Pair closed last week’s trading session lower after ECB dovish statement. The central banks is decided to maintain their bond buying program in support of economic recovery. ECB’s President Christine Lagarde speech was also dovish, saying that is premature to talk about exit at this point. On the US Dollar side higher inflation readings and better than expected Michigan Consumer sentiment boosted the US Dollar as all positive economic releases are putting additional pressure on FED to rate hikes sooner than expected.
As for this week, traders will be focusing on the FOMC minutes due to be released on Wednesday. Even though a rate hike at this meeting is not expected, traders must be alert and closely monitor the minutes and the press conference to be followed. Due to the positive economic performance of the US economy, any surprise from FED could be around the corner. On others as the summer heat starts, “worst enemy of the corona virus” and vaccination of over 50% of the population achieved, markets will welcome the complete reopening of all business around the world and the reopening of traveling between Europe and USA.
On the economic calendar we have on Monday, European industrial production pointing higher at 0.4% On Tuesday, German Harmonized index of consumer prices to remain unchanged at 2.4% US retail sales control group expected higher at 0.3% and producer price index lower at -0.4% On Wednesday, FOMC minutes and economic projections will be released. On Thursday, European consumer price index core expected lower at 0.2%
Technically, the picture is still positive. Pair closed just above (38.2%) at 1.2108 and this keeps a positive bias for the pair. In this week’s trading session if the pair continues on the downside, we are expecting to test next support of (38.2%)1.2058 if pair breaks below this level the picture will be turned into neutral with the next level standing at (50%) If pair resumes upside and close above (23.6%) will keep the picture positive with the next level to be retest at 1.2240 Our traders kept open their short positions at 1.2169 and 1.2240 targeting profits at 1.1973 We are expecting buyers to appear around 1.2056 targeting profits above 1.2240
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session lower mainly on upbeat US economic releases. Recent upbeat economic releases from both the US and UK are boosting both US Dollar and GBP and keeping the pair trading within the same range. GBP is still facing some front winds at the moment due to the pending agreement between UK and EU on the northern Irish protocol and delay on the full reopening after the recent surge in new corona Indian variant.
As for this week traders will be closely monitoring the FOMC minutes, due to be released on Wednesday and a heavy economic calendar in the UK. The speech from BOE governor will be giving guides on central bank’s future policy.
In the economic calendar we have on Tuesday, ILO Unemployment rate pointing lower at 4.7%and average earnings higher at 5.3% On Wednesday, consumer price index expected higher at 1.8% retail price index lower at 0.2% On Friday, retail sales expected lower at 29.2%
Technically the pair is positive after keeping trading higher and flirting with 0.0% level. In this week’s trading session if pair trades on the upside and close above 1.4250 will open the road to the next level of 1.4350 Alternative if pair resumes the downside first level to be retested is 1.4000 (23.6%). Our traders are waiting for a pull back around 1.4000 to start buying the pair again. We are expecting short sellers to appear at 1.4250 targeting profits at 1.4000
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