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Trading the News: U.S. Durable Goods Orders

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by , 05-26-2016 at 10:03 AM (396 Views)
          
   
Trading the News: U.S. Durable Goods Orders

Another 0.5% expansion in orders for U.S. Durable Goods may heighten the appeal of the greenback and spur a near-term decline in EUR/USD as it puts increased pressure on the Federal Open Market Committee (FOMC) to further normalize monetary policy.

What’s Expected:

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Why Is This Event Important:Even though Fed Chair Janet Yellen remains in no rush to implement higher borrowing-costs, we may see a greater dissent at the next quarterly meeting in June as a growing number of central bank officials see the U.S. economy approaching ‘full-employment.’

How To Trade This Event Risk
Bullish USD Trade: Demand for Large-Ticket Items Increase 0.5% or Greater

  • Need red, five-minute candle following the rate decision to consider a short EUR/USD position.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate position.
  • Set stop at the near-by swing high/reasonable distance from cost; at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is met, set reasonable limit.

Bearish USD Trade: Durable Goods Orders Report Disappoints

  • Need green, five-minute candle to favor a long EUR/USD trade.
  • Implement same strategy as the bullish dollar trade, just in the opposite direction.

Potential Price Targets For The Release
[U]EURUSD Daily

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  • EUR/USD may continue to give back the advance from earlier this year following the failed attempt to test the August high (1.1713), while the Relative Strength Index (RSI) largely fails to preserve the bullish formation carried over from the previous year.
  • Interim Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
  • Interim Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)



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