EURUSD Closed last week’s trading lower on demand of safe heaven US Dollar amid global selloff in Equity markets. Stocks slide in the beginning of the week after London proposed a second lockdown while covid-19 new cases surge day by day globally. Demand of US Dollar is also related to the political uncertainty in the upcoming US elections and the comments of FED’s Jerome Powell highlighting that the delay of approving an aid package for those heart by the pandemic will cause additional job losses and dipper economic turbulences.
In this week traders will be focused on the additional aid package approval by the US policymakers, debates between US president Donald Trump and democratic candidate Biden and how the debates can change the polls, FED’s officials’ speeches and US Non-farm payrolls.
On the economic calendar we have on Tuesday, European Consumer confidence to remain unchanged at -13.9 German Harmonized index of consumer prices pointing lower at -0.2%. U.S. Consumer confidence expected higher at 90. On Wednesday, German retail sales expected lower at 3.4% European Consumer price index expected higher at 0.7% US ADP employment expected higher at 650K and US Gross Domestic Product unchanged at -31.7%, On Thursday, German Markit manufacturing to remain unchanged at 56.6 and European Markit manufacturing unchanged at 54.3 US ISM manufacturing PMI expected unchanged at 56. On Friday, US non-farm payrolls expected to add another 875k new jobs with Average Hourly earnings unchanged at 0.4% and Michigan consumer sentiment lower at 72.8
Technically, the picture is positive. Pair slide below 161.8% and finally broke the multi month range of 1.1750 – 1.2000 opening the road to 1.1400 (100%). In this week’s trading session if the pair continues on the downside we are expecting as first level 1.1550 a level acted as resistance last 2 years and now turned as support. A break below this level will open the road to test 1.1400 Our traders are expecting the downside correction to continue. Our traders took profit all their short positions opened above 1.1800 and keeping open their short positions opened between 1.1000- 1.1800 targeting profits on lower levels. We are expecting buyers to take control at 1.1545 and sellers to take profits on their short positions opened above 1.1600 if downside continues. Alternative if pair close above 1.1630 last weeks closing price on the 4H chart, upside move may resume and bring the pair on the next resistance of 1.1900 (161.8%)
GBPUSD closed the week lower after extremely negative comments from BOE Governor Bailey. Mr. Bailey said: ‘The UK economy can be viewed as a glass half full or half empty’ highlighting that “We have looked very hard at the scope to cut rates further, including negative interest rates.” Economic indicators in the UK are better than expected although BOE express fears that below surface recovery is very uneven. UK new covid-19 cases surge to very high levels and the London rumors of a second lock down added downside pressure on GBP.
As for this week all eyes will be on any possible decision of a second lock down, covid-19 new cases and how the BOE will act in saving the UK economy.
In the economic calendar we have on Wednesday, Gross domestic product with expectations to remain unchanged at -21.7%. On Thursday, Markit manufacturing PMI expected unchanged at 54.3
Technically the pair changed from positive to neutral after last week’s sharp downside move and close just on 61.8% In this week’s trading session if pair continues on the downside traders are expecting as next level 1.2474 (50%) Alternative if pair breaks and close above 61.8% upside move will resume and first level to be tested will be 1.3030 New buyers took control at 1.2720 and keeping open their long positions from last week at 1.2800 targeting profits at 1.3200 we are expecting more aggressive buyers at 1.2474 (50%)
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