EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session unchanged after a failed rally. Last week’s rally was due to comments from ECB’s officials saying that the central bank could hike rates as soon as in July meeting. The rally didn’t hold for long after ECB’s president Christine Lagarde maintained a dovish tone and requested from all ECB’s officials to keep silence and make no comments till the next meeting. On the other hand, the hawkish speech from FED’s Powell added more downside pressure on the pair as he confirmed that central bank will hike rates by 0.5% on the next meeting. Apart from the two central banks’ divergence on rate hike policy, the pair is facing more front winds last week. The French Presidential elections shows Le Pen just a breath away from becoming France’s new president and the IMF warning that Germany could get into dip recession on Russian oil ban.
As for this week market participants will mainly focus on the outcome of the French Presidential elections. If Macron wins, we could see the pair recovering lost ground. If Le Pen wins, we could see sharp downside move on the pair. UN general secretary will meet Russian president Putin this week. The outcome of the meeting could give some relief on markets from the Russian – Ukrainian war impact on markets.
On The economic calendar, we have on Monday German IFO business climate pointing lower at 88.3 On Tuesday, US Durable goods orders expected higher at 1% On Thursday, US Gross domestic product expected higher at 7.3% On Friday, US PCE Price Index expected lower at 0.3% and Consumer sentiment higher at 65.8
Technically the picture is negative after last week’s failed attempt to break above (23.6%) and the downside move that brought the pair on multiyear low levels. The pair is trading into oversold territory and we are expecting a sharp move on the upside in the coming sessions. In this week’s trading session if pair break and close below 1.0754 (0%) will accelerate losses down to 1.0700. 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 1.0800 targeting profits above 1.1350 we are expecting more aggressive long positions on the way down. Alternative if pair trades on the upside, we are expecting short sellers to appear above 1.1040 (38.2%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower on hawkish FED’s comments and on disappointing economic releases in the UK. The speech from FED’s Powell highlighted that the central bank is ready to hike rates by 0.5% on the next meeting. On the other hand, BOE’s Bailey said that the weak economic indicators may keep central bank policy unchanged for now.
As for this week, market participants will be monitoring the outcome from the meeting between UN General secretary and Russian president Putin. A positive outcome could send some relief messages around the markets. Traders should keep their ears open for any central banks’ officials’ comments that could lead to sharp moves on either direction.
On the economic calendar we have no high impact events from the UK. Traders will focus on the US counter party economic events. On Tuesday, US Durable goods orders expected higher at 1% On Thursday, US Gross domestic product expected higher at 7.3% On Friday, US PCE Price Index expected lower at 0.3% and US Consumer sentiment higher at 65.8
Technically the pair is negative after last week’s sharp downside move and a break below strong support of 1.3000. In this week’s trading session if pair resumes upside, we are expecting to test 1.3020 (23.6%) Alternatively if pair continue trading on the downside a break below (0%) could accelerate losses down to 1.2700 Our traders are net long 100% with positions opened between 1.3412 to 1.2900 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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