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Week ahead February 28th – March 4th

EUR/USD FUNDAMENTALS AND TECHNICAL

Pair closed last week’s trading session lower on US Dollar strength. The US Dollar has seen increasing demand as safe-haven asset last week due to the war between Russia and Ukraine. As we have previously mention in our weekly review this was the most important event behind pair’s price action. Last week’s events will be affecting markets for the coming few months. US and EU imposed sanctions on Russia and Russian diplomats as a first package of retaliation measures for the war. Whether the measures were enough to affect the Russian economy or will be a boomerang on EU economy this will be pending to review in the next six months.

As for this week market participants will focus only on the Russian-Ukraine war. The non-farm payroll will be the most important economic release for the coming week, although, we are expecting any economic release to be overshadowed by the war. Central banks comments should be followed with attention as both central banks especially the ECB might change their view on monetary policy due to the war. Such a geopolitical turmoil will effect global economy recovery. The high oil and gas prices will push inflation higher and add pressure on the central banks to act and hike rates. On the other hand, central banks may pull back for now and wait to see if the sanctions on Russian will affect negative the global economy and most sure the European economy.

On the economic calendar we have on Tuesday, German retail sales pointing higher at 1.8% German Harmonized index of consumer prices higher at 5.4% and US ISM manufacturing PMI higher at 57.9 On Wednesday, European HICP expected higher at 5.3% and US ADP employment to add 320K new jobs. On Thursday, US ISM services PMI expected higher at 60.5 On Friday, European retail sales expected higher at 9.5% and US non-farm payroll to add 438K new jobs.

Technically, the picture is negative after last week’s close below (50%). If pair trades on the upside and breaks and closes above 1.1347 (61.8%), will change the picture back to neutral and retest 1.1481 (100%) Alternative if pair trades on the downside, a close below (38.2%) will keep the picture negative and retest 1.1100. Our traders took profit all their short positions opened at 1.1347 and 1.1481 Buyers are keeping open their long positions at 1.1350, 1.1292, 1.1246, 1.1190 and 1.1123 targeting profits at 1.1500. If pair recovers lost ground and continues trade on the upside we are expecting all long positions to take profit above 1.1350 and short sellers to appear above 1.1350 targeting profits as low as 1.1100

 

 

 

GBP/USD FUNDAMENTALS AND TECHNICAL

 

Pair closed last week’s trading session sharp lower on Russian-Ukraine war. As we have previously mentioned this war conflict will bring the pair sharp on the downside as investors are fleeing into US Dollar as safe haven asset. The UK parliament adopted sanctions on Russia as a retaliation for the war against Ukraine, although, this was taken negative from GBP traders as the sanctions might work against UK ‘s economy rather than Russia’s economy. The BOE is facing some pressure on normalizing monetary policy, with its members to be divided whether to continue hiking rates or not. Recent petrol prices and taxes, have dramatically increase cost of living for UK households and this is something that worries BOE and might pull back from its fast normalizing monetary policy as it was initially expected.

As for this week traders will focus on the Russian -Ukraine war and on any additional sanctions by the UK and the EU. The non-farm payroll release from the US will have limited impact on the pair, as, all eyes will be turn on the Russia- Ukraine conflict and the comments from central bank’s officials, whether the banks will continue their monetary normalization policy or will pull back for now and see how the Russian sanctions might affect negatively the UK economy.

In the economic calendar we have on Tuesday, UK Markit manufacturing PMI to remain unchanged at 57.3 and US ISM manufacturing PMI higher at 57.9 On Wednesday, US ADP employment to add 320K new jobs. On Thursday, US ISM services PMI expected higher at 60.5 On Friday, the US non-farm payroll expected to add 438K new jobs.

Technically the pair is negative after last week’s close below (38.2%). In this week’s trading session if pair resumes upside, we are expecting to test 1.3500, alternatively, if continues on the downside and close below (28.6%), will open the road down to 1.3160 Our traders took profit their short positions opened at 1.3580 and new aggressive buyers appeared with long positions at 1.3412 and 1.3319 targeting profits at 1.3600 We are expecting more aggressive buyers to come in, below 1.3300. Alternative if pair resumes upside, we are expecting short sellers to appear above 1.3500 targeting profits at 1.3300

 

 

 

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

Ekonomik Takvim

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