In previous idea I mentioned the reasons why price action is expected to be capped at 1.1850, reasons for a retest at 1.1835, in this idea I will mention additional reasons why to expect a short term reversal to be capped at 1.1770 at risk of falling further to 1.1720?
reasons why price action shall take the downwards direction to be capped at 1.1770 ahead of U.S. jobs data?
1- Germany >> is seeing the biggest surge in imported inflation since the early 1980s .
2- Germany >> the speed of recovery is being put at risk as companies in the manufacturing powerhouse report shortages of materials .
3- EU >> Europe's largest economies are starting to feel the squeeze from fraying supply chains .
4- U.S. >> raised its travel advisory for Germany one notch to level 3, saying Americans should reconsider travel due to Covid-19 .
5- U.S. calendar data >> readings show that the pace of the economic recovery is slowing = On the contrary good for the USD as it signs for non-rising inflation, given that the inflation is already more than high in the U.S. + taper talks SOMEHOW is in progress (better than in EU, not considering taper for longer period according to ECB) .
6- EU calendar data >> readings show rising inflation, slower pace of economic progress (given ECB is extending its bond-buying program and is DOVISH) = inflation is expected to keep rising which is EUR negative .
what can can cause a retest at 1.1845 to be capped at 1.1860?
1-Significant drop in the U.S. jobs data (NFP, initial jobless claims, unemployment rate) = to raise investors' fears Fed would stick to not giving clear calendar date when to start the taper process which is USD negative . ( THE MAIN CATALYST POST EU CPI DATA ) .
2- Upbeat EU data ahead of U.S jobs data (however it may not strongly affect the direction) .
CONCLUSION
- The main price direction catalyst post EU CPI data is the U.S. jobs data - - Price range would be 1.1860-1.1770 if U.S jobs data (Friday) happens to be DOWNBEAT - - Price range would be 1.1850-1.1720 if U.S. jobs data (Friday) happens to be DOWNBEAT, however the 1.1750 support would be hard to break below - - BEARISH direction to be capped at 1.1770 ahead of U.S. jobs data -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
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CORRECTION, third item in CONCLUSION, - Price range would be 1.1850-1.1720 if U.S. jobs data (Friday) happens to be UPBEAT, however the 1.1750 support would be hard to break below -
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Breaking News (WEDNESDAY) European Central Bank members Klaas Knot and Robert Holzmann signaled they would support tapering down the institution's emergency bond-buying scheme after preliminary inflation figures beat estimates. Price action to be stressed, even the fall may be delayed, still on the BEARISH view, however it is recommended to close positions at opened prices or take profit.
@gelzumeldg, thank you so much, I highly appreciate your support and feedback, however there are breaking news that came out few hours ago, expected somehow to weaken the fall, please check the latest update.
@gelzumeldg its consolidating at upper range, if jobless claims, NFP, unemployment rate (U.S.) happens to be downbeat so definitely euro will rise, also yesterday ECB stated they are discussing taper, i’m off position till tomorrow’s data.
bakuraryou88
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Is the bearish view still valid? Seems like forecasted bullish US data decided to go way bearish instead. Wait for your thoughts on this, thanks.
MohamedElsodoody
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@bakuraryou88 the ADP nonfarm employment change was very downbeat and price moved up from 1.1813 in response to that, as i mentioned in analysis any bad U.S. employment data will push the price to break above 1.1850, i had a bearish before U.S. jobs data. No the bearish is not valid for now.
MohamedElsodoody
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@bakuraryou88 i mentioned if bad U.S. data price to be capped at 1.1860 but it broke even above because of the ECB announcement to discuss taper on next meeting, which is to shift the price range higher for sure.