Week ahead March 19th – 23rd  

GBP

Critical week ahead for the UK pound!

First event to look at, is the BOE meeting on Thursday the 22nd. Expectations for a rate hike at this meeting is almost nullified. Although, it’s important to hear what Mr. Carney is going to say in his speech and also what the MPCs are going to vote, only one more vote favoring a rate hike will need to push GBP/USD higher. Inflation readings are also important for the path of BOE monetary policy, expectations are pointing to 2.8%, just lower than the last one at 3%. A bigger reading will definitely push BOE to accelerate their interest rate hike policy. On March the 22-23 the European council is expected to agree that the transitional period will favor UK businesses. A favorable agreement will be a boon for GBP and may target a new fresh high level, possibly around 1.4500. If no agreement can be found, it have a negative impact on GBP and we could see lows as far as 1.3500 in the coming weeks. 

Technically, GBP/USD is still bullish and a continued trading style to buy into dips should be maintained. The same trading technique should also be continued, first order for long position at 1.3800, take profit 1.4000, trailing stop above 1.3900. Next buy order is standing at 1.3665, take profit 1.4000, trailing stop above 1.3800.

Euro

Currently the EURO is trading in “no man’s land” territory, and no matter what came out of the ECB or potential news on the economic calendar, the EURO was unaffected for the past 2 months. Fundamentally, EUR/USD is in the fate of the FOMC meeting this week. On Wednesday the 21st, the FED will release its minutes, a 0.25% increase in US interest rates is expected and is priced in already. The tone to be used in the press conference after the minutes will be more important as to which direction the pair will follow. The economic events for Eurozone this week will not have significant impact, and a need to focus on the counterparties of EURO will dictate to move the pair in any direction.

EUR/USD is range trading between 1.2200 – 1.2450 and is giving mixed signals as to the direction that it will move. On a technical point of view, continue with a bullish stance and once again buy into dips. First buy order should be placed at 1.2215, take profit 1.2400, trailing stop above 1.2300. Strong buy at 1.2151, take profit 1.2400, trailing stop above 1.2215.

Following the speech of Fed’s new Chairman Mr. Powell will yield great importance, as a less than hawkish tone may not give the chance to buy the pair at 1.2215 and a buy order may need to be initiated at the current price during the speech, most probable at 1.2280, using as always the same trading technique, take profit at 1.2420, with a trailing stop above 1.2390.