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Trading plan for July 18

By FX BAZOOKA analytical team

Main events to watch on July 18 (Friday):

JPY: Monetary Policy Meeting Minutes (23:50 GMT)

EUR: Current Account (09:00 GMT)

CAD: CPI (12:30 GMT)

USD: Prelim UoM Consumer Sentiment (13:55 GMT)

Trade ideas

EUR/USD was supported on Thursday above $1.3520. If this level gives way, bears will test 2013-2014 support line in the $1.3505 area. A close below June’s low at $1.3503 is needed for a more pronounced decline. As the pair’s oversold at H4, there may be a small correction up. The euro zone’s current account surplus is expected to increase. Yet, the pair’s advance will be limited as the market will be expecting positive numbers from the US consumer confidence and this is an indicator of bigger importance for the short-term trade. If euro recovers, sell orders may be placed a bit below $1.3560 with stop at $1.3580 and target in the $1.3500 area. The medium-term picture is bearish as the pair is pressured by the heavy daily Ichimoku Cloud.

GBP/USD traded under selling pressure on Thursday, cautiously testing the levels below $1.7100. We remain bullish in a long term, but the sterling needs a strong driver to break above $1.7200. The cable will likely consolidate in the $1.72000/0000 range with a bearish tendency until the BoE meeting minutes release on the next Wednesday. Market volatility will increase in the second half of the next week with the UK retail sales and Q2 GDP releases. Until then, there is no potentially surprising data on the GBP/USD agenda. Sell the cable on a daily close below $1.7100 with an initial target of $1.7060.

Despite the strong US Fhilly Fed index, the resistance area at 102.00/30 is likely to contain the buying interest on USD/JPY. Safe-haven yen is in demand on the back of increased risk aversion - new US sanctions against Russia played their part. Watch the BOJ policy minutes release at midnight. If they don’t bring any surprises with the BOJ maintaining its optimistic view on the economy, we will sell USD/JPY with a target of 101.00. Next buy orders are clustered below 100.70.

AUD/USD has managed to recover after selling in the previous 2 days. Below $0.9368 we will expect Aussie to revisit the recent low. On the upside we expect AUD/USD to remain capped by $0.9412 (daily Kijun line). The downside target lies at $0.9320.

USD/CAD will depend tomorrow on Canada’s inflation data. If the data come in line with the forecast (a significant slowdown in inflation’s expected), then USD/CAD will rise to 1.0815 (200-day MA). If inflation is significantly higher than expected, USD/CAD will test levels below 1.0700.

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