TheNews

Trading the News: U. of Michigan Confidence Survey

A rebound in the U. of Michigan Confidence survey may spark a bullish reaction in the U.S. dollar and fuel the recent selloff in EUR/USD should the data print highlight an improved outlook for growth and inflation.

What’s Expected:

Why Is This Event Important:

The Federal Open Market Committee (FOMC) looks poised to deliver a December rate-hike as ‘the Committee judges that the case for an increase in the federal funds rate has continued to strengthen,’ and Chair Janet Yellen and Co. may continue to normalize monetary policy in the year ahead as the central bank sees a ‘moderate’ recovery going forward. However, another unexpected decline in household sentiment may dampen the appeal of the greenback and drag on interest-rate expectations as central bank officials continue to warn ‘market-based measures of inflation compensation have moved up but remain low; most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.’

How To Trade This Event Risk
Bullish USD Trade: U. of Michigan Confidence Survey Climbs to 87.9 or Greater

• Need red, five-minute candle following the report to consider a short EUR/USD trade.
• 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: U.S. Household Sentiment Continues to Deteriorate

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

Potential Price Targets For The Release
EURUSD Daily

• EUR/USD stands at risk for further losses as it fails to preserve the ascending channel formation carried over from the previous month, with a break of the October low (1.0851) raising the risk for a more meaningful run at the March low (1.0822) especially as the pair preserves the bearish trend carried over from earlier this year.
• Interim Resistance: 1.1300 (23.6% retracement) to 1.1320 (38.2% expansion)
• Interim Support: 1.0780 (100% expansion) to 1.0800 (23.6% retracement)

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