I am sure you have read plenty of mixed interpretations of the July jobs numbers by now, so I will save you the details and just start by saying companies are not hiring at the pace required to sustain this “recovery”. The big mover today were US bond yields, highlighted by the US 10 yr treasury yield breaking the prior 2010 low of 2.883% to a new low of 2.821%. Bond yields are plummeting as the possibility of another edition of quantitative easing in response to the slowing recovery becomes our reality. The dollar is under pressure as the outlook for a possible fed hike is being pushed years, not months, back. The Yen rallied hard across the board, as did the Euro in response to the view that a US slowdown will not have a drastic impact on Euro zone economies as the US is a small percentage of Europe's export market. The one factor that could work against the Euro zone export market is a stronger euro that will mitigate their competitiveness.
I have several wave counts in the US 10 yr yield, and most point to significant support at the 2.75% level, which means a bounce contrary to market sentiment is ahead of us. To connect the dots, US bond yields at support could ease the intense USD selling pressure. EURUSD 180 min chart has a 3 level Fib resistance zone at 1.3320 that could act as a ceiling to relieve the extremely oversold nature of the USD.
Moving down to the 90 min chart, the NPF miss setup a EURUSD break from a 4th wave triangle. I identified 1.3320 resistance on the 180 min chart, but we zoom into the internals of the blue 4th wave form that 180 min chart, we can further identify another 3 level Fib resistance zone between 1.3350 and 1.3400. I am fully prepared to take the other side of this trade, but will be first watching for additional intermarket confirmation that this is the right trade. As a follow up from yesterday's AUDUSD chart, the expanding 5th wave diagonal with resistance at 0.9200 wound up being the correct interpretation. A break below trendline support of that pattern at 0.9140 will further substantiate my EURUSD analysis
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