EURUSD pair retreated from lows as it was widely expected. The upside move was fueled from the recovery of the equity markets as we previously mentioned. The main actor on this pair was once again the US Dollar, dropped from its Highs after US president Trump announced that a call between him and China’s president Xi, brought both countries closer to a trade deal that will finally give an end to the so prolonged trade war. The news was applaudable by markets. Although not so pessimistic for now. Another reason behind the price retreatment was the already priced in nonfarm payroll numbers that came just as expected at 250K. Just before the closing bell we’ve seen a huge selloff in equities and a stronger Dollar. This is a preposition ahead of next week’s US mid-term election and volatility is expected to pick up this week. Going into this week we have on Tuesday the European Markit PMI with expectations to remain flat at 53.3 On Thursday, EC will release the economic Growth forecast and later the FOMC meeting will release their minutes. No hike is expected at this meeting, traders and investors will investigate the minutes for the future path of the US Dollar. A hawkish policy is mainly priced in, so the potential for a stronger Dollar are much less than that of a softer dollar in the next few weeks at least.
Technical, the pair is neutral. Our traders maintain Buy positions at 1.1674 (23.6%), 1.1604 (38.2%) 1.1548 (50%) 1.1500 (61.8%) and at 1.1320 and targeting profits around 1.1800. The pair broke below the 61.8% Fibonacci level (1.1500) and reverse near the 100% (1.1330). This is keeping the picture to neutral for now and traders are expecting a retest of 100% (1.1320) with aggressive buying pending orders. On the worst-case scenario, a break below 100% (1.1320) will force traders to trigger stop losses below 1.1280
GBPUSD sharp reversal from lows was expected as we mentioned las week. The reversal came immediately after the EU and the UK have reached an agreement on financial services post-Brexit according to newspaper reports, which would allow UK firms access to the EU markets if a Brexit deal is agreed and if the UK financial regulation remains broadly aligned with that of Europe. If these reports are confirmed, the recent rally in GBP will continue. GBP’s fate however remains heavily dependent on the ongoing negotiations with neither side budging yet on the Irish border. Even if a solution is found, any Brexit negotiation will still have to be passed by the UK Parliament where opinions remain heavily divided. Getting into this week we have only on Friday the UK gross domestic with expectation pointing at 1.5% higher that last 1.2% and manufacturing production also pointing higher at 0.1% from last -0.2%.
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 technic for now.
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