EUR/USD fundamental weekly overview, data analysis
FUNDAMENTAL WEEKLY OVERVIEW
1- Drop in initial jobless claims and a rise in JOLTs Job openings (Jun)
- TO ADD TO THE PROGRESS OF REACHING THE FED'S EMPLOYMENT GOAL -
- RAISING THE OPTIMISM THAT ON FED CHAIR POWELL SPEAKS NEXT TUESDAY WILL BE OFFICIAL ANNOUNCEMENT ON THE CALENDAR DATE FOR FED TO TAPER ASSET PURCHASES -
- TAPERING ASSET PURCHASES MEANS LESS PRINTING DOLLAR, CONTROLLING INFLATION -
- TAPERING IS USUALLY TO BE FOLLOWED BY A HAWKISH FED -
2- Inflation stayed high in July with Consumer Price Index rising 5.4% from a year earlier , high annual PPI rises to 7.8% in July vs. 7.3% expected
- RISING THAN 2% ANNUAL INFLATION IS CONSIDERED VERY HIGH = RUNNING HOT ECONOMY -
- VERY HIGH INFLATION = CURRENCY NEGATIVE AS LONG AS CENTRAL BANK DOES NOT MOVE FORWARD TO ADJUST POLICY TO REDUCE CASH FLOW IN ECONOMY -
3- Last ECB news were not this week but previously was mentioned
- PROMISING LONGER TERM DOVISH -
- EXTENDING BUYING BONDS PROGRAM -
- MORE PRINTING EUR -
- CURRENCY NEGATIVE -
ANALYSIS
- If we combine the three factors above together, also considering the previously EU annual CPI reading that reflected rising inflation in EU, we will find out strongly that monetary sentiment is on the USD side and that what makes it hard to break above 1.1750, and if it happens to be = to be short lived, good chance for sellers, to be followed by a break below 1.1750 -
CONCLUSION
- SHORT TERM PRICE RANGE 1.1780-1.680 -
- HIGH U.S. INFLATION READINGS MAY MAKE BULLS ABLE TO BREAK ABOVE 1.1750 TO 1.1780 BUT TO BE FOLLOWED BY A REJECTION TO BELOW 1.1750 -
- OPTIMISM ON TAPER MAY MAKE BEARISH ABLE TO BREAK BELOW 1.1700 TO 1.1680 BUT AS LONG AS THERE IS NO OFFICIAL TAPER ANNOUNCEMENT = TO BE FOLLOWED BY A REJECTION TO ABOVE 1.1700 -
- THE MOST LIKELY IS TO CONSOLIDATE 1.1750 - 1.1700 -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
1- Drop in initial jobless claims and a rise in JOLTs Job openings (Jun)
- TO ADD TO THE PROGRESS OF REACHING THE FED'S EMPLOYMENT GOAL -
- RAISING THE OPTIMISM THAT ON FED CHAIR POWELL SPEAKS NEXT TUESDAY WILL BE OFFICIAL ANNOUNCEMENT ON THE CALENDAR DATE FOR FED TO TAPER ASSET PURCHASES -
- TAPERING ASSET PURCHASES MEANS LESS PRINTING DOLLAR, CONTROLLING INFLATION -
- TAPERING IS USUALLY TO BE FOLLOWED BY A HAWKISH FED -
2- Inflation stayed high in July with Consumer Price Index rising 5.4% from a year earlier , high annual PPI rises to 7.8% in July vs. 7.3% expected
- RISING THAN 2% ANNUAL INFLATION IS CONSIDERED VERY HIGH = RUNNING HOT ECONOMY -
- VERY HIGH INFLATION = CURRENCY NEGATIVE AS LONG AS CENTRAL BANK DOES NOT MOVE FORWARD TO ADJUST POLICY TO REDUCE CASH FLOW IN ECONOMY -
3- Last ECB news were not this week but previously was mentioned
- PROMISING LONGER TERM DOVISH -
- EXTENDING BUYING BONDS PROGRAM -
- MORE PRINTING EUR -
- CURRENCY NEGATIVE -
ANALYSIS
- If we combine the three factors above together, also considering the previously EU annual CPI reading that reflected rising inflation in EU, we will find out strongly that monetary sentiment is on the USD side and that what makes it hard to break above 1.1750, and if it happens to be = to be short lived, good chance for sellers, to be followed by a break below 1.1750 -
CONCLUSION
- SHORT TERM PRICE RANGE 1.1780-1.680 -
- HIGH U.S. INFLATION READINGS MAY MAKE BULLS ABLE TO BREAK ABOVE 1.1750 TO 1.1780 BUT TO BE FOLLOWED BY A REJECTION TO BELOW 1.1750 -
- OPTIMISM ON TAPER MAY MAKE BEARISH ABLE TO BREAK BELOW 1.1700 TO 1.1680 BUT AS LONG AS THERE IS NO OFFICIAL TAPER ANNOUNCEMENT = TO BE FOLLOWED BY A REJECTION TO ABOVE 1.1700 -
- THE MOST LIKELY IS TO CONSOLIDATE 1.1750 - 1.1700 -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
- BIPARTISAN SENATE VOTING TO UNVEIL THE 3.5 TRILLION INFRASTRUCTURE PLAN -
- MEANS MORE STIMULUS, MORE SPENDING, HIGHER INFLATION, USD NEGATIVE -
STILL I'M ON MY BEARISH VIEW AS LONG AS FED IS PROMISING TO TAPER AND ADJUST MONETARY POLICY TO RESOLVE ALL MENTIONED PROBLEMS BUT ALSO PUSH THE USD HIGHER -
- I DONT BELIEVE PRICE WILL BREAK ABOVE 1.1800 AND I USE IT TO MY BENIFIT -
- HOLDING ABOVE 1.1800 FOR LONGER PERIOD PROVES I COMMITTED AN ERROR IN ANALYSIS -