EUR/USD FUNDAMENTALS AND TECHNICAL
Pair closed last week’s trading session lower, registering a new multiyear low level. The pair continues trading lower in the mercy of US Dollar’s strength fueled by global risks. ECB’s Lagarde has finally joined the other members on rate hike approach as early as in July. Although, this was not enough to keep the pair higher as the risk of an escalation of the war in Ukraine still weighing negative on Euro. The negative signals coming out of the economic releases also showing that Europe is on the edge of falling into deep recession with higher prices and shortage of goods in autumn.
As for this week market participants will mainly focus on the economic calendar, and the speeches from ECB’s Lagarde and FED’s Chair Powell. If the ECB will reinforce the rate hike in July the pair may continue to recover lost ground. Failing to do so the pair could continue on the downside adding more pressure on ECB. Finland’s and Sweden’s NATO membership is the biggest thread for the EU at this stage as the uncertain Russian reaction could escalate the war in Ukraine into the EU.
On The economic calendar, we have on Tuesday, European gross domestic pointing at 5%, US retail sales expected higher at 0.7% On Friday, German producer price index expected higher at 1.4%, and European consumer confidence expected at -21.5
Technically the picture is negative after last week’s trading session that pushed the pair into 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 1.0350 (0%) will accelerate losses down to 1.0250. If pair manage to recovery and close above (23.6%) could change the picture back to neutral and open the road to recovery. Our traders are net 100% long with positions opened between 1.1350 to 1.0500 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 US Dollar’s strength and on renew downside pressure on Northern Ireland protocol. The UK warned EU to be more flexible on trade deals and thread EU of revoking the protocol. A combination of negative economic release with the Brexit renew differences were more than enough to push the pair into lower levels.
As for this week market participants will be focus on the heavy economic releases in the UK and the speech from FED’s Jerome Powell. and BOE’s MPs. The discussion between EU and UK on Northern Ireland protocol should be taken into consideration from traders as this could add downside pressure on the pair.
On the economic calendar we have on Monday the BOE monetary policy report. On Tuesday, UK Unemployment change to remain the same at 3.8% US retail sales expected higher at 0.7%. On Wednesday, UK consumer price index expected higher at 9.1%, UK retail price index lower at 0.9%. On Friday, Gfk consumer confidence expected at -38, UK Retail sales lower at -7.2%
Technically the pair is negative after last week’s sharp downside move and a break and closed at new 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 1.2500 (23.6%) Alternatively if pair continues trading on the downside a break below (0%) could accelerate losses down to 1.2100 Our traders are net long 100% with positions opened between 1.3412 to 1.2200 targeting profits above 1.3400 We are expecting more aggressive buyers on the way down and short sellers to appear around 1.3170
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