EURUSD

 

EURUSD advanced during last week’s trading sessions, unfortunately for the bulls, on Friday, the advance was halted by a better than expected number in the U.S. nonfarm payrolls, 201,000 jobs added a better number than initially estimated (196,000) this number, even if better than expected, will only encourage FED to continue its interest rate normalization process. Taking the number on an average expectation number it is not as positive as traders thought. Last months’ disappointing 157K if combined with Friday’s 201K, it’s still below FED’s dash board of 200K each month. In such a scenario continuation of the down side move for this pair will be realized only if Trump will continue threatening China with more tariffs and even implementing the new $267 billion new tariffs. As for the coming week, on Tuesday, we have the ZEW Survey from Germany and Europe area with expectation pointing lower than previous readings. On Wednesday, European Industrial production is expected to be much higher. Later during the day in the U.S., producer price index is expected to hit 2.8%. On Thursday, the German Harmonized index of consumer prices will be released and later the ECB monetary policy and press conference will take place. This will be the key for EURUSD as we are all expecting to listen the ECB’s future path in policy normalization including the withdrawal of QE. If the ECB fails to deliver, what markets are expecting, this will put the EURUSD in trouble. Finally, on Friday, the U.S. retail sales are expected to be lower.

It is worth mentioning here that an outsider event may also have  positive impact on EURUSD. On Thursday, the Bank of Turkey is expected to increase their interest rate on Turkish lira and this will boost Turkish bonds that could indirectly affect the EURO due to the European exposure in Turkey.

 

Technically the pair is neutral. As we mentioned last week. the pair could retest Fibonacci levels 38.2% and in extension 61.8%. For now, the pair is still flirting the 38.2% and support level of 1.1542. A break below could accelerate losses to 1.1300. A retracement on the 38,2% and a break above 23.6% is needed in order to change the picture from neutral to positive.

 

 

GBPUSD

 

The pair continues trading higher last week as traders turned positive after last week’s news cross. An agreement between the Brexit camps to withdraw the dead line from negotiations gave the pair another upside push. Although the rally was halted at 1.3020 as the nonfarm payrolls in the U.S. came better than expected. For this week we have a heavy economic calendar in the U.K. On Monday, Industrial production and manufacturing production are expected to be lower, Gross domestic product is expected much higher than last month. On Tuesday, the Average earnings is expected to be higher. On Thursday, the BOE is releasing their policy meeting minutes. No rate hike is expected although the press conference to be follow will give farther clues of the BOE’s future path.

 

Technically the pair is positive as it is continuing trading above the downtrend line formed the last 4 months. Traders are expecting the upside to continue. It was proved that buying into the dips is a profitable trading style for now. So traders remain long and continue buying into the dips targeting profits around the 38.2% Fibonacci level (1.3300), where a pull-back may take place.

 

 

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