The major events of the week were the better than expected NFP and BOE’s decision to cut the GBP interest rate by 0,25% and increase the QE by 70 billion pounds.
On Thursday the BOE decided to act for the first time after 2009 and reduce the GBP interest rate. This was expected by traders but the QE increase was not and as a result the GBP lost important pips on Thursday.
On Friday an NFP of 255k compared to a forecasted 180k pushed the dollar higher.
From the pairs that I monitor and trade, I expect the Eur/Usd to remain inside the current range and below 1,12. The attempt to break higher from the emas failed and it closed the week just below 1,11. I expect it to continue moving lower and test the ascending DeMark trendlines (daily and weekly) between 1,09 and 1,10. I only want to short the pair from bounces from higher levels.
The Gbp/Usd lost 157 pips this week but before BOE’s decision was trading 300 pips higher from the close of the week. Just like the Eur/Usd, I expect the pair to continue lower. It could be traded from current level, aiming support at 1,28 or wait for eventual bounces from resistance around 1,34 area.
Small profits for the Aud/Usd that tested resistance and bounced. Wednesday’s speech from the RBA Governor could send the pair lower and offer us an opportunity for going long.
Eur/Jpy and Gbp/Jpy both closed with losses this week and should continue moving lower unless the BOJ intervenes against the JPY. The Usd/Jpy, because of a better than expected NFP, started moving higher. If this up move continues there will be no need for extra action from the BOJ, but if for some reason, it slips (the Usd/Jpy) to 100 or lower, the eventual intervention from the BOJ will affect all JPY pairs by pushing them higher. Because of this it is not advisable to short the Eur/Jpy or the Gbp/Jpy despite the undergoing down trend.
The Eur/Aud lost 162 pips this week with an ATR of 400 pips. Even if I am convinced the pair will finally break support and move lower, from a technical point of view it should bounce from current level. I only want to short the pair from higher levels, preferably from 1,50.
The Gbp/Aud was the loser and the mover of the week with -259 pips. I was able to close a short I had with a nice profit and my second short is in profit and I set my take profit at 1,7. I expect the pair to continue lower and test support (at 1,7) and depending on the pressure on the GBP and AUD strength to either bounce from support or break it. Just like the Eur/Aud, from a technical point of view it should bounce. I only want to short this pair and a potential bounce will offer trading opportunities. A break of support, will require a second test before entering short again.
Small losses for the Usd/Jpy that was trading 100 pips lower than the close of the week but the better than expected NFP pushed the pair higher. I expect the pair to continue moving higher, unless the JPY strength prevails and pushes the pair lower to the 100 or even 99 level where a serious intervention from the BOJ should be awaited.
Profits for the Usd/Cad because of a better than expected NFP and worst than expected figure for Canadian employment. The pair tested resistance at 1,32 and bounced. Technically, I expect the pair to remain below resistance and with an increase in Oil price, it should start moving lower again.
No important news for the week, except for the interest rate cut from the Reserve Bank of New Zealand (a currency that I am not trading). The market should continue with the current trends and reduced volatility should be expected. August is a holiday month for traders around the world. As far as I am concerned, I will be monitoring my open trades and come daily to my office.