EURUSD is directly affected by the move of GBP and the Brexit negotiations outcome. Although last week’s downside move was mainly due to Italy’s decision not to comply on the budget and also to the very disappointing Markit PMI of the Euro zone, adding some worries on the already existed ones of the ECB showing a slowdown of the Eurozone economy. Such disappointing economic outcomes adding pressure on ECB’s decision to reconsider abandoning their easing program and the return of interest rates normalization. On the economic calendar, this week we will have many ECB and FED officials speaking throughout the week. On Monday, German IFO business climate is pointing lower. On Wednesday, the US Gross Domestic Product expected to remain unchanged at 3.5% and core personal consumption also unchanged at 1.6%. On Thursday, European business climate expected lower, German Consumer price index also lower at 2.4% down from 2.5%, later during the day the US core personal consumptions expected unchanged at 2%, and the FOMC minutes will be released, with no change in this policy meeting, traders will focus for the minutes will indicate whether or not there will be a rate hike in December. Finally, on Friday European core consumer price index is expected to remain steady at 1.1%
Technically, the pair is negative to neutral. Our traders maintain Buy positions 1.1500, 1.1320 and 1.1220 targeting profits around 1.1500. Pair is expected to continue range between the 0% Fibonacci level at 1.1220 and 1.1500 (50%) Fibonacci level. A break and close above 1.1430 on the 4H chart needed to change the picture to neutral/positive
GBPUSD swings up and down after each new is released, real ones or fakes ones, both are taken as an opportunity for traders. Last week price closed unchanged for this pair, after surging almost 200 pips when both sides announced that they agreed to a final draft agreement. Although, market digested the news in the last 2 days trading sessions bringing pair down to previous open after the Spain Governments comment over Gibraltar, said that new clauses like not including Gibraltar in the new terms and relations agreed between UK and EU must be added in the agreement otherwise they will not vote for the agreement. A vote against from Spain is not something that can stop Brexit but as markets are sensible on such news it will always create additional uncertainty. Britain is just a step away from EU withdrawal, although volatility in the pair will be high for the rest of the year. PM May is headed to Brussels for the EU summit this weekend in order to meet with all EU leaders and seal the agreement. According to the last 2-3 weeks moving, the 1.30 level is a level where such an agreement is priced in, on the other hand a disastrous EU summit and failed to sign the agreement will push the pair down to 1.2690 level, last seen on October 30. Apart from the EU summit success, PM May will next challenge the UK parliament for approval in December, something that until now it looks like a difficult last step. With the opposition party and Irish DUP voting against the deal this will give to the traders many opportunities to continue trading this pair on either direction. On the economic calendar we have BOE’s governor Carney speech on Monday and Mortgage approvals on Thursday.
Technically the pair is neutral. Our traders maintain open buy positions at 1.3135 (23.6%), 1.3063 (38.2%) and 1.2930 (61.8%) targeting profits at 1.3300. Buying the dips is the main trading style for now, we are expecting our traders to aggressively buy the pair around 1.2700.
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