Last week was a nightmare for EURO bulls, a sharp fall of the EURUSD exchange rate was a surprise to everyone. Even though minutes from ECB meeting were as expected, ”QE tapering” and “interest rate increase” the phrases used to express the minutes like “cautiously tapering” and “not earlier than mid 2019” disappointed the markets and it was enough to justify the decline from 1.1840 down to 1.1560. This week’s economic calendar is light; economic reports are all but non-existent for the EURO and the US dollar. However, the week will be dominated by FED’s official’s speeches and from ECB’s official’s speeches. Both camps will try to intervene at least verbally and is worth following, as this will create volatility for this pair. Fundamentally speaking both the US dollar and the EURO are in line for strengthening so it is unlikely to see a sharp drop with the pair. Recovery will come soon and gradually will see higher levels.
Technically, EURUSD is turning neutral to negative. Last week’s support of 1.1557 rejected a break once again and the pair closed above 1.1600. This might provide a breather to the pair for further gains. For now, is better to wait until markets digest the fundamentals and take profit the positions opened last week.
Once again, the pair was the victim to the US strength last week. Even though PM Theresa May’s victory in the parliament pushed the pair higher, it could not last long as the bears gained control, and with the help of US dollar, brought the pair down to fresh lows. This week’s highlights are the BOE minutes. On Thursday, BOE will announce their minutes on how the economy of the UK is performing and what are their projection for interest rate normalization. Expectations are for no changes in this policy, however, a vote between the MPs of (6 – 3) could push the pair higher.
Technically the pair is neutral. Therefore, its time now to wait until last week’s positions will take profit.
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