EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on European growth stall, mostly due to the war in Ukraine and the sanctions opposed on Russia that are weighing negative on Euro zone. Investors and traders were bracing for a very busy week ahead with many fundamental events. On the one side the war in Ukraine and its negative impact on the EU growth, on the other side, the French election result and in addition to the above, the ECB meeting ahead.
As for this week market participants will mainly focus on the ECB monetary policy decision due to be released on Thursday. The Central bank has been under pressured by the inflation number in last few months and is now time to act according to many ECB’s officials. If the Central bank will signal a rate hike in the coming meetings, this will help Euro to recover lost ground. If failed to deliver a hawkish outcome, we might see Euro sinking farther. The French presidential election will also weigh on Euro. If Macron will lose and Mrs. Le Pen will be elected this will have a negative impact on Euro. Le Pen the far-right party was always against Euro and vows to remove France from the single currency.
On the economic calendar, we have on Tuesday, the German Harmonized index of consumer prices to remain unchanged at 7.6%, and the US Consumer price index pointing higher at 6.6%. On Wednesday, ECB rate decision and press conference will show if the central bank is willing to normalize monetary policy. The US retail sales to show an increase of 0.6% and Michigan consumer sentiment expected lower at 58.8
Technically the picture is negative after last week’s downside move. In this week’s trading session if pair breaks and closes below 1.0800 (0%) will accelerate losses down to 1.0700. Although we must keep in mind that pair is in an oversold territory and a sharp recover might be around the corner. If pair manage to recover lost ground and close above (23.6%) could change the picture back to neutral. Our traders are net 100% long with positions opened between 1.1350 to 1.1000 targeting profits above 1.1350 we are expecting more aggressive long positions at 1.0800. Alternative if pair trades on the upside, we are expecting short sellers to appear above 1.1080 (38.2%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on continuing geopolitical turmoil surrounded by the war in Ukraine. The UK economy is badly hart by the Russian sanctions as they have been backfired on the UK growth and boosted inflation due to the very high gas and oil prices. The lack of any comments from the BOE is keeping the pair lower, as is continue to pricing-in a 0.5% US Dollar rate hike in May.
As for this week market participants will continue monitoring the outcome from the war in Ukraine and mostly will follow the economic releases. The main market mover for this week will be the UK inflation number. A higher than expected inflation number will boost possibilities for a rate hike by BOE in their next meeting and this could help the pair recover lost ground.
On the economic calendar we have on Monday, Gross domestic product pointing lower at 0.3% and manufacturing production lower at 0.4%. On Tuesday, ILO Unemployment rate to remain unchanged at 7.6% and US Consumer prices higher at 6.6%. On Wednesday, consumer price index expected higher at 6.7% and retail price index higher at 8.8%. On Thursday, US retail sales expected higher at 0.6% and US Michigan consumer sentiment lower at 58.8%
Technically the pair is negative after last week’s attempt to break below (0%) In this week’s trading session if pair resumes upside we are expecting to test 1.3100 (23.6%) Alternatively if pair continue trading on the downside a break below (0%) could accelerate losses down to 1.2900 Our traders are net long 100% with positions opened between 1.3412 to 1.3000 targeting profits above 1.3400 We are expecting more aggressive buyers on the way down and short sellers to appear above 1.3300
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