- If it happens to be upbeat (EUR POSITIVE) = A retest of weekly high 1.1800 could be, to be capped at 1.1820, to be followed back a retreat below 1.1800, HOWEVER MY POINT OF VIEW THAT IT WOULD BE VERY LOW EXPECTED AHEAD OF POWELL SPEAKS AWAITING ANY NEWS ABOUT THE CALENDAR TAPER DATE (OFFICIAL ANNOUCNCEMENT OR DELAY TO BREAK ABOVE THE LAST WEEK HIGH OF 1.1805 -
- If it happens to be downbeat (EUR NEGATIVE) = to support the upper range consolidation of 1.1800-1.1750, breaking below 1.1750 would not be ruled out but low expected ahead of Powell speaks -
How can U.S. retail sales report affect price range?
- If it happens to be downbeat (EUR POSITIVE) = A retest of weekly high 1.1800 could be, to be capped at 1.1820, to be followed back a retreat below 1.1800, HOWEVER MY POINT OF VIEW THAT IT WOULD BE VERY LOW EXPECTED AHEAD OF POWELL SPEAKS AWAITING ANY NEWS ABOUT THE CALENDAR TAPER DATE (OFFICIAL ANNOUCNCEMENT OR DELAY TO BREAK ABOVE THE LAST WEEK HIGH OF 1.1805 -
- If it happens to be upbeat (EUR NEGATIVE) = to support the upper range consolidation of 1.1800-1.1750, breaking below 1.1750 would not be ruled out but low expected ahead of Powell speaks -
CONCLUSION
- THE MAIN DRIVER ON THE WEEKLY FRAME TO BREAK ABOVE 1.1805 OR BREAK BELOW 1.1706 DEPENDS ONLY ON ANY NEWS ON TAPER ASSET PURCHASES UPDATES OF FED (POWELL SPEAKS) -
- ACCORDING TO THE LATEST U.S. INFLATION DATA WHICH SIGNED FOR CONTINUING RISE, MAKES POWELL HAS LOW CHANCES TO DELAY TAPER OR FAIL INVESTORS BY NOT PROPERLY ADJUSTING MONETARY POLICY, AND IF IT HAPPENS AS EXPECTED THERE WOULD BE A BIG BEARISH MOVE IN THE CURRENCY PAIR (THE HIGHER PROBABILITY) -
- IF POWELL SURPRISINGLY DELAYS TAPERING ASSET PURCHASES THEN PRICE WOULD BREAK ABOVE 1.1800 TO TARGET 1.1850, AND SHORT POSITIONS WOULD BE FAVORED TO BE CLOSED AND SHIFTED TO LONG -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
Again thanks for the great analysis. Powell's speech today will be for teachers so not sure if he will mention tapering at all ahead of FOMC meeting minutes due to be published tomorrow; but people will still be looking out for clues in what he says...
MohamedElsodoody
⋅
@arezqiah, you got my attention that today is a town hall and not policy speaks, you are absolutely right, I apologize I did not revise it, its all about the FOMC now as you say.
MohamedElsodoody
⋅
@arezqiah, but let me correct that still the analysis goes same way, nothing changes, price range the same ahead of new data, just to shift Powell speaks to FOMC. I will correct this in the next idea. thank you.
arezqiah
⋅
This is mind-boggling, retail sales figures are very bad yet it pushed USD up! Or am i missing something?
MohamedElsodoody
⋅
@arezqiah let me tell you something you are a smart guy, the trick here is that the right value of exchange rate should be already 1.17 means below 1.1750, yes decline in retail sales indicates bad economy but this big decline is good for easing inflation direction, less spending, good for USD at higher inflation period,that is why you can find in my last ideas that i was not digesting the bullish move above 1.1750 and mentioned i used it to my benefit.
arezqiah
⋅
@MohamedElsodoody, Honestly I don't really get it. I couldn't find a rational explanation anywhere either. You say "this big decline in retail sales is good for easing inflation". Well in the current context of the Fed trying to decide when to taper, bad sales = low inflation = slow economy are all factors which should not rush their decision! And when tapering is delayed USD has no reason to become stronger. So I'm lost on this one...
MohamedElsodoody
⋅
@arezqiah also don’t expect sustained decline, Volatility, as also this less spending, less inflation, raises the fears of taking the action to taper, the pair is in volatility to bearish direction ahead of taper updates, just if you combine fundamentals with technical you shall not expect any higher high ahead in the daily frame ahead of taper updates. I like the opened discussions, and if you have more questions please i would be glad to think loud.
MohamedElsodoody
⋅
@arezqiah i will try to brief it, as long as monetary policy is on the USD side, the pair will keep its bearish stance, because monetary policy is the most important factor to predict the good economy more than calendar, bad calendar+supported monetary policy at the current moment. = bearish pair, any upside movement is nothing more than a chance to sell, till monetary policy changes to improperly adjusted to suit calendar.
MohamedElsodoody
⋅
@arezqiah why you dont get it? Lower retails sales= lower spending, lower spending= rising inflation is stopping, all these factors good when inflation is high USD POSITIVE, so bad retail sales at high inflation time is on the contrary good for USD
arezqiah
⋅
@MohamedElsodoody, I tell you what I know about this. High inflation is generally not good for any currency. It devalues the currency during normal time. But during a crisis (Covid 19) after which a central bank decides to "stimulate" the economy (i.e print more money) inflation figures following that stimulus should be viewed as the criteria by which the central bank decides to stop stimulating the economy aka "tapering". So when inflation figures are high (during the context of a crisis) the market reacts in favor of the currency which goes up in value because there is a high chance that the central bank would want to taper to ease inflation as that's a sign the economy is back on track. But if inflation figures are low then there is no rush for the central bank (fed) to intervene, and the currency (USD) has no reason to go up in value! What do you make of this? Am I right or wrong?