Home Forex FX Play of the Day Recaps: August 28 – 31, 2023

FX Play of the Day Recaps: August 28 – 31, 2023

FX Play of the Day Recaps: August 28 – 31, 2023


Our FX strategists had a stable week with two out of two stable methods moved of their favor, whereas the opposite two had been shortly invalidated by elementary knowledge.

Learn on to see extra of how they did in what was a really busy week, particularly for the U.S. greenback!

AUD/USD 2-Hour Forex Chart by TV

AUD/USD 2-Hour Foreign exchange Chart by TV

On Monday, we had been leaning bullish on AUD/USD after motion in China to assist their financial system and better-than-expected retail gross sales knowledge from Australia. From the U.S. greenback facet, final Friday’s value motion instructed that merchants noticed Fed Chair Powell’s Jackson Gap speech as “not as hawkish,” sentiment that might carry over into the brand new week.

From a technical evaluation standpoint, AUD/USD bulls had been holding the 0.6380 assist space like champs and the 100SMA crossed above the 200SMA, a combo that might doubtlessly attract revenue taking from brief positions and/or contemporary anti-dollar merchants.

We instructed a number of value habits situations to observe earlier than contemplating an extended threat administration plan, however most likely one of the best end result seemingly got here from a situation that we didn’t counsel, which was a pullback to the assist space.

AUD/USD dropped to the 0.6400 main psychological deal with as soon as once more on Tuesday, and with the assistance of weaker-than-expected U.S. knowledge the pair ripped larger and by no means actually regarded again.

From that time on, the 0.6450 minor psychological drew in assist all week, giving bulls a number of alternatives to play USD weak spot.

Total, the end result was arguably optimistic for our authentic dialogue, with the diploma of the end result seemingly extra depending on how this was threat managed on condition that the bullish transfer was restricted to the 0.6500 main psychological deal with and value motion was very uneven.

USD/CHF 2-Hour Forex Chart by TV

USD/CHF 2-Hour Foreign exchange Chart by TV

On Tuesday, we checked out USD/CHF because the pair was trending larger on the 1-hour chart. Our main catalyst of focus for potential volatility was the quick approaching U.S. shopper convention and job openings knowledge.

Our thought was that if the U.S. knowledge got here in above expectations then that might try to additional purchase into the uptrend in USD/CHF, with rising odds of success if the pair dipped additional to the rising transferring averages and Fibonacci ranges and bullish reversal patterns appeared.

Sadly our value bias was basically invalidated only a few hours laters as each the U.S. shopper confidence and job openings numbers got here in under expectations, supporting/drawing in merchants who’re speculating that the Fed is much less prone to keep hawkish on rate of interest coverage at their upcoming financial coverage assertion.

USD/CHF really fell considerably on the date releases, breaking under our focused assist space for a possible entry (had the U.S. knowledge got here in optimistic), and examined the underside of the rising channel. After a bit of additional volatility there, patrons got here in to carry the rising channel regardless of a broadly bearish week for the Buck.

Total, we centered on the potential of optimistic U.S. fundamentals to align with the value development, and the volatility was higher than anticipated, which had been each tactical errors on our half. However our anticipated value strikes typically performed out as anticipated (i.e., pullback earlier than returning to the uptrend), seemingly on the larger theme of financial/rate of interest coverage divergence between the Fed and Swiss Nationwide Financial institution drawing in longer-term elementary patrons.

The result of this technique dialogue may have gone both means, extremely depending on the danger administration plan executed and adaptableness to the financial knowledge.  However for us, after the U.S. knowledge got here out weaker-than-expected, the value technique was invalidated straight away.

EUR/USD 30-Min Forex Chart by TV

EUR/USD 30-Min Foreign exchange Chart by TV

EUR/USD shot to the highest of our watchlist on Wednesday after it broke a falling ‘highs’ sample due to broad USD weak spot on Tuesday. Primarily based on our evaluation, we thought that the ECB’s current hawkish rhetoric would hold a bid beneath the euro for the session, whereas the contemporary weak U.S. financial knowledge could attract additional USD promoting.

With that line of considering, our base case for value motion was {that a} shallow dip could also be within the playing cards for the session (presumably off of German and Spanish CPI reviews), which may shortly attract fundie patrons to play the foremost themes.

We had been additionally keeping track of U.S. personal employment and preliminary GDP knowledge as potential catalysts to observe as they might seemingly assist our value outlook bias in the event that they got here in weaker-than-expected.

Fortuitously for our technique concept each the ADP and GDP numbers did are available weaker-than-expected prompting promote strain on the U.S. greenback through the U.S. buying and selling session. There have been really sufficient merchants to push the pair shortly as much as our prolonged goal space between 1.0930 – 1.0950 earlier than topping out.

This technique seemingly labored out very nicely if it was within the threat administration plan to take earnings on the goal space. If that wasn’t within the plan, then it’s seemingly this strat isn’t figuring out positively after the broad euro selloff on Thursday and the Buck’s steadiness after Friday’s considerably blended U.S. jobs and manufacturing PMI updates.

EUR/JPY 30-Minute Forex Chart by TV

EUR/JPY 30-Minute Foreign exchange Chart by TV

On Thursday, our FX strategists had been trying out EUR/JPY and the way current hawkish ECB rhetoric appears to be the narrative driving the euro larger. However we needed to attend and see what the most recent financial knowledge from Europe was going to provide us earlier than making an attempt to leap within the uptrend.

Our thought was that IF Euro space CPI, ECB assembly minutes and German financial updates supported the ECB’s seemingly transfer to lift charges additional this month, then we’d search for a pullback and bullish reversal patterns on EUR/JPY to play the uptrend.

Nicely, Euro space Flash CPI got here in higher-than-expected whereas Germany’s jobs and retail gross sales knowledge upset bigly! All mixed, this knowledge end result had a really damaging affect on the euro, signaling that merchants had been focusing extra on the concept that if the ECB hikes additional, there’s larger probabilities of recession forward for the Euro space.

This invalidated our lengthy value bias on EUR/JPY, a situation that was quickly solidified with an excessive bearish candle break of our mentioned technical evaluation setup, making this a no-go proper from the European open.

For these watching the information dwell and tailored to the Euro space knowledge and the market response, then perhaps you mixed the weak knowledge and bearish break of the rising trendline sample, and threat managed into a brief place.

If that’s the case, then it’s seemingly you probably did very nicely as EUR/JPY primarily reversed and noticed large bearish strain by the remainder of the week.

This content material is strictly for informational functions solely and doesn’t represent as funding recommendation. Buying and selling any monetary market entails threat. Please learn our Threat Disclosure to be sure you perceive the dangers concerned.



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