Forecast for Tomorrow - levels for EUR/USD: 'dancing' above the cloud

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Press review

Sergey Golubev, 2015.09.02 17:31

Trade Ideas For EUR/USD by UBS (based on efxnews article)

EUR/USD: "The market seems rangy and uncertain at the moment, but the ECB meeting on Thursday and US jobless figures on Friday may provide some clarity. Fade 70 to 80 pip moves in either direction today, with stops at 1.1145 and 1.1425."

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Sergey Golubev, 2015.09.02 07:40

Deutsche Bank: bullish condition for EUR/USD during and immediate after NFP (based on efxnews article)

BNP Paribas made the forecast for NFP to be more than 220K on Friday: "Our economists expect an above-consensus 230K increase in jobs and a steady unemployment rate of 5.3%."

By the way, Deutsche Bank is expecting for NFP to be significantly below 220K expectation:

• "To be clear, we do not believe that underlying momentum in the labor market has meaningfully deteriorated. As we have previously noted, August employment has historically tended to disappoint consensus expectations. The last four August payroll reports were all weaker than expected; they were on average 55k below consensus."
• "The data are even more compelling if we go back further in time. Since 1988, when our sample begins, August nonfarm payrolls have disappointed the financial markets in 21 of the last 27 years, or 78% of the time. The average forecasting error has been -61k. The range of misses, though, has been large. The median forecast error has been -42k."

So, we can expect the following concerning EUR/USD for example:

• BNP Paribas - bearish condition for this pair during and immediate after this high impacted news event.
• Deutsche Bank - bullish condition for this pair during and immediate after this high impacted news event.

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Sergey Golubev, 2015.09.03 11:10

Trading the News: European Central Bank (ECB) Interest Rate Decision (based on dailyfx article)

Even though the European Central Bank (ECB) is widely expected to retain its current policy in September, the fresh updates coming out of the Governing Council may trigger a selloff in EUR/USD should the committee show a greater willingness to expand/extend its quantitative easing (QE) program.

What’s Expected:

Why Is This Event Important

Dovish rhetoric accompanied by a downward revision in the ECB’s growth & inflation forecast is likely to dampen the appeal of the Euro, and central bank President Mario Draghi may talk up bets for additional monetary support in an effort to further insulate the fragile recovery in Europe.

Nevertheless, we may get more of the same from the ECB as the non-standard measures work through the real economy, and the near-term bound in EUR/USD may gather pace in September should the central bank endorse a wait-and-see approach.

How To Trade This Event Risk
Bearish EUR Trade: ECB Shows Greater Willingness for Larger/Longer QE Program

• Need red, five-minute candle following the policy announcement to consider a short EUR/USD trade.
• If market reaction favors a bearish Euro trade, sell EUR/USD with two separate position.
• Set stop at the near-by swing high/reasonable distance from cost; need at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is met, set reasonable limit.

• Need green, five-minute candle to favor a long EUR/USD trade.
• Implement same strategy as the bearish euro trade, just in the opposite direction.

EURUSD Daily

• Despite expectations for a greater deviation in the policy outlook, need a break of the near-term bullish trends in price & RSI to favor a further decline in EUR/USD.
• Interim Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
• Interim Support: Interim Support: 1.0790 (50% expansion) to 1.0800 (23.6% expansion)

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Press review

Sergey Golubev, 2015.09.03 15:15

• past data is -45.2B
• forecast data is -43.2B
• actual data is -41.9B according to the latest press release

if actual > forecast (or previous data) = good for currency (for USD in our case)

[USD - Trade Balance] = Difference in value between imported and exported goods and services during the reported month. Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.

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"The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $41.9 billion in July, down $3.3 billion from $45.2 billion in June, revised. July exports were $188.5 billion, $0.8 billion more than June exports. July imports were $230.4 billion, $2.5 billion less than June imports."

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EURUSD M5: 166 pips price movement by USD - Trade Balance news event: