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Week ahead January 31st – February 4th

EUR/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on FEDs hawkish stance. The central bank reinforces its view on three rate hikes in 2022 with the first one as early as in February. On the other hand, ECB keeps a dovish stance with many officials commenting that is not yet the time to hike rates. The two central banks’ policy divergence is pushing the pair in new lows last seen back in 2020.

As for this week market participants will focus on ECB’s meeting and press conference. As it is widely expected there will be no change in the central bank’s policy. The most hawkish scenario could be a reduction in bond buying program that will create no strong support for Euro in order to help it recover. The US non-farm payroll will be the main factor behind any price move a better than expected number could push the pair down to new levels. The conflict between Russia and Ukraine is an additional factor that keeps the Euro weak as traders are preparing for the worst.

On the economic calendar we have on Monday, European Gross domestic product pointing higher at 4.7% German Harmonized index of consumer prices, lower at 4.7% On Tuesday, German retail sales expected at -0.6% and US ISM manufacturing PMI lower at 57.5 On Wednesday, European consumer price index expected lower at 4.3% and US ADP employment will show 207K new jobs On Thursday, ISM services PMI expected lower at 58.7 On Friday, European retail sales expected lower at 5.4% and US non-farm payroll expected at 200K new jobs.

Technically, the picture is negative as pair closed below (23.6%). If pair continues to trade on the downside and breaks and closes below 1.1150 (0%), will keep the picture to negative and accelerate losses down to 1.1000 Alternative if pair resumes upside, a close above (23.6%) will change the picture back to neutral and open the road to 1.1300. Our traders keeping open their long positions at 1.1310  1.1261  1.1207 and 1.1123 targeting profits at 1.1500 we are expecting more aggressive buyers below 1.1100 Alternative if pair turn higher we are expecting short sellers to appear at 1.1300 targeting profits at 1.1100

 

 

 

GBP/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on FED’s hawkish stance, as the central bank reinforces its view on three rate hikes in 2022 with the first one as soon as in February. On the GBP side the inter-government turmoil on 2020 downing street party continues to add downside pressure on GBP. Russian Ukraine conflict is another factor that is keeping the pair lower as a conflict between the two countries will have negative impact on GBP.

As for this week, traders will focus on the BOE meeting. The central bank expected to hike rates by 0.25% on this meeting. Any surprise of a 0.5% rate hike could be seen as positive for the GBP and recover all lost ground, alternative if central bank will hold the pair will accelerate losses. Traders will keep their eyes on Friday’s non-farm payroll. A better than expected number could add downside pressure on pair. a worst than expected will help the pair recover lost ground.

In the economic calendar we have on Tuesday, UK Markit manufacturing PMI to remain unchanged at 56.9 and US ISM manufacturing PMI lower at 57.5 On Wednesday US ADP employment expected to show an additional 207K new jobs. On Thursday, BOE expected to hike rates by 0.25%, that will be followed by a speech from Governor Bailey. US ISM services PMI expected lower at 58.7 On Friday, US non-farm payroll expected to add 200K new jobs.

Technically the pair is negative after last week’s closed below 38.2%. In this week’s trading session if pair resumes upside and close above 38.2%, we are expecting to test 1.3500, alternatively, if continues on the downside and close below (23.6%), will keep the picture negative and open the road down to 1.3200 Our traders opened long positions at 1.3500 and 1.3442 targeting profits above 1.3600 we are expecting more aggressive buyers below 1.3300 Alternative if pair trades on the upside we are expecting the first short sellers above 1.3600

 

 

For more detailed economic calendar events please visit our live economic calendar on: 

Calendário Econômico

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