Forex Signals Brief July 27th – Fed Went As Planned, What’s Next?
Today, we will need to trade based on yesterday's dovish FOMC Statement. The statement released exactly as we predicted in our Forex Signals Brief on July 26th. Let's see how we can expect this to impact the market today.
The Federal Reserve (Fed) left interest rates unchanged at 1.25%. In addition to this, the central bank found the gains in the labor market have been solid since the NFP report for June.
But, inflation figures didn't go as expected, which boosted sentiment for the dovish statement. Also, referring to the reduction in the balance sheet, the Fed said they would start unwinding “relatively soon” instead of providing an actual date.
Five Economic Events To Watch Today:
EUR – The Spanish Unemployment Rate is due at 6:00 (GMT) with a positive forecast of 17.8%, compared to the previous forecast of 18.8%. M3 Money Supply will be released at 8:00 (GMT). Honestly, I'm not expecting a lot of movement caused by either of them. Yet, if they release surprising figures, it could be enough to shake the market.
USD – The Core Durable Goods Orders is scheduled to be released at 12:30 (GMT) with a positive forecast of 0.4%, higher than the 0.3% figure from last month. Similarly, the Durable Goods Orders is likely to be released showing a massive hike from -0.8% just last week, to 3.5%. It can provide support to the oversold US dollar as it's a leading indicator of production. The rising purchase orders signals that manufacturers will increase activity as they work to fill the orders.
At the same time, the US department of labor will be releasing the unemployment claims. Economists are expecting increased claims. Since it's a weekly report, we may not see heavy movement over this.
EUR/USD – Sets The New Trading Range
The common currency Euro traded just like I recommended in my previous update. We were supposed to stay in buying only above $1.1620, to target $1.1680. The EUR/USD not only hit that target but also entered a new region.
I had emphasized the need to target $1.1710 after the market broke above $1.1470. Zooming out to the weekly chart, we can see the pair has crossed above another resistance level of $1.1735.
So, what's next for this pair? I'm looking to target $1.1900 soon, probably in the next week and $1.2050 later on. We need to stay in buying to avoid anti-trend trades.
EUR/USD – 4-Hour Chart – Major Resistance
Technically, the pair has entered the overbought region as we can see the momentum indicators, RSI & Stochastic are holding at 72 & 89 respectively. Whereas, the moving averages are confirming investors' bullish bias. The immediate support prevails at 1.1665 (50- periods EMA – on the hourly chart) while the resistance is at $1.1775. For tips on how to upgrade your trading techniques, take a look at our FX Leaders support and resistance trading strategy article.
EUR/USD – Key Trading Levels
Support Resistance
1.1645 1.1752
1.1593 1.1842
1.1344 1.2001
EUR/USD Trading Plan
Seeing as the market is already at the top, the idea is to wait a bit for EUR/USD to come lower to $1.1725 to take a buying position, with a stop below $1.1690 and take profit of $1.1795. Lastly, I would highly recommend reading our FX Leaders article on how to trade the EUR/USD signals for tips on how to trade more profitably.
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