EURUSD traded lower last week after the disappointing economic indicators from Europe continue to confirm weaker growth in the EU. As ECB maintaining its dovish stance and continue warning of slower growth and implementation of any measures necessary in order to achieve price stability, and the over performed US economic indicators on the other side, are clear signals that this pair will persist trading lower. The surprise Scottish PM declaration of a referendum that may result to the Scottish independence was taken negative from Euro traders as this is bringing more uncertainty in the future.
On this week’s economic calendar, we have on Monday the US core personal consumption expenditure pointing lower at 1.7%. On Tuesday, European gross domestic product expected unchanged at 1.1% and German Harmonized index of consumer prices expected higher at 1.6%. On Wednesday, US ISM manufacturing PMI expected lower at 54.8, ADP Employment expected higher at 180K and later during the day FOMC minutes will be released. No change in policy is expected at this meeting. We are expecting Fed to maintain its rhetoric saying that future rate path will depend only on the economic indicators. On Friday, European consumer price index expected higher at 1.6%, US nonfarm payrolls expected lower at 180K and US ISM manufacturing PMI higher at 57.2
Technical, the picture is negative. The break out of multi-month strong support at 1.1185 is putting the pair into oversold territory. The sharp reversal move on the upside by the end of last week could bring the pair back into range. A fail of keeping the upside reversal will be the continuation of the down trend until the next support of 1.0985. Our traders maintaining all buy positions open at 1.1500, 1.1275 and 1.1185 targeting profits at 1.1500 using trailing stops for each trade above 100 pips profits. A break and close below 1.1138 on the 4H chart this week will force traders using stop losses at 1.1080
GBPUSD continue trading lower last week after MPs from both parties are challenging PM Theresa May to quit. The most negative event and the main driver for last week’s negative sentiment on this pair was due to the decision of Scottish PM Nicola Sturgeon announcing a referendum for May 2021, giving the people to chose between Brexit and Scottish independence and remaining in the EU as an independence country. The Scottish decision is one of the biggest challenges the UK government is facing and is increasing the possibilities of canceling Brexit. The overall picture in GBPUSD pair is negative due to the new Brexit outcomes, although, it worth mentioning that economic indicators last few months are improving and this may force BOE to add a more hawkish tone on their coming meetings.
On the economic calendar this week we have on Wednesday, Markit manufacturing PMI pointing lower at 53. On Thursday, BOE minutes and press conference. No change is expected on this meeting, although MPs voting on changing rates must be closely followed as we may have surprises as we are going deeper into 2019, and, GBP’s softening is threatening UK Inflation.
Technically the pair is turn from neutral to negative after the break out of the triangle formation (mentioned last week) and the close below the 61.8% Fibonacci level on the 4H chart. If the pair will continue trading below this level in the coming week, we can see lower levels and possible retesting of 1.2800 level. Alternative, if uptrend resumes and break and close 1.3000 (61.8% Fibonacci level) will put the pair back into neutral picture. Our traders maintain open their buy positions at 1.3200 (23.6% Fibonacci level), 1.3123 (38.2% Fibonacci level), 1.3062 (50% Fibonacci level) and 1.2996 (61.8% Fibonacci) targeting profits at 1.3330.
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