124.15.
20150803-usdjpy
USDCAD
Pivot: 1.305
Likely scenario: Long positions above 1.305 with targets @ 1.3135 & 1.3175 in extension.
Alternative scenario: Below 1.305 look for further downside with 1.301 & 1.2965 as targets.
Comment: The RSI is bullish and calls for further upside.
20150803-usdcad
USDCHF
Pivot: 0.96
Likely scenario: Long positions above 0.96 with targets @ 0.968 & 0.972 in extension.
Alternative scenario: Below 0.96 look for further downside with 0.957 & 0.9545 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
20150803-usdchf
GOLD
Pivot: 1086.5
Likely scenario: Long positions above 1086.5 with targets @ 1105 & 1115 in extension.
Alternative scenario: Below 1086.5 look for further downside with 1080 & 1073 as targets.
Comment: The RSI is mixed with a bullish bias.
20150803-gold
OIL
Pivot: 48.65
Likely scenario: Short positions below 48.65 with targets @ 45.95 & 45.35 in extension.
Alternative scenario: Above 48.65 look for further upside with 49.5 & 50.5 as targets.
Comment: As long as 48.65 is resistance, likely decline to 45.95.
20150803-oil
DAX
Pivot: 11170
Likely scenario: Long positions above 11170 with targets @ 11435 & 11550 in extension.
Alternative scenario: Below 11170 look for further downside with 11070 & 11030 as targets.
Comment: The RSI lacks downward momentum.
20150803-dax
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20150803-calendar
TIME IS IN GMT(+3)
Report prepared by the easy-forex VIP desk at 09:00 GMT.