EUR/USD FUNDAMENTALS AND TECHNICALS

 

Pair closed last week’s trading session lower  after FED signaled a rate hike as early as 2023. With many members now to support the rate hike its obvious that the future path that the central bank will follow is change in policy and return back to the normalization.

After the minutes a speech from FED chairman Jerome Powell reiterated the bank’s hawkish tone by commenting on the economic recovery outlook, mentioning that the US economy and the labor market recovered and can support bank’s decision. Markets took the news as extremely hawkish and repriced rate of EURUSD sharp lower.

 

As for this week, traders will be focusing on both the central banks speeches. From FED side, chairman Jerome Powell and from ECB side president Lagarde are due to speak during the week and guide investors for their future policy. Traders need to be focus on ECB comments as a persistent dovish tone will create huge divergence between the 2 banks and could drive the pair even lower.  Alternative a less dovish speech that could signal the reduction of bond buying program could turn everything upside down and pair recovery some of last week’s losses.

 

On the economic calendar we have on Monday the speech from ECB’s president Lagarde On Tuesday, European consumer confidence pointing higher at -2.9 and a speech from FED’s chair Powel. On Wednesday, German Markit Manufacturing PMI expected lower at 63 German Markit PMI composite higher at 57.6 and European Markit PMI composite higher at 63 US Flash Manufacturing PMI lower at 61.5 and services PMI 70. On Thursday, US durable goods orders expected higher at 2.9% On Friday US core PCE index expected lower at 0.6% and University of Michigan consumer sentiment higher at 86.5

Technically, the picture changed to negative. Pair closed below (61.8%) at 1.1862 and this turned the overall picture negative for the pair. In this week’s trading session if the pair continues on the downside, we are expecting to test next support of 1.1700 alternative if resumes upside and close above 61.8% on the 4H chart could recover some losses and test resistance level of 1.2000 ( 50%) Our traders took profit all their short positions at 1.2169 and 1.2240 at 1.1973 New long positions opened at 1.1970 and 1.1865 targeting profits above 1.2240 wea re expecting more aggressive long positions at 1.1700

 

 

GBP/USD FUNDAMENTALS AND TECHNICALS

 

Pair closed last week’s trading session lower mainly on US Dollars strength after FED signalled rate hikes as mentioned on the above EURUSD review. On the GBE side we had some positive economic events like BOE’s inflation target and better than expected unemployment rate. Although the FED rate decisions overshadowed the UK economic releases and pair closed sharp lower. In Addition to the above mentioned some headwinds came when the government decide to postpone the full reopening to July 19 due to the rise in cases prompted by the Delta covid variant.

 

As for this week traders will be closely monitoring the BOE minutes and FED speeches. Caution now need to be in place as the next move on rate hikes might be coming from the BOE. The UK economy is recovering the labour market improves and the inflation is on rise. All those are translated into a rate hike that is just around the corner. Even though no rate hike is expected at this meeting, any change in the percentage of 0-9 in the voting will boost GBP.

In the economic calendar we have on Wednesday, Flash Manufacturing PMI pointing lower at 64.1, service PMI unchanged at 62.9 On Thursday, BOE rate decision and minutes will be released. On Friday, Gfk consumer confidence expected at -7 and CBI retail sales at 12

Technically the pair is neutral even after the sharp downside move and close below (38.2%) at 1.3800 In this week’s trading session if pair trades on the downside and close below 50% will change the picture to negative and will open the road to (61.8%)  Alternative if pair resumes the upside first level to be retested is 1.4000 (23.6%). Our traders start buying the pair again at 1.4000 and 1.3837 targeting profits at 1.42000 We are expecting more aggressive buyers at 1.3700

 

 

For more detailed economic calendar events please visit our live economic calendar on: 

https://10tradefx.com/economic-calendar/

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