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Busy US schedule today – Chicago PMI on tap

The Greenback retreated a bit yesterday, after a small strengthening sensation started to appear among traders at the end of last week.
The US calendar is full of interesting and important news releases today, after yesterday’s almost empty calendar which produced no major price movements.

The US Core PCE Price Index is expected to be released today at 0.2%, which is a slight increase from last month’s 0.1%.
Personal spending is also expected to be released today, and past data shows that personal spending rose by 0.1% during the month of June, compared to a rise of 0.5% during May. As we can expect, the USD may loose again some of its strength due to the fact that the average American consumer’s spending power has decreased. A sharp drop in confidence as well as a widening gap between spending and income will resurrect talk of an end of the year interest rate cut.
The most important news release of the day would no doubt be the Chicago PMI, which is expected to go down from 60.2 to 59.0. although the expected figure indicates growth in the manufacturing sector, it still means the growth level is decreasing, had it comes inline with expectations, and will probably shift the USD down a bit.
It appears that the USD will continue to weaken today against the 13-nation currency, on the basis of the diverse data which is going to be published today in the market. The forecast indicates a slowdown in personal spending growth while an inflation gauge closely watched by the Federal Reserve may stay in the same level. US economy is expected to have Additional negative signals especially after the Rising mortgage rates and defaults which have hurt badly the mortgage lenders this year. More than 50 lenders have filed for bankruptcy or sold themselves.
Traders will be watching the price movement closely today, as it is a direct preparation to Friday’s main event – the release of the Nonfarm Payrolls.

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Daily Forex Technical Analysis

EUR/USD

The pair is now forming a downwards channel with strong resistance at the 1.3720 level. The daily chart is bearish, and the hourlies support the notion with a bearish cross above the 80 level on the slow stochastic. It appears that the pair is going to the 1.3600 level.

GBP/JPY

After a short correction, the pair regains the bearish path, and seems to be quite confident to reach the target point of 2.0100. The hourlies are quite bearish, as the dailies produce mixed signals. A preferable strategy would be to keep out until a clear daily sign will emerge.

USD/JPY

The pair seems to be having difficulties breaking through the 118.00 level, after several attempts that failed. This sets the support level as a very strong one, that if breached will produce a very strong bearish move. The ongoing sentiment is down so a preferable strategy would be to wait for a break signal before entering with a short position. 177.75 will confirm the move.

USD/CHF

The pair is floating at a relatively tight range for several days now, and the daily studies start sending bullish signals. The hourlies are still producing mixed signals, and most of the time is floating at neutral territories. A break through 1.2135 will confirm that the move up is valid, and will probably take the pair back to the 1.2300 levels quite soon.

Wild – Crude Oil

The upwards channel continues, as we see several attempts to break through the 77.20, with no success. This confirms the fact that Oil is accumulating the bearish energy, and that the correction is imminent. Forex traders might benefit from that, as it might be a great entry point for a short position.

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