Trader, analyst and instructor with a 6-year experience

Trading plan for July 25

By Elizaveta Belugina and Kira Iukhtenko

Main events to watch on July 25 (Friday):

NZD: ANZ Business Confidence (01:00 GMT)
EUR: GfK German Consumer Climate (06:00 GMT), German Ifo Business Climate and M3 Money Supply (08:00 GMT)
GBP: Prelim GDP (08:30 GMT)
USD: Core Durable Goods Orders (12:30 GMT)

Trade ideas

EUR/USD initially got a bit lower today pulling this year’s minimum down to $1.3437 before getting a bit higher on mostly positive euro zone’s PMIs with good surprise from Germany and not so good decline in the French reading. We expect more of a correction tomorrow, though the downtrend will remain strong as long as the pair’s below $1.3575. Resistance is in the $1.3525/30 and then at $1.3550. On the downside euro is vulnerable for a decline to $1.3430, $1.3415 and $1.3400.

The Reserve Bank of New Zealand has increased the benchmark rate to 3.5% today, but managed to make its statement as dovish as it could be indicating that there will be no more tightening at the next meetings and that NZD exchange rate is too high. NZD/USD to $0.8566 (daily Cloud’s top) and is clearly oversold now, but sellers may re-emerge at $0.8650 and $0.8680 pushing New Zealand’s currency towards $0.8500.

Despite good data from China this morning AUD/USD had difficulties with overcoming $0.9450. On H4 the MAs are horizontal below $0.9400. A correction to $0.9410 is likely before the bulls resume pushing higher. There will be no data from Australia tomorrow, so stick to risk sentiment, the US and technicals. AUD/NZD jumped above 1.1000 and a correction towards 1.0900 is now possible.

GBP/USD hit our target of $1.7000 in the early US session, pulled down by strong US unemployment claims. Earlier in the day the market was disappointed by a smaller-than-expected UK retail sales growth. I wouldn’t call the data dramatic, as the overall UK retail sales growth in H1 was at a highest level in 10 years, but traders were simply waiting for a reason to sell. Watch the preliminary Q2 UK GDP at 8:30 GMT on Friday. Market consensus lies at 0.8% (unchanged from the Q1 growth). Figure in line with market forecast will be enough to lift the UK economy to the pre-crisis levels and confirm the sustainable pace of the recovery. However, even a small disappointment in data will trigger a selloff. BoE made it clear yesterday, that economic growth will slow down in the second half of the year, so the even a strong GDP figure is unlikely to impact the terms of rate hikes. 

Daily close below $1.7000 will be a worrying signal for GBP/USD bulls. We remain bearish and expect to see the cable at $1.6950 in the near term (rising channel support, 100-month MA). Break below would be a selling signal, pulling the cable into the $1.6900/6880 area. Resistance is now seen at $1.7037, $1.7060 and $1.7100. 

USD/JPY pushed higher on Thursday, but remains capped by the 101.80 resistance. All eyes on the Japan inflation data at 23:30 GMT (Thursday). The release could bring some long-awaited volatility to the markets. Break above 101.80 will open the way to 102.30, but we expect the price to hold inside of the bearish triangle for a while as the market is not strong enough for a breakout. Support is seen at 101.20 and 101.00.

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