 Hi, my name is Leon Roe currency trader and trading coach at training 180 comm welcome to this week's forex and gold Fundamental and technical supply and demand analysis if you're new a warm welcome to you And if you're returning an equally warm welcome to you and don't forget to like subscribe and share press that like button right now if you like the content that I provide every week in the weekly analysis, so let's get into the week ahead and Zooming in straight away, so the the US and UK are releasing key inflation reports next week We've invested looking forward to see if The recent price pressures show any signs of abating amid the economic growth slowed down So that's quite important. The reason why is because there is this theme that the global economic economy is is slowing down slightly and if inflation can show signs of abating then The central banks won't necessarily have to will have that much pressure on them to high crates The last thing a central bank wants to do with a currency is high crates in the midst of an economics potential economics slowdown, right because that's what's known as stagflation and And so stagflation is a really difficult situation for central banks to be in so they need economic growth, right in order to really I guess take make the decision to kind of high crates Let's do it anyway if if you know inflation is above and persistently above and consistently above their 2% target But it makes it more difficult in the midst of a potential Global economic slowdown other than that important data to follow include retail sales and industrial production figures From the US in China and employment reports from the UK and Australia. That's going to be again employment Reports are I guess a leading indicator of the economy, right? So if you have high unemployment or low employment, then you're heading into, you know I guess an economic slowdown if you have low unemployment or high employment, of course Then your economy is growing, right? So It's a great sign that your economy is growing. So that's going to be important for the UK and Australia the eurozone in Japan will be releasing Foreign trade data. That's always important as well while New Zealand publishes second quarter GDP growth Which I think is I'm in the New Zealand long trade been in a long trade for a couple of weeks And that is going really well. So as long as the data supports the narrative There's no reason for me to actually exit that trade plus the RBNZ, which is the New Zealand central bank Are saying that they're going to be hiking rates, right? Which is the reason why you're seeing The New Zealand dollar really kind of outperform. Anyways, let's get into a bit more detail on the on the charts and Going on the dollar index, right? So let's look at the dollar index And I think actually before we get really kind of get into the net grid on the dollar index. It's really important to understand Central bank forecasts, I guess from ING and other other banks and ING are a Dutch bank And they've pretty much put together this this timeline really good timeline and What this explains really is and why this isn't really important is because it outlines what they think Central banks are going to do with regards to rate hikes or potential rate cuts and also QE balance sheet changes now why is that important because Currencies Appreciating depreciate based off of monetary policy for example rate hikes and whether an increase or a decrease or a tapering in in quantitative easing and as you can see from 2021 It's 2022 and easy there forecast It's not set in absolute stone because things can change of course that data has to support this narrative But if you know that the forecast do come in Correct or at least close to being correct then you can kind of Price in central banks and the market can price in what they think the valuation of one currency versus another reason So I give you I give you an example, right? So a lot of traders will trade for example the euro dollar, right? So let's look at the European central bank and they're expected to reduce PEPP but APP boosted basically from their quantitative easing perspective is a little tiny bit of tapering and we'll get into this a Bit later when we look at the euro But when you look at for example The Federal Reserve if you look at the fact that by the third quarter The expectation is for potential rate hike, right? You've got the arrow there pointing upwards by the third quarter of 2022 This is what is potentially happening when the hiking cycle First and the European Central Bank are lagging. So what should happen? Logically over the medium to long term not necessarily the short term This is where traders trip themselves up about fundamentals not working They work just fine It's that you just don't know how fundamentals actually work and the perspective that central banks and Investors have they have a medium to long term view not necessarily the most shortest time view usually is that ultimately The Federal Reserve are looking to appreciate their currency first rate hikes Yeah, and the European Central Bank are not doing anything to appreciate their currency. So What you know, the question is is what way should you really be trading? Right in the medium to long term and looking for pullbacks Which way should the trend be going if this does play out? Of course, it should be you know, you should be shorting the European the euro and buying the Federal Reserve That's not to say that every single week You know the the the euro dollar is gonna go down, right? That doesn't it doesn't work like that It has to be pullback and these pullbacks come can last for weeks, right? But the point being is that we've seen this happen From earlier in the year and this has really been the theme and this is the reason why you've seen that downtrend in the euro dollar So just extrapolate that out into you know Into other central banks who's first who's lost and then have a medium to long term view on what you you know Which way you should be trading and as long as the data supports the narrative That's really the way that you you know that we trade And that's where and that's how we capture the the larger trends that has nothing to do with Elliot waves or any kind of technical analysis This is the reason why currencies appreciate and depreciate This is the fundamental analysis that you need to to take notice of But let's