EURUSD Closed the week higher, on US Dollar’s weakness while equity markets were erasing almost all previous month’s rally. Selloff in equity indices started after US president Trump signaled that he may not be signing a deal with China until next November and most probable after US elections. As it was widely expected, Trump announced tariffs on France and that pushed the US Dollar even lower. By the end of the week headline from Bloomberg reported that US and China will complete a Phase 1 agreement before new tariffs go into effect on December 15. This reversed the US Dollar higher and equity indices. A surprising better than expected Nonfarm payroll was the cheery on the top of the cake, pushing both equities and US Dollar higher. As for this week traders will have to follow once again the final result from US-China trade agreement. Pair could also be affected by UK voting results. If polls will be correct and Boris Johnson wins this it could positively affect the Euro as he will deliver a Brexit with a deal on the table. This week we have FOMC meeting where no change of policy is expected, And ECB monetary policy also with press conference, where Chair Christine Lagarde is expected to downplay again Europe’s deteriorated economy and highlight inflation expectations. Any negative comments will push the pair lower.
On this week’s economic calendar, we have on Tuesday, German ZEW economic sentiment pointing at 0 change and US nonfarm productivity pointing lower by -0.2%. On Wednesday, US consumer price index expected unchanged at 2.3% and later the FOMC minutes will be released and follow up with a press conference. On Thursday, German Harmonized index of consumer prices expected unchanged at 1.2% and later the ECB will release their policy statement and interest rate decision. On Friday, US retail sales expected higher by 0.4%
Technically, the picture is neutral after last week’s trading session managed to close above the critical support of 1.1000 (23.6%). If the pair close this week above 38.2% 1.1088 could help pair trade higher at 1.1150 (50%) alternatively a close below 23.6% 1.1000 will open the road for retesting 1.0900 (0%). Traders maintain open buy positions at 1.1088 and 1.1020 targeting profits at 1.1214 with stop losses at 1.0800 and triggering trailing stops above 1.1100. If Trailing stops will be triggered, then new buyers will come at 1.1020 and below. More aggressive buyers expected to appear at 1.0900
GBPUSD closed the week higher amid traders over optimism that Boris Johnson will be the winner this week and Brexit will be delivered with a trade deal on the table. According to many polls Boris Johnson is ahead from Corbyn, although this result is well priced in for GBP and extra cautious need to be in place for this week. We are expecting big swings on either direction before and after the voting. Expectations are for GBP higher if Boris wins, alternatively if Boris failed to form a government this will bring the pair sharp lower. For this week traders will be focused only on voting results that will definitely overshadow any other economic event.
On this week’s economic calendar, we have on Tuesday, manufacturing production pointing at better than negative 0% change, Industrial production higher by 0.2% gross domestic product higher by 0.1% and manufacturing production lower by -1.5%.
Technically the pair is positive. Pair broke and closed above the (50%) 1.3140 and this is keeping the picture positive. Recent break and close above 1.3140 can push the pair even higher at 1.3390 (61.8%). Although pair entered an overbought territory and this could bring some downside correction in the coming sessions. A close below 1.3140 this week will add downside pressure on the pair and extend the downside move at 1.2868 (38.2%). Traders keeping open their buy positions at 1.2869 targeting profits at 1.3374 with trailing stops at 1.3100. We expect more buyers to appear and start buying the dips at 1.2870.
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