EURUSD Closed the week marginally higher after an unsuccessful attempt to break the critical level of 1.0900. EURUSD price is mainly driven by the negative US PMI from last week and a mixed lower nonfarm payroll versus a better that expected unemployment rate. Both economic indicators taken negative by traders and reduced significant possibilities of a rate cut in the coming FOMC meetings. For this week, traders will be focused on the FOMC meeting and the path the FED will follow for the next of the remaining 2019, no change in policy is expected at this meeting even though last week’s speech from FED’s chair Jerome Powell reiterated his stance that FED is prepared to do anything in order to maintain economic expansion. 2 more speeches are scheduled ahead of Wednesday’s FOMC minutes, all eyes will be turned on Powell. We are expecting EURUSD rate to be at the current level for long as traders are closing watching the results from next week’s trade talks between US and China. Equities sharp drop from last week weighting on this pair and must be monitor, as the last Friday’s recovery might not be long lasting.
In this week’s economic calendar, we have on Monday, German factory orders pointing again lower by -1.5%. On Tuesday, German industrial production expected lower by -0.3% and US producer price index lower at 2.3%. On Wednesday, FOMC minutes will be released. On Thursday, ECB will release their monetary policy meeting accounts, later during the day, the US consumer price index is expected to remain unchanged at 2.4%. On Friday German Harmonized index for consumer prices expected to remain unchanged at 0.9%
Technically, the picture is negative. Pair continue trading within the trend channel. The strong support at 1.0900 rejected once again and put traders on hold and now eyeing for a retest before opening the road for 1.0800. Traders long positions at 1.1014 and 1.0955 hit stop losses at 1.0900. Traders are still optimistic that the pair will retread higher and we are expecting new buyers to jump in this week at 1.0900 targeting profits at 1.1100 and with stop losses at 1.0800
GBPUSD closed the week higher amid EU’s softer stance and giving UK a major concession on a possibly time limit on Irish boarder backstop mechanism. News taken positive from GBP traders as this was one of the keys that was blocking Brexit talks between the 2 sides. PM Boris Johnson accepted proposal from EU but short after, pair retreaded lower as the time limit was escorted by a note that this would be in force only if UK will accept Northern Ireland in the EU custom union, something that not only UK will accept but also Irish Government. For now, there are no signs that Irish government will accepts this. For this week all eyes will be on the time limit of 10 days given to PM Boris Johnson to come up with a new plan that will be accepted by EU and supported by parliament. GBP will continue trading on Brexit news outcome and may continue trading higher if Boris Johnson request and granted an extension for another 3 months. According to Bloomberg source the new plan will include the below:
- The U.K. has said customs checks will need to take place on goods crossing the Irish border.
- Johnson does not want Northern Ireland to be part of the EU’s customs union, but to stay part of the U.K.’s goods regime. This, he says, means some form of customs checking is inevitable.
- The U.K. has proposed that these inspections could be conducted at dedicated clearance centers away from the border, rather than along the 310-mile frontier itself. It will be up to the customs authorities to decide where they want to conduct the checks.
- Other customs processing could take place either at the location where the goods originate, or their destination.
- GPS technology could be used to monitor goods as they cross the border, according to a report from RTE.
- Johnson has proposed to align Northern Ireland’s rules on agri-food with those of the EU, to avoid difficulties with farm products on the island of Ireland. EU officials say this does not go far enough as most goods will not be covered by such rules
- It is not clear whether these proposals will form part of Johnson’s final blueprint, which he will present to the European Commission later this week.
- Some of these details were contained in a U.K. technical discussion document — known as a “non-paper.”
On this week’s economic calendar, we have on Monday, BRC like-for-like retail sales pointing to 0% change. On Tuesday, BOE’s governor will speak. On Thursday, manufacturing production pointing lower by -0.1% industrial production -0.1% and Gross domestic product expected lower at 0%
Technically the pair is neutral. Pair traded higher last week, and our traders expecting the pair to continue higher. Our traders keeping open their buy positions at 1.2400 and 1.2300 targeting profits at 1.2800 and triggering trailing stops above 1,2450. We are expecting more aggressive buyers to appear at 1.2200-1.2000
For more detail economic calendar events please visit our live economic calendar on:
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