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Trading plan for August 12

Events to watch on August 12 (Tuesday)

AUD: NAB Business Confidence, HPI (1:30 GMT)

EUR: German ZEW Economic Sentiment, ZEW Economic Sentiment (9:00 GMT)

Trade ideas

EUR/USD is trading at the middle Bollinger band on H4 and just above the 20-period MA at $1.3380. There were no important data in the euro zone’s economic calendar on Monday. Tomorrow Germany and the euro area release IFO economic sentiment indices – economists expect a sharp decline in German reading to the lowest level of 2014. Euro may remain under pressure ahead of the release drifting down to support at $1.3366 (July low). Bad reading will bring EUR/USD to the recent lows. If the data is significantly better than expected, EUR/USD can make a short squeeze to $1.3430.

GBP/USD spent the day slightly above the Friday’s 2-month low of $1.6765. In our view, the last week’s close below $1.6800 is bearish signal that opens the way to $1.6700/6690. Tuesday’s UK economic calendar is light. The key drivers will come on Wednesday with a bag of labor market data and the inflation report.

USD/JPY recovered back above 102.00 following the Friday’s sharp and quick dip to 101.50. The pair remains directionless, but, given the persisting geopolitical risks in Ukraine and Iran we concede more dips to come this week. Support is seen at 101.00, while resistance lies at 103.00. 

Despite the bullish hammer on the AUD/USD chart on Friday, the pair was moving down today. Discouraging labor market data released last week did make strong negative pressure on AUD. Tomorrow during the Asian session should watch Australian business confidence data – this is an important indicator. AUD is not so oversold now and may easily test the recent low in the $0.9240 area on the negative news. The upside should be limited by $0.9305/15.

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