Forex Analysis
ByEconomic Analysis
Wall Street trading locked at slight rises last Friday, though the week’s summary recorded a light retreat on the leading indexes, with the Dow Jones Industrial Average dropping 0.3%, the NASDAQ index plummeting 0.4%, and the S&P 500 index descending 0.2%.
In the American macroeconomic sphere, today we expect the publishing of order data from US factories for the month of August. According to analysts’ predictions, this index is expected to descend 0.4%. Thursday will open the season of quarterly reports in the US with the publishing of quarterly reports for the American aluminum giant Alcoa. As the previous report season has been successful, so is this one expected to be. On Friday, investor attention will be focused on the monthly employment report reflecting the state of the labor market in the world’s largest economy.
Asia’s stock markets have recorded rises this morning based on the rise of commodity prices and the weakening of the Yen, adding support to the Japanese export industry. As such, the Tokyo stock exchange climbs 0.5%, Hong Kong climbs 1.4%, Seoul strengthens by 0.4%, Taiwan rises by 0.1%, whereas the Shanghai exchange has been closed today due to holidays.
In the global currency sphere, the United States dollar has strengthened slightly against the leading currencies since the opening of trade during the night, strengthening by 0.1% against the Yen to a level of 83.30. The greenback strengthens 0.2% against the Euro to a level of 1.376. America’s currency weakens by 0.1% against the British pound, reaching a level of 1.5810 United States dollars per British pound.
Technical Analysis
NZD/USD
After rising to an impressive ten-month high around the 0.7460 mark, the New Zealand dollar – United States dollar pair is expected to experience a slight correction today before continuing its positive trend. Throughout the last three weeks, the pair has created a downwards-tilted trench pattern. After braking its ascent at the upper border of the pattern that serves as a resistance level, the pair will inevitably descend to its lower level marked at 0.7380.
At that point the pair is likely to find sufficient support to restart its upwards trend, moving towards the 0.7500 level, carrying on towards the 0.7650 resistance level. That said, a daily close below the lower border of the pattern and trigger level marked off at 0.73500 will signal of a potentially stronger correction that may retreat down to the strong support level and 200-day moving average at 0.7100.
EUR/USD
The Euro – United States dollar pair has completed the fifth wave in the Elliot wave sequence, rising from the 1.2600 low to the high mark of around 1.3800 at the close of Friday’s trading. Having reached its goal, the pair is definitely expected to begin a downwards correction, creating a sell opportunity.
Our trigger for a sell deal is the trend line accompanying the last wave of upwards movements (the 5th wave) passing through the 1.3680 trend line. Only a decisive breach of that level (by a daily close under it) will confirm the beginning of downwards movements. In such a case, the pair is expected to continue moving south, towards the first support level at 1.3510, and later on, to the further support level around 1.3150 United States dollars for one Euro.
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