EUR/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on stronger US Dollar. Demand for save heaven US Dollar pushed the pair lower and closed below yearly low levels. Uncertainty in Chinese economy, intra government turmoil in the US over debt ceiling and better than expected economic indicators in the US were the main reasons behind US Dollar’s strength.

As for this week, traders will be focus on the employment number in the US. A better than expected number will boost the US Dollar and add additional downside pressure on the pair. Markets are awaiting from China’s evergreen group to get government support and avoid defaulting. Defaulting is a worst scenario, not only for Chinese economy but also for global economy. In the US the discussion between democrats and republicans will continue during the week in order to find a common ground and support the US government, avoiding a closing down. This is a scenario that appears every year the last few years with government to close partially in many states for few days till the budget is finally approved. US Dollar will benefit from this period of uncertainty and will result in another downside move in the pair. On the Euro side, inflation is adding pressure on the ECB to move forward on normalizing its extra loose policy and if this is the case, pair may stabilize around current levels. Traders must pay extra attention to the OPEC meeting this week. As the European inflation jumped due to the higher oil prices last month, a possible increase in oil extraction by OPEC with few millions of barrels per day could bring oil price down and also European inflation back to its lower figures, something that ECB will not be happy with.

On the economic calendar we have on Monday, US factory orders pointing higher at 0.9% On Tuesday, European Markit PMI composite unchanged at 56.1, US ISM services PMI lower at 59.8 On Wednesday, European retail sales expected lower at 0.4% and ADP employment higher at 475K On Thursday, German industrial production lower at -0.5% On Friday, US non-farm payrolls expected to show an increase of 500K with the average hourly earnings lower at 0.4%

Technically, the picture is negative Pair closed below 0% at 1.1593 and painting a picture of price retracement down to last year’s break out point of 1.1500 If pair continues to trade on the downside this week will accelerate losses down to 1.1500 Alternative if pair resumes upside a close above (23.6%) 1.1643 will be need to change the picture back to neutral. Our traders stopped loss their long positions at 1.1970, 1.1865 and continue to keep 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 downside 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 lower mainly on US Dollar’s strength. Main factors behind recent US Dollar’s strength is the uncertainty in Chinese economy, the intra government turmoil in the US over debt ceiling and better than expected economic indicators in the US. On the GBP side we have a turmoil in the market with the shortage of goods in the supermarkets and the panic on fuel shortages. All above mentioned are weighing negative on UK Economy and this results on softer GBP that’s drive the pair lower. Even though BOE is signalling a rate hike in the coming months markets are still doubt over the current situation and keeps the GBP lower.

As for this week traders will be focus on the US employment numbers and UK government’s actions on how to handle the shortages of goods in the UK. We have seen the government last week, easing the visas for EU workers especially the lorry drivers in order to increase the inflow of working force in the UK and stabilize the situation surrounding recent lorry driver’s shortage and the impact on shortage of goods.

In the economic calendar we have on Thursday, Markit services PMI pointing at 56.1 and on Friday the FPC meeting minutes and statement report will be released.

Technically the pair is negative after last week’s downside move and a close at 1.3534 In this week’s trading session if pair continues to trades on the downside and close below 0%, will open the road to 1.3400 Alternatively if pair trades on the upside, a close above 38.2% will change the picture to neutral. Short sellers took profits at 1.3600 and new buyers appeared at 1.3600 and 1.3415 targeting profits at 1.3800 We are expecting aggressive buyers on the way down and short sellers to appear above 1.3700

 

 

 

 

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