EURUSD Closed the week firm higher amid US Dollars weakness and persisting sell off. US deteriorating economic indicators show last week that US economy shrinking faster than expected. GDP plunged by 32.9% while unemployment claims continue to register more that 17 million last week. Additional downside pressure on US Dollar is the increasing deaths from corona virus. Even though new cases stabilized the per day new cases, the death number increases and this weight negative on US Dollar. FED meeting last week gave to markets a dovish tone and this was the top above the cake that helped the pair trading at a multiyear high level.
As for this week traders will continue monitoring COVID outbreak and FED’s action on more fiscal policy to avoid falling into a recession. Non-farm payrolls will be the most important economic release for this week.
On this week’s economic calendar, we have on Monday European Markit manufacturing PMI with expectations to remain unchanged at 51.3 and US ISM manufacturing PMI pointing higher at 54 On Tuesday, European retail sales expected higher at 0.2% US ADP employment expected positive at 1,250K new jobs and US ISM non-manufacturing PMI lower at 54.8 On Thursday German factory orders expected lower at 9.5% On Friday, German industrial production expected higher at 8.8% and US non-farm payrolls expected to show that 1.360K new jobs added with average hourly earnings to be lower at 4.4%
Technically, the picture is positive. Pair continue trading above 161.8% level and stretching into overbought territory. In this week’s trading session if the pair continues on the upside we are expecting as next level 1.2000. Traders are expecting a downside correction that could bring the pair back to 100% 1.1400. Our traders keeping open their short positions opened between 1.1000- 1.1900 and continue to aggressive sell the pair on any new rally. We are expecting more aggressive short positions this week if pair continue on the upside. Alternative if pair retrace back to the 100% 1.1400, we may see buyers coming in and short sellers taking profits.
GBPUSD closed the week higher, mainly on US Dollar weakness. Despite UK’s government new restrictions on locking down more than 4 million people, GBP continue to trade higher. PM Boris Johnson intervenes to block any easing lockdowns on fears of COVID new cases increasing number. Another reason behind GBP rally are hopes from The University of Oxford and AstraZeneca reported substantial progress in developing a coronavirus vaccine. The Phase 1/2 trial proved safe and able to develop what scientists call “double protection.” As for this week same scenarios will surround the pair, COVIDnew cases and COVID vaccine progress. BOE minutes are due to be release on Thursday. No action expected from BOE in this meeting although, should be closely monitor the stance that BOE is willing to follow to help economy from not going into recession. We have seen ECB pumping more money into markets and this will not be a surprise if BOE will follow with the same Quantitative easing policy.
On this week’s economic calendar, we have On Monday Markit manufacturing PMI with expectations to remain unchanged at 53.6 On Thursday BOE will release their minutes with no rate hike expectations.
Technically the pair is positive after last week’s closed at 1.3084 above 61.8% and just below 100% If pair breaks and close above 1.3150 (last week’s high) we could see more gains with first level to be tested at 1.3257 just below (100%) in the coming sessions. Alternative a close below 100 % and below 1.3150 will change the picture to neutral and resume downside to retest 61.8%. Our traders started to sell the pair at 1.2700 1.3016 and 1.3150 targeting profits at 50% 1.2470 we are expecting more aggressive sellers this week if pair continue upside, alternative, if pair retreat lower we are expecting new buyers to appear as from 1.2700 and more aggressive buyers at 1.2470 (61.8%)
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