EUR/USD traded lower and retested the 1.1200 level, a multi month strong support. The downside move took place after the ECB meeting last Thursday. A new round or “cheap money” or TLTRO round 3 was introduced and will remain in place until 2021, inflation expectations and growth were downgraded from 1.7% to 1.1%. The ECB’s actions may keep the pair price lower for longer as all chances of a rate hike in 2019 have been waived. By the end of last week, the pair managed to recover some lost ground after the US nonfarm payroll came out worse than it was expected.
For this week, we have on Monday the German Industrial production pointing higher at 0.4% and US retail sales also higher at 0.6%. On Tuesday, the US consumer price index is expected unchanged at 1.6%. On Wednesday, the European industrial production is expected higher at 0.9% and US durable goods lower at -0.5%. On Thursday, the German Harmonized index of consumer prices is expected to remain unchanged at 1.7%. On Friday, the European consumer price index is expected unchanged at 1.5%
Technical, the picture has turned negative. Our traders are keeping open their buy positions at 1.1500 (50% Fibonacci), 1.1400 and 1.1352 (23.6% Fibonacci) and 1.1220 (0% Fibonacci) targeting profits around 1.1565
The pair broke below 23.6% and the trend line closed above the multi month low and strong support of 1.1220. If pair will manage to keep this support on the 4H chart it could continue recovering lost ground and retreat to 1.1350 level. Alternatively, a break and close below 1.1220 could accelerate losses and form a new price relocation that can bring the pair trading between 1.1000 and 1.1200 for a longer time.
GBP/USD traded lower last week as traders and investors are prepositioning ahead of the crucial parliamentary voting on March 12th. After a week of hard negotiations between the UK and EU, now the new proposal of PM May is on the table once again for backup voting and approval. The new proposal is mainly focused on the Irish boarder backstop and more legally binding changes. In the case that the deal will be rejected, a new vote will take place on extending the withdrawal date from March 29th up to 21 months later, or, fulfill the withdrawal process without deal. The second will be seen as extremely negative for the UK economy and the pair could drop down to 1.2500 level.
On the economic calendar we have on Tuesday the manufacturing production pointing lower at -2%. And on Wednesday the budget report.
Technically the pair is positive to neutral. Traders started reopening new buy positions at 1.3200 (23.6%) 1.3119 (38.2%) 1.3053 (50%) and 1.2889 (61.8%) with take profits at 1.3341. If pair will continue trading above 1.2800 (100%) this will maintain the pair in the range of 1.2800- 1.3300. Alternatively a break and close below 1.2800 will turn the picture negative and could see pair trading as low as 1.2500
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