Trading plan for July 15

By FX BAZOOKA analytical team

The economic calendar for tomorrow is full with events that will have an impact on Forex majors:

USD: Retail Sales (12:30 GMT), Fed Chair Yellen Testifies (14:00 GMT)

EUR: ECB Draghi speaks (17:00 GMT on Monday, July 14), German ZEW Economic Sentiment (09:00 GMT)

GBP: CPI (08:30 GMT), BoE Carney’s Speech (09:00 GMT)

JPY: BOJ’s Meeting (tentative)

AUD: RBA’s Monetary Policy Meeting Minutes & New Motor Vehicle Sales (01:30 GMT)

NZD: CPI (22:45 GMT)

Trade ideas

EUR/USD didn’t show strong reaction to the unexpected and big decline in the euro zone’s industrial production (-1.1%). At this point everybody expects Draghi to sound dovish. What matters is how dovish he will actually be. It seems for now that there’s little Draghi can say as the ECB may not be planning bolder easing steps in the near future. As a result, the pair may continue its stable sideways crawl. Technically the indicators are in the sleeping horizontal state. The upside should be limited by $1.3650. As euro met resistance at $1.3640, it’s likely to ease to $1.3605/00. There’s also support at $1.3575. German economic sentiment release may have more direct impact on the market as Germany is the region’s probably only hope now and a miss here will hurt euro. In addition, the pair will decline if Yellen sounds more optimistic about the US economic outlook.

GBP/USD holds at high price levels despite the current bearish correction. The main event in focus for tomorrow will be the British inflation data. We recommend you paying special attention to the CPI. The higher is the CPI, the sooner the regulator will hike interest rates. The market consensus is 1.6% versus 1.5% in May. The reading above 1.8% could push the cable above the $1.7130 resistance, while the reading below 1.5% – pull the pair below $1.7000. We tend to the bearish scenario in a short term. Given the overbought market conditions, the data have to be more than strong to surprise the investors and push the cable higher from the current levels.

The main event influencing USD/JPY on Tuesday will be the Bank of Japan policy meeting. Monetary policy is widely expected to remain unchanged. Meanwhile, the central bank will take a close look at its growth and inflation forecasts and could cut its fiscal year GDP forecast. However, JPY decline remains limited as the BOJ clearly wants to avoid additional monetary stimulus. Given all that, we forecast USD/JPY to face resistance around the 102.00 mark. Next resistance is seen at 102.30 and 102.80, while support lies at 101.20 and 101.00. We maintain a cautious view on USD/JPY trades as long as the sideways 100.80/102.80 channel holds.

AUD/USD isalso quiet just below $0.9400 and trading in the narrow range. The base scenario is decline to $0.9368. Next support is at $0.9340. On the upside resistance are at $0.9412, $0.9425, $0.9450. Investors will be scanning the RBA meeting for some dovish comments.

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