Pair closed last week’s trading session lower on ECB’s dovish statements. As it was widely expected ECB signalled a new round of stimulus package to support the economy from the second wave of COVID. ECB signalled that apart from the aid package will consider re-calibrating PEPP alongside with TLTROs. All those fundamental changes had a negative impact on Euro even though GDP numbers came out better than expected.
In this week, traders will be focus on the US election results. Markets continue to trade lower in a massive sell-off ahead of elections with investors to run into safe-haven US Dollar. Polls are putting ahead the democratic candidate Biden and such result may stress markets farther and push US Dollar higher. All investors and traders must brace their self for increasing volatility and uncertain market moves. FOMC will release their minutes on Thursday. No action expected at this meeting, although caution must be in place and follow the statement on how FED will react on the second wave of COVID.
On the economic calendar we have on Monday, German Markit manufacturing PMI with expectations to remain unchanged at 58 and US ISM Manufacturing PMI pointing higher at 55.6 On Wednesday, US ADP Employment expected at 526K and US ISM Ser-vices PMI unchanged at 57.8 On Thursday, German factory orders expected lower at 2.6% European retail sales lower at 2.8%. On Friday, German industrial production expected higher at 2.9% US nonfarm payroll expected higher at 700K with a bounce lower on the average hourly earnings at 4.6%
Technically, the picture is neutral. Pair traded lower and closed near October’s lows and strong support of 1.1606 In this week’s trading session if the pair continues on the downside and break below 1.1606 we are expecting downside momentum to accelerate and next level to be tested 1.1402 (100%) Alternative if manage to keep and reject 1.1606 upside momentum may resume and retest resistance of 1.1866 (161.8%) Our traders took profit all short positions opened above 1.1700 and keeping open their short positions opened between 1.1000- 1.1600 targeting profits at 1.1400 and below. We are expecting buyers to take control at 1.1600 Alternative if pair continues upside more short positions will be opened above 1.1700
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed lower last week’s trading session amid delay of a trade deal between EU and UK. European Commission president Ursula von der Leyen said that the talks were making good progress but that fisheries and level playing field issues remain, and until these are solved then progress will likely stall. UK PM Boris Johnson will meet with Ms. Von der Leyen next week to break the current gridlock. GBP is also facing some downside pressure due to the regional lockdowns and tier 3 restrictions entered in force last week.
As for this week markets will focus on both the outcome of the Brexit talks, the covid-19 outbreak in the UK and any additional measure or even a full lockdown and BOE meeting on Thursday. No action is expected on this meeting but always need to keep our eyes and ears open for future actions on supporting the economy from the second wave of COVID
In the economic calendar we have nothing Monday, Markit manufacturing PMI to remain unchanged at 53.3 On Wednesday, Markit service PMI expected unchanged at 54.5 On Thursday, BOE minutes will be released.
Technically the pair is neutral after last week’s downside move. In this week’s trading session if pair continues on the downside, traders are expecting as next level 1.2700 Alternative if pair resume upside move, first level to be retested is 1.3157 Our traders keep opened short positions at 1.3000 targeting profits at 1.2700 We are expecting more aggressive short sellers to appear on the way up. Alternative if pair continues the downside short sellers will take profits and buyers will start to appear as from 1.2700 (61.8%)
For more detail economic calendar events please visit our live economic calendar on:
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