Trading plan for July 30
Main events to watch on July 30 (Wednesday):
EUR: German Preliminary CPI (all day), Spanish Flash CPI & GDP (07:00 GMT)
USD: ADP Non-Farm Employment Change (12:15 GMT), Advance GDP (12:30 GMT) and FOMC Statement (18:00 GMT)
Tomorrow will be a big day as there will be important data coming from the US. The speculation of when the Fed will start raising rates is certainly the main theme of this summer. As American labor market data have been encouraging so far, this makes many traders eager to buy USD on the first hints of positive news. The Fed may deliver little new about the rates: opinions of the FOMC about this differ and the Fed pledged to keep rates low for some time after QE ends. The central bank could tell more about how it will be normalizing policy. All in all, as the majority of traders expect a rate hike closer to the middle of the next year, USD bulls would welcome any hints that the increase in borrowing costs could happen earlier. However, we consider such thing unlikely as Yellen is a dove. What is clear about tomorrow is that the Fed will continue tapering QE and that US GDP will probably show good growth in Q2 after its dip in the first 3 months of the year. This may be enough to support USD and give it a lift in some pairs.
EUR/USD remains under pressure. Euro is affected by the whole business with sanctions against Russia as the market players are concerned that these sanction will backfire on the European economy. The pair’s prospects look bearish. Some pullbacks are possible, but sellers will re-emerge at $1.3450 and $1.3475. Watch for $1.3385 and $1.3350 on the downside. GBP/USD continues to erode support levels and now is targeting the top of the daily Cloud at $1.6890. Resistance is at $1.6970. A close above 102.00 will be a good sign for USD/JPY with potential targets at 102.30/40, but it might be difficult for the prices to get past this fairly strong resistance. AUD/USD is vulnerable for a decline to $0.9360.