Trade Setups in Forex, Eyes on BOC Rate Decision!
|During the Asian & European Session, the dollar continued its decline over disappointing manufacturing figures from the United States. The weaker dollar also helped the euro to recover from more than two-year lows.
In addition to this, the British Pound also rallied, gaining some of Tuesday’s losses following the latest parliamentary effort to stop a no-deal Brexit.
The pullback in the greenback was provoked by manufacturing activity in the world's largest economy shrinking last month for the first time in three years, figures from the Institute for Supply Management announced on Tuesday revealed.
At the moment, the market is a bit calm as traders await for the Bank of Canada interest rate decisions and trade balance data from the Canadian economy.
So all in all, the market is entirely packed with high impact economic datasets and geopolitical tensions which are likely to keep the financial markets on the move.
EUR/USD - Weaker Dollar Brings Bulls for Euro
During the European session, the EUR/USD currency pair continues its recovery streak above the 1.10 handle even after the decline in the Eurozone Retail Sales and dovish European Central Bank incoming President Lagarde, as broad-based greenback instability and weakness continue to EUR/USD currency pair push upward.
As of writing, Eurozone Retail Sales fell through July due to a drop in the sale of clothing, according to the newest data printed by the European Union statistics agency, Eurostat, on the day.
Retail sales dropped by 0.6%m/m in the 19-nation bloc during July vs. +1.2% seen in June and -0.6% last. according to the annualized basis, Eurozone Retail Sales increased by 2.2% in the reported month vs. +2.8% previous and +2.0% expected.
Moreover, the retail sales delivered by the Eurostat is a measure of changes in sales of the Euro zone retail sector. That represents the performance of the retail sector during the short term. The moves are broadly followed as a sign of consumer spending. Therefore, typically, positive economic growth forecast bullish for the EUR currency, whereas a low figure is seen as bearish for the EUR currency.
EUR/USD - Daily Technical Analysis
On the technical side, the EUR/USD continues trading in a bearish channel which was extending single currency solid support around 1.0900. As discussed in our previous brief, the RSI and MACD were trading in the massively oversold zone, signaling that the sellers are exhausted and bullish may jump in the market.
That's precisely has happened with the EUR/USD. As the chart shows, the single currency Euro bounced off above the 1.0920 support area to place fresh intraday high of around 1.1020.
On the 4 hour timeframe, the EUR/USD is testing the 50 periods EMA at 1.10250. It's the same level where the bearish trend line is also extending resistance. So now, we need to see if the EUR/USD manages to close below this level, elsewhere, the market may continue going upward until 1.2055.
EUR/USD - Daily Technical Levels
Support Resistance
1.0908 1.1109
1.0835 1.1238
1.0633 1.1439
Pivot Point 1.1036
EUR/USD - Daily Trade Sentiment
During the U.S. session, I will be looking to stay bearish below 1.1050 and bullish above 1.1010.
USD/CAD - Double Bottom Support, Eyes on BOC
The market today is all about trading Bank of Canada's interest rate decision, which is due at 14:00 GMT today. Well, the Bank of Canada (BoC) governor Stephen Poloz is anticipated to keep the overnight interest rate unchanged at 1.75% today.
During their previous meeting in July, the central bank recorded that while the Canadian economy is responding to potential growth, ‘the outlook is clouded by stubborn trade tensions’. Financial markets anticipate steady rates, which no change in 1.75% interest rate today.
USD/CAD - Daily Technical Analysis
After making a strong bearish move ahead of the news release, the USD/CAD is trading above 1.3305, the strong double bottom support level. The Canadian dollar is getting also support from 50 periods Exponential Moving Averages which is keeping USD/CAD supported around 1.3310.
Currently, the USD/CAD is forming Doji candles, which is a clear signal of neutral bias among traders.
Well, my friends, it's just a clam before the storm as any surprising change from the Bank of Canada may shake the markets today.
USD/CAD - Technical Levels
Support Resistance
1.3303 1.3352
1.3283 1.3381
1.3234 1.343
Pivot Point 1.3332
USD/CAD - Daily Trade Sentiment
Well, it's really easy for me to suggest any trade, but It would be rational to stay out of the market until the rate decision and trade balance figures are actual out.
Overall, 1.3310 is a crucial level to determine the buying and selling behavior of the market. Trade bearish below 1.3300 to target 1.3280 and 1.3260. Alternatively, take a buy position above 1.3325 to target 1.3375.
Gold - XAU/USD - Sideways Range Remains Intact
Safe-haven metal prices continue to unchanged and fluctuate near the $1548 with the lack of fresh political and trade catalysts.
Recently the bullion traders turned risk-averse due to the detail of the trade meeting between the United States and China which is due this month. Besides this, the greenback instability on the downbeat figures of August month ISM manufacturing purchasing managers’ index (PMI) form the US.
At the Brexit front, the political drama at the United Kingdom parliament to hold the no-Brexit deal, which increased the support of major lawmakers recently, also supported the gold prices. Moreover, it should also be marked that downbeat sentiment from the international central bankers has been the different catalysts to support the risk-off.
Gold - XAU/USD - Daily Technical Analysis
Gold has entered into the fresh trading range of 1550 - 1532. The RSI and MACD are holding in a neutral range, suggesting neutral bias among traders. The 50 periods EMA is supporting the precious metal above 1529.
In addition to this, gold is also likely to face support around 1532, extended by the bullish trend line. If you zoom on the 4-hour chart, gold is forming an ascending triangle pattern which can drive an upward breakout, to extend gold prices further higher.
Gold - XAU/USD - Daily Technical Levels
Support Resistance
1521.97 1533.92
1514.7 1538.6
1502.75 1550.55
Pivot Point 1526.65
XAU/USD - Daily Trade Sentiment
Recalling yesterday's brief, the suggested trade idea was to place a Buy stop above 1534 with a take profit around 1545. I hope our analysis help you secure 110 pips green pips. Well, for now, keep an eye on 1535 to stay bullish until 1545 and 1549.
All the best for the U.S. session!
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