EURUSD traded lower last week after a rally to take out the multi month highs failed. As we mentioned last week, it is all about the FED interest rates affected by jobs number. The 224K of nonfarm payrolls it was well applauded by the dollar bulls and the result was a sharp downside move on this pair. As for the coming sessions a fundamental event will affect the pair’s next move, with Christine Lagarde as the next ECB president and a fan of QE it is obvious that pair may continue trading lower. Another strong fundamental is the persisting decelerating industrial production in Germany. The disappointing numbers from last week, confirms once again the ECB worries of slower growth and reinforces the additional stimulus and possible rate cut.
On this week’s economic calendar, we have on Monday, German Industrial production pointing lower at -0.4%. On Tuesday, many FED officials are due to speak and is worth listening to their position on rates. On Wednesday, ECB non-monetary policy meeting will produce additional guidance on the future policy path of ECB and later during the day FOMC minutes will be released. Rate cut is definitely off the table for now but the language that will be used is important. On Thursday, German Harmonized index of consumer prices expected to remain steady at 1.3%, in the US consumer price index expected to remain unchanged at 2%.
Technically the picture is positive. Even a lower retread on the downside last week, the overall picture is still positive as far as the pair will remain above 1.1225. alternatively a break and close below 1.1225 will change the picture to neutral and push the pair to retest support line at 1.1100. Our traders trigger trailing stops above 1.1350 and took profit at 1.1383. New buy orders were opened at 1.1287 and 1.1225 targeting profits at 1.1500.
GBPUSD continues to trade lower last week as markets continue to pricing in, a pro-brexit new PM that will drive UK out of EU without a deal. A speech from BOE president Mr. Carney, was taken more dovish as the usual hawkish and this reinforces the idea that BOE may cut rates in order to sustain The UK economy. And avoid catastrophic no deal Brexit. Deteriorating economic events continue to point to slower growth in the UK as business are for long time now in a wait to see mode.
On the economic calendar this week we have only on Wednesday, Industrial production pointing higher at 1.5% and manufacturing production also expected higher at 1.3%. On Thursday, Financial stability report will be released.
Technically the pair is negative and continue trades below the 100% Fibonacci level. And registering new lows every week. A break and close above 1.2788 need to change the picture back to neutral. 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), 1.2996 (61.8% Fibonacci) and 1.2788 (100% Fibonacci) targeting profits at 1.3330. As the pair is approaching the 161.8% Fibonacci extension and still trades into oversold territory a sharp move on the upside it still an option that traders are so long waiting for.
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