Sharp recovery took place last week as FOMC and Jackson Hole symposium failed to deliver what investors were expected. Even though Fed’s Powell speech was in line with the rate hike increase expectations, the rhetoric was taken as dovish rather than hawkish and this pushed the dollar lower. Another reason that helped EURUSD’s recovery was the One-week holiday in Turkey and due to this event EURO did not pass another week of down side pressure, at least in regards to Turkey markets. As for this week, markets are back to normal and EURO may give back some gains if Turkey returns with renew turmoil. On the other hand, the Economic calendar is light this week and this could favor an upside continuation. On Monday, German IFO business climate expected marginally higher at 102. On Wednesday U.S. Gross domestic product expected marginally lower at 4% down from last 4.1% and core personal consumption unchanged at 2%. On Thursday, German Harmonized Index of Consumer prices expected lower at 2% down from last 2.1%
Technically speaking the pair is in a downside trend. The Fibonacci retracement lines on a daily chart are showing a sharp retracement on the 100% Fibonacci level, matching the old resistance of 1.1350 acting now as support. The Pair is in an oversold territory and recovery may continue in the coming sessions pushing the pair at least until the 61.8% retracement line at 1.1778 were profits are expected to be taken off the table. A break above the 1.1778 will accelerate gains and change the overall picture to positive.
Last week’s thin trading, offered some relief for GBP and the pair continue to trade higher. This move was also favored by the Turkish holiday, as mentioned earlier, and the Jackson Hole outcome. As for this week no economic data is scheduled to be released so once again the pair is in the faith of Brexit negotiations outcomes.
Technically the pair is negative. Pulling a Fibonacci retracement on the 4H chart and in combination with the downside trend lines we may expect the recovery to continue up to 23.6% at 1.3080 before downtrend resumes. On the other hand, last week’s Fibonacci retracement in the daily chart proved a sharp upside reversal on the 100% and on the strong support of 1.2626. If the pair maintains the recovery and breaks above 1.3080 this will change the overall picture to positive. Our trader is keeping open all buy positions and is targeting profits above 1.3200.
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