With the Fed decision coming very soon, FX markets are likely to be on standby through the upcoming Asia and London sessions.
But if we do see some action, it may come from EUR/AUD as we get top tier economic updates from Australia and consumer sentiment updates from Europe.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at USD/CHF ahead of mid-tier reports from the U.S., so be sure to check that out to see if there is still a potential play!
Intermarket Update:
Equity Markets Bond Yields Commodities & Crypto
DAX: 15519.13 -0.64%
FTSE: 6996.08 -0.42%
S&P 500: 4401.70 -0.47%
NASDAQ: 14660.58 -1.21% US 10-YR: 1.236% -0.04
Bund 10-YR: -0.444% -0.004
UK 10-YR: 0.56% +0.00
JPN 10-YR: 0.019% +0.005 Oil: 71.72 -0.26%
Gold: 1,800.00 +0.045%
Bitcoin: $37,888.50 -3.95%
Ethereum: $2,235.17 -6.66%
Fresh Market Headlines & Economic Data:
S&P 500 slips from a record, falling for the first time in six days
U.S. Home prices broke records in May, according to S&P Case-Shiller
U.S. consumer confidence holds steady at a 17-month high in July
Richmond Manufacturing Index ticked higher in July to 27 from 26 in June
ECB’s Holzmann says central bank’s new policy guidance was a ‘step too far’
UK retail sales dip slightly in July after post-lockdown jump-CBI
Britain reports highest deaths from COVID-19 since March as Johnson urges caution
CDC to reverse indoor mask policy, saying fully vaccinated people should wear them indoors in Covid hot spots
Coffee prices surge as unusual cold threatens Brazilian production
Upcoming Potential Catalysts on the Economic Calendar
API Crude Oil Inventory Change at 8:30 pm GMT
Bank of Japan Summary of Opinions at 11:50 pm GMT
Australia Inflation at 1:30 am GMT (July 28)
Japan Leading Economic Index at 5:00 am GMT (July 28)
Germany Consumer Confidence, Import Prices at 6:00 am GMT (July 28)
France Consumer Confidence at 6:45 am GMT (July 28)
U.K. Housing Prices at 6:00 am GMT (July 28)
Italy Business & Consumer Confidence at 8:00 am GMT (July 28)
What to Watch: EUR/AUD
With the latest monetary policy statement from the Federal Reserve coming Wednesday, the financial markets are likely to be in a holding pattern as traders await what clues they may get on the next rate hike in the U.S.
But if we do get lucky enough to see some action in FX, it may be sparked by the latest inflation data from Australia to get the Aussie moving. We’ve also got consumer sentiment data from Europe on deck to potential bring some short-term volatility for forex traders, making the euro one to watch for possibly some quick pips.
That makes EUR/AUD one to watch, especially as price action may also draw in technical traders into the mix. On the one hour chart above, we can see the pair is back in an uptrend since its dip last week. The market is now retesting the rising ‘lows’ pattern, which may draw in technical traders looking to hop back in the uptrend.
For us, we’ll be on the lookout to see what Aussie inflation comes out with. If it’s hot like the rest of the world, then it’s possible EUR/AUD could break below that rising trendline in the very short-term. If risk sentiment is bullish at that time then there could be an opportunity to play the pair to the short side to the next potential support area around 1.5950.
If Aussie inflation data disappoints, the odds are pretty good the rising trendline will draw in EUR/AUD bulls, especially if we see negative risk sentiment driving overall financial market behavior. The rising covid cases theme has been supportive of low-yielding assets recently, so if that continues, EUR/AUD bulls may quickly be back and take the pair to the previous swing high area around 1.6100 – 1.6150.
