Pair closed last week’s trading session higher after failed to break below the multi month lower level. Initial move on the Downside was due to ECB minutes highlighting that the bank is expected to increase its bond purchase program next quarter. On the other side US Dollar halt its rally and rebounded lower om 1.8 trillion pandemic package approval and on weaker than expected Inflation number that erased any rate hike options for the near future.
As for this week, all eyes will be turned on Wednesday’s FOMC with traders and investors to focus on the next step that the FED will follow in the road to recovery. As vaccination program is progressing as it was expected and full recovery in just around the corner, FED might start changing its dovish language and this might result in stronger US Dollar in the months ahead. From the European side the only front wind for the Euro is the slowing vaccination, and some comment coming out from Germany, warning about a 3rd wave of covid-19 infections.
On the economic calendar we have on Tuesday, ZEW economic sentiment pointing lower at 65.1 US retail sales lower at -0.5% On Wednesday, European Core consumer price index expected to remain unchanged at 1.1% On Friday, German producer price index expected lower at 0.7%
Technically, the picture is neutral. Pair closed above 61.8% at 1.1950 In this week’s trading session if the pair trades on the downside and break and close below (61.8%), the overall picture will become negative with next level in sight 1.1615 (100%) If pair continues on the upside and close above 50% will change the picture to positive. Our traders keeping open their long positions at 1.2174, 1.2060, 1.1972 and 1.1878 targeting profits at 1.2343 we are expending more aggressive buyers below (61.8%) alternative if pair trades on the upside we are expecting short sellers to take control above 1.2170
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session higher mainly on US Dollar’s pullback and on better than expected UK economic releases. With the UK GDP beating expectations and the US CPI lower, pair manage once again to recover from last week’s losses.
As for this week, traders will focus on FOMC and BOE’s releases. Both banks are following vaccination program progress and are weighting economic recovery. With both economies on truck of full recovery and with their economic indicators to improve, is a matter of time when and which bank will become hawkish first and push the pair higher or lower. With the US vaccination at 20% of the US population and the UK at 35% of the population it is more obvious that BOE will be the one moving forward. Although traders and investors must start weighting on GBP the negative impact of Brexit that is deteriorating imports and exports between UK and EU. The exports and imports negative impact on UK economy is something that must keep alert GBP traders in the coming months.
In the economic calendar we have on Thursday BOE monetary policy. On Friday Gfk consumer confidence pointing better but still negative at -20
Technically the pair is neutral after last week’s upside move. In this week’s trading session if pair continues on the upside, we are expecting to test 1.4000 (23.6%) Alternative if pair resumes downside, first level to be retested is 1.3846 (38.2%) The pair continue trading within its multi-month uptrend channel. Our traders kept open their long positions at 1.3840 targeting profits at 1.4200 more aggressive long positions are expected at 1.3720 (50%) Alternative, if pair continue on the upside we may see short sellers around 1.4100 targeting profits at 1.3800
For more detail economic calendar events please visit our live economic calendar on:
*The material does not contain an offer of, or solicitation for, a transaction in any financial instruments. 10TradeFX accepts no responsibility for any use that may be made of these comments and for any consequences resulting in it. No representationor warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losing all your invested capital, so please make sure that you fully understand the risks involved.