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EURUSD Testing Ichimoku – Forex Economic Update


Aug.29.2016

EURUSD Testing Ichimoku

It's the final week of summer and  EURUSD testing Ichimoku with a potential renewed bearish sentiment. Is the new sentiment enough to breakthrough? Also what's up on the economic calendar on the final days of  August?

 

EURUSD Testing Ichimoku - Kiana Danial Orbex Invest Diva EURUSD Testing Ichimoku - Kiana Danial Invest Diva

EURUSD Testing Ichimoku | Technical Analysis

The US dollar had an impressive jump on Friday as a December rate hike possibility rose after Janet Yellen’s speech in Jackson Hole. The EUR/USD pair dived down breaking below our first pivot at 1.1220. It tested the upper band of Ichimoku cloud on Monday forming a spinning top candlestick chart pattern. 

 

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This is not yet a confirmed bearish signal for long term traders. Only a break below the Ichimoku cloud and our main pivot of 1.11 will change out outlook on the market sentiment. The first bearish target is set at 1.09 while resistance remains at 1.15. Get my book to learn more about technical analysis.

 

EURUSD Testing Ichimoku - Technical Analysis EURUSD Testing Ichimoku - Technical Analysis

 

US Dollar Fundamentals

Yellen was Kinda Upbeat about economy in Jackson Hole

Fed head Janet Yellen’s Jackson Hole summit revealed that US economic growth “has not been rapid.” But “it has been sufficient to generate further improvement in the labor market. This gave investors a glimpse of hope for the US dollar.

Better than Expected Personal Consumption Expenditure 

On Monday the US released their Personal Spending figure which remained unchanged comparing to last year at 1.6%. It was better than the expected 1.5%. This means that consumers are buying goods and services, fueling the economy and spurring output growth. However since Retail Sales, which also covers consumer spending, was released about 2 weeks ago, this event didn't impact Ms. USA as much.

EUR Fundamentals

Suspicious Monetary Policy Tools Might be Needed

ECB member Benoit Coeure also got a chance to get up and speak at the Jackson Hole event. For him, price stability was the main focus of his testimony. He zoomed in on how short-term interest rates could be pushed to the effective lower bound more frequently if the economy continues to weaken.

Coeure added that unconventional monetary policy tools might be needed if government action and fiscal policy adjustments aren’t enough to keep euro zone economies afloat.

The rest of Coeure’s speech was about financial stability risks and other potential side effects of keeping rates too low for too long. He mentioned the need for the ECB to get more creative with its stimulus measures and for euro zone national governments to step up their game in shoring up growth and inflation.

No wonder Mr. Euro took a dive after Coeure's speech!

Coming up for EUR and USD

Tuesday: Coming up on the economic calendar on Tuesday, German Consumer Price Index will be out during the London session. It will assess changes in the cost of living by measuring changes in the prices of consumer items.

The US CB Consumer Confidence is the most important set of data on Tuesday, released at 2 PM GMT. This will assess  consumer sentiment regarding business conditions, employment and personal income in August.

The combination could create further volatility in the EUR/USD pair as EURUSD testing Ichimoku.

Wednesday: Market moving events for Mr. Euro continues on Wednesday:

  • German Retail Sales at 6 AM GMT
  • German Unemployment Change at 7:55 AM GMT
  • Euro-Zone Consumer Price Index Estimate for August and Unemployment Rate for July both out at 9 AM GMT

 

EURUSD Tesing Ichimoku - Trading Strategy

So how can we take advantage of EURUSD testing Ichimoku?  For a bearish scenario, wait for a confirmation of a break below the cloud. A break below pivot of 1.11 could be our second bearish confirmation. However if the pair suddenly decide to go nuts, perhaps on the news that Donald Trump is leading on the polls versus Hillary Clinton, and breaks back above 1.1220, our outlook will turn back to bullish. targeting 1.1350 and 1.15 in extension.

More on Economic Calendar

Tuesday

London Session: We have German Import Price Index for July at 6 AM GMT followed by KOF Leading Indicator at 7 AM which could impact the Swiss Franc. UK’s Net Consumer Credit is scheduled to be out at 8:30 AM GMT and we have other consumer confidence data out of the EU zone during the London session which could result in volatility in the Euro crosses.

New York Session: During the New York session Canada will release their Current Account at 12:30 PM  which summarizes the flow of goods and services, income payments, and transfers in and out of Canada.The US Consumer Confidence is the most important set of data for today released at 2 PM GMT, assessing  consumer sentiment regarding business conditions, employment and personal income in August.

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Wednesday

Asian session: Australia’s Private Sector Credit is out and Japan will release their  Housing Starts figures for July

London Session: Moving forward during the London session UBS Consumption Indicator for July is scheduled at 6 AM GMT which is an index for consumer spending in Switzerland.UK’s Nationwide House Prices and German Retail Sales will also be out at the same time followed by German Unemployment Change at 7:55 AM GMT.  Euro-Zone Consumer Price Index Estimate for August and Unemployment Rate for July will both be out at 9 AM GMT to create trading opportunities in the EUR crosses.

New York Session: The hottest market moving event during the New York session is Canada’s GDP released at 12:30 PM GMT. Later the US will release their Pending Home Sales at 2 PM GMT.

 

Next Day's Asian session: During the next day’s Sydney session, New Zealand will release their quarterly Terms of Trade Index at 10:45 PM GMT, Australia will release the AiG Performance of Manufacturing Index at 11:30 PM and Japan will release their Capital Spending at 11:50 PM to end the trading day

 

Here are Invest Diva's calculations for important EURUSD/  approximate levels to keep an eye on:

Support Levels Turning Point Resistance Levels
1.06 1.11 1.1350
1.09 1.1220 1.15

 

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Kiana 喜愛成
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