Preparing for the publication of important statistics
On Friday, the US dollar markedly strengthened due to the positive statistics on the US labor market for July. Will the EURUSD correct down?
Last week, the euro updated its 2.5-year high against the US dollar. On Tuesday, August 8, 2017 the German foreign trade data for June will come out in the EU. Their preliminary forecast looks good and supported the euro on Monday. Meanwhile it is difficult to say how much it can be justified. On Monday, the German industrial production indicator was published, which unexpectedly declined in June, for the first time this year. No other significant European economic data are expected this week. On Friday, August 11 the July inflation data will be published in the US. Alongside with the labor market indicators, it is the most important factor in hiking the Fed rate. The preliminary forecast for inflation is positive, which may support the positive sentiment of the US dollar against the euro.
On the daily timeframe, EURUSD: D1 remains in the rising trend. However, its growth has slowed down and a number of indicators have formed bearish signals. The downward correction is possible in case of the publication of negative economic information in the EU on Tuesday and positive economic information in the US on Friday.
- The Parabolic indicator gives a bearish signal.
- The Bollinger bands have markedly widened, which means higher volatility.
- The RSI indicator is above 50. It has formed a negative divergence.
- The MACD indicator gives a bearish signal.
The bearish momentum may develop in case EURUSD drops below the Friday low at 1.172, when strong US labor market data were released. This level may serve as an entry point. The initial stop loss may be placed above the last fractal high, the 2.5-year high and the Parabolic signal at 1.192. After opening the pending order, we shall move the stop to the next fractal high following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level at 1.192 without reaching the order at 1.172 we recommend cancelling the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
| Position | Sell |
| Sell stop | below 1,172 |
| Stop loss | above 1,192 |