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FBS: trading plan for August 7

Main Events to watch on Thursday (Aug. 7)

AUD: Employment Change, Unemployment Rate (1:30 GMT)

GBP: BoE Policy Announcement (11:00 GMT)

EUR: ECB Policy Announcement (11:45 GMT), ECB Press Conference (12:30 GMT)

CAD: Building Permits (12:30 GMT), Ivey PMI (14:00 GMT)

USD: Unemployment Claims (12:30 GMT)

Trade ideas

The performance of EUR/USD showed that the bulls remain too weak to make a decent correction up. The pair slid to new minimum of 2014 at $1.3332. Tomorrow is the ECB meeting, and the market players seem pretty bearish. Taking into account the recent discouraging economic data from the euro area and the concerns about the negative effects of sanctions against Russia on the European companies and the tensions in Ukraine in general, the odds are that Draghi sounds dovish. The way down is open to $1.3295 (Nov. 2013 low) and then to $1.3230. Euro is oversold on H4 and daily. Still, corrections will be shallow with resistance at $1.3410/12 and $1.3450. Any spikes up during Draghi’s will be actively sold.

AUD/USD rose from yesterday’s low at $0.9290, but is still trading below the 100-day MA at $0.9330. Tomorrow Australia releases very important labor market data. The employment is expected to have increased by 12K in July and the jobless rate to stay at 6%. The pair may turn down either from the current levels or from $0.9340/50 targeting support at $0.9290/80.

GBP/USD lost ground in the European session on Wednesday, erasing almost completely the recent recovery. The markets were disappointed by weak UK industrial and manufacturing production growth. The BoE policy announcement (Thursday, 11:00 GMT) is now moving into the limelight. There is a speculation that strong Services and Construction data released earlier in the week could make one or more MPC members to vote for a sooner rate hike tomorrow. However, the general decision will likely be unanimous, so we’ll be awaiting the Meeting Minutes release on August 20. GBP/USD drop below $1.6800 will open the way for a decline into the $1.6700/6690 area. Resistance lies at $1.6880 as we write.

USD/JPY extended the decline on Wednesday, slipping to the 102.30 support. In our view, geopolitical threats are underestimated by the market, so the pair may re-enter the long-term triangle this week. Break below 102.25 will open the way into the 101.90 area. Major resistance lies at 103.00 and 104.00/10.Japanese economic calendar remains empty, while United States will release unemployment claims on Thursday.

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