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Week ahead March 7th – 11th

EUR/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on US Dollar strength coming from an increasingly demand for safe-haven US Dollar. As the war continues throughout a second week, the pair continues to face strong head winds. The downside move on the pair is mainly due to the sanctions that the US and EU adopted on Russia. Its obvious that the sanctions will have a huge negative impact on Europe and according to some EU officials this was expected and Europe is ready to pay the cost of sanctions. The hyperinflation that is currently governing Europe is a something that worries ECB and traders are anxious on whether the ECB will move on an emergency rate hike, or will prolong its easing policy in order to provide liquidity to European banks to cover the declining liquidity created by the sanctions on Russian banks.

As for this week market participants will focus on the ECB interest rate decision and press conference. ECB’s president Lagarde will provide strong fundamental guidance for traders on how the central bank will move forward given the current geopolitical turmoil in Ukraine. If the central bank will boost QE program in order to help the banks, this might be extremely negative for Euro and will bring the pair down to post pandemic levels seen back in March 2020.

On the economic calendar we have on Monday, German retail sales pointing higher at 9.5% On Tuesday, European Gross domestic product to remain unchanged at 4.6% On Wednesday ECB rate decision expected to keep interest rate unchanged US Consumer price index expected higher at 6.4% On Friday, German Harmonized index of consumer prices to remain the same at 5.5% and Michigan consumer sentiment expected lower at 61.3

Technically, the picture is negative after last week’s closed at (161.8%). Pair entered into an oversold territory and invalidated the old Fibonacci levels. Drawing new levels for the coming sessions, it looks like the pair rejecting for now level (0%) standing at 1.0900 If pair retreat on the upside we are expecting as first level to be tested the (23.6%) 1.1025 if breaks and closes above 1.1025 (23.6%), will retest 1.1222 (38%) Alternative if pair continues trading on the downside, a close below (0%) will keep the picture negative and accelerate losses down to 1.0600. Our traders are keeping open their long positions starting from 1.1350, till 1.0900 targeting profits at 1.1500. If pair recovers lost ground and trades on the upside we are expecting many long positions to be hedge with short positions at 1.1122 and short sellers to appear above 1.1200

 

 

 

GBP/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session sharp on the downside on Russian-Ukraine war. The UK’s sanctions on Russia are weighing negative on the UK economy as the gas prices in the UK become thirteen times higher since last year. This is pushing cost of leaving higher and stopping the UK economy from recovering out of the already deteriorated economic outlook that pandemic created last two years. The demand for safe-haven US Dollar and the comments form FED’s Powell that the central will hike rates on their next meeting is keeping the pair on the downside at least for now.

As for this week traders will continue focus on the Russian -Ukraine war and any possible comments from BOE on the continuing surge of gas prices that are creating hyperinflation in the UK.

In the economic calendar we have on Tuesday, BRC Like-for Like retail sales pointing higher at 15.2% On Wednesday, US Consumer price index expected higher at 6.4% On Friday, UK Gross domestic product expected higher at 0% Industrial production to remain unchanged at 03% manufacturing production higher at 3.1% NIESR GDP higher at 1.1% and US Michigan consumer sentiment lower at 61.3%

Technically the pair is negative after last week’s close below 23.6%. In this week’s trading session if pair resumes upside, we are expecting to test 1.3319, alternatively, if continues on the downside and close below (0%), will open the road down to 1.3000 Our traders keeping open their long positions at 1.3412 and 1.3319 targeting profits at 1.3600 We are expecting more aggressive buyers below 1.3200. Alternative if pair resumes upside, we are expecting short sellers to appear above 1.3500 targeting profits at 1.3300

 

 

 

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