EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher on the absence of any major economic releases from the US. The weekly speeches from FED’s Officials sent a mixed signal in the markets and kept the pair trading within the same range. Geopolitics and central bank’s rate decision are the keeping traders on hold, so as the pair.
As for this week market participants will mainly focus on the ECB meeting and the rate decision. The central bank is expected to hike rates by 0.75%. This will not help the pair trading higher, although, it might limit the downside pressure. If the central bank will surprise with 1% rate hike that will help the pair trade higher as the signal will be clear, that the central bank is willing to fight inflation and stabilize prices from going up.
On the economic calendar, we have on Monday, German composite PMI pointing lower at 45.4 Manufacturing PMI lower at 47.2 European composite PMI lower at 47.6 and US services PMI lower at 49. On Thursday, ECB rate decision and press conference. US Gross domestic product expected higher at 2.4% and durable goods orders higher at 0.5% On Friday, German gross domestic product expected lower at -0.2% German Harmonized index of consumer prices to remain the same at 10.9% and US Michigan consumer sentiment to remain unchanged at 59.8
Technically the picture is neutral after last week’s close above 23.6% In this week’s trading session if pair continues on the upside and close above (38.2%) could change the picture to positive and re-test next level of 1.0160 (50%). Alternatively, if pair reverse on the downside we are expecting to retest last low of 0.9550 (0%) We are expecting new buyers at 0.9550 targeting profits at 1.0000 Short sellers are still open at 1.0030 targeting profits at 0.9550 and we are expecting more sellers around 1.0000 (38.2%)
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session marginally higher after is faced some sharp moves on both directions, upside and downside. The high volatility in the pair it was a result of UK’s government turmoil. The resignation of PM Liz added downside pressure on the pound, and create uncertainty in the market. Geopolitical turmoil and fears of a nuclear thread is weighing negative on the UK economy. High inflation is deteriorating the retail sales figures as Britons started to feel the higher pricing pressure. All the above negative events are confronting BOE’s efforts to stabilize inflation by hiking rates and is keeping the pair into consolidated mode. Moody’s downgrading UK’s rating from stable to negative, is making harder for the UK government to access borrowing facilities.
As for this week market participants will focus on the UK’s election of new PM. Sunak leads the race together with Boris Johnson. The new PM will have a heavy calendar with many responsibilities on his agenda. The UK’s come back in the borrowing markets, the inflation fights and the price stability is among the mayor issues.
On the economic calendar we have on Monday, UK composite PMI pointing lower at 48.2 UK services PMI lower at 49 On Thursday, US Gross domestic product expected higher at 2.4% and US durable goods orders higher at 0.5% On Friday, US Michigan consumer sentiment to remain unchanged at 59.8
Technically the pair is positive as the pair closed marginally below 61.8% level at 1.1300. In this week’s trading session if pair manages to continue on the upside and close above 1.1300 (61.8%) will keep the overall picture positive and could open the road to full recovery up to 1.1900 Alternatively a break below 50% could accelerate losses down to 1.0900 We are expecting new buyers at 1.0700 and short sellers at 1.1800
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