EURUSD Closed last week’s trading session unchanged after mixed signal came out from ECB’s officials. In the first place we had a comment that ECB is watching closely the recent Euro appreciation and will not let the euro appreciate farther as it could cause more difficulties in achieving the inflation target needed. On the other hand, after last week’s ECB meeting chair Christine Lagarde contradicted latest comments and avoid mentioning that ECB will intervene in the EURUSD rate.
As for this week traders will mainly focus on the economic indicators and FOMC minutes. Any change in the EURUSD rate now is in the hands of FED. All eyes will be on the after-meeting press conference while FED chair may give clues on weather FED is ready to inject more cash as pandemic support package in order to support the US economy from getting into recession.
As for the economic calendar we have on Monday, European industrial production pointing higher at 10%. On Tuesday, European ZEW survey economic sentiment expected lower at 58. On Wednesday, US retail sales expected lower at 1.1% and later FOMC minutes will be released. On Thursday, European consumer price index expected at 1.2%. On Friday, German producer price index expected lower at 0.1% and US Michigan consumer sentiment index expected higher at 76.
Technically, the picture is positive. Pair still trading around 161.8% in range of 1.1750 – 1.2000 looking for breakout. A formation of higher highs and higher lows is giving the pair a bullish bias although traders should be alert for possible down side correction. In this week’s trading session if the pair continues on the downside we are expecting as first level 1.1700 (last 6 week’s lower level). Traders are expecting the downside correction, break from 1.1750 and bring the pair back to 100% 1.1400. Our traders keeping open their short positions opened between 1.1000- 1.1900 We are expecting buyers to take control at 1.1545 and sellers to take profits on their short positions opened above 1.1800 if downside resume. Alternative if pair breaks and close above 1.2000 on the 4H chart, upside move may resume and bring the pair on the next resistance of 1.2100
GBPUSD closed the week sharp lower after Brexit negotiations took a rough ride. UK warn that is preparing a law to override previous agreement with EU. EU on the one hand, warning UK with a 15 day noticed that if UK will not compromise and reach a deal by then, it will be no other option rather than UK to be withdraw from the EU without a deal. On the other hand, Irish minister Simon Coveney warns UK that such decision as canceling the previous agreement will be unwise.
As for this week, all eyes will be on the Brexit negotiations and mainly on Wednesday when UK government is due to publish the bill on override the previous agreement with EU. Volatility expected to be high during this week’s trading session with possibility of bigger downside move for the pair as the voting on Brexit will take place starting from Monday.
In the economic calendar we have on Monday, inflation report hearings. On Tuesday, ILO unemployment rate expected to remain unchanged at 3.9% and average earnings expected lower by -0.6% On Wednesday, Consumer price index expected higher at 1.3% and retail price index higher at 0.7%. On Thursday BOE meeting will release the minutes with no change on interest rate. On Friday, retail sales expected lower at -3.4%
Technically the pair is still positive. Last 2 week’s sharp retracement from 100% level is now testing the 61.8% level. If pair close above 61.8% 1.2715 we may see a recovery on the upside. Alternative if pair breaks and close below 61.8% downside pressure will resume and first level to be tested will be 50% 1.2465. Our traders took profit all their short positions opened at 1.2700 1.3016 1.3150 1.3300 and 1.3486. We are expecting buyers to appear as from 1.2750 last week’s lower level and more aggressive buyers at 1.2714 (61.8%)
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