US Session Bullet Report – USD Strikes Back As China Cuts Rates

US Session Bullet Report

USD rose 1.2% in early EU session after China lowered interest rates unexpectedly in an effort to revive confidence that the economy can meet the goal of 7% growth this year. The announcement gave a boost back to stock markets as lower interest rates equal lower lending costs for companies, thus more possible profits. German DAX recovered close to 5% after yesterday’s steep sell off and is trading above Monday’s gap (+700 points from yesterday’s lows). Other notable movers are EURUSD which dropped from 1.1715 highs yesterday to as low as 1.1455 after the Chinese rate cut. USDJPY which dropped up to 600 pips yesterday rallied further, surpassing the psychological level of 120.00, but rebound was aborted once it faced its daily pivot at 120.25.

Going into the US session, there is a lot of data that can be market moving, with Consumer sentiment being the one with the most potential. A moderate rebound is expected. If that is not the case, a USD selloff might be the case, as rate hike expectations in 2015 will likely approach 0. Interest rate differentials between the USD and EUR moved against the USD yesterday, but the ‘damage’ could have been worse. This suggests that the markets still don’t exclude a Fed rate hike in the near future. In this framework, the losses of the dollar should be considered as quite big given the potential economic announcements beating expectations.

Trading Quote of the Day:

“Trade what you see, not what you think.”

EURUSD
Pivot: 1.1495
Likely scenario: Long positions above 1.1495 with targets @ 1.1625 & 1.173 in extension.
Alternative scenario: Below 1.1495 look for further downside with 1.1395 & 1.1345 as targets.
Comment: The RSI is mixed to bullish.

GBPUSD

Pivot: 1.572
Likely scenario: Long positions above 1.572 with targets @ 1.5805 & 1.5835 in extension.
Alternative scenario: Below 1.572 look for further downside with 1.569 & 1.5655 as targets.
Comment: The RSI is well directed.

AUDUSD

Pivot: 0.7155
Likely scenario: Long positions above 0.7155 with targets @ 0.7235 & 0.728 in extension.
Alternative scenario: Below 0.7155 look for further downside with 0.711 & 0.704 as targets.
Comment: The RSI is mixed to bullish.

USDJPY

Pivot: 120.25
Likely scenario: Short positions below 120.25 with targets @ 118.2 & 117.1 in extension.
Alternative scenario: Above 120.25 look for further upside with 121.3 & 122.35 as targets.
Comment: The upward potential is likely to be limited by the resistance at 120.25.

USDCAD

Pivot: 1.3195
Likely scenario: Long positions above 1.3195 with targets @ 1.3295 & 1.3355 in extension.
Alternative scenario: Below 1.3195 look for further downside with 1.3145 & 1.3055 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

USDCHF

Pivot: 0.9295
Likely scenario: Long positions above 0.9295 with targets @ 0.9455 & 0.9505 in extension.
Alternative scenario: Below 0.9295 look for further downside with 0.9245 & 0.92 as targets.
Comment: The RSI is well directed.

GOLD

Pivot: 1157
Likely scenario: Short positions below 1157 with targets @ 1142 & 1137 in extension.
Alternative scenario: Above 1157 look for further upside with 1163 & 1170 as targets.
Comment: As long as 1157 is resistance, likely decline to 1142.

OIL

Pivot: 40
Likely scenario: Short positions below 40 with targets @ 37.75 & 35.9 in extension.
Alternative scenario: Above 40 look for further upside with 40.6 & 41.25 as targets.
Comment: As long as the resistance at 40 is not surpassed, the risk of the break below 37.75 remains high.

DAX
Pivot: 10200
Likely scenario: Short @ 10029 with targets @ 9550 & 9320 in extension.
Alternative scenario: Above 10200 look for further upside with 10440 & 10650 as targets.
Comment: The upward potential is likely to be limited by the resistance at 10200.