The market is entering a week of uncertainty and high geopolitical tensions. After last Friday’s tweets of US president Trump and his ambivalent remarks on whether America will make strikes against Syria, we’ve seen global markets higher and the Dollar recovering from it’s lows. Unfortunately, Saturday morning the world was caught with surprising news that the US and allies had launched missiles to Syria. Response from Russia and Iran was negative and with promises of payback actions as it was widely expected. Geopolitical events may play a main role on how markets will behave this week. The weekend was followed with declarations from president Trump saying that the mission was accomplished and that the chemical factory strike was the only target, confirmation from all sides indicate that no Russian facility was affected from the strikes, giving the market some sense of stability for this week. Also declaration from Russian President Putin, mentioning that Russia does not want escalation in the region is also favorable for the markets. The economic calendar for this week will keep the Euro neutral to negative, as the general picture shows EURUSD is still in range trading. On Monday, US Retail sales are pointing higher 0.3% versus the last reading of 0.2%. On Wednesday, Europe’s Consumer price index is expected to point lower at 0.9% compared to 1% last year. The combined reports will push EUR/USD marginally lower. During the week, many FED officials are schedule to speak and according to what they will say the US dollar will react accordingly.
Technical analysis shows the EURUSD pair is range trading. We maintain our trading style to buy into dips. Keep open buy position at 1.2280, take profit 1.2400, trailing stop above 1.2350. Second buy order is standby at 1.2184, take profit 1.2400, trailing stop above 1.2280.
Worth mentioning, the GBPUSD pair will also be affect by geopolitical progress as mentioned above. Due to the fact that UK was actively involved in the strikes and threats from Russian and Iran directly applied to the UK we may see GBP giving back some of its last week’s gains.
A heavy economic calendar for the UK economy will keep GBP in bullish momentum. On Tuesday, average earnings expected to tick higher at 2.9% versus its last report of 2.6%. ILO unemployment is expected to be lower at 4.1%. On Wednesday, consumer price index is expected to remain unchanged at 2.4%. Finally, on Thursday, retail sales are expected to be lower at 0.2% compared to last report of 0.8%. If all economic events come out positive, this should push GBP higher and break above the January’s high of 1.4345 and will be testing our trend line high of 1.4500.
Technically, we maintain a bullish stance and we continue to buy into dips. We place new position buy at 1.4158, take profit 1.4300, trailing stop above 1.4245. Second buy order at 1.3995, take profit 1.4200, trailing stop above 1.4158.
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