WEEK AHEAD Feb. 26th – March 2nd
We are a breath away from the Italian election. As we mentioned in last Friday’s report, the Italians are heading to polls on Sunday 4th of March. With this information, caution should be taken with the EURO for this week. Even though the main picture remains bullish, it will be better to not take any risk entering long positions. Any unfavorable result in the point of view of “European relation”, will push the Euro into new lows and possibly break below the uptrend channel. The potential downside will be short lived, as the next step after the election will be the negotiations between the parties in order to form a coalition. The economic calendar is light for the Euro but still has the ability to make an impact. Starting Tuesday, the Harmonised index of consumer price in Germany is expected to drop from 1.4% to 1.3%, and on Wednesday core consumer price index is expected to remain at 1%.
On a technical point of view, we maintain our positive stance and we buy into the dips. For this week, we keep open the last week’s buy at 1.2350 and we place a new buy order at 1.2216. On Friday, March the 2nd will need to change our trading strategy as we reevaluate the market. In order to safeguard our capital ahead of the opening of Monday 5th, we will hedge our EURO long position with a short position including stop loss. A more detailed trading strategy will be publicly available on our website on Friday 2nd of March before markets will close.
The economic events this week will most likely have a little impact on the Pound. We will keep a close look at the PMs comments about Brexit and U.K.’s demands. However, on Friday the speech of PM Theresa May, will definitely impact GBP.
On a technical point of view, we maintain a bullish sentiment and continue to buy into drops. First buy order is place at 1.3800 and the next strong buy order at 1.3600
Heavy economic news for the USD this week, starting on Monday Fed’s Bullard speech is expected to be hawkish. New home sales are expected to shift from negative to positive. On Tuesday FED’s Powell speaks twice, more hawkish than the first one. Durable goods orders will show a decrease. On Wednesday, Gross domestic product index is expected to remain steady at 2.4%. On Thursday, core personal consumption is expected to remain unchanged at 1.5%, and personal income slightly lower from 0.4% to 0.3%. ISM manufacturing PMI also slightly lower at 58.6 from 59.1. All the above mention economic events will impact Dollar’s recent recovery with its counterparts. Better numbers will help dollar maintain and even continue to recover, on the other hand a worse than expected result will push Dollar lower.