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Trading plan for 04/09/2017:
In response to North Korea's weekend nuclear test the global financial markets are in risk aversion mode. All major stock indices in the Eurozone and in the US had opened with a gap down. Asian indices are losing as well, Nikkei 225 is 0.93% under the line. Gold jumped to $1,337 and managed to retreat only to $1.332.
On Monday 4th of the September, the event calendar is light in important news releases, so the financial markets will pay attention to the global geopolitical situation development and the US reaction to the latest hydrogen bomb test by Nort Korea. During the London session, Spain will publish Unemployment Change data, UK will release Construction PMI data and Eurozone will post Sentix Investor Confidence and Producer Price Index data.
EUR/USD analysis for 04/09/2017:
The Sentix Investor Confidence and Producer Price Index data from the Eurozone are scheduled for release at 08:30 am GMT and 09:00 am GMT respectively. Market participants expect the investor confidence to remain relatively stable with a slight decrease from 27.7 to 27.4 points in the reported month. There is no surprise the confidence in the Eurozone remains on the elevated levels, as the main power house, Germany, is continuing to perform very well in the economic terms. The only concern is now a lack of inflationary pressure as the PPI data today indicate another slide from 2.5% to 2.1% in annual terms. This issue will be surely discussed at the next European Central Bank meeting in September. However, the ECB President Mario Draghi remains optimistic regarding the further pick up in inflation.
Despite some data release, the whole day will be under the influence of the recent nuclear test made by North Korea, so the financial markets might get quite choppy during the trading hours. If the situation deteriorates any further, the most likely reaction in the financial markets across the globe will be another flight-to-safely move.
Let's now take a look at the EUR/USD technical picture on the H1 time frame. The market is trading in oversold conditions, just above the local dashed trend line. The wide support zone between the levels of 1.1817 and 1.1865 is the most important intraday zone and bears will not be in control over this market if this zone is not clearly violated. The next technical resistance is seen at the level of 1.1978 (post-NFP high).
Market Snapshot: Gold at highest level in 10 months
After the recent geopolitical developments, the price of Gold surged to the level of $1,338, the highest level in 10 months. The immediate technical support is seen at the level of $1,326. Due to the visible bearish divergence between the price and the momentum oscillator, it is worth to keep an eye on this level. Larger time frames trend remains bullish.
Market Snapshot: USD/JPY in the middle or the range
The initial reaction after the North Korea nuclear test was a Yen appreciation, but now the price is slowly going back to the opening zone. The weekend gap hasn't been filled yet, but it all depends on further geopolitical developments today. The biggest and most important resistnace is still the area betweent he levels of 110.61 - 111.01.
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