Happy Friday, traders. We are closing another very profitable week! At the moment, the US dollar is oversold. Despite the downbeat remarks from ECB president Mario Draghi, traders seized the opportunity to buy the Euro at cheaper prices before the tapering of the ABS (Asset Backed Securities). Let's take a look at what happened yesterday and what the market could have in store for us today:
ECB Monetary Policy
During the press conference, Mario Draghi admitted that economic health is increasing along with a balanced growth risk. However, he also lamented that this has yet to translate into inflationary pressures. That's why the ECB needs to continue with the asset purchase program, to boost the economic growth and inflation.
US Jobless Claims & Philly Fed Index
The greenback plunged sharply after the release of the US Philly Fed Index as it fell from 27.6 to 19.5, reflecting a considerable slack in growth, compared to the forecast of 23.4. Downbeat Philly Fed figures blurred the impact of the better than expected jobless claims figures.
Top Events To Watch Today
CAD – Canada is due to release CPI m/m figures at 12:30 (GMT) today with a forecast of -0.1%, lower than the previous figure of 0.1%. The CPI figures show the change in the price of goods and services purchased by consumers.
The BOC recently increased the interest rates, despite the weaker inflation and falling oil prices. It will be interesting to see investors' reaction towards the inflation data as even the weaker data wasn't able to stop BOC from raising the interest rates. At the same time, Core Retail Sales m/m are likely to be released with a 0.0% gain, lower than 1.5% figure last month.
GBP – Public Sector Net Borrowing is due at 8:30 (GMT). We need to keep in mind that the more people borrow, the more currency devalues. Therefore, a lower value of public sector net borrowing will support the currency.
Gold – XAUUSD- The Metal With Haven Demand
During the New York session, we encountered another bullish wave which was definitely expected. That's why I preferred to close the gold sell signals manually in profit before the US session yesterday.
As of now, we aren't expecting any fundamental market moving data from the United States. This means the market is likely to trade the echoes of the ECB decisions and technical levels today.
Technically, the precious metal has crossed above the major resistance level of $1242, and it's consolidating right above at $1244. But on the daily timeframe, it's still below the 50 periods EMA, which is a major hurdle. Refer to our strategy article to get a better understanding of how to profit from a moving average. RSI is holding at 57, signifying investors' bullish bias. The stochastic is in overbought territory.
Gold – Daily Chart – Trend line Resistance
On the daily chart, the trend line connecting the low price on May 9th ($1214) to the high on July 20th ($1247) is narrowing the trading range. For now, the current trading range is $1242 – $1247.
Gold – XAU/USD – Trading Levels
S1: 1242 R1: 1247
S2: 1237 R2: 1252
S3: 1234 R3: 1225
Gold – Trading Plan
Due to a lack of market moving events and a technically narrowed trading range, I'm looking to stay bullish above $1242 with a target of $1247 & $1252. Refer to FX Leader's detailed articles on how to trade & profit gold signals to learn more about our gold signals.
Good Luck & Have a Great Weekend!