get back into the dollar and actually now notice in that and take a note of that now Your understanding probably why this week you're seeing a bit of a bounce off of this This demand zone is hidden demand zone this week to the upside And again just getting to maybe a bit more detail is that the Fed are seen on track for 2021 taper start even as COVID-19 swells So policymakers watching data ahead of the 20 of September 21st 22nd meeting and taper unlikely this month But Fed may give a November signal So although we had disappointing jobs data last week, and I think a lot of traders ended up going short on the dollar It Although it delayed tapering There is still on track They are still on track for a tapering bias hence the reason why you're seeing Prices potentially go to the upside Well, you saw prices go to the upside this weekend. It doesn't mean that prices can't go, you know back down and and eventually Sorry, I'm end up going to the upside eventually, but and that's again if they tape her It's kind of like buying the rumor setting the fact But overall, you know the bias for the dollar Although it's a bit more neutral for me probably more to the upside than to the downside But again the data needs to support the narrative the better the data. So if employment comes out retail sales come out You know unemployment data comes out and The central bank is still talking about tapering in November. Hopefully you should see the overall Trend, you know continue to you know the upside of course, there will be pullbacks within that But overall pullback should be looked at as buying opportunities So let's see what happens with with With the with the dollar and again with the dollar index This is just a measure of dollar strength overall against the major currencies So if you look for if you see prices really kind of come down to a demand zone on the dollar index It's just looking for Dollar buys against its confluence on other dollar crosses So overall you're still seeing some dollar strength as long as the data supports the narrative of of a of a buy trade and of tapering which should appreciate the currency moving on to the dollar yen and the dollar yen again Been really in this range between this high and this low as far as supply and demand again I think any real, you know any major pullbacks. I think I'll probably buying opportunities I think if prices can come down a really kind of deeper pullback My bias would be to the to the upsides although if prices do come up into as the area of supply That level has been touched several times But I think just above this 11062 area would be actually a decent short But you'd have to really kind of see risk off coming to the market risk off is when there is a flight to safe haven Protection if there are is a lot of fear uncertainty in the market and and prices come up Then money tends to float into safe haven assets The dollar actually is considered a safe haven asset, but I think the Japanese yen should want to Should want to strengthen it as it is one of the main safe haven assets But overall my bias is to the long side. So probably just looking for you know pullbacks on on this currency pair Dollar Swiss dollar Swiss this week you've seen basically, you know The dollar kind of push up break through that demand zone which had been kind of touched several times Came up into this area and sold off a little bit. I am looking at Getting into this trade but waiting for a deeper pullback. I really want something around this 91 round number area for me to get Long or if prices really do prove proof of value Which actually would be somewhere around here seconds and Prices are made a new high. So yeah, the prices do pretty much come back down and did his own That's pretty the first area to look for Potential buy trades, but I do think the ultimate, you know buy for me Anyway, is somewhere around somewhere around this 91 area Those of you who are in a private members discord group will recognize that as a stop-hunt zone or if prices can come down to this 90 Cent area here 90 cent and a half Zone around here the Swiss Frank for me is no way even near a buyer again unless there is some risk off sentiment Until that really happens and even then I probably wouldn't buy the Swiss Frank I probably just wait for risk off to push prices to where I want to be a buyer and then look for a buying opportunity But if you do want to get short that that was the opportunity I think probably just a bit higher than that if you want to get short again Would be the best or the better zone Moving on to the dollar CAD dollar CAD has been again bit in a range Bit choppy I do think that let's have a look there is Bit of supply not necessarily the best supply in the world, but there is some supply in and around here And if you got a bit more demand as well drag that slightly up It's not really a pair that I'm I'm interested in I think the both central banks are pretty much on a tapering and hiking cycle over the next You know six to 12 months. So for me not there's no necessarily no edge there when trading You know fundamental analysis you're looking for divergences, you know or convergences But divergences meaning one is hiking and one is at least, you know holding rates or cutting Right, that's really the divergences you're looking for and if both central banks are you know hiking rates Then there really is no divergence there. So for me, it's not really a currency pair that I'm looking at But if you are then you're looking at probably a deeper pullback into this area this one-two-four zone or Looking at the highs I think that this area here is a really nice area to look for a short technically But you'd have to believe that the Canadian dollar is an absolute bargain at these prices against the US dollar And vice versa if you're buying In demand, you'd have to really believe fundamentally that the US dollar is an absolute bargain against the Canadian dollar moving on to the New Zealand dollar US dollar and as I was speaking about earlier the the RBNZ are actually looking to hike rates and that's pretty much why you're seeing this you know massive move right and There should be you know probably some sort of pullback but pullbacks I think should be looked at as buying opportunities So at the moment with from a from a demand zone perspective really you have to wait for kind of a pullback to get Long or if prices do make higher highs