EURUSD Technical Analysis 2015, 16.08 - 23.08: ranging with waiting for direction

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Sergey Golubev, 2015.08.17 09:53

BNP Paribas for USD - 'We expect to be a choppy second half of August' (based on efxnews article)

BNP Paribas are forecasting the strong USD but with the secondary ranging market condition - just because of China news on Fed expectations:

• "The underlying effective Fed funds rate has also been drifting higher over the past two weeks, reaching 15bp and suggesting some of the move in rates market pricing could reflect expectations for a move within the target range rather than a hike in the target."
  
• "The minutes to the Fed’s July meeting on Wednesday will be closely watched for more insight into Committee thinking on the timing of hikes, while a speech from San Francisco Fed President John Williams on Thursday from a conference in Indonesia may give some insight into how Fed thinking has been affected by CNY developments."
  
• "We remain patiently bullish on the USD through what we expect to be a choppy second half of August."

As we see from the chart - Dollar Index Future (DXY) is located above 100-SMA/200-SMA for bullish condition and, seems, this bullish condition will be continuing in August as well. But the choppy market was started in the end of April this year and there is no any indication that this choppy condition will be finished by the beginning of September. Thus, we can confirm the forecast made by BNP Paribas.

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Sergey Golubev, 2015.08.17 20:02

Friday held the MA. Today more below. (based on forexlive article)

"The EURUSD closed last week by keeping the 100 hour MA (blue line in the chart below) as a support level. Today in the Asia-Pacific session, the price dipped below that moving average level, and has stayed below (at least on a closing basis) since that time.  The weaker than expected Empire manufacturing has push the price back above the moving average, but last hours closing price could still not close above it. So there is some reluctance to have a momentum shift to the upside.  The current 100 hour moving average comes in at 1.11147."

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Sergey Golubev, 2015.08.18 10:21

FOMC Meeting Minutes expectations by Barclays and September Fed hike (based on efxnews article)

Barclays made a forecast for high impacted fundamental news events which will be on Wednesday at 19:00 GMT. The bank is telling that Federal Open Market Committee is already made a decision concerning a September Fed hike. Besides, Barclays is expecting the USD dollar to gain strength because "fears around China and weak commodity prices should keep pushing investors out of risky assets":

• "We do not expect a material change and we anticipate that the document will echo the latest comments from different FOMC members. We think they will want to keep options open and will probably signal the data dependency of their decisions ahead. We believe that the FOMC has already made up their mind about their next move, absent any market disruptive events in the months ahead. Our base case remains a September Fed hike."
• "Furthermore, we argued that the actual path of the normalization process will be more important for FX markets. The pace at which the Fed could tighten monetary conditions should depend heavily on price measures."
• "We expect the USD to be supported in the next weeks mainly due to external factors. Fears around China and weak commodity prices should keep pushing investors out of risky assets, benefiting the USD under different scenarios."
  

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Sergey Golubev, 2015.08.18 20:21

BNP Paribas: 2 Things To Look For At FOMC Minutes (based on efxnews article)

• "The key message will probably be that ‘lift-off’ is approaching and that we moved a step closer in July. A majority of FOMC participants probably still expected ‘lift-off’ to be appropriate sometime this year. As markets are already pricing this in, the minutes should present few surprises."
  
• "Two things to look for: (1) what “some” further labor-market improvement means and (2) why there was no progress report on being “reasonably confident” in the inflation outlook."