August 17, 2021

Daily Asia-London Sessions Watchlist: EUR/GBP

 EUR/GBP hits the top of the Asia-London watchlist with employment data coming around soon from both the U.K. and Euro area. Will this textbook Fibonacci setup draw in sellers after the updates?

Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at the triangle pattern on GBP/AUD, 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: 15925.73 -0.32%

FTSE: 7153.98 -0.90%

S&P 500: 4479.67 +0.26%

NASDAQ: 14793.76 -0.20% US 10-YR: 1.260% -0.037

Bund 10-YR: -0.466% +0.002

UK 10-YR: 0.575% +0.00

JPN 10-YR: 0.021% +0.012 Oil: 67.48 -1.40%

Gold: 1,789.80 +0.65%

Bitcoin: $45,835.50 -1.12%

Ethereum: $3,150.21 -1.81%

Fresh Market Headlines & Economic Data:

Dow, S&P 500 close at record highs ahead of major retail earnings reports

There’s growing support within the Fed to announce the tapering of bond purchases in September

N.Y. Fed’s Empire State manufacturing business index declines in August

Statistics Canada says manufacturing sales rose in June, while wholesale sales fell

U.K. House prices cooling at top end of market – Rightmove

Japan extends, expands coronavirus emergency as cases surge

China economy under pressure as factory output, retail sales growth slow sharply

Children hospitalized with COVID-19 in U.S. hits record number

Upcoming Potential Catalysts on the Economic Calendar

RBA Meeting Minutes at 1:30 am GMT (Aug. 17)

Japan Tertiary Industry Index at 4:30 am GMT (Aug. 17)

U.K. Claimant Count Change, Unemployment Rate at 6:00 am GMT (Aug. 17)

Euro area Employment Change, GDP at 9:00 am GMT (Aug. 17)

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: EUR/GBP

On the one hour chart of EUR/GBP above, we’ve got a textbook Fibonacci setup potentially give the bears an opportunity to play the downtrend at better prices. After the 100 pip decline from 0.8550 to 0.8450 in the front half of August, the pair has bounce over the last two sessions and found resistance at the Fibs between 0.8500 – 0.8520, which also lines up with the broken support area from the end of July. We can also see a bit of bearish divergence between the price action and stochastic as well, which could draw in technical bears in the short-term.

Fundamentally, we’re likely to see a bit of volatility in the upcoming London session as we’ll get the latest updates from both the Euro area and the United Kingdom on the employment situation.  Expectations are likely that the U.K.’s unemployment rate will remain unchanged while we could see an improvement in the Euro area’s read on employment.

These are low tier, backward-looking updates so the odds are low that we’ll see any extended moves off of this. But they are still jobs data so if there is an outsized surprise from expectations or previous reads, then the odds go up quickly that we may get a strong directional move.

For now, we’ll be on the look out for technical bears to hop back in, and if we see bearish candle patterns form in the current trading area (61% Fibs & broken previous support area), we’ll consider a short play, especially if Euro area jobs disappoints and/or U.K. data surprises positive.

And if we get a big bullish surprise from the Euro area vs. negative read from the U.K., that tight consolidation we’re currently see now could draw bulls looking for an upside breakout to take the pair higher. Stay frosty!