Pair closed last week’s trading session higher on economic recovery optimism in the EU as many countries started to waive restriction with many others to follow by May 15. ECB meeting was also another factor behind last week’s upside move as the Central bank, kept the policy unchanged and did not use any dovish language on the press conference as it used to do in the previous meetings. On the US Dollar side, we have seen the US Dollar strengthen somehow after US President Biden set to raise taxes on capital gain, this announcement pushed investors out of the equity markets falling sharp on the downside and drove them into save heaven US Dollar.
As for this week, traders will focus on FOMC minutes, although no change in policy is expected at this meeting, the press conference that will follow might give some indications on what the central bank is up to in the future. Vaccination program in Europe resume normal with no more delays and this will continue driving the market sentiment higher resulting in stronger Euro.
On the economic calendar we have on Monday IFO business climate pointing higher at 97.7 and US durable goods higher at 2.5% On Wednesday, German Gfk consumer confidence expected at -5 and later FOMC meeting with press conference will follow. On Thursday, German Harmonized index of consumer prices to remain unchanged at 2% US Gross domestic product expected higher at 6.5% On Friday, German gross domestic product expected at -3.2% European gross domestic product higher at -1.9% European consumer price index higher at 1.6%
Technically, the picture is positive. Pair closed firmed above 38.2% at 1.2096 and this gives a positive bias for the pair. In this week’s trading session if the pair continues on the upside , we are expecting to test next resistance of 1.2170 (23.6%) If pair resumes downside and close below 50% will change the picture back to neutral with next level in focus the 1.1878 (61.8%) Our traders keeping open their long positions at 1.2174, 1.2060, 1.1972 and 1.1878 targeting profits at 1.2343 with trailing stops at all positions at 1.2070 Our short sellers keeping open short positions at 1.1973 and 1.2060 targeting profits at 1.1878
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session higher mainly on better-than-expected UK retail sales. Although pair jump on multi-month highs at the beginning of the week, after that retreaded lower by the end of the week on US Dollar strength due to US President’s announcement on capital gain tax rate increase.
As for this week, traders will focus on the FOMC meeting in order to gather information on how the central bank is planning to move in the future, and on the economic release from both sides.
In the economic calendar, there is nothing to follow on GBP side so the pair will depend on the US economic release.
Technically the pair is neutral after closing just above 38.2%. In this week’s trading session if pair trades on the upside, we are expecting to retest 1.4000 Alternative if pair retreats on the downside and break and close below 38.2%, first level to be retested is 1.3720. Our traders took profit all their long positions at 1.4000 we are expecting them to continue buying the pair at 1.3840 targeting profits at 1.4000 or sell it at 1.4000 targeting profits at 1.3840
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