It is indeed a challenging time in the realm of forex trading, where key economic events often stand out as grave challenges or golden opportunities. Being a trader is never easy, and traders find it extremely tough to maneuver through such events, particularly when the market is slow as at the turn of summer. The tendency of traders mostly ends up failing to capitalize on such opportunities due to incompetence in the execution process.
This report is going to tackle the given challenges by focusing on three very significant events in the near future: RBA interest rate decision of Australia, BoE meeting, and the U.S. NFP report. This will enable us to analyze those events and their effects on the forex market and provide you with a strategic approach to elevate your trading decisions.
Upcoming Market Events
Moving into the first week of August, it’s time to be cognizant of major events that will drive the Forex markets. With three primary events at our fingertips for the next few days, let’s get down below.
1. RBA Interest Rate Decision
Date: Tuesday
Reserve Bank of Australia’s interest rate announcement will be the big highlight of this trading week. The RBA so far has preferred to maintain a status quo of interest rates when it did not deliver a hike as most of the analysts had predicted. Analysts are voting in for a possible hawkish response from Governor Philip Lowe and making his prime rate hike from 4.3% to 4.5%. This would trigger the volatility at new levels, especially in the Australian dollar.
Trading Strategy:
- Traders will observe the AUD/USD pair in the next session.
- Fibonacci retracement levels may be plotted in the pairs to look for potential long entries.
- There is a pretty strong support level at the region of 0.6658, which coincides with the 78% retracement level.
- Traders can go long here and place the stop-loss orders below 0.6600.
- Thus, one can remain in control of the risk while collecting maximum potential post-RBA volatility.
2. BoE Interest Rate Decision
Date: Thursday
Thursday is another market-moving day as the world waits for what the governor of the Bank of England (BoE) will announce about the interest rate. Analysts are uncertain about the governor’s decision; this may keep the interest rate at 5% or increase it by a quarter point.
Key Market: GBP/JPY
The Great Britain pound (GBP) vs. Japanese yen (JPY) has been pretty active lately. And since the BoE is due to make an announcement, we can look for some volatility in this pair. There are many obvious support zones on the GBP/JPY chart:
- 38% at 177.78
- 62% at 173.99
- 78% at 171.25
Here one would most likely try to bid through these supports, if only it keeps the long idea going well with the GBP until the BoE.
3. U.S. Non-Farm Payrolls (NFP) Report
Date: Friday
The U.S. Non-Farm Payrolls report is one of the most followed economic reports. The labor market has been one of the bright spots for the Federal Reserve, but the NFP figures often come with significant revisions and ambiguities. Traders are prepared for massive volatility in all USD-related pairs, especially the US30 index.
Trading Strategy:
- US30 index clearly presents a trading opportunity within the release of NFP.
- For the long term, keeping the levels that incorporate previous highs and the 62% retracement level ensure the ongoing balance of a bullish nature inasmuch as prices remain above the level 35,205.
- If the index falls below the level and has a daily close below it, one would look at possible correction for the short term.
Conclusion
There are going to be ample action trade setups within the following week with huge events: RBA, BoE, and, above all, the U.S. NFP report. Summer is crazy volatile, so discipline combined with a smart entry will help navigate the mess. After all, patience is the best thing, and sometimes you just have to wait for the perfect opportunity rather than making trades happen.
As you go into the trading week ahead, keep these strategies in mind to bolster your trading decisions. If you enjoyed this report, leave a comment below.
Quiz Time
What year did George Soros and the Quantum Fund try to break the British Pound Sterling; Soros then earned one billion dollars in profit? Choose between 1989, 1992, or 1995 and write your answer below!
