EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session higher, recovering all last week’s lost ground. As things around the world were nice and calm and the FED was almost there to hike rates, something suddenly turned everything upside down. The new covid-19 variant called OMICRON is spreading rapidly in south African and now in Europe and the US. The news was more than enough to drive US Dollar lower as doubts mount on whether the FED will hike rates under the new market conditions where the OMICRON virus is threaten not only economic recovery but is also threaten governments to impose new lock-downs and stricter measures.
As for this week, traders will be focus on the new OMICRON virus spread and how governments around the world will react. The speech from FED’s chair Jerome Powell it will be a very important speech regarding US Dollars’ future. This is the first speech since Jerome’s Powell renew its position as FED’s Chair and the first speech after the new OMICRON virus spread.
On the economic calendar we have on Monday, German Harmonized Index of consumer prices pointing lower at 5.4% On Tuesday, European Consumer Price index lower at 3.7% On Wednesday, German retail sales lower at -2%, US ADP Employment expected to add 525K new jobs and ISM manufacturing PMI expected higher at 61. On Friday, European retails sales are pointing lower at 1.5%, US Non-farm payrolls to add 528K new jobs and the ISM service PMI expected lower at 65.5
Technically, the picture is negative as pair continues to trade in lower lows every week. lower If pair continues to trade on the downside this week and breaks and closes below 1.1190 (0%), will accelerate losses down to 1.1100 Alternative if pair trades on the upside, a close above (23.6%) will change the picture back to neutral. Our traders are keeping open their long position at 1.1435 and 1.1300 targeting profits above 1.1600 we are expecting more aggressive buyers on the way down and short sellers to appear above 1.1600
GBP/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower after recovery from a sharp dip during the week’s trading session. The initial reaction on the downside was due to the news on OMICRON virus and the travel restrictions from many South African countries. As for the recovery this was due to the US Dollar’s weakness on the new virus as it is estimated to keep the FED on hold and postpone any rate hike in the near future. The new virus is mounting doubts about both central banks’ future monetary normalization plans. While everything was ready for a rate hike as soon as in December, now traders will be waiting for longer time for this to happen.
As for this week traders will be focus on the new OMICRON virus as both countries, the US and the UK, are already facing the new OMICRON virus thread and we are expecting governments to take stricter measures in order to prevent the spread. The speech from FED’s Jerome Powell and BOE’s Bailey will be the main keys on what the FED and the BOE will decide after the new virus thread.
In the economic calendar we have on Wednesday, Markit Manufacturing PMI pointing lower at 58.1 and on Friday Markit services PMI at 58.6 From the US the main event will be the Non-farm payrolls number where is expected to add 528K new jobs.
Technically the pair is negative after last week’s new low. In this week’s trading session if pair continues on the downside and breaks and close below last week’s 1.3287 will accelerate losses down to 1.3200, alternatively, if resumes upside and close above (23.6%), will change the picture to neutral and open the road to 1.3600 Our traders kept open their long positions at 1.3546 and 1.3412 targeting profits at 1.3760 we are expecting more aggressive buyers on the way down and short sellers above 1.3600
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