Pair closed last week’s trading session lower on better than expected US ADP employment. Although the pair attempted to break lower the disappointing unemployment rate and the no dovish Christine Lagarde speech pushed the pair higher and recover somehow from weekly losses.
As for this week, traders will be focusing on Wednesday’s FOMC. No rate hike is expected at this meeting, although is good to follow the minutes and the comment from FED as it will continue sending hawkish signals while inflations is in line with the central bank’s target and labour markets improves. A more hawkish FOMC than the expected one will push the dollar higher in the near term. On the Euro side, the ECB special Strategy meeting on Thursday could add additional downside pressure on Euro. Extra attention must be paid to the new corona delta virus spreading as the EU commission is warning for new lockdown measures.
On the economic calendar we have on Monday, European Markit PMI composite to remain unchanged at 59.2 On Tuesday, European retail sales expected lower at 7.9% German ZEW survey economic sentiment lower at 75.4 US ISM services PMI lower at 63.5 On Wednesday, German industrial production expected higher at 0.5%
Technically, the picture is negative. Pair broke and closed below (61.8%) at 1.1865. In this week’s trading session if the pair continues on the downside, we are expecting to test last week’s low at 1.1800 a break below this level will open the road to 1.1700 alternatively if resumes upside and close above 61.8% on the 4H chart could accelerate gains toward 1.1970 Our traders kept open their long positions at 1.1970 and 1.1865 targeting profits above 1.2240 we are expecting more aggressive long positions at 1.1700 alternatively a break on the upside could bring short-sellers around 1.2070 targeting profits at 1.1750
GBP/USD FUNDAMENTALS AND TECHNICALS
Pair closed last week’s trading session lower on worries that the government’s reopening plan for July 19 could be delayed due to the fast spread of coronavirus delta variant. Apart from the virus worries an inter-government election showed that Boris Johnson’s government is losing ground. On the US side, the ADP employment and Nonfarm payrolls added additional downside pressure on the pair as the economic indicators show that the US economy is outperforming the UK economy.
As for this week, traders will be closely monitoring the FOMC minutes due to being released on Wednesday. A more hawkish release could push the pair even lower. On the UK side, all eyes will be on the government’s decision whether will go into full reopening or keep the partial restrictions.
In the economic calendar we have on Monday, Markit services PMI to remain unchanged at 61.7 On Friday, Manufacturing production expected higher at 1% and gross domestic product lower at 1.7%
Technically the pair is negative after last week’s lower break. In this week’s trading session if the pair continue to trades on the downside and close below last week’s lower level of 1.3730 will keep the picture negative and will open the road to 1.3676 (100%) Alternative if the pair resumes the upside first level to be retested is 1.3900 (61.8%). Our traders kept open their long positions at 1.4000 and 1.3837 targeting profits at 1.4200 We are expecting more aggressive buyers at 1.3700
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