Pair closed last week’s trading session lower on FED’s hawkish comments. Even though it was widely expected the announcement of tapering bond buying program, market’s participants took the news as hawkish and drove the US Dollar higher. Investors and traders sell off stocks and indices and start buying the US Dollar with expectations that the FED will stop the bond buying program as soon as in September. With the US economic releases improving and the inflation rate on higher levels, the next move from FED, is a rate hike.
As for this week, traders will be focusing in the Jackson Hole symposium. All eyes will be turned on the declarations from central bank’s officials. The Jackson Hole symposium will be highlighted by the FED’s chairman speech. Additional attention must be in place on what the governments are planning to do in the next 6 months in order to avoid a fall winter delta pandemic wave. We’ve seen already declarations from Apple CEO saying that workers will not return to the office till middle of 2022.
On the economic calendar we have on Monday German Markit manufacturing PMI pointing lower at 65, German Markit PMI composite lower at 62.2, European Markit PMI composite lower at 59.7 On Tuesday German gross domestic product to remain unchanged at 9.2% On Wednesday US Durable goods expected lower at -0.2% On Thursday, US Gross domestic product expected higher at 6.7%
Technically, the picture is negative. Pair retreated higher after a new dip down to 1.1660 but still closed below support at 1.1700 (0%) As far as the pair trades below (0%) the picture is negative with increasing chances to retest 1.1600 this week. If pair continues on the upside this week and closes above 0% could accelerate gains to 1.1855 (23.6%) Our traders kept open their long positions at 1.1970, 1.1865, 1.1762 and 1.1715 targeting profits above 1.2240 we are expecting stop losses to be triggered if the pair breaks and closes below 1.1650. Alternatively, a move on the upside could bring short sellers around 1.2000 targeting profits at 1.1700
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower. The disappointing inflation number from the UK in combination with the Hawkish FED was more than enough to bring the pair sharp lower and close around July’s lower levels. Apart from the disappointing inflation in the UK, the covid-19 infections and hospitalizations are keeping BOE on hold for now in normalizing their policy.
As for this week traders will be closely monitoring the Jackson Hole symposium and any declarations from the participants. A close monitoring on the FED’s chair Powell speech need to be in place as he may confirm the tapering of bond buying program as soon as this September. Such a declaration will add downside pressure on the pair.
In the economic calendar we have on Monday Markit manufacturing PMI pointing lower at 59.7 and Markit services PMI lower at 59
Technically the pair is negative after last week’s sharp downside move and close marginally above 100% level at 1.3621 In this week’s trading session if pair continue to trades on the downside and close below 100%, will open the road down to 1.3446 Alternatively if pair resumes upside move, a close above 1.3836 (61.8%) is needed in order to change the picture to neutral and open the road to 1.3915 (50%) Our traders kept open their long positions at 1.4000, 1.3837 and 1.3671 targeting profits at 1.4200 We are expecting more aggressive buyers at 1.3573 and short sellers to appear at 1.3856 targeting profits at 1.3600
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