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Week ahead May 9th – 13th

EUR/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session unchanged as pair digested all fundamentals events that drove the pair at the lowest levels since 2014. The 0.5% rate hike from FED was well priced in as it was widely expected, and this took the pair temporary on the upside. The better than expected non-farm payroll added some downside pressure on the pair but with not significant move on the downside. The war in Ukraine started to be also digested by markets and we have seen the pair continues trade around the same levels last two weeks, giving us the signal that all negative events are priced in and is ready to recover.

As for this week market participants will mainly focus on economic calendar with the inflation numbers to be on the top as the race of all central banks around the world on rate hike is becoming more and more on the front desk. Traders should be cautious on ECB’s U-turn. As all the central banks have already hiking rates to fight inflation, there is no more space left for ECB to do so. We are expecting that ECB will hike rates at any point in the next few meetings, although a comment before that could accelerate recovery before the rate hike will happen.

On The economic calendar, we have on Tuesday, German ZEW economic sentiment pointing lower at -42.5 On Wednesday, German Harmonized index of consumer prices to remain unchanged at 7.8% and US Consumer price index lower at 6%. On Friday, European industrial production expected lower at -1% and US Michigan consumer sentiment lower at 63.6

Technically the picture is negative after last week’s trading session that kept the pair on multiyear lower levels. The pair is trading into oversold territory and we are expecting a solid reversal move on the upside in the coming sessions.  In this week’s trading session if pair breaks and closes below 1.0470 (0%) will accelerate losses down to 1.0350. If pair manage to recovery and close above (23.6%) could change the picture back to neutral. Our traders are net 100% long with positions opened between 1.1350 to 1.0700 targeting profits above 1.1350 we are expecting more aggressive long positions on the way down. Alternative if pair trades on the upside, we are expecting short sellers to appear around 1.1090 (61.8%)

 

 

GBP/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session lower on hawkish FED minutes and on BOE’s negative comments. Even though the BOE hiked rates by 0.25% this was not enough to keep GBP higher. The central bank sent out to investors a solid negative signal on the UK economy growth. The BOE warned that the UK could fell into deep recession in 2022 as the war in Ukraine has accelerate inflation, reaching 10%.

As for this week market participants will be focus on both central bank’s officials’ speeches and on the economic calendar, with the inflation numbers to be on the first stage.

On the economic calendar we have on Tuesday, BRC like-for-like retail sales lower at -1.6% On Wednesday, US consumer price index expected lower at 6% On Thursday, UK gross domestic product expected lower at 1% UK Industrial production higher at 0.1% UK Manufacturing production lower at 1.7% On Friday, US Michigan consumer sentiment expected lower at 63.6

Technically the pair is negative after last week’s sharp downside move and a break and closed at multi year lows. Pair managed to recover some lost ground before the close of last week’s trading session as is now entered into oversold territory. In this week’s trading session if pair continue recovering on the upside we are expecting to test 1.2618 (23.6%) Alternatively if pair continues trading on the downside a break below (0%) could accelerate losses down to 1.2200 Our traders are net long 100% with positions opened between 1.3412 to 1.2400 targeting profits above 1.3400 We are expecting more aggressive buyers on the way down and short sellers to appear around 1.3170

 

 

 

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

Calendário Econômico

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