EURUSD Closed the week marginally higher amid US Dollars weakness. In the US, corona virus cases continue to register higher numbers day by day forcing more states to keep restriction measures on businesses. In Europe area EU summit warned that collapse in economic output will worsen in the second quarter as corona virus second wave is inevitable. European economy expected to contract by 8.7% a number worse than the 7.7% expected back in Spring. Commission warned that uncertainty encompassing this forecast is very high and risks surrounding growth with most possible scenario to be on the downside. As for this week all eyes will be on the corona virus second wave outbreak and on ECB meeting on Thursday. No action is expected at this meeting although investors will gather clues on future action the ECB will take in case of second COVID-19 outbreak.
On this week’s economic calendar, we have on Tuesday, German Harmonized index of consumer prices to remain unchanged at 0.8% German ZEW survey economic sentiment expected lower at 60. US Consumer price index (MoM) expected higher by 0.1% and lower at 1.1% on a (YoY). On Wednesday, US industrial production expected higher at 4.3%. On Thursday, ECB interest rate decision with no change at interest rate, US retail sales expected at 4.6% and initial jobless claims expected lower at 1.250K On Friday, European consumer price index core expected higher at 0.3% and US Michigan consumer sentiment higher at 79.1
Technically, the picture is positive to neutral. Pair continues trading in tight range above 61.8%. A break and close below this level will add downside pressure and test next level at 50% 1.1028 alternative if breaks above last week’s top of 1.1360 pair will retest 100% 1.1400 Our traders keep open their short positions at 1.1029 and 1.1100 targeting profits at 1.0930. We are expecting buyers to appear at 1.1100 and 1.1020 targeting profits at 1.1400 Alternative if pair tests 100% 1.1400, we are expecting aggressive short positions.
GBPUSD closed the week higher on UK’s Chancellor Sunak mini budget presentation. The package of measures announced by Sunak in his summer statement totaled £30 billion and was designed to boost the British economy after the slump caused by the lockdown measures imposed to counter the economic impact of the coronavirus pandemic. Although package is a relatively small sum compared with the £500 billion cost of the UK bank bailout in 2008, the cost of the HS2 high-speed rail projectcalculated at around £75 billion – and the estimated £205 billion cost of replacing Trident, the UK’s nuclear program. The new measures will also have to be paid for in due course but, for now, the package will likely continue to support GBP. As for this investors and traders will focus on continuing UK-EU talks on trade deal and the speech from BOE’s governor Bailey.
On this week’s economic calendar, we have on Tuesday, BRC like-for-like retail sales pointing at 6% Gross domestic product higher at 5% and manufacturing production lower by -24%. On Wednesday, consumer price index expected unchanged at 0.5% and retail price index higher at 0.2% On Thursday, ILO unemployment rate expected higher at 4.7% On Friday, Gfk consumer confidence expected higher at 12
Technically the pair is positive after last week’s higher closed at 1.2621 If pair manage to stand above current level (1.2621 we could see more gains with first level to be tested at 1.2720 (61.8%) in the coming sessions. Alternative a break and close below 50% will change the picture to neutral-negative and resume downside to retest 38.2%. Traders are expecting pair to range around same levels (1.2200-1.2700). Buyers are keeping open their long positions at 1.2460 (50%) targeting profits above 1.2700 adding trailing stops at 1.2600 If trailing stops will be triggered this week, we are expecting new buyers to appear as from 1.2460 and more aggressive buyers at 1.2321 and 1.2220 (38.2%) If pair continues higher we are expecting new sellers to jump in at 1.2720 (61.8%)
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