Currency Analyst since 2010

Forex trading plan for September 2

By Elizabeth Belugina

The market’s risk sentiment remains unstable. Worse than expected manufacturing data from China on Tuesday morning once again provoked decline in stocks increasing demand for safe-haven euro and yen. US ISM manufacturing PMI came out lower than expected (51.1 vs. 52.6 forecast). This is the lowest reading since August 2013. 

At the beginning of this week, traders were once again considering the possibility of the Federal Reserve’s rate hike. Note that the expectations of the market are very data-dependent. Watch the upcoming releases: weaker figures will hurt USD. On Wednesday, traders will be watching ADP non-farm employment change (12:15 GMT): it is believed that this labor market indicator provides hints for more important non-farm payrolls (NFP) due on Friday.

EUR/USD rose, but failed to fix above the 200-day MA. Support is at 1.1200, 1.1150 and 1.1100 (key level) ahead of 1.1017. Resistance is at 1.1300, 1.1330 and 1.1380/1.1400. Advance of the single currency will likely be limited ahead of the European Central Bank’s meeting on Thursday.

GBP/USD is trying to hold above 1.5300 after it closed below the 200-day MA on Monday (1.5365). This level is now acting as resistance together with 1.5410/00. British manufacturing PMI was slightly lower than expected. Britain will release construction PMI at 08:30 GMT. Support is 1.5245, 1.5200 and 1.5170.

USD/JPY reversed down from 121.50 and slid to support at 119.60. Further support is at 118.90 and 118.30. As the uncertainty about the Fed’s policy remains, advance of the pair will be limited.

AUD/USD was testing levels below 0.7100. The Reserve Bank of Australia left the benchmark interest rate unchanged at 2%. On Wednesday Australia will release Q2 GDP data. The nation’s economic growth is expected to slow down from 0.9% to 0.4%. Support is at 0.7000 (psychological level), 0.6989 (April 28 2009 low) and 0.7200. Resistance is at 0.7100 and 0.7150. 

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