Pair closed last week’s trading session unchanged as hawkish FED minutes were already priced in last week. The FED, as it was widely expected, announce the end of its bond buying program as soon as by the end of 2021. The central bank also highlighted that a rate hike could be happen as early as mid-2022. All the above mentioned actions were more than enough to keep the pair trading in yearly low levels. Another reason behind the US Dollar strength is the uncertainty surrounding Chinese economy after its giant real estate company Evergrande group financial turmoil had brought some turbulence in the Chinese economy and the risk of spreading a global financial crisis is increasingly high as many investors described the situation as “Chinese Lehman Brothers event”. On Thursday the Chinese government commented that will support the group in order to maintain stability in the Chinese economy.
As for this week, traders will be monitoring the speech from FED’s Chairman Jerome Powell, few others members’ speech and the progress in China, regarding its giant real estate company Evergrande group financial support. In Germany elections for the new chancellor and successor of the multiyear chancellor Angela Merkel is under way. Although we believe that the event will not affect Euro price, it is always good to be cautious.
On the economic calendar we have on Monday, US Durable goods orders pointing higher at 0.6% On Tuesday, German Gfk consumer confidence expected at -0.7 On Wednesday, European Consumer confidence expected at -4. On Thursday, European Consumer price index expected at 1.6%, German Harmonized index of consumer prices at 3.4% and US Gross domestic product at 6.6%. On Friday, German retail sales expected higher at 3.7% and US ISM manufacturing PMI unchanged at 59.9
Technically, the picture is neutral. Pair closed unchanged between 23.6% and 0% at 1.1720. 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 US Dollar’s strength. As the situation around Chinese giant Evergrande is continue worrying investors for a potential financial crisis the demand for US Dollar is adding downside pressure on the pair. Although the downside pressure was limited as the BOE announced the monetary normalization in 2022 and highlighted that the 4% inflation is supporting a rate hike even in 2021. The hawkish minutes from BOE boosted the pair on the upside and recovered some lost ground from last week’s downside pressure.
As for this week traders will be focus on FED’s official speeches, mainly the speech from chairman Jerome Powell and the progress around China’s support for Evergrande.
In the economic calendar we have on Thursday, Gross domestic product pointing at -1.5% and on Friday, Markit Manufacturing PMI at 56.3
Technically the pair is neutral after last week’s upside move and a close between 61.8% and 100% level at 1.3671 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 trades on the upside, a close above 61.8% will be needed to change the picture to positive. Short sellers are still open at 1.3860 targeting profits at 1.3600 We are expecting aggressive buyers on the way down and more short sellers to appear on the way up.
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