Currency Analyst since 2010

Forex trading plan for August 12

US dollar index hold its ground on Thursday after two previous days of decline. American unemployment claims came better than expected showing that the nation’s labor market is on good shape. We’ll find out more about American economy on Friday: the US will release retails sales, PPI (12:30 GMT) and consumer confidence (14:00 GMT) figures. Also pay attention to China’s industrial production release during Friday’s Asian session: the reading will shape the market’s risk sentiment. Good reading will be positive for Australian dollar, while weak reading will increase demand for Japanese yen. Note that oil prices rose by about 1% on Thursday after the International Energy Agency forecasted crude markets would rebalance in the next few months following several years of heavy overproduction.

EUR/USD tested 1.1135, but the managed to return above the 50-day MA at 1.1150. Close above this point may give the bulls strength to attempt an increase to 1.1230 (100-day MA), but firstly they will need to clear resistance at 1.1180 (resistance line drawn through August highs). Technical developments at the daily chart favor the bullish outcome. Support is at 1.1120/00. Watch German preliminary GDP at 06:00 GMT. The euro area’s preliminary GDP will come out at 09:00 GMT.

GBP/USD declined on Thursday after it failed to sustain gains on Wednesday, However, indicators show that bearish momentum declined. Weekly pivot support at 1.2935 guards the downside. Next support is in the 1.2800 area. Resistance is at 1.3020. If the bulls manage to push the prices above this point, we will see deeper correction higher with targets at 1.3090/1.3100 and potentially even 1.3150.

USD/JPY remains under pressure. Break below support at 101.70 will open the way down to 100.70 and below that the target will be at 100.00. If the bulls somehow manage to change the situation – that doesn’t seem very likely – the pair will meet resistance at 101.80 and 101.75.

It seems that there are serious AUD/USD sellers in 0.7755 area. However, the bulls obviously don’t give up. As long as the pair remains above 0.7676 (July high, bottom of the upward trend channel), the outlook will remain bullish. 

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