EURUSD gave back all profits last week and traded lower on renewed fears that the Italian budget may bring future turbulences in the EU. After failing to agree on a more EU compliant budget last week, EU sent a letter to Italy asking them to reply by Monday 22nd of October and giving them an additional 2 weeks to adopt an option requesting a new budget. ECB’s Mario Draghi on a speech in Brussel raised concerns about Europe’s economy and this is also raising concerns between investors weather ECB will be ready to raise interest rates back to normal in 2019. Apart from that the pair pushed lower as traders and investors understood last week’s FOMC as a hawkish one. As for this week, the economic calendar is light with only two major events, on Thursday, the ECB will release their monetary policy statement that will be followed by a press conference and on Friday the US gross domestic product with expectation pointing lower at 3.3%
Technically the pair is neutral. Our traders maintain Buy positions at 1.1674 (23.6%), 1.1604 (38.2%) and at 1.1548 (50%) and 1.1500 (61.8%) and targeting profits around 1.1800. The pair once again rejected the 61.8% Fibonacci level (1.1500) and closed above 1.1500. This is keeping the picture neutral for now and traders are expecting a continuation of the upside retesting support at 1.1605 for this week.
GBPUSD sharp lower move this week was the result of another failed Brussel summit. UK and EU divorce is still pending because of the Irish boarder disagreements. Brussel talks have been postponed on Thursday after failing to agree. EU gave the UK another one month to come back with a fresh proposal. PM Theresa May declared after summit that the UK is willing to compromise on Irish boarder to speed up the Brexit process. BOE Governor Mr. Carney said in an interview late on Friday from New York that the bank’s stress test shows that UK banks can withstand more than Brexit and that banks have adequate capital to maintain lending in the face of multiple headwinds. The speech was taken as positive and gave to GBP a fresh breath retreating from weekly lows. GBP’s economic calendar is light this week, so traders and investors will be focusing on any new declarations from both the EU and the UK on Brexit.
Technically the pair is neutral. Last week’s drop gave traders the chance to open new buy positions at 1.3135 (23.6%) and 1.3063 (38.2%) targeting profits at 1.3300. If, downside persist we are expecting our traders to continue buying into the dips even lower at 1.2930 (61.8%)
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