Trader’s most preferable pair might be in trouble this week. Despite a relatively quiet previous week, EUR/USD did not manage to maintain the recovery and resumed towards downside, speculating, things might get worst this week. On Wednesday, German Gross domestic product is expected to remain stable at 0.3%, German markit service PMI projects to be unchanged at 53, and Europe’s Markit manufacturing PMI may be marginally lower at 56 down from 56.2. On Thursday, the ECB monetary policy meeting accounts are due to be released without any changes. Finally, on Friday, German IFO Business climate is expected to be lower at 102 down from 102.1. As for the USD the coming week will determine whether the rally will continue or will halt. Starting on Monday, we have the Fed official’s speeches ahead of Wednesday’s FOMC minutes. A rate hike is not expected at this month’s meeting but the details of the minutes will give a clear picture of the path that the FED will follow until the end of 2018 and beyond. The EUR/USD pair at this current level is pricing in 3 rate hikes by the end of the year. A back step from FED will halt the dollar’s rally and will help the pair to recover. On the other hand, a firm hawkish FED will bring pair to new lows.
Technical analysis of EURUSD is neutral to negative. A brake and close below the 1.1800 opened the road to the next strong support of 1.1717. It is expect that pair will test this support ahead of Wednesday’s FOMC. If this support will be reject, the recovery will be much stronger than last week’s failed attempt. We aim to keep open buy positions at 1.1900 and place new buy orders at 1.1718, take profit 1.1900, trailing stop above 1.1800. After Wednesday’s FOMC, if the pair closes below 1.1718, stop loss must be triggered for both open positions at 1.1690
The pair still looking for direction. Last Weeks slow movement is now heading into a week with very heavy economic calendar for both actors, GBP and USD. On Tuesday, UK Inflation report hearings will be released. On Wednesday, retail price index is expected to be lowered at 3% down from 3.3%, but this might not affect the pair as its already digested from last week and it was mostly due to the bad weather that is stopping people from going shopping. UK consumer price index is the one that traders will give their focus. Expectations are for 2.3%, unchanged from last month. A bigger number will bring the bull back to the game, as this will push BOE for a rate hike in August. On Thursday, retail sales are expected at 1.4%, higher from last 1.1% due to the weather reason we mentioned above. On Friday, UK gross domestic is expected at 1.3%, higher than last reading of 1.2%. If the above mentioned numbers will be correct and with the help of a non-hawkish FOMC, we will see the pair turning sharply higher, and clearing the support of 1.3450.
Technically, the pair is neutral. Recovery can take place at this level. Keep open buy positions at 1.3500, take profit 1.3700, and trailing stop above 1.3600.
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