EURUSD remains on the multi-year lows as U.S. midterm election gave back to democrats the control in the house of representatives and trade war fears between the US and China are back on the main stage. On the EURO side we have a major reason that keeps pair lower, the Italian budget. On Tuesday Italy will resubmit its budget to the EC. With the Italian government stance not to reduce their budget and the European union on the other side pushing Italy to the limits, the EURO is poised for more losses. On the economic calendar we have on Tuesday the German Consumer Price Index pointing to unchanged 2.5% and ZEW survey at -25. On Wednesday, Europe’s Gross Domestic Product expected unchanged at 1.7% and later the U.S. Consumer Price Index expected higher at 2.5%. On Thursday, the U.S. retail sales expected higher at 0.5% a much better number than last -0.1%. Finally on Friday, European Consumer price expected to remain unchanged at 1.1%.
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 (100%) and targeting profits around 1.1800. The pair broke below the 1.1500 (61.8%) Fibonacci level and closed at (1.1336) just above the 100%. 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 and close below 100% (1.1320) will force traders to trigger stop losses below 1.1270
GBPUSD reversal on pair did not last long. This was mainly due to the hawkish FOMC from last week and to some profit taking ahead of this week’s Brexit negotiations. Drop was also fueled after DUP’s Foster raises alarm on May’s plan, and, the resignation of Mr. Jo Johnson. This week’s economic calendar is heavy for the GBP. On Tuesday Average earnings expected unchanged at 3.1%. On Tuesday consumer price index expected higher at 2.5% this may bring BOE back to the track of increasing interest rate and could be positive for the GBP. On Thursday retails sales also expected higher at 3.3%. Although, traders already know that economic calendar is not the driver last period, the beginning of the new Brexit negotiations is the one that will drive this pair.
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.
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