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July 27, 2021

USD- What You Need To Know This Week And How To Trade It

Frank Cabibi

7/27/2021

To report:ActualForecastPrevious
CB Consumer Confidence129.9123.9128.9
FOMC Statement---
Advanced GDP q/q-8.5%6.4%
Core PCE Price Index m/m-0.6%0.5%
Unemployment Claims-375K419K
https://www.forexfactory.com/calendar

CB Consumer Confidence basically measures whether we will see more consumer spending in the US. If actual is greater than forecast, it's good. The FOMC statement expectations are mixed with the little data we have, but investors are eyeing statements on economic growth because that will help us understand whether they will start to taper sooner or not. Advanced GDP q/q is just the first of the 3 GDPs to be introduced, so it might have the biggest influence on economic sentiment. The forecast is much higher than the previous number so analysts are expecting lots of growth this quarter. Core PCE Price Index m/m is the month to month change in price of goods consumers purchase excluding necessities. Unemployment claims is a big factor going into Thursday's report as we have missed expectations for several weeks.

Our outlook

I don't think the Fed will go without discussing tapering, and it would most likely get addressed in the Q&A. I also don't think that they will announce when they plan to taper, but when they do, they'll let us know well beforehand. Right now, we have a lot of concerns going on in the market including the delta variant, so that is still at the forefront of everyone's mind. If jobs numbers miss again, and the housing market cools off, we could start seeing some concern which could start incentivizing investors to move their money to the USD and out of stocks.

Trade Setups

USDCAD

UC on the 4H chart keeps testing support and formed three bottoms leaving long wicks to reject the lows. This area of consolidation might stay until the Fed meeting tomorrow. Price is nearing a rising trend line as well.

GBPUSD

GU popped today on the positive Brexit news as price breaks above resistance and is heading for further resistance at 1.39000. The break out of its 4H falling trend line is a bullish sign for the pair.

USDJPY

UJ on the 4H timeframe continues to fall and is touching a support zone near a previous bottom. A lower low and high suggests a move lower under 109.000, but the catalyst of that move will depend on this week's big news.

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