FX:EURUSD   Euro / U.S. Dollar
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- Fundamental Analysis:
It could be said that next week is a very busy week for EURUSD             . With abundant of economic data from both US and EU, the volatility would be very high, and traders should be cautious about any big move of FX market especially EURUSD             .
Last week, there was a divergence between EU data and US data. While US economic data is gradually better, EU economic data showed deterioration, and this could transfer to the performance of EURUSD             this week: stronger USD and weaker EUR.
I summarize important economic data of US and EU next week:
- Monday: Germany Retail Sales + EU CPI            
- Tuesday: Markit Manufacturing PMI + Germany Unemployment Rate + Change
- Wednesday: EU GDP
- Thursday: ECB Meeting+interest rate decision
- Friday: Germany Factory Orders
- Tuesday: ISM Manufacturing PMI
- Wednesday: ADP report + factory order
- Thursday: ISM Non-Manufacturing PMI
- Friday: NFP report + Unemployment rate
(I also pay my attention in Redbook + construction spending on Tuesday: Redbook is used to forecast Retail Sales, construction spending is used to forecast housing market)
The main focus will be ECB Meeting. With a lot of negative data last two weeks, it’s very difficult for ECB members to keep silent about the deterioration of Eurozone. They have to react; recently, we heard about negative deposit rate and most likely this option would be on the discussion table of Meeting. Otherwise, they can adopt a bond purchase program similar to FED’s QE . No matter what happen, I think at least ECB must have some guidance to respond the risk of deflation, and this could trigger a sell-off for EURUSD             .
Regarding to EU economic data, the EU CPI             on Monday would be negative base on Germany CPI             data last Friday, Germany economy accounts one third of entire Eurozone economy, so if Germany CPI             is not good, it would pull back entire Eurozone. Other data could be positive such as Germany Unemployment rate + change, but I think traders don’t dare to drag EURUSD             higher because we still have US data. There is 80% possibility US data will be very positive. It’s very dangerous to LONG EURUSD             in the being time. In my opinion, there are two possibilities:
- Firstly, traders will sell-off EUR ahead ECB Meeting + NFP report because they know ECB will react with risk of deflation and NFP report would be very positive.
- Secondly, traders will wait until ECB Meeting and NFP report released; in this case, EURUSD             could be higher.
Hence, the bias of trading EURUSD             next week is sell-off; in the worst case, if ECB has no reaction, they think recent deterioration of EZ is just temporary, and NFP report is negative, EURUSD             absolutely come back 1.40 level, but I think this option is hard to happen.
- Technical Analysis:
This week, FA governs the FX market, so TA has no meaning to consider; I just watch which level EURUSD             will test.
We have SMA100 at 1.666
Support zone is at 1.3690
50% Fib retracement is at 1.3630
1.3630 is the target which I think EURUSD             will test next week. In the worst case, if no one wants to save EUR, the next Fib retracement level would be the support: 68% fib retracement at 1.3550.
Recent days, I saw EURUSD             broke short term trend line I show on the chart. This trend line provides resistance level . Above the head of price, resistance levels will be 23.6% Fib retracement level at 1.38; according Gann Square of Nine, 1.3845 is a good resistance level . I choose this level to place stop loss. The target is 1.3550, but if the price hits 1.3630, I will close my position and get profit.


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