and pull back into this, you know Demand zone which would be here that would be really the the play It's a look for if you're looking to buy the New Zealand dollar over the US dollar now if GDP comes out This week on the New Zealand dollar and it comes out, you know, it's really poor then Actually, in fact, this will be a really nice sell trade opportunity to take advantage of some potential selling on the on the New Zealand dollar because if GDP doesn't support a Rate hike for example, which is what the central bank want to do then the market has to reprice and revalue The New Zealand dollar right so if it comes out as poor or Really disappointing then in fact if you are in this trade probably maybe look to take some sort of profit And also potentially if you're not in this trade, you may want to take advantage of you know Some some short-term selling on the New Zealand dollar Moving on to the pound The pound again and the US dollar fundamentally I think are again in the same place when it comes to looking to high crates Right, they look both look into high crates and taper soon although the British pound is seen as being ahead of the US dollar So ultimately if they're ahead then prices should want to drift, you know higher I'm not saying it's going to be this week, of course No one knows short-term price but overall if in the medium to long-term you should have an overall longer-term trend Because if the British pound are hiking rates sooner, then the Federal Reserve then that's really the path That prices should want to go in but also looking at the pound this week There was some disappointing news the US the UK economy The UK economy's coronavirus rebound grinds to a halt in July so GDP rose just 0.1% of services Manufacturing stagnate and more troubles ahead with ending of support programs and tax rises So the UK economy barely grew in July sorry suggesting The recovery from the coronavirus recession is rapidly levelling off and consumer spending weakens and supply Disruptions hamper production. So it wasn't great news and this was due to I guess we had a bit of a what was known as a pinged emic where the NHS the natural the National Health Service app was alerting us as to If we were Potentially in contact with someone who had coronavirus and if we were pinged then we would have to Self-isolate but what was happening was is that even whether you had corona or not The fact that you had to self-isolate Caused a lot of disruption to the UK economy, so I Think this may just be a blip who knows But for now short-term wise if we're looking at short-term price You might start to see the pound start to sell off But again if the data supports the narrative as far as you know GDP comes out In the next quarter is being really good then this could be a decent buying opportunity In and around these zones and I think probably this one three five area would be a really bargain price for the For the pound so if you want to take advantage of maybe some short-term sentiment now would be a decent time to look for a Shorting opportunity if you're looking to trade this pair But to me, I think this pair really isn't on my list at all of pairs to trade there are much easier Pairs to trade mean that they're pairs with bigger divergences rather than looking at Monetary policy that is really kind of heading in the same direction Moving on to the euro dollar and the euro dollar so This week we've seen a bit of a sell-off and in fact I did make a video This week regarding how to trade the news and really why Buying or selling the dollar and buying the euro around this area here because this was a jobs miss right? There was a massive jobs miss last week Friday, and so I made a video For the private members but also posted it publicly for YouTube as to why If you're looking to you know buy the euro and sell the dollar Which means you would have been buying at highs while that was a terrible terrible idea, right? And I'll kind of break it down in that video and if you If you You know watch that video you'll understand how exactly this played out and we just sort basically People getting stopped out right liquidity hunting, etc. That's not to say the prices can't go higher, but you know It was a it was a really a bad idea anyway to to to kind of buy the euro and sell At Lowe's or by the euro at highs Even based off of that because the market really doesn't move on Well, the market moves mainly on Fundamentals yes, but in the short term it's more to do with liquidity and the avoidance of slippage So if you watch that video, you know, you'll see basically, you know the plan and how pretty much it played out anyways Euro this week did have their the ECB did have their their announcement and The title is the lady isn't tapering but asked again in December said there's been a lot of hand-banging over the guard Statement and what it means for the future of the ECB bond buying program, but bigger test but a bigger test is looming so pretty much The guard was very vague in her Assessment of whether the European Central Bank were looking at tapering and what type of tapering and then what that would look like And again tapering is an appreciation of the currency. So the market was pretty much left scratching their heads, but I just read this first paragraph the European Central Bank has made a very small down payment on prolonged economic recovery One durable enough to withstand COVID-19's troubling variants But the big decision making Comes in December when the central bank undertakes a comprehensive review of its bond buying program With a few more months of Delta under its belt and better and a better sense of direction about the federal reserves withdrawal of stimulus There will be less room to fudge the messaging So they're pretty much just holding and wait having a wait and see approach But I think they're gonna be forced obviously in December to really kind of come out and give the market clarity So how does that look obviously in the market? And you're just pretty much seeing you know a non-event, right? So it you know the news came out on Thursday There was a bit of spiking up and down up and down but nothing really right? so the market is interpreting what the what Christine Lagarde said and Didn't see any real, you know Meaningful means or Decision to really kind of buy or sell and either way, but I do think in the short term I do think in the short term potentially there is room for prices to you know go to the upside And you'd have to really kind of wait for prices to come down into that demand zone the 117 area Which seems to be a bit of a line in the sand for investment banks For a potential buy trade if you are looking to buy the euro If you are looking to continue to sell the dollar then I would really wait for prices again to come up to this 119 area in fact put the one just above that that that supply zone before looking at getting short So euro euro dollar mixed messages Not not the greatest to be fair, but I think the sorry the power for these resistance Should still be to The downside overall maybe in the short term you might see a bit of a pickup But I think overall you're looking at where you know who's ahead and who's not this could just be a base Get a bit of a pullback and then before prices go to the downside Moving on to the euro yen Again euro came up into this supply zone technically not really a pair that I'm interested in to be fair Not that interested in any more but There are there is a supply zone right there So if you want to get short meaning that you're buying the Japanese yen again waiting for risk off sentiment to really come Into the market. I think the higher level around this one through one area It's pretty the best area to look for any kind of short trades My bias if I had to pick one would be actually probably more of a long trade And that would be really nice that area that I do actually like this One two eight technically as a nice buy for the euro But ultimately This pair isn't necessarily the greatest pair if I'm looking to you know Buy or sell against the Japanese yen There's there's much better pairs or stronger pairs to look to To look to buy or sell the Japanese yen against right so but technically I do like this This area here and this demand zone and this supply zone is it is actually quite decent as well But not necessarily a great pair fundamentally at the moment Aussie dollar and the Australian dollar Had a nice little run-up. I do think the Australian dollar is Potentially undervalued, but I think the the data needs to support the narrative I think this area here is actually a decent area to look for any kind of buy trades Ultimately if prices do come down here, I think that is going to be a really really nice buy There's definitely strong demand around here. So whatever push prices Higher this was obviously and as an absolute bargain for the For the Australian dollar, so if prices come back down here again Then that's where you want to really look for potential buy trades if obviously the data supports the narrative, of course but the Australian dollar are lagging behind the US dollar in terms of the You know central bank monetary policies So if anything, I think the path for lease resistance is to for now anyway to the downside But if the Australian dollar start to really kind of pick up, I do think that These are nice buying opportunities. So if you do want to get short It's really looking forward to get a pullback into that zone there or that zone there before looking at getting short on the Aussie dollar Aussie yen again, I think I will be looking at buy trades in and around these areas I Think similar very similar to the Aussie dollar But I think the Japanese yen is a much better pair to trade the Australian dollar with so The Japanese yen are pretty much lost when it comes to you know, trying to strengthen their currency So any pullbacks I think into these areas are going to be nice. You also have the confluence Some confluences of horizontal support and resistance as well. So that's really Really really nice in and around that area if if prices can get down there because nobody really knows what price will do But if prices do come down here then I think a nice buying opportunities for a potential long trade and Short-term wise as far as supply wise, I think yeah that level is probably gone now But it's created another supply zone. In fact, it's hidden supply right there. There's an outside candle So supply there is a supply zone right there So any pullbacks into that zone and then get short again probably wait for more risk off before getting involved in that and Gold gold, you know really being driven. I think by the Fed and what you know, monetary policy is happening and as you see the Federal reserve is still on track for tapering. So that's had a bit of an effect on gold Plus there was you know, we were kind of do a pullback anyway, right? So if the Federal reserve Do start to taper which means they're going to potentially strengthen their their currency the US dollar then You should see prices actually gold prices continue to go to the downside But you'd also need to see the data support the narrative. So you need to see GDP right GDP In in the US really start to grow From that perspective and if it does then what you're going to see is again Gold probably look to sell off. So the better the the the dollar does the worse for gold price Regardless of inflation because of the fact that the Federal reserve are going to be hiking interest rates Which again is a return on the dollar. So what tends to happen is is traders and investors will look for Look to hold the dollar because they're getting a return on investment They're getting a yield whereas in gold gold doesn't pay a yield. So Even though inflation is a way above the 2% target If the Federal reserve are looking to hike rates, then gold should probably come to the downside and dollars should Continue to go higher But if you are a gold bug and you want to get long on this currency pair currency pair on this Sorry, it's commodity and the reason why you would probably get long is because GDP starts to you know drop off And inflation continues to go higher Which is known as stagflation if there are stagflation problems then gold is going to be a great buy a really really good buy At these levels. So let's see what happens But keep an eye on the US dollar and what happens with the Fed and the economy before looking to buy Or sell gold anyways guys, I think that's it for this week and it is in fact, let me just pull that down I think there's a supply zone right there Yeah, so that's it Guys, that's it for this week. Again, don't forget to like subscribe press that like button subscribe and share with your fellow colleagues and Until next week. Have a great trading week and take care