EURUSD closed higher last week as both central bank’s minutes show patience on the future rate policy. Although both central banks raised concerns about global economy slow down, they avoid creating big waves in an already vulnerable market. A relatively calm week that finally went spiral during the last few trading hours on Friday after Chinese president Xi initiated additional tariffs on US goods in retaliation to last month US tariffs on Chinese goods. US president Donald Trump immediately reacted to the Chinese decision and ordered the US companies to start searching alternative partners in order to hit back at China. Equity markets dropped sharply on the news and this drove the US dollar lower. On the one hand a personal fight between Donald Trump and Jerome Powell accusing the FED of acting wrongly and on the other hand the trade war between the 2 counties started rising concerns between FED officials while they are trying to maintain a patience and calm effort on monetary policy and help the economy maintain positive growth. As for this week, all eyes will be on the US-China trade relations and US president Trumps tweeting. The US durable goods number will create additional pressure on the US dollar if it confirms negative.
In this week’s economic calendar, we have on Monday, German IFO business climate pointing lower at 95.1 and US durable goods with expectations lower at 1.1%. On Tuesday, German gross domestic product is pointing lower by -0.1% and US consumer confidence lower at 130. On Wednesday, German consumer price index is expected lower at 1.5% and Harmonized index of consumer prices higher at 1.3%, US gross domestic product expected lower at 2%. On Friday, European consumer price index expected higher at 1.1% and US core personal consumption expenditure unchanged at 0.2%.
Technical, the picture is neutral, the pair managed to reject the critical support at 1.1045 and hold above 1.1100. During this week, if pair continues higher and holds above 1.1200, the picture may change to positive and can give more gains in the weeks ahead. Alternatively, a downside move will retest support at 1.1045 and put the pair under pressure. Our traders keeping open their positions at 1.1287 and 1.1225 and 1.1124 targeting profits at 1.1400 and triggering stop losses below 1.1045. Above 1.1200 trailing stops will be triggered to the positions of 1.1124
GBPUSD continues trading higher than last week on positive comments from the meeting between Boris Johnson and Angela Merkel mentioning that the Irish backstop was only a fallback position designed to come into effect if all other options failed. Merkel then said that a solution to the backstop impasse would probably be found in the next two years, but there is a possibility to find it in the next 30 days. A later meeting with Boris Johnson and Emanuel Macron, even though not very positive, it was also taken as positive by the GBP investors and traders as Macron’s stance against UK was more soft than previous months. With the new Brexit outcomes there are more hopes for a new deal or an amended one and possibilities of a no deal Brexit reduced.
In this week’s economic calendar, we have nothing to follow, so any move on this pair will depend on Brexit outcome and on counterparty US dollar.
Technically the pair turned from negative to neutral after managing to retreat from lows and keep the 1.2150 the old strong support from 2016. We can see continuations on the upside move so our traders will take advantage of Friday’s downside move and will jump into buying any dips starting at 1.2200
For more detail economic calendar events please visit our live economic calendar on:
*The material does not contain an offer of, or solicitation for, a transaction in any financial instruments. 10TradeFX accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representationor warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all your invested capital, so please make sure that you fully understand the risks involved.