Trading plan for 16/07/2018
The absence of investors from Japan has dampened activity on the currency market, but overall there is a slightly better climate for risk currencies. Data from China have better and worse sides, which also did not give rise to volatility. The stock market grew slightly.
The weekend was also calm for events, so investors enter the new week in observation mode. The US Dollar loses slightly, giving away fields to risky currencies – a form of rebounding trends from the previous week. NZD / USD has the highest reflection of 0.6780. In the range are still USD / JPY (112.40) and EUR / USD (1.17).
The stock market in the region is weaker today, probably due to Chinese data not encouraging to increase. Shanghai Composite is losing 0.8% and Hang Seng is down 0.4%.
China’s GDP in the second quarter increased by 6.7 percent y/y, as expected. June retail sales increased by 9.0% y/y with a forecast of 8.8%, but industrial production fell less – 6.0% while the market participants expected 6.5%.
On Monday the 16th of July, the event calendar is light in important data releases, but the global investors should keep an eye on US data: Retail Sales, Business Inventories and NY Fed Empire State manufacturing index.
EUR/USD analysis for 16/07/2018:
The lack of new information in the subject of trade wars is good news and risky assets are trying to create the strength for correction. Concerns about escalation, however, are still present in the background and there is little need to disturb the peace. The market received some time to digest the latest White House news about the new import tariffs for Chinese goods worth USD 200 billion. The Chinese side continues to withhold the official response and this has helped stabilize the yuan exchange rate, and also gave reason to rebound the Shanghai stock exchange. Behind the signals from China, the investment climate is warming in the wider market, although the reaction is moderate. On the other hand, it is well known to everyone that the last word in the commercial zone has not been said and we remain at risk of unexpected information until the US and China successfully complete trade negotiations. For now, however, they do not even sit at the common table, which promises that these summer holidays will not be a boring period of time as it usually is.
Let’s now take a look at the EUR/USD technical picture at the H4 time frame. The price has retraced 61% of the previous swing up and has bounced from the level of 1.1615. Currently, the bulls are trying to test the short-term trend line resistance around the level of 1.1715-1.1719, but so far no avail. Nevertheless, the oversold market conditions and positive momentum are supporting the short-term bullish outlook. The next technical resistance is seen at the level of 1.1719 – 1.1726 and then higher at 1.1758.