Trading plan for August 19
Key market drivers for August 19 (Tuesday)
AUD: Monetary Policy Meeting Minutes, RBA Gov Stevens Speaks
USD: July Building Permits, July CPI
GBP: July Inflation
JPY: July Trade Balance
On Monday EUR/USD was trading calmly in the $1.3400/$1.3380 area. On H4 chart the pair looks capped by the 100-period MA and may test $1.3360 and $1.3340. On the upside spikes to $1.3440 area possible, but we recommend new shorts at this point.
USD/JPY remains under bullish control, but they are not strong enough to provoke a true rally. The pair was in demand on Monday, strengthening to 102.50. However, the Friday’s peak at 102.70 remains unbeaten as we write. In the current uncertain environment we stay away from this pair. We want to see a break above the 102.80/103.00 resistance area to go long. There are no releases on the Japan’s agenda in the coming Asian session, so all eyes on the US inflation and building permits data. Late Tuesday watch the Japanese trade balance (23:50 GMT). Trade deficit is expected to have contracted to 0.77 trillion in July (negative for USD/JPY as expectations for additional BOJ easing will decline). However, we need to see a break at least below 102.00 to discuss selling USD/JPY. Next support lies at 101.50 and 101.00.
GBP/USD opened the week with a bullish gap at $1.6730, but failed to extend the rally. The cable found some support at the 200-month MA ($1.6650). At the same time, this is the 200-day MA. However, we remain bearish for the sterling in the medium term. Bullish correction will likely be limited by the $1.6750 or $1.6800 resistance. Traders await the UK inflation figures on Tuesday (8:30 GMT). According to the market consensus, CPI slowed from 1.9% to 1.8% in July. Lower inflation is a negative factor for GBP/USD. Break below $1.6650 will open the way to our next medium-term target of $1.6300.
AUD/USD is on the upside for the fifth day in a row, but it’s trading within Friday’s range. The 20-day MA went below the 100-day one and the daily Ichimoku Cloud turned negative. There was nothing to move Aussie except the swings in geopolitical sentiment. AUD is waiting for the signals from the Reserve Bank of Australia as it release its August meeting minutes tomorrow. The central bank left the interest rate unchanged at 2.5%. Traders will be watching for any attempts of Glenn Stevens to talk down the national currency. Small longs from $0.9335 to $0.9355 are possible. When the prices reach $0.9355, it will be time to switch to shorts. If the bulls fail to gather strength, a fix below $0.9320 will bring the pair to support is at $0.9305 and $0.9285.