EURUSD traded lower last week due to weak economic indicators from EU’s main countries. Downside pressure will be increased in the sessions ahead as we are approaching the next ECB meeting, were, a more than usual dovish tone is expected. On the other hand, the US dollar stopped softening as is already pricing in a rate cut path from FED. If the next FOMC fails to deliver such a dovish path for 2020 we may see pair continue trading on the downside. Recent gulf tensions between Iran and the US is adding downside pressure on the pair as the US Dollar is seeing as a heaven asset in such geopolitical situations and due to high demand is becoming stronger.
On this week’s economic calendar, we have on Tuesday, the German ZEW Survey with expectation to be lower at -6 and Europe’s consumer price index expected to remain unchanged at 1.2%. On Wednesday, FOMC minutes and press conference will be the main actor behind EURUSD next move. On Friday, German Markit manufacturing PMI expected to be higher at 44.6 and European Markit PMI lower at 51.7, later the US Markit manufacturing PMI expected lower at 50.4.
Technical, the picture is neutral. Pair resumed the downside after failed to break and close above the important level of 1.1350. Our traders took profit their old buy positions at 1.1275 and reopened them on the way down targeting profits at 1.1500 using trailing stops above 1.1350. New pending buy orders were placed at 1.1185 targeting profits at 1.1500. A break and close below 1.1200 this week will bring the pair back to the downside trend channel and attempt once more to break the strong support of 1.1100
GBPUSD traded lower last week due to a clearer picture on who will be the next PM. After 3 days of voting we’ve seen the hard Brexiters coming closer to Win this race. First round results are showing Boris Johnson as the next PM with a crushing 114 votes against Jeremy Hunt’s 43 votes. Starting on the 16th of June until the 20th Tories will vote for their leader in order to finally compete with Boris Johnson on the final voting due on June 22. Another factor behind recent GBP weakness is the weak economic indicators and their negative impact on BOE’s rate path decision.
On the economic calendar this week we have on Monday, inflation report hearings. On Wednesday, retail price index expected lower at 2.8% and consumer price index lower at 2%. On Thursday retail sales expected lower at 2.4% and later during the same day BOE minutes will be released with a press conference to follow.
Technically the pair is negative and continue trades below the 100% Fibonacci level. A minor pull back last week, failed to continue and kept the picture negative. A break below 1.2589 will push the pair down to 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 aggressive bought on 1.2788 (100% Fibonacci) targeting profits at 1.3330.
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