EURUSD. We mentioned last week that it was too early to applause the rally, as this was due to lack of liquidity from Christmas’ and new year’s weeks of short trading and the continuing government closure in the US. After last week’s sharp drop down to 1.1300 pair managed to recover by the end of the week following the dovish declaration of FED’s Powell saying that FED is considering reducing its balance sheet. This took place immediately after the positive nonfarm payroll number came more positive than it was expected, and the US Dollar players took Mr. Powell’s declaration much more seriously than the nonfarm payroll number. Even though, in the EURUSD pair, the US Dollar is softer comparing to other pairs, and this is giving more space for more softness, but due to European underperforming economic indicators the pair is stacked in lower range prices.
As for this week’s economic events we have on Monday, the US ISM manufacturing PMI pointing lower. On Wednesday, ECB non-monetary meeting and later, on the same day, FOMC minutes will be released and expectations are for balance sheet reduction at this meeting, at least this what Mr. Powell signaled on Friday. On Thursday, ECB monetary policy meeting accounts will be released, and later FED’s Powel will speak. On Friday, US core CPI expected to remain unchanged.
Technically, the picture is neutral-positive. Our traders opened new buy at 1.1346 (23.6%) and targeting profit at 1.1500 using trailing stops above 1.1420. Pending buy orders are placed at 1.1272 a support that it was tested many times in the last 45 days, and at 1.1216 the strongest support and (0%) on the Fibonacci.
GBPUSD closed last week on a positive note after it retested a strong support standing at 1.2480. The sharp decline was called as usual (flash crash) and it was blamed on the algorithm trading. Even though the pair managed to recover all losses and now is testing the strong resistance of 1.2760. Fundamentally, the pair will be under pressure in the coming weeks because once again Brexit talks will be resume and PM May will try once again to secure votes in the parliament before the 14 of January programmed Brexit plan voting.
On the economic calendar we will have on Wednesday a speech from BOE’s Governor Mr. Carney and on Friday the UK gross domestic product with expectations to remain unchanged.
Technically the pair is neutral. Our traders started buying the pair at 1.2645 (23.6% Fibonacci level) targeting profits around 1.2800 using trailing stop above 1.2759 and placed pending buy orders at 1.2480. Alternatively, a break and close above 1.2759 could convince traders to open new buy positions at 1.2759 and target profits higher at 1.2900.
For more detail economic calendar events please visit our live economic calendar on:
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