EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher as markets are figuring out the high inflation in EU and the US. From the EU side the high inflation doesn’t t seem to stress ECB in changing its policy. In the US the FED’s interest hike rate looms as policymakers, view the high inflation temporary high due to oil prices. Mixed signals from both continents are keeping the pair somehow unchanged at the lower levels of the year. It is now a wait and see situation. Will the ECB or the FED will move first in a more hawkish stance is something that traders are waiting to listen.
As for this week, traders will be focus on the ECB meeting. The waiving of bond buying program will start in November and remain to priced in the next 6 months on what pace the ECB will continue waiving the bond buying program and what comments will be added on the high inflation of the last month.
On the economic calendar we have on Tuesday, ECB’s bank lending survey. On Wednesday, US Durable goods orders pointing lower at -0.2% On Thursday, European consumer confidence expected at -4.8 German Harmonized index of consumer prices higher at 4.4% and US Gross domestic product lower at 2.5% On Friday, German gross domestic product expected higher at 2.2% European Gross domestic product lower at 3.5% and US Michigan consumer sentiment unchanged at 71.4
Technically, the picture is neutral as pair retreated higher and closed above 23.6% at 1.1644 If pair continues to trade on the upside this week and break and closes above 38.2% will change the picture to positive and accelerate gains towards 50% 1.1700 Alternative if pair resumes downside a close below (23.6%) will change the picture back to negative. Our traders keeping open their long positions at 1.1762, 1.1715 and 1.1600 targeting profits above 1.1800 we are expecting more aggressive buyers on the way down and some profit taking on the way up with the first sellers to appear above 1.7000
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session unchanged after an attempt to break higher. The high inflation number is adding pressure on BOE to hike rates as soon as at their 4th November meeting. Although the pair retreated lower after the upside spike following a release showing that UK registered the higher number of new covid-19 cases in all Europe. Weak retail sales also adding some downside pressure on GBP, although the move was even and balanced as the Markit PMI beat expectations. Comments from BOE’s chief economist saying that he feels very uncomfortable with the 5% inflation added some upside bias in the pair.
As for this week traders will be focus on the US Dollar’s economic releases and the speech of BOE’s Tenreyro.
In the economic calendar we have nothing to follow.
Technically the pair is neutral after last week’s upside move and a close at 1.3759 In this week’s trading session if pair continues to trades on the upside and close above 61.8%, will open the road to 1.3900 Alternatively if pair resumes downside, a close below 50% will change the picture to negative and accelerate losses down to 1.3400. Short sellers keeping open their short positions at 1.3700 and 1.3767 targeting profits at 1.3600 We are expecting new buyers on the way down around 1.3600 and more aggressive short sellers above 1.3800
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