Last week was an eventful week with 3 Central Banks announcing their interest rate decisions and official statements. There were major data releases as well, like U.S. Non-Farm Payroll, U.S. GDP, China's Trade Balance, China's CPI, Australia's and New Zealand's employment data, etc.
Both the Bank of England (BOE) and the Reserve Bank of Australia (RBA) held their interest rate at 0.5% and 2.5% respectively. There wasn't any extreme dovish tone, such as "overvalued" or "standby to cut", from RBA's statement after the interest rate announcement. The only notable statement came from RBA Governor Glenn Stevens, when he said that the Aussie is "uncomfortably high".
The first boost to the Greenback came last Thursday when European Central Bank (ECB) cuts their benchmark interest rate to a record low of 0.25%. The move by ECB came earlier than what the market had expected, EURUSD plunged 200 pips in less than an hour resulting in the dollar Index climbing close to 100 points in the same duration. This decision came about as concerns of deflation heightened when the inflation last month fell to 0.7%, less than half of ECB's upper limit of 2%. With the possibility of deflation looming in the background, ECB may consider an American-style of Quantitative Easing (QE).
The second boost arrived on the follow day when U.S. announced the Non-Farm Payroll (NFP) figure surging to 204K, way above the market expectation of around 120K. Although the unemployment rate rose to 7.3% against the previous figure of 7.2%, but it did little to dampen the dollar rally. Dollar Index rallied from 80.80 to 81.50. The upbeat employment figure reignited the QE tapering talk. The biggest clue to this is the 2,000 points plunge in Gold after the release of the figure. Gold prices has been one of the main beneficiary of U.S. QE program, as such, QE tapering will have an opposite effect on gold prices.
After an eventful week, will the momentum of the dollar continue? This could well be one of the hottest questions in the FOREX market for this week. For me to answer that question, I am looking forward to the U.S. Unemployment Claims this Thursday. With the upbeat NFP figure and a slightly higher unemployment rate, I am expecting an improved Unemployment Claim figure, which could strengthen the dollar further. The Vice Chair of Federal Reserve (FED) Yellen is scheduled to testify as FED Chairperson Designate on Thursday as well. I do not expect much from the FED's testimony at this time; however, any unexpected statement made is likely to stir up the volatility of the Greenback.
Top News This Week
EU: Flash GDP q/q. Thursday, 14th Nov 6.00pm.
I expect figures to come in at 0.2% (previous figure was 0.3%).
U.S.: Unemployment Claims. Thursday, 14th Nov 9.30pm.
I expect figures to come in at 328K (previous figure was 336K).
Short EUR/USD at 1.3415
On the H1 chart, EUR/USD is moving from a downtrend into a consolidation. With the upcoming EU Flash GDP and U.S. Unemployment Claim figure releasing later this week, I am expecting the Euro to weaken against the U.S. dollar.
A resistance around the level of 1.3430 is observed. We will go short once prices bounced off the resistance level at 1.3415. A stop loss of 50 pips is placed above the resistance. We will have two targets on this trade, exiting the first position at 1.3365 and the second one at 1.3315.
Entry Price = 1.3415
Stop Loss = 1.3465
1st Profit = 1.3365
2nd Profit = 1.3315