I start this week by recapping what happened last week: the main focus is FOMC Minutes. According to the Minutes, FED changed its monetary policies by dropping threshold unemployment rate and setting the time for first rate hike. FED forecasts unemployment rate this year is stable around 6.1%-6.3%, and the first rate hike would be around six months after QE3 end. In the Janet Yellen speech, I just heard three words:” around six months”: that’s it. This helps investors to have more time to adjust their portfolios; financial market would not shock with unpredicted rate hike. After FOMC Minutes, I have to admit that the QE3 will end in this fall; there is no chance for continuing this Stimulus, and we have to accept this : FED will not hesitate to cut QE3 each Minutes. Alongside FOMC Minutes, I see the EU economy has some negative signals: EU CPI down to 0.7% from 0.8% forecast. This is indeed a big problem for Mario Draghi. He tried to drag entire economy goes up; he wants goes up. Low means stagnation and low demand. Low could open the door for more stimulus from ECB, and Mario Draghi has to consider other options such as negative interest rate. Moreover, ZEW Survey-Economic Sentiment of EU and Germany are also bad too. This proves that Germany and Eurozone need to find different dynamic to come back the development.
This week, the main focuses regarding EU are:
- Germany IFO- Current Assessment + Business Climate + Expectation
- Germany CPI
In my opinion, I don’t hope those data would be positive base on the performance of EU data last week.
Hence, if EU data could drive EURUSD , the responsibility is transferred to US data.
This week is a busy week for US data with a lot of leading indicators are published.
- Durable Goods Orders
- New Home Sales
- Personal Incomes
- Personal Spending
Those above data are very important to USA. By considering those data, we can forecast other data and entire economy. Durable Goods are goods which last more than three years such as furniture, laptop, TV etc . Consumers always cut spending in Durable Goods if they worry about future income as well as the prospect of economy. Hence, Durable Goods Orders always is good leading indicator to predict industry product, Consumer spending, payroll. New Home Sales is a good indicator for Housing market. More houses are built and sold; it will stimulate other relating sector such as construction material, labour, furniture. Personal Incomes and Personal Spending help tracking Personal Consumption Expenditure and GDP because 80% GDP of USA comes from consumer spending. Those data are very good to predict Retail Sales too. Hence, if those US data are positive, traders could be confident to LONG USD against other currencies because in the long term, US economy would be better; good economy will help USD is more attractive to buy.
In my opinion, I believe US economic data would be positive. When EU data stand mute, and US data raises its voice, it’s time to SHORT EURUSD .
One more point, if you look at EURGBP , you will see a lot of signal for SHORT EURGBP ; it means EUR would weaken and consolidate for SHORT EUR.
- Technical Analysis:
Look at on the chart; EURUSD now stops at 23.6% Fib retracement.
11.4% Fib at 1.3868 and 38.2% Fib at 1.3690, 1.3690 is also level of Kumo cloud, so this is a good support.
I will SHORT EURUSD to 1.3690 level.
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setting will be 1 week and a haft, 1 month, and 2 month. Thus, setting would be 9,26,52
Now, a trading week has only 5 days : Saturday and Sunday are off, so the setting must adjust:
1 week and a haft = 7
1 month = 22
2 month = 44
changing setting for more precise.