EURUSD Closed the week lower as it was widely expected. As we mentioned last week a pull back from recent rally was expected since ECB maintained the same dovish language as usual and due to the Brexit deal delay. German manufacturing indicators continue to deteriorate, and US dollar reversed higher on China-US trade deal. Earning season is on its way, better results will drive the US equities higher. We expect the pair to continue to trade lower with those fundamentals on its back.
In this week’s economic calendar, we have on Tuesday, the US S&P/case-Shiller home prices indices pointing higher at 2.3%. On Wednesday, European business climate pointing at -0.21, German Harmonized index of consumer prices expected to remain unchanged at 0.9%, US ADP employment expected at 132K new jobs and US Gross domestic product lower at 1.6% later during the day FOMC minutes will be released and markets are watching for a rate cut of 0.25%. On Thursday, German retail sales expected to remain unchanged at 0.5%. European gross domestic product expected lower at 1.1% and European core consumer price index unchanged at 1%. U.S. core personal consumption expenditure expected unchanged at 1.4%. On Friday, Nonfarm payrolls pointing lower at 105K new jobs and average hourly earnings higher at 3%.
Technically, the picture is neutral as far as, trading within the trend channel. Recent upside move is giving a cautious positive picture and traders are becoming more optimistic that pair will continue to trade higher. Pair pulled back from last week’s high of 1.1180 just below the 61.8% Fibonacci. If pair will keep the support at 1.1080 (38.2%) we could see a retest of 1.1180, alternatively a break and close below 1.1180 will bring in sight the 1.1011 (23.6%). New buyers jumped in this week at 1.1088 targeting profits at 1.1200 and with stop losses at 1.0800. we expect more buyer to come in at 1.1011
GBPUSD closed the week lower after UK parliament vote for a delay on Brexit deal with excuses that had no time to study the 100 pages of the deal. PM Boris Johnson agreed to give lawmakers more time in exchange of a general election for December 12. On Monday a motion in parliament will take place in order to vote and approve general election. Two thirds of the MPs need to vote in order to pass the motion. With this new Brexit outcome, a departure on October 31st is waived. On the other hand, European council decided to extend their decision on whether to give an extension to the UK and how much extension period to give. The decision from EU council has been postponed for this week.
On this week’s economic calendar, we have on Thursday, the GFK consumer confidence pointing lower at -13 and on Friday, Markit manufacturing PMI with expectation lower at 48.0. All eyes will be on Monday’s parliament decision and EU council extension period and conditions.
Technically the pair is still neutral even though retreaded lower last week. Pair need to break and close above the (38.2%) 1.2860 in order to change the picture in a more positive outlook. Traders keeping open their buy positions at 1.2869 targeting profits at 1.3374. We expect more buyers to appear at 1.2550
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