EURUSD Last week’s rally halted and the pair turn lower after ECB’s Mario Draghi expressed his worries about Europe’s weak growth and added that further stimulus may be need. Germany, the biggest European economy released the preliminary statistics for the German economy that pointed that growth slept at 1.5% in 2018. All those factors mentioned above will put more pressure on ECB to delay the interest rate normalization for later in 2019. Europe’s CPI number of 1.6% show a stagnation of Europe’s inflation and this is adding downside pressure on the Euro. Apart from that, an upside move in the DXY index pressures the pair lower. The Dollar’s strengthening is due to renewed global growth fears that are driving investors into save heaven assets. Following the DXY index for this week, a break above this level (96) is needed to be maintained in order to confirm that dollar’s strength will continue.  

As for this week’s economic events, we have on Tuesday, the German ZEW Survey economic sentiment with expectations marginally lower at -17.4. On Thursday, European Markit manufacturing PMI expected unchanged and later the ECB will announce its interest rate decision and monetary policy statement following a press conference. Later, on the same day the US Markit manufacturing PMI expected marginally lower. On Friday, German IFO business climate expected lower at 100.6.

Technical, the picture has turned neutral from positive. Our traders kept open their buy positions around 1.1500 (50% Fibonacci) and continue buying the dips at 1.1400 targeting profits around 1.1567. We are expecting to see aggressive buying this week at 1.1361 (23.6% Fibonacci) and 1.1320 as this is a very strong support tested many times in the past.



GBPUSD closed marginally higher last week even though May’s Brexit plan was heavily defeated in the parliamentary voting last Tuesday. The day after on Wednesday, we have seen Theresa May wining once again parliament’s confidence vote and this gave the UK Government more time to present a plan B on Monday and negotiate with the opposition parties before the new voting scheduled for January 29. Not too many changes are expected on Plan B, so the expectations of leaving the Union without deal are still high.

On the economic calendar we will have only the Tuesday releases, where the UK Average earnings is expected unchanged at 3.3%.

Technically the pair is positive. Our traders are buying the dips staring around 1.2900 (61.8% Fibonacci) and they are placing new pending buy orders at 1.2825 (50%) and 1.2441(38.2%) targeting profits around 1.3000




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