EURUSD And here we go again …! Letters fighting resumed between EU and Italy, the reason? Italian budget again! EU notified the Italian Government over a 4 Billion fine if they do not adjust its budget and reduce excessive deficit. Salvini’s answer was obvious: Italian government dissolve and new snap elections again! Even though the above mentioned are negative weighing on Euro, pair traded marginally lower last week after parliamentary elections results show a balanced pro-Europeans and Eurosceptics seats in the EU parliament. Apart from Eurozone’s grey clouds, the pair will have to face the global uncertainty created last month when the world’s 2 biggest economies the US and China, started a serious trade war between them imposing tariffs to each other. Trump’s trade war is something that all the world’s economies will have to closely monitor in order to avoid a new global financial crisis. On the FED’s point of view in order to avoid extending US equities sell off, we can expect a more dovish tone and possible rate cut in the future. This will weigh negative on the US Dollar and can push EURUSD pair higher.
On this week’s economic calendar, we have on Monday, European Markit manufacturing PMI with expectations to remain unchanged at 47.7. US ISM manufacturing PMI expected higher at 53.3. On Tuesday European consumer price Index expected lower at 1.3%. On Wednesday, European Markit PMI expected unchanged at 51.6. and US ISM non-manufacturing PMI expected unchanged at 55.5. On Thursday European Gross domestic product expected unchanged at 1.2% and later during the day ECB will release their monetary policy statement followed by a press conference. On Friday all eyes will be on the US nonfarm payrolls release of 190k new jobs and average hourly earnings to remain the same at 3.2%
Technically, the picture is negative to neutral. Pair continue trading within the down trend channel and range of 1.1300 – 1.1100. A clear break and close above 1.1275 (23.6% Fibonacci) needed to change the picture to neutral-positive. 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 1.1100 on the 4H chart this week will force traders using stop losses at 1.1080
GBPUSD traded lower last week amid stall in Brexit negotiations and uncertainty over who will be the successor of PM Theresa May. Even though pair could advance due to US Dollar’s weakness, still weighed lower as UK’s political uncertainty is adding more pressure on the pair.
On the economic calendar this week we have on Monday, Markit manufacturing PMI pointing lower at 52.4 and BRC retail sales also lower at 0.2%. On Tuesday, Markit construction PMI to remain unchanged at 50.5. On Wednesday, Markit service PMI expected higher at 50.6. On Friday, Consumer inflation expectations expected to remain unchanged at 3.2% and NIESER GDP expected at 0.4%.
Technically the pair is negative and continue trades below the 100% Fibonacci level. The pair is entered over sold territory. If this week pair persist trading lower, it might challenge the lowest multi month support of 1.2500. Our traders maintain open their buy positions at 1.3200 (23.6% Fibonacci level), 1.3123 (38.2% Fibonacci level) at 1.3062 (50% Fibonacci level) and 1.2996 (61.8% Fibonacci) and they aggressively bought on 1.2788 (100% Fibonacci) targeting profits at 1.3330. Our traders triggered their stop losses at 1.2490 expecting that pair will sharp recover and reject the lows of 1.2500, a level registered back in 2016 just days before the flash crush. And again, registered and rejected in 2018. A sharp upside moved by the end of last week is a good sign for bulls.
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