Pair closed last week’s trading session marginally higher as markets digested the US Dollar’s strength of the last month. With the FED failed to provide any hawkish minutes in their last meeting the pair manage to recover some lost ground and traded around same levels. Fed officials said that tapering does not mean rate hike, and this has been taken dovish from markets. From the European side economic indicators are still weak. ECB’s officials are stuck on their old rhetoric on weak inflation, with the ECB’s president Christine Lagarde saying that current increase in prices are temporary as are depending on soaring energy prices.
As for this week, traders will be focus on the speeches from many FED officials. Speeches will be followed with attention and any change in the language used will be weighing on US Dollar. A more dovish stance from the speeches could trigger huge price correction in the pair. A hawkish stance will keep the pair trading around same levels. On others, the light economic calendar will be a secondary role in price action.
On the economic calendar we have on Wednesday, European consumer price index to remain unchanged at 1.9% On Thursday, European consumer confidence expected at -5 On Friday, German manufacturing PMI expected at 56.8 German Markit PMI composite at 55.2 European Markit PMI composite at 54.5 and US Markit manufacturing PMI at 60.5
Technically, the picture is negative Pair continues to trade below 1.1600 registering lower lows every week. If pair continues to trade on the downside this week and break below 1.1530 will accelerate losses down to 1.1500 Alternative if pair resumes upside a close above (23.6%) 1.1623 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 firm higher on Brexit advanced negotiations regarding Northern Ireland Protocol. The European union proposed the changes on the protocol and UK’s Boris Johnson accepted the changes and schedule a meeting in Brussels on Friday.
As for this week traders will be focus on the FED officials’ speeches during the week and on the Brussel meeting results on Friday. A backstep from UK could turn the GBP lower, alternative if the propose protocol will be signed GBP could accelerate gains.
In the economic calendar we have on Wednesday, Consumer price index pointing at 3.2% retail price index at 4.7% On Friday, retail sales expected at 0.7% and Manufacturing PMI at 55.6
Technically the pair is neutral after last week’s upside move and a close at 1.3744 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. Our traders took profit all their long positions opened at 1.3600 and 1.3415 New short sellers appeared 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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