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Trend warriors gather ’round!
If you’re looking for a way to trade the U.S. dollar ahead of today’s U.S. data releases, then you’ll want to take a closer look at EUR/USD’s downtrend!
Before moving on, ICYMI, yesterday’s watchlist looked at AUD/USD’s broken resistance level ahead of the RBA’s policy decision. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. Factory Orders in October: -3.6% m/m (-2.3% m/m forecast; 2.3% m/m previous)
Tokyo’s core CPI for November: 2.3% y/y (2.4% y/y forecast, 2.7% y/y previous)
ANZ: New Zealand’s commodity prices dipped by 1.3% m/m in November (2.8% m/m in October)
BRC: Spending in its U.K. members’ stores increased 2.7% y/y in November (4.2% y/y in November 2022, 2.5% y/y in October 2023)
Australia’s current account deficit for Q3 2023: 0.158B AUD (3.3B AUD surplus expected, 7.8B AUD surplus in Q2)
au Jibun Bank Japan Services PMI revised lower from 51.7 to 50.8 in November (51.6 in October) and marked the softest growth in the service sector since December 2022
China’s Caixin services PMI for November: 51.5 (50.5 forecast, 50.4 previous)
As expected, RBA kept its interest rates at 4.35%; “Whether further tightening of monetary policy is required…will depend upon the data and the evolving assessment of risks”
ECB member Isabel Schnabel: “The most recent inflation number has made a further rate increase rather unlikely.”
Moody’s cuts China’s credit outlook from “stable” to “negative” over “persistently lower medium-term economic growth” and “downsizing of the property sector”
Price Action News
Overlay of AUD vs. Major Currencies Chart by TradingView
The Australian dollar started the day on a weak note as more traders took profits from all their buying from the previous days.
And then the Reserve Bank of Australia (RBA) dropped its December policy decision. As expected, the central bank kept its interest rates steady at 4.35%. What the markets didn’t expect was for the RBA to sound less hawkish (even slightly dovish) by implying that its next decisions would be data-dependent.
AUD dropped like a rock against its major counterparts and has barely recovered from its intraday downswings.
It’s currently seeing the heaviest losses against JPY, GBP, and USD and the least losses against NZD and CHF.
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s PPI reports at 10:00 am GMT
U.S. ISM services PMI at 3:00 pm GMT
U.S. JOLTS job openings at 3:00 pm GMT
Australia’s quarterly GDP at 12:30 am GMT (Dec 6)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
EUR/USD 15-min Forex Chart by TradingView
EUR/USD has been showing us lower highs and lower lows since hitting resistance at the 1.1000 psychological handle last week.
Trend traders may have a chance to jump in EUR/USD’s short-term downtrend today as the pair revisits the 1.0840 Pivot Point line after bouncing from its 1.0800 December lows.
As you can see, EUR/USD’s current levels aren’t too far from a trend line AND the 100 SMA resistance in the 15-minute time frame.
Today’s U.S. data releases may make or break EUR/USD’s downtrend. Word around is that we’ll see strong(ish) labor market-related reports from the U.S., which could reinforce the Fed’s relatively hawkish biases.
Meanwhile, PMI releases from the Euro Area earlier today highlighted concerns about spotty growth in the region.
Better-than-expected U.S. reports may draw in enough EUR sellers to extend EUR/USD’s downtrend. If the selling gets momentum, EUR/USD may revisit its 1.0800 December lows.
If today’s reports encourage risk-taking instead of USD-buying, though, then we should also be ready for EUR/USD possibly breaking its short-term downtrend. Look out for clear breakouts above the Pivot Point area as well as shifts in the intraweek market themes to see if EUR/USD can sustain an upside breakout and then a bullish reversal.
Good luck and good trading this one!
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