EUR/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on mixed economic releases. The US inflation came out worse than expected and this increases doubts on what the FED will say this Wednesday. On the other hand, retail sales and Michigan consumer sentiment show that economy is still performing well. The main reason behind the US Dollar strength is the demand for save heaven as equity markets continue to slide.

As for this week, all eyes will be turned to Wednesday’s FOMC. Some officials are already supporting the tapering of bond buying program and the rate hike. Although this is not the case on this meeting. A rate hike is out of question for now, but, the comments and the tapering timetable will weight on the pair. A back food from FED will most probably bring the US Dollar lower and will help the pair recover lost ground. A hawkish FOMC will add pressure on the pair. From the Equity side if investors will jump in and buy the dips will also drive the US Dollar lower.

On the economic calendar we have on Monday, German producer index pointing lower at 0.8% On Wednesday FOMC releases and press conference. On Thursday, German Markit Manufacturing PMI expected higher at 65, Markit PMI composite higher at 62.2, European Markit PMI composite higher at 59.7 On Friday, German IFO business climate higher at 100.4

Technically, the picture is neutral. Pair retreated lower and close between 23.6% and 0% at 1.1725. If pair trades on the upside this week a close above (38.2%) will be need to change the picture to positive and accelerate gains towards 1.1200 (50%) Alternative a downside move and close below 0% will change the picture to negative and accelerate losses towards 1.1600 Our traders kept open their long positions at 1.1970, 1.1865, 1.1762 and 1.1715 targeting profits above 1.1970 Trailing stops will be triggered above 1.1900 and stop losses below 1.1700 if pair close below this level in the 4H chart On the upside at 1.2000 we are expecting short sellers to take control.

 

 

GBP/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on the sake of save heaven US Dollar. As equity markets are falling investors are fleeing into US Dollar ahead of FOMC this week. From the UK side, economic indicators outperformed last week, as from the US side, were mixed. This is weighting on either direction for the pair, with increasing possibilities to favour the GBP.

As for this week traders will be focus on both central banks’ meetings. FED on the one side might signal bond buying tapering, and BOE on the other side might signal a rate hike by mid-2022 as inflation accelerates and economic indicators improve.

In the economic calendar we have on Thursday, Markit services PMI to remain unchanged at 56 and the BOE interest rate decision and monetary report release.

Technically the pair is neutral after last week’s sharp downside move and a close well below 61.8% level at 1.3727 In this week’s trading session if pair continues to trades on the downside and close below 100%, will open the road to 1.3500 Alternatively if pair resumes upside, a close above 61.8% will be needed to change the picture to positive. Our traders took profit their long positions of 1.3837 and 1.3671 as trailing stops were triggered at 1.3900 Short sellers are open 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.

 

 

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