Slow Mid-Week Trading Plagues The USD
Shain Vernier • 1 min read
Mid-week has brought muted trading conditions and moderate action across the forex. Thus far it has been a mixed bag for the Greenback. Losses against the Euro and Swiss franc have been offset by gains vs the Canadian dollar and British pound. The economic calendar is wide-open and volatility has been low.
During the U.S. pre-market hours, the MBA Mortgage Applications for August was released. Applications continued to fall, coming below July’s stats at -3.0%. U.S. Real estate metrics have consistently underperformed during the summer months. With 4.1% GDP and historically low Unemployment, one is liable to believe U.S. real estate to be strong. And it is — just not as strong as expected.
EUR/USD Daily Technicals
In a live market update from yesterday, I outlined the key levels for the EUR/USD. Since then, price has tested and failed at topside resistance. Unfortunately, the trading plan was a loser, with the stop being run by two pips before reversing beneath 1.1600.
It appears that the vacant economic calendar and slow trading conditions are promoting a rotational EUR/USD. Until Friday’s U.S. CPI release, I expect this market to trade between the 38% Current Wave retracement (1.1612) and the June/July Double Bottom (1.1510).
Bottom Line: If the EUR/USD fails to sustain trade above the 1.1612 area, then we are in a position to test the Double Bottom just above the 1.1510 handle.
For the remainder of the week, I will have buy orders queued up from 1.1512 to capitalize on a rejection of the 1.1500 psychological level. With an initial stop at 1.1474, this trade produces 38 pips when implementing a 1:1 risk vs reward plan.