Pair closed last week’s trading session higher on disappointing employment numbers. Both, the ADP employment and nonfarm payroll number came out worst than expected and drove the US Dollar lower as markets are preparing for a dovish FOMC meeting this month. US Dollar slide, stabilized after a better than expected ISM manufacturing number was released.
As for this week, traders will be focusing on the ECB meeting. The central bank expected to tapper their bond buying program after inflation hit 3% last week. In such a case we may see the pair trading higher. If ECB will surprise and keep their accommodative policy unchanged, we may see the pair giving back all last week’s gains. Few FED officials are due to speak out this week and traders must pay attention to what they are going to say as they may change their dovish stance to hawkish.
On the economic calendar we have on Monday German factory orders pointing lower at -1% On Tuesday, European gross domestic production expected to remain unchanged at 13.6%. On Wednesday ECB will release their monetary policy and a press conference will be follow. On Friday, German Harmonized index of consumer prices expected at 3.4%
Technically, the picture is neutral. Pair retreated higher and close just below 38.2% at 1.1877 As far as the pair trades below (38.2%) the picture is neutral with increasing chances to retest 1.1700. If pair continues on the upside this week and closes above (38.2%) the picture will change to positive and could accelerate gains to 1.1200 (50%) Our traders kept open their long positions at 1.1970, 1.1865, 1.1762 and 1.1715 targeting profits above 1.1970 With trailing stops to be triggered above 1.1900. At 1.2000 we are expecting short sellers to take control.
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher mainly on US Dollars weakness. After ADP employment and nonfarm payroll missed by far expectations, the pair benefit from an upside move. The only front wind for GBP in delta covid-19 variant, continuing to spread in the UK. Although this was already priced-in last 3 weeks, the bulls are now partying on the recovery.
As for this week traders will be monitoring the economic calendar as main catalyst behind any move in the pair. The light economic calendar in the US and the UK will most probably keep the pair trading in range. Main factor behind any move on the pair will be on the FED officials’ speeches during the week.
In the economic calendar we have on Monday Like-for-Like retail sales pointing lower at 3.2% On Friday Manufacturing production expected lower at 0.1%, gross domestic product lower at 0.5% and NIESR GDP higher at 4.4%
Technically the pair is positive after last week’s upside move and close above 61.8% level at 1.3860 In this week’s trading session if pair continue to trades on the upside and close above 50%, will open the road to 1.4000 Alternatively if pair resumes downside, a close below 61.8% will be needed to change the picture to neutral and retest last week’s lower level at 1.3600 Our traders kept open their long positions at 1.4000, 1.3837 and 1.3671 targeting profits at 1.4200 with trailing stops to be triggered above 1.3900 The first short sellers appearing now at 1.3860 targeting profits at 1.3600 We are expecting more aggressive buyers on the way down and short sellers to appear on the way up targeting profits at 1.3600
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