There is no major economic indicator set to be released other than the FED dependent PCE data later in the NY session. Before that Personal Income and savings will be released but are all projected to dip. Earlier, the Pound took a beating as Q2 GDP growth took a down turn while current account readings and the general service sector which accounts for more than 80% of UK GDP is contracting. With these turn of events-as data shows, we begin questioning their reasoning behind a bullish monetary policy trajectory BoE and Carney plans to adopt in the coming months. Of course, inflation is one of the metrics pointed out but then again it is slightly above the central bank’s ideal range of 2%.
Germany’s unemployment records shows that labor condition is robust after employment improved by 23K last month against a forecast which pointed at worsening labor market. All in all, the Euro reacted and continues to chart its way higher despite inflation concerns. Core inflation remains flat at 1.1% and a tad lower than last month-1.2%.
Technically, I remain a bear on this pair. Next week we have NFP and as things stand, US labor is forecasted to slow down. If anything, I still have my doubts and despite the hurricanes, NBS may spring a surprise for USD bears. In the weekly chart, bears have broken that 6 month support line and it only natural-as history shows-for that same level to be retested. There is a double bar reversal pattern in the daily chart and a rally towards this month’s visible support at 1.9 is possible. If it does and tests the support turned resistance line, then stochastic short entries in lower time frames will provide better entries for bears.
This set up will probably mature next week and therefore trading should-if my forecast is correct- happen as follows:
Sell Limit: 1.9-1.95
Stop Loss: above 1.20
Take Profit: 1.6, 1.4-ideally
Have a good trading day and weekend.