Currency Analyst since 2010

Forex trading plan for August 4

US dollar index: DXY recovered a bit, but remains under bearish pressure after breaking below important support in the 95.40 area on Tuesday. According to ADP report, US private sector added 179K new jobs in July and the reading for June was also revised higher to 176K. However, dollar bulls are still discouraged by the previous weak American data and US ISM services PMI came out at 55.5 below the consensus forecast of 56.0. On Thursday America will release unemployment claims (12:30 GMT) and factory orders (14:00 GMT).   

EUR/USD: The pair met resistance of the 100-day MA at 1.1235 and retreated below 1.1200 breaking the short-term uptrend. Support is at 1.1180/70. Below this level the euro will correct down to 1.1120/00. This is our main scenario. There will be news of low importance in the euro zone’s economic calendar: ECB economic bulletin and retail PMI. On the upside further resistance is located at 1.1285 (2016 resistance line).    

GBP/USD: The pair consolidated in the 1.3365/00 area ahead of the Bank of England’s Super Thursday – the day, when the central bank announces its monetary policy decision and releases the minutes of the meeting, as well as its quarterly inflation report (11:00 GMT). In addition, Governor Mark Carney will conduct a press conference (11:30 GMT). The BOE is expected to cut the benchmark interest rate from 0.5% to 0.25%, but the move is already completely priced in GBP/USD. Pound met resistance at the top of the short-term rising channel. Decline below 1.3300 should meet support at 1.3250 and 1.3215.     

USD/JPY: The pair found support at 100.70, but remained near 3-week lows. The picture remains bearish. There are no reasons for a reversal to the upside, just a correction is possible. We’ll be looking for entry points to add to the short position at 101.80. Other resistance levels are at 102.50 and 103.50. Below 100.80 the next target will be at 100.00.   

AUD/USD: The pair was stopped by April-July resistance line in the 0.7635. However, despite the Reserve Bank of Australia’s interest rate cut, there was no big selloff in Aussie. Australia will release retail sales at 01:30 GMT, the forecast is positive. AUD/USD is expected to consolidate in the 0.7600/0.7550. 